#1ONREL Transforming ENERGY Fall 2023 Solar Industry Update David Feldman Krysta Dummit, BGS Contractor for SETO Jarett Zuboy Brittany Smith Dana Stright Matthew Heine Robert Margolis October 26, 2023#2Agenda 1 Global Solar Deployment 2 U.S. PV Deployment 3 PV System Pricing 4 Global Manufacturing 5 Component Pricing 6 U.S. PV Imports 7 PV Domestic Content NREL 2#3Executive Summary Global Solar Deployment H1 2023 PV installations increased significantly (y/y) in China (153%) and Germany (102%), and to a lesser extent the United States (34%). Australian and Indian first PV installations in H1 2023 shrank modestly, y/y. U.S. PV Deployment EIA projects the percentage of U.S. electric capacity additions from solar will grow from 45% in 2022 (17 GWac) to 56% in 2023 (31 GWac) and 62% (41 GWac) in 2024. • The United States installed 11.2 GWac (11.8 GWdc) of PV in H1 2023-its largest H1 ever-up 44% y/y. ⚫ The United States installed approximately 7.7 GWh (2.5 GW ac) of energy storage onto the electric grid in H1 2023, +32% (+8%) y/y, as a result of growth in all sectors. PV System and Component Pricing • U.S. PV system and PPA prices have been flat or increased over the past 2 years. . Global polysilicon spot prices rose 35% from late June ($7.84/kg, below the weighted average production cost of $8.2/kg) to early October ($10.55/kg). • Global module prices reached yet another record low, falling 21% between late June and early October to $0.14/Wdc. ⚫ In Q3 2023 (first 2 months), the average U.S. module price ($0.33/Wdc) was down 11% q/q and down 23% y/y, but at a 98% premium over the global spot price for monofacial monocrystalline silicon modules. Global Manufacturing According to Infolink (formerly PV Infolink), the top 10 module manufacturers were responsible for 160 GW (+57% y/y) in H1 2023 and the top 5 cell manufacturers together shipped 84 GW of cells (+49% y/y). • Since the passage of the IRA, more than 240 GW of manufacturing capacity has been announced across the solar supply chain, representing more than 22,000 potential jobs and more than $12 billion in announced investments across 72 new facilities or expansions. • In H1 2023, the U.S. shipped 3.1 GW of PV modules - an increase of 0.8 GW from H1 2022. U.S. PV Imports • The United States imported 25.1 GWdc of PV modules in H1 2023, well over double imports from H1 2022. • Most panels imported were exempt from Section 201 duties and were therefore likely bifacial. A significant number of thin-film modules were also imported. ⚫ 1.5 GW dc of cells were imported in H1 2023, up 28% y/y. • The U.S. is not on pace to reach the 5-GW quota exemption limit for Section 201 tariffs. A list of acronyms and abbreviations is available at the end of the presentation. NREL 3#4Agenda 1 Global Solar Deployment 2 U.S. PV Deployment 3 PV System Pricing 4 Global Manufacturing 5 Component Pricing 6 U.S. PV Imports 7 PV Domestic Content • H1 2023 PV installations increased significantly (y/y) in China (153%) and Germany (102%), and to a lesser extent the United States (34%). Australian and Indian first PV installations in H1 2023 shrank modestly, y/y. BloombergNEF estimates 2023 installations in China to be around 200 GW, far exceeding last year's record of 106 GW. NREL 4#5Installations (GWdc) 40 35 450 25 20 15 10 International H1 2023 Installations H2 H1 ↑ 106 GW ...] 2022 2023 2022 Germany China 74 GW 510 GW 2023 95 GW • • H1 2023 PV installations increased significantly (y/y) in China (153%) and Germany (102%), and to a lesser extent the United States (34%). Australian and Indian PV installations shrank modestly in H1 2023, y/y. - - Bloomberg NEF estimates Chinese 2023 PV installations to be around 200 GW, far exceeding last year's record of 106 GW.* JMK Research expects India to install 14- 15 GW in 2023 (compared to 17-18 GW in 2022), and estimates the country had a solar pipeline of 47 GW at the end of June. At the end of June, these countries had cumulatively installed 839 GWdc of PV. 5 0 2022 2023 2022 2023 2022 2023 U.S. 153 GW India 70 GW Australia 32 GW Cumulative Capacity *China reported 87 GW of PV installations in 2022 and 78 GW in the first half of 2023; however, these numbers reflect a combination of utility-scale projects reported in Wac and distributed PV reported in Wdc. IEA estimated Chinese 2022 installations to be 106 GW. Chinese values here reflect the same 2022 ILR. Sources: Australian Photovoltaic Institute. Mercom (07/31/23, 08/28/23). PV Magazine (06/13/23; 08/28/23); Wood Mackenzie/SEIA: U.S. Solar Market Insight: Q2 2023. NREL 5#6• . Concentrating Solar Power Update Chinese CSP company Cosin Solar currently has 100 MW of projects operational and another 900 MW under construction, making it the first company to supply 1 GW of tower projects. HeliosCSP interviewed an engineer who has been working on the 110-MW U.S. Crescent Dunes project-the first large-scale, high-storage CSP plant, which began operation in 