Study finds increased costs for solar and wind construction but lower for natural gas

Labor, materials shortages blamed for $32M cost bump at Iowa County solar farm

 

The average U.S. construction costs for solar photovoltaic systems and wind turbines in 2022 were close to 2021 costs, while natural gas-fired electricity generators decreased 11%, according to recently released data from the U.S. Energy Information Administration.

Average construction costs for solar generators increased by 1.7% in 2022, and for wind turbines they increased by 1.6%.

U.S. capacity-weighted average utility-scale construction cost by technology

 

These three technologies—solar, wind, and natural gas—comprised 86% of the capacity added to the U.S. electric grid in 2022. Investment in new electric-generating capacity in 2022 decreased by 27% from 2021 to $36.9 billion dollars.

Generator cost data are reported to EIA through the EIA-860, Annual Electric Generator Inventory. The costs discussed in this article reference our electric generator construction costs data, which organize the nominal construction cost values for generators installed in each reporting year. The recently released data examine trends from past years. Discussion of additional cost information and trends is available in our Short-Term Energy Outlook.

Solar
Average U.S. solar construction costs across all solar panel types increased 1.7% to $1,588 per kilowatt (kW) in 2022. The increase was primarily driven by a 13% increase in the construction cost for crystalline silicon tracking panels, which increased to $1,605/kW, the highest price since 2018.

The average construction cost for crystalline silicon fixed-tilt panels decreased by 13%, but they remained the most expensive of the major solar technologies at $1,788/kW. The average cost for Cadmium telluride panels also decreased by about 6% to $1,529/kW in 2022.

Average U.S. construction cost for solar photovoltaic systems

Data source: U.S. Energy Information Administration, Electric Generator Construction Costs and Annual Electric Generator Inventory

Most solar panels installed in the United States are crystalline silicon tracking panels. Unlike fixed-tilt systems, solar tracking systems automatically move to follow the sun as it moves across the sky, allowing more continuous sun exposure and, therefore, greater electricity production.

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Wind
The average construction cost for U.S. onshore wind turbines increased 1.6% in 2022 to $1,451/kW. Higher costs were driven by increases in construction costs for wind farms greater than 100 megawatts (MW) in nameplate capacity. The cost for wind farms between 100 MW and 200 MW of capacity increased by 10% to $1,614/kW. Construction costs for the largest wind farms—those with more than 200 MW—also increased to average $1,402/kW in 2022, up 1.4%. Construction costs for wind farms with 1 MW to 100 MW of capacity continued to decrease, this time by an average of 7.3% to 1,806/kW in 2022.

Average U.S. construction cost for wind farms

Data source: U.S. Energy Information Administration, Electric Generator Construction Costs and Annual Electric Generator Inventory

Natural gas
The average construction cost for natural gas-fired generators fell 11% between 2021 and 2022. The decrease was driven primarily by decreases in the cost for combined-cycle facilities. The average construction cost for generators at combined-cycle facilities fell by 42% in 2022 to $722/kW.

The costs for other natural gas technologies increased in 2022. The average construction cost for a combustion turbine almost doubled between 2021 and 2022 to $1,006/kW, and the cost for internal combustion engines fueled with natural gas increased by 27% to $1,677/kW.

Average U.S. construction cost for natural gas-fired generators

Data source: U.S. Energy Information Administration, Electric Generator Construction Costs and Annual Electric Generator Inventory