The Road Ahead for Solar PV Power

The Road Ahead for Solar PV Power

By Stephen Comello, Stefan J. Reichelstein, Anshuman Sahoo
December 2017Working Paper No. 3620

Over the past decade, solar photovoltaic (PV) power has experienced dramatic deployment growth coupled with substantial decreases in system prices. This article examines how solar PV power is currently positioned in the electricity marketplace and how that position is likely to evolve in the foreseeable future. We first assess the current cost competitiveness of solar PV in select U.S. locations and industry segments using the Levelized Cost of Electricity (LCOE) metric. Our framework enables us to quantify the effects that supportive public policies, time-of-use pricing, and anticipated future technological improvements have on the LCOE. We then explore the potential for combining solar PV with battery storage as a means of enhancing the value of solar power. Our analytical framework identifies conditions that make it financially attractive to add behind-the-meter batteries to an existing PV solar system in a residential setting. Taken together, our findings suggest that solar power, by itself and in conjunction with low cost storage, is positioned to account for a growing and signicant share of the overall energy mix.