2015. - - Crescent Dunes is essentially recommissioning itself now, slowly bring the plant back online from several repairs. ACS, a multinational EPC firm, indirectly purchased the plant from the original owner, SolarReserve. It is currently selling power to NV Energy, which was originally under a PPA with the contract until the project defaulted in 2019. They are selling electricity exclusively at night or when their storage tanks are full. Reason for operational challenges: (1) The hot tanks were poorly designed the first time (for cost-cutting reasons) and poorly welded when they were replaced. (The welders were not used to working with those type of alloys, causing the tank to crack.) They've been installed now a third time. (2) One of the two superheaters sat with water in it and rusted; it has yet to come online. - These expenses are much less than the estimated $250M it would take to satisfy BLM requirements for removing the plant (SolarReserve initially estimated it would cost $7M). NREL | 6#7Agenda 1 Global Solar Deployment 2 U.S. PV Deployment 3 PV System Pricing 4 Global Manufacturing 5 Component Pricing 6 U.S. PV Imports 7 PV Domestic Content EIA projects the percentage of U.S. electric capacity additions from solar will grow from 45% in 2022 (17 GWac) to 56% in 2023 (31 GWac) and 62% (41 GWac) in 2024. According to EIA data, the United States installed 11.2 GWac of PV in H1 2023-its largest H1 ever-up 44% y/y (SEIA reported 11.8 GWdc). The United States installed approximately 7.7 GWh (2.5 GWac) of energy storage onto the electric grid in H1 2023, +32% (+8%) y/y, as a result of growth in all sectors. NREL 7#8States: Q2 2023 Updates Wind and Solar Capacity (GW) 9.10 20.00 30.00 44.00 Category 2030 Projection Based on Current Policy Gap Between Projection and NDC-Aligned 2030 Goal Projected share of NDC goal achieved in 2030 North Dakota South Dakota Nebraska Minnesota Wisconsin Michigan Towa 0.2100 0.9200 United States Nevada Utah Colorado Kansas Missouri California Arizona reduced the Illinols Indiana Map shows progress toward installed wind + PV capacity by 2030 compatible with the U.S. Nationally Determined Contribution (NDC) under the Paris Agreement, as modeled by RMI. For example, if current policies are successful, MA will achieve 92% of an NDC-compatible 9-GW wind + PV target by 2030, while AZ will achieve only 21% of a 21-GW target. The gaps are mostly PV in AZ and NJ and a mix of PV and wind in NY, MA, NC, OH. Ohio required PV Pennsylvania MD West Virginia Kentucky Tennessee Oklahoma Arkansas New Mexico Mississipp Alabama Georgia Texas Louisiana Baja California Sonora value of rooftop Chihuahua PV energy (Coahuila de Zaragoza exports by 10%. Baja California Nuevo Leon Sur Sinaloa Durango Sou Carolina Florida Virginia N Brun Maine installations >50 MW to meet rules related to noise, setbacks, and drilling safety. New York increased low- and moderate-income (LMI) access to community solar via pre-development grants and technical assistance. Boston, Massachusetts banned fossil fuel use in new municipal building construction and renovations. The city will require all buildings to be wired for all-electric use starting 2024. New Jersey made its pilot community solar program permanent, with requirements including 51% LMI subscribers and 15% minimum bill savings. North Carolina will add 6 GW of PV and 2.7 GW of energy storage by 2031 under Duke Energy's updated Carbon Plan and Integrated Resource Plan. Sources: NJBPU (8/16/23); PV Magazine (8/7/23, 8/24/23, 8/28/23); PV Tech (8/18/23); RMI, State Climate Scorecards (2023); Utility Dive (8/8/23) NREL 8#9FERC Issues Order 2023 Background • Bottlenecks in interconnection queues are holding up 1,700 GW of clean power in the United States (mostly solar and batteries). Average grid connection cost in PJM, MISO, and NYISO $/W(AC) 0.25 0.20 • Interconnection approval times can take 3 years or more, on average. 0.15 • The cost of interconnection upgrades is increasing. 0.10 In 2017, more than one-third of systems in the Midwest incurred no upgrade costs, and by 2021 it had dropped to 11%. • Solar projects in the U.S. pay on average $0.09/W, according to BloombergNEF analysis, or about 8%-10% of their total costs. Source: BloombergNEF, "US Takes a Step to Clear Grid Backlog But a Leap Is Needed." 0.05 0.00 2016 2017 2018 ■Solar 2019 2020 2021 ■Wind NREL 9#10FERC Issues Order 2023 The new order includes several changes: • • . Implements a first-ready, first-served cluster study process, in which project requests enter a "cluster window" and all receive the same priority, allowing for a group interconnection study rather than sequentially. Cluster study costs imposed on a pro rata and per capita basis, and upgrade costs allocated to cluster on a "proportional impact method." - BNEF stated that most grid operators already (or will soon) conduct joint grid connection studies, and it will not necessarily reduce the combined cost of grid interconnection. Implements enhanced financial commitments and withdrawal penalties to discourage withdrawals and requires demonstration of site control at the time of submission (or a deposit of $500k-$2M). Aims to increase the speed of the interconnection queue by removing the "reasonable efforts" standard governing transmission provider's duty for timely completion of studies and places firm study deadlines and penalties for missing study deadlines ($1k per business day of delays to cluster studies / $2.5k for facilities studies). Allows interconnection process to have one interconnection point (and study) for co-located facilities. Source: JDSupra (08/11/23); The National Law Review (08/18/23) NREL 10#11FERC Issues Order 2023 Impact · Once implemented, FERC rules will improve and harmonize existing grid interconnection best practices but do not represent disruptive, structural changes that may be necessary to install the levels of solar and wind necessary to decarbonize the grid by 2035. Such measures may include: - - Reforms to the cost allocation of grid upgrades (e.g., in Texas, upgrades are borne by the consumer, not the project). Allowing interconnections ahead of all grid upgrades. A more proactive approach for grid planning that identifies areas with high wind and solar potential and preemptively builds out system capacity in those regions. Comparison of U.S. annual grid investment scenarios • Many of the upgrades occur now as developers seek interconnection. $ billion 160 140 Net Zero Scenario 120 100 With IRA 80 Historical 60 40 m 2020 2025 2030 NREL 11 Permitting reform to significantly build out transmission assets. BNEF states that current process has deterred lots of projects that would help. After the order was issued, BNEF did not change its outlook on U.S. solar and wind deployment, as it already assumed some level of interconnection process improvements. Source: BloombergNEF, "US Takes a Step to Clear Grid Backlog But a Leap Is Needed." 20 0 2015#12Planned U.S. Electric Generation Plants in Relation to Energy Communities Planned U.S. Generation Capacity in Relation to Energy Communities, September 2023 ashington North akota Minnesota Gregon ° Idaho South Dakot © 2023 Mapbox © OpenStreetMap Alaska . olorado Nebraska United State Kansas New grunswick Maine Nova Sc Closures & Energy Communities Adjacent to Coal closure Coal Closure MSAs/non-MSAS, FEE and EC Technology (group) All Others Batteries Offshore & Onshore Wind Solar Photovoltaic Nameplate Capacity (MW) Okloma en о 0 500 1,000 1,500 2,000 ≥ 2,500 Hawaii Click here to interactively view this data on Tableau Public. • Since the passage of the Inflation Reduction Act, which provides an additional 10% tax credit for renewable energy projects located in an "Energy Community", a significant amount of new planned renewable energy projects have been announced. In September 2022, one month after the passage of the Inflation Reduction Act, the EIA tracked approximately 123 GW of planned utility-scale PV, land-based wind, and battery projects (of which 78 GW had not yet started construction). Since then, 60 GW of new projects have been added to the dataset, 38 GW of which has not yet started construction. Canada Nail 2023 Mapbox © OpenStreetMap © 2023 Mapbox © OpenStreetMap Note: Brownfields, which are also eligible for the energy community bonus credit, do not have the same census tract delineations and so are not included in this analysis. Sources: U.S. Energy Information Administration (EIA), EIA Form 860 (November 2022, November 2023). NREL 12#13Percent of Planned Solar, Wind, and Battery Markets Located in Energy Communities Click here to interactively view this data on Tableau Public. Out of Energy Community In Energy Community Capacity (GW) 100 80 10 40 20 20 0 70% % Capacity in Energy Community 60% X% Capacity in Energy Community (new projects) 50% 40% 30% Added Planned Projects Planned Projects 20% . Planned (Sep. Planned (Sep. Planned (Sep. Planned (Sep. Planned (Sep. Planned (Sep. 2022) 2023) 2022) 2023) 2022) 2023) - 10% 0% Note: based on EIA data, there werende planned offshore wits announced between septem22nd September 2023. Additionally, the latitude and longitude of these projects reported in EIA Form 860 likely does not reflect the location in which these projects will determine their eligibility (i.e., the point of interconnection). Sources: U.S. Energy Information Administration (EIA), EIA Form 860 (November 2022, November 2023). NREL analysis found that new projects added to the planned project dataset do not have a significantly higher percentage of capacity located in energy communities as projects which were in the dataset as of September 2022. - - This analysis also includes projects in construction, however the results are very similar when only looking at new projects which have not begun construction yet. The percentage of planned land-based wind capacity located in energy communities increased the most (from 30% to 40%), however the number of projects located in energy communities increased less dramatically (from 26% to 30%) and was impacted by a few large projects. The percent of planned solar PV capacity in energy communities is relatively consistent (if not lower) than the percent of installed capacity in those areas from 2021 through July 2023 (see LBNL data on slide 20). It typically takes years to develop large electric generating assets in the United States, therefore data may not show a significant change in deployment in these communities for some time. Additionally, a relatively large percentage of projects were already being developed in these areas. EIA data is also not necessarily added uniformly in terms of project development and therefore is a better indicator of long-term trends. NREL 13#1470 10 60 U.S. Generation Capacity Additions (GW₂c) 50 U.S. Generation Capacity Additions by 40 40 30 20 20 10 10 Source: 2010-2022 and Planned 2023-2024 Avg. (2010-2014) Avg. (2015-2019) 2020 2021 2022 2023 2024 Other Nuclear ■Natural Gas (Other) Natural Gas CT Natural Gas CC Batteries Wind DPV 62% UPV Began operating through July 2023 Planned August 2023 and full 2024 • EIA projects the percentage of U.S. electric capacity additions from solar will grow from 45% in 2022 (17 GWac) to 56% in 2023 (31 GWac), and 62% (41 GWac) in 2024. - Wind accounts for 14%, batteries 15%, and nuclear 2% of projected capacity in 2023; in 2024 those percentages are 9%, 19%, and 2%, respectively. Natural gas accounts for the remaining 14% in 2023. Over the next 2 years, EIA projects there will be nearly 90 GW ac of capacity additions from wind and solar alone. Wood Mackenzie/SEIA projects 32 GWdc of solar installations in 2023 and 35 GWdc in 2024, depending both on favorable supply chain conditions (domestic and international) and on the ability to optimize the Inflation Reduction Act bonus credits. Over the next 5 years, Wood Mackenzie/SEIA projects about 20 GW dc upside or downside relative to their base case as a result of these factors. Sources: EIA Form 860M/Preliminary Monthly Electric Generator Inventory ("Planned" and "Operating") and EIA Short-Term Energy Outlook Table 7e, downloaded October 6, 2023; Wood Mackenzie and SEIA US Solar Market Insight Full Report 2Q 2023, Sep 2023. NREL 14#15Quarterly PV Installed (GWac) · 8 7 6 ம 2 0 U.S. Installation Breakdown Quarterly: EIA (GWac) According to EIA data, the United States installed 11.2 GW ac of PV in H1 2023-its largest H1 ever-up 44% y/y (SEIA reported 11.8 GWdc). - Residential (3.4 GWac) remained up significantly in H1 2023, 45% y/y, as was nonresidential (1.2 Gwac-up 60%) and utility-scale (6.6 GWac-up 40%). • 39% of U.S. PV capacity installed in H1 2023 was in Texas, Florida, and California. 23 states installed more than 100 MW ac in H1 2023. U.S. PV Installations by Market Segment Utility-scale ■C&I ■Residential Click here to interactively view this data on Tableau Public. H1 2023 U.S. PV Installations by Region (11.2 GWac) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 2020 2021 2022 2023 Texas 9% Southwest 14% Florida 17% California 12% Other 5% Northeast 15% Southeast 12% Midwest 16% Note: EIA reports values in Wac, which is standard for utilities. The solar industry has traditionally reported in Wdc. See the next slide for values reported in Wdc. Sources: EIA, "Electric Power Monthly," forms EIA-023, EIA-826, and EIA-861 (July 2023, February 2022, February 2019). NREL 15#1610 8 00 6 st N U.S. Installation Breakdown Quarterly: SEIA (GWdc) Wood Mackenzie/SEIA reports a record first half of PV installations, with 11.8 GWdc installed in H1 2023-an increase of 34% y/y. - Big growth occurred year over year in the residential and utility-scale space, with Q2 residential installations hitting another record level of deployment. SEIA reports that the growth comes despite uncertainties that remain in receiving IRA benefits, higher interest rates, and challenges with UFLPA compliance. Nonresidential installations were mostly flat, with SEIA citing continued impacts of interconnection delays, supply chain constraints, and uncertainty over IRA implementation. U.S. PV Installations by Market Segment Utility | Nonresidential PV Residential PV Unlike the previous slide, these values are • in GWdc-not GWac. Installations typically fall after Q4 and this Q1 was particularly large due to delays in projects originally intended for a Q4 installation. Florida, California, and Texas continue to lead installations, accounting for 46% of H1 2023 installations. - However, 27 states installed more than 100 MW in the first half of the year. H1 2023 U.S. PV Installations by Region (11.8 GWdc) Southeast 11% Northeast 10% Florida 21% Quarterly PV Installed (GWdc) Q1Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 2020 2021 Sources: Wood Mackenzie/SEIA: U.S. Solar Market Insight: Q3 2023. 2022 2023 Southwest 15% Other 8% Midwest 10% California Texas 11% 14% NREL 16#17Solar Generation as a Percentage of Total Net Generation 32% 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% 10% 8% 6% 4% Solar Generation as a Percentage of Total Generation, Q4 2022-Q3 2023 12.8% 18.5% 17.9% 25.1% 24.4% 27.5% Click here to interactively view this data on Tableau Public. 11.0% 10.2% 9.8% 8.9% 8.9% 8.0% 7.5% 6.9% 6.5% During the 1-year time span from Q4 2022 to Q3 2023, 20 states generated more than 5% of their electricity from solar, with California leading the way at 27.5%. CSP Residential • C&I UPV 6.2% 6.1% 6.1% 6.1% 6.0% 5.4% .3% 2% 0% CA NV MA HI VT UT RI AZ PR NC ME CO NJ NM FL ID MD VA GA DE TX US Note: EIA monthly data for 2023 are not final. Additionally, smaller utilities report information to EIA on a yearly basis, and therefore a certain amount of solar data has not yet been reported. "Net Generation" includes distributed PV generation. Net generation does not take into account imports and exports to and from each state, and therefore the percentage of solar consumed in each state may vary from its percentage of net generation. *EIA does not estimate distributed PV production in Puerto Rico; utility-scale values derived from EIA Form 923 and distributed PV values represent estimates based on capacity installations from EIA Form 861 and system production from PVWatts. Source: U.S. Energy Information Administration (EIA), "Electricity Data Browser." Accessed October 2023. • Five states (California, Nevada, Massachusetts, Hawaii, and Vermont) generated more than 15% of their electricity using solar. Three other states generated more than 10% of their electricity using solar: Utah, Rhode Island, Arizona. In calendar year 2022, solar generation was 4.1% in Delaware, 4.3% Idaho, and 4.8% in Texas-all these states broke the 5% barrier recently. Nationally, 5.3% of electricity was generated from solar-up from 4.8% during 2022. The roles of utility and distributed solar vary by state. Southern and Western states rely more on utility-scale solar, while northern states and Hawaii rely more on distributed solar. NREL 17#18Energy Storage Installed (MWh) • U.S. Energy Storage Installations by Market Segment The United States installed approximately 7.7 GWh (2.5 GWac) of energy storage onto the electric grid in H1 2023, +32% (+8%) y/y, as a result of growth in all sectors. - - Q2 2023 installations were the highest on record, despite contractions in the residential and CCI markets. In Q2 2023, California had its lowest residential storage installs since 2020. Grid-Scale (MWh) Wood Mackenzie reports that battery costs are declining from their late 2022 peak; however, labor and balance of plant costs are increasing. Lithium spot prices decreased, but transformer and inverter costs continue to rise. California continues to lead in the residential and utility-scale space, but other markets are developing as well, with 8 other states/territories installing more than 100 MWh in H1 2023. Colorado was the third-leading state thanks to two utility-scale projects installed in H1 2023. H1 2023 U.S. Energy Storage Installations by Region (7.7 GWh) U.S. Energy Storage Installations by Market Segment 6,000 5,000 ■CCI (MWh) 4,000 ■Residential (MWh) 3,000 ■Grid-Scale (MW) CCI (MW) 2,000 Residential (MW) 1,000 0 Q1Q2Q3Q4Q1Q2 Q3 Q4Q1 Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 1,800 1,650 1,500 1,350 1,200 1,050 900 750 600 450 300 150 0 Energy Storage Installed (MW) Texas, 15% Colorado, 12% 2017 2018 2019 2020 2021 2022 2023 California, 47% Note: "Grid-scale" refers to all projects deployed on the utility side of the meter, regardless of size or ownership; "CCI" refers to "community-scale, commercial, and industrial." Source: Wood Mackenzie Power & Renewables and Energy Storage Association, U.S. Energy Storage Monitor: Q2 2023. NREL 18 Other, NY, 4% NV, 3% 3% AZ, NM, PR, 6% HI, 4% 3% 3%#19Energy Storage Installed (MW) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 U.S. Energy Storage Installations by Market Segment (EIA) EIA reports that the United States installed approximately 2.0 GWac of energy storage onto the electric grid in the first half of 2023-up 5% y/y as a result of high levels of utility-scale and residential deployment. U.S. Energy Storage Installations by Market Segment Residential ■C&I Utility-scale Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 Sources: EIA Form 860M, EIA Form 861M. 2020 2021 2022 2023 California represented approximately 35% of battery storage capacity installed in H1 2023, followed by Texas (27%). - The top five markets represented 88% of installed energy storage capacity. H1 2023 U.S. Energy Storage Installations by Region (2.0 GW) Other, 242 MW Colorado, 225 MW California, 692 MW Texas, 542 MW AZ, 201 MW Hawaii, 92 MW NREL 19#201. 2. Five Things To Know From LBNL's Utility-Scale Solar, 2023 Edition Half of utility-scale PV capacity built during January-July 2023 is in Energy Communities and should qualify for the IRA Energy Community tax credit adder. Under IRA, the production tax credit (PTC) is more valuable than the investment tax credit (ITC) for many utility-scale PV systems, especially without bonus credits. 3. Average capacity factors by plant vintage have been flat since 2014 as installation in areas with lower solar resource has offset increases in ILR and use of tracking. 94% of utility-scale capacity installed in 2022 used tracking, the highest ever. Because of high electricity prices, the total (energy plus capacity) value of PV electricity increased 40% between 2021 and 2022, reaching a record $71/MWh. 4. 5. Annual Capacity Additions (GWAC) >5 MWAC 12 1 Project Not in Energy Community 10 Project in Energy Community Capacity Factor (in AC terms) Higher CapEx and/or lower capacity factor prefers the ITC Lower CapEx and/or higher capacity factor prefers the PTC Typical CapEx and capacity factor ranges for utility-scale PV CapEx ($/W-AC) 1.8 2.0 2.2 2.4 2.6 2.8 3.0 2 1.0 1.2 1.4 1.6 1.8 CapEx ($/W-AC) 2.0 2.2 2.4 2.6 2.8 3.0 1.0 1.2 1.4 1.6 20% 22% Typical CapEx 24% 26% 28% 30% and capacity factor ranges for utility-scale PV 32% 34% 36% 38% 40% 42% 44% 30% ITC versus 100% PTC 46% 50% ITC versus 120% PTC (Domestic Content and Energy Community) 48% (Base Case) 50% Average Capacity Factor in 2022 30% 2023 (until July) projects built in Energy Communities 25% Index of Capacity Factor Influences (2010=100) 200 Capacity factor 3 Prevalance of tracking 175 8 6 projects built in "2023 Energy Communities" in past years 69% 63% 59% 54% 20% 15% 48% 10% 150 125 ILR (DC:AC) 100 4 65% 5% 61% 73% 41% 46% 74% 58% 2 52% 75 Solar resource 37% 31% 50 74% 0% 26% 26% 42% 39% 35% 27% 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023* 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Commercial Operation Year (COD Year) Source: Bolinger et al. 2023. Utility-Scale Solar, 2023 Edition. Lawrence Berkeley National Laboratory. NREL 20#21Five New Things To Know From Tracking the Sun ... 2023 Edition Module Efficiency and Monocrystalline Market Share Residential Small Non-Residential 20.6% 20.8% Median module 20% efficiency (left-axis) 0% 2002 Percent of Sample 10% 0% Mono-crystalline share (right-axis) 2015 2022 2004 2022 2007 Large Non-Residential 20.4% 100% Storage Attachment Rates by Sector (2022) Non-Residential Residential 10% 2022 2015 2022 7% 2022 0% 1. In 2022, the median module efficiency of U.S. residential PV systems was 20.8%, up 0.7 percentage points y/y. 20th/80th percentile range module efficiencies was 20% to 21.5%. 2. Third-party ownership has declined over time from its historical high of 59% of residential installations in 2012 to 25% in 2022. Market share varies a lot by state. 3. For the second year in a row, microinverters represented over half the residential market, beating out DC optimizer systems 53% to 41%. However, for large nonresidential systems, DC optimizer market share continues to grow, up to 39% in 2022, compared to 1% for microinverters. 4. Residential attachment rates have steadily risen over time, reaching 10% of the sample in 2022-approximately eight states have an attachment rate greater than 10%. 65% of paired storage had a capacity of 5 kW; however, market share for larger storage sizes has grown over time, driven by backup power demand. 5. LBNL performed a regression analysis and found prices are generally lower in markets with more cumulative PV installations and areas with higher income. Their modeling also suggests that prices are $0.6/W lower for systems installed during new construction. Source: Barbose, G., N. Darghouth, E. O'Shaughnessy, and S. Forrester. 2023. Tracking the Sun: Pricing and Design Trends for Distributed Photovoltaic Systems in the United States 2023 Edition. Berkeley, CA: Lawrence Berkeley National Laboratory. September 2023. NREL 21#22Agenda • • Most data suggest mixed PV system pricing across market segments, with price increases in nominal terms. U.S. PV system pricing, or costs, is estimated and quoted in a variety of ways, including: - Reported price (backward-looking) 1 Global Solar Deployment 2 U.S. PV Deployment - - Reported costs (backward-looking and may not include profit, unless incorporating "value") Developer quotes (forward-looking) Bottom-up cost benchmarking (forward-looking). 3 PV System Pricing • 4 Global Manufacturing 5 Component Pricing 6 U.S. PV Imports 7 PV Domestic Content • In 2022, the ranges in average U.S. PV system pricing across methods were reported to be: - - $3.1/W-$4.2/W for residential solar - $1.6/W-$3.2/W for nonresidential solar - $0.9/W-$1.1/W for utility-scale solar. In the first half of 2023, the ranges in average U.S. PV system pricing across a smaller set of methods were reported to be: - $2.7/W-$4.3/W for residential solar - $1.8/W-$2.4/W for nonresidential solar - $1.2/W for utility-scale solar. NREL 22#23. Tracking the Sun: National Price, 2000-2022 Over the long term, median installed prices have fallen by roughly $0.4/W per year, on average, but price declines have tapered off since 2013, after which price declines averaged $0.1-$0.2/W across segments, following the trajectory of module costs. • PV system prices rose in nominal dollars over the past 2 years but continued to fall in real dollars. 2022$/WDC $0 90 2000 $15 Residential Percentile Range (20/80th) Small Non-Residential Large Non-Residential $4.2 $3.2 2022 2002 Source: Barbose, G., N. Darghouth, E. O'Shaughnessy, and S. Forrester. 2023. Tracking the Sun: Pricing and Design Trends for Distributed Photovoltaic Systems in the United States 2023 Edition. Berkeley, CA: Lawrence Berkeley National Laboratory. September 2023. 2022 2004 2022 $2.2 NREL 23#24$3,500 $3,000 NREL Bottom-Up Cost Modeling: Q1 2023 Installed Cost Benchmarks Q1-2023 PV only $/kWdc (2022 USD) Modeled market price (MMP) benchmarks are significantly higher than minimum sustainable price (MSP) benchmarks for PV-only and PV-plus- storage systems, indicating significant inflationary market and policy distortion in Q1 2023. Q1-2023 PV + ESS $/kWdc (2022 USD) $2,682 15% $2,500 $2,335 $2,000 $1,460 $1,383 $1,500 $1,761 $1,489 18% $5,000 $4,702 21% $4,000 $3,877 $2,434 $2,944 $3,000 $2,249 26% $2,329 $1,379 $2,106 $333 $609 Soft Costs $1,196 $1.646 28% $288) $547 EBOS $272 $208 $176 $171 $270 SBOS $996 $174 $137 $146 $1,000 $145) $624 $764 $138 5764 ☑ESS XXXXX चालत $525 $525 $314 Inverter $187 محد 536 عصر $274 $338 $49 $372 اثر گاه کره بان $253 $35 5253 548 $372 Module $977 $1,161 $2,000 $1,000 $333 $973 $894 19% $434 $272 $237 $408 $208 $176 $219 $174 $500 $146 $314 $154 $128 $187 $132 $129 $49 $48 $36 $35 $274 $338 $372 $372 $253 $253 MSP MMP Residential PV 8 kW dc MSP MMP Community PV MSP MMP Utility PV 3 MWdc 100 MWdc MSP MMP Residential PV + ESS 8 kW + 5kW/12.5kWh MSP MMP Community PV + ESS 3 MW +1.8MW/7.2MWh MSP MMP Utility PV + ESS 100 MW +60MW/240MWh Source: Ramasamy et al. 2023. U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks, With Minimum Sustainable Price Analysis: Q1 2023 NREL 24#25• NREL Utility-Scale & Residential PV- Only MMP Benchmarks, 2020-2023 • Utility-scale PV-only MMPs were 8% higher in Q1 2023 than in Q1 2022. Higher inverter, labor, and electrical BOS (including network upgrade) costs more than offset lower module, structural BOS, and other soft costs. Utility-Scale PV-Only Systems $/Wdc (2022 USD) • Residential PV-only MMPs were 15% lower in Q1 2023 than in Q1 2022. Higher BOS costs were more than offset by lower module, inverter, logistics, and customer acquisition costs. Residential PV-Only Systems $/Wdc (2022 USD) $1.40 $3.50 $3.10 $1.15 $1.16 $3.00 $1.20 +8% $3.00 $1.07 $3.18 -15% $2.68 $1.01 $0.20 $1.00 $0.28 $2.50 $1.38 $0.25 $0.24 $1.78 $0.24 $1.75 $0.80 $0.13 $2.00 $1.28 $0.13 $0.13 $0.17 $0.60 $0.22 $0.22 $0.28 $0.30 $1.50 $0.49 $0.18 $0.06 $0.21 $0.21 $0.40 $0.04 $0.03 $0.05 $1.00 $0.36 $0.36 $0.47 $0.57 $0.46 $0.29 $0.20 $0.38 $0.38 $0.37 $0.50 $0.30 $0.31 $0.66 $0.46 $0.38 $0.34 $- 2020 2021 2023 2020 2021 2022 2023 2022 Module Inverter ■Balance of System Installation Labor Other Soft Costs Source: Ramasamy et al. 2023. U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks, With Minimum Sustainable Price Analysis: Q1 2023 NREL 25#262022 USD NREL Community Solar Benchmarks, Q1 2023 The cost of community solar systems was benchmarked for the first time, including unique expenses for subscriber acquisition and management. Community PV and PV + BESS System Cost $/kWdc Community PV Officework Cost $/kWdc $250 $3,500 $220 $223 $2,944 $200 $3,000 $2,500 Subscriber acquisition cost $2,329 $839 Other Officework $2,000 $1,761 $660 $223 Fieldwork $1,489 $317 2022 USD $150 $100 $1,500 $496 $220 EBOS $208 $317 $171 SBOS $223 $1,000 $174 $50 ESS $258 $145 $764 $208 Inverter $500 $525 $154 $0 $49 Module $372 $372 MSP MMP $253 $0 MSP MMP MSP MMP Warehousing Engineering Interconnection (PV Only) (PV Only) (PV + BESS) (PV + BESS) Source: Ramasamy et al. 2023. U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks, With Minimum Sustainable Price Analysis: Q1 2023 Logistics Permits I Recruit Subscribers NREL 26#27• • Reported Price of U.S. Utility-Scale PV Projects Over Time The median installed price of PV has fallen by 78% since 2010 to $1.32/Wac ($1.07/Wdc) in 2022. The lowest 20th percentile of project prices fell below $1.1/Wac ($0.8/Wdc) in 2022. • • Larger utility-scale solar projects (50-100 MW) cost 21% less than smaller projects (5-20 MW) per megawatt of installed capacity in 2022. This sample is backward-looking and may not reflect the price of projects built in 2023 and 2024. Installed Costs (2022 $/WAC) Installed Costs (2022 $/W) 8 7 6 5 4 3 xx xxxx xx Median ($/W-AC) Median ($/W-DC) O Individual Projects ($/W-AC) 2.5 x Individual Projects ($/W-DC) 2.0 2.0 1.5 1.5 1.0 1.0 2 0.5 1 0.5 0 n 2010 2011 2012 2013 10 29 41 GW 0.2 0.4 0.9 38 1.3 2014 2015 2016 2017 2018 65 3.2 87 146 163 94 2.9 7.4 4 4. Commercial Operation Year 2019 2020 2021 2022 103 158 128 59 4.5 9.4 11.2 4.6 0.0 2022 Columns show median values for 2022 projects, with 20th and 80th percentiles 0.0 5-20 MW n=14 108 MW 20-50 MW n=8 190 MW 50-100 MW n=20 1326 MW Project Size (MWAC) Source: Bolinger, M., J. Seel, C. Warner, and D. Robson. 2023. Solar Empirical Trends in Project Technology, Cost, Performance, and PPA Pricing in the United States: 2023 Edition. Berkeley, CA: Lawrence Berkeley National Laboratory. 100-300 MW n=17 2998 MW NREL 27#28$6.0 $5.0 System Price (2022 $/Wdc) $2.0 $1.0 $0.0 $4.0 $3.2 $2.9 $3.3- $3.0 $2.6 $2.8 BNEF WoodMac/SEIA Modeled 2022 Modeled, Reported, and Quoted System Price From Various Sources • NREL and LBNL PV system price ranges generally overlap other sources. • Across various sources, reported system pricing is generally higher than modeled and quoted system pricing. NREL (MMP) NREL (MSP) EnergySage Note: Some sources only report a range, which is represented by the error bars. Residential Quote Reported LBNL Sunrun Sale Price SunPower Rev./W BNEF $4.0 $1.2 $1.8 $1.7 $1.8 $1.6 $1.1 $1.0 $1.0 Wood Mac/SEIA NREL (MMP) NREL (MSP) LBNL (≤100kW) LBNL (>100kW) BNEF (1-Axis) Wood Mac/SEIA (1-Axis) NREL (1-Axis, MMP) NREL (1-Axis, MSP) Sources: Barbose et al. 2022; Bolinger et al. 2022; Ramasamy et al. 2022; BNEF, "H1 2022 U.S. PV Market Outlook," April 2022; : Wood Mackenzie/SEIA: U.S. Solar Market Insight: 2021 Year-in-Review, March 2022; EnergySage, Solar Marketplace Intel Report H1 2021 - H2 2022. NREL 28 Modeled Reported Non-Residential Modeled Utility-scale Reported $0.9 $1.1 LBNL#29Why is there such price Utility-scale PV variation? – There is some variation in estimates; however, reported and modeled pricing is relatively consistent between sources. • Soft costs are more easily spread out over large projects. • There are diminishing returns to economies of scale. • Utility-scale businesses operate under very competitive operating conditions, where bid-price typically becomes the differentiator. • Nonresidential PV - Nonresidential PV contains a large variation in project type from offtaker (industrial, commercial, nonprofit, government), system size (lots of small projects, but a significant capacity of larger projects), and project design (rooftop, ground-mount, carport). NREL 29#30Why is there such price variation? • Residential - - - Some of the variation in residential pricing can be explained by different installers; state environments; temporal differences between when a system or component has a quoted price and when a system is installed; and sizes in datasets. 2022 system size: LBNL (7.2 kW); NREL (7.9 kW); EnergySage (10.2 kW); Sunrun (7.2 kW). However, when accounting for these factors, large discrepancies still exist. NREL | 30#31Why is there such price variation? Median Installed Price and 20th/80th Percentiles (2022$/WDc) $5 $8 . Modeled and quoted residential PV system prices between $2.8/W (EnergySage) and $3.10 (BNEF) correspond to some of the lowest state and installer reported pricing; this discrepancy cannot be explained by economies of scale (system size). Percentile Range by Installer (20/80th) -Median Price by Installer $4.6 $4.2 $4.2 $4.2 $4.3 $4.2 $4.2 $4.1 $4.0 $3.9 $3.9 $3.7 $0 ≤2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 System Size (kW) 9-10 10-11 11-12 >12 Median Installed Price and 20th /80th Percentiles (2022$/WDC) $7 U.S $3.1 $3.6 $3.8 $3.8 $3.8 $3.9 $4.0 $4.2 $4.2 $4.2 $4.3 $4.3 $4.5 $4.6 $4.6 $4.7 $4.8 $5.8 $0 $0 1 NH WI MN OR MA NV DE MD FL TX CA CT AZ WA NY NJ NM CO NC UT RI Top-100 Residential Installers Ordered according to median price 100 Source: Barbose, G., N. Darghouth, E. O'Shaughnessy, and S. Forrester. 2023. Tracking the Sun: Pricing and Design Trends for Distributed Photovoltaic Systems in the United States 2023 Edition. Berkeley, CA: Lawrence Berkeley National Laboratory. NREL 31#32Why is there such price variation? Financing and other costs are likely responsible for a larger portion of the additional discrepancies in residential PV reported price. - TPO Finance: Sunrun, which finances most of its customers' systems, reported a 2022 value per customer of $5.80/W, which represents the net present value of contracted cash flows, tax credits, and other benefits, including an assumed contract extension. Financing and operating a PV system for 30 years requires additional costs beyond just installation. Its 2022 "creation cost" was $4.17/W compared to its average PV system sales price of $3.30/W. - Loan finance: Loans, which represented most residential PV system installations in 2022, incur additional costs to set up. Additionally, many loan providers charge "dealer fees" to lower the interest rate of the loan, which show up in the reported price of a system. - Other costs not necessarily quoted (or modeled) in a standard PV system, but which may be reported in a system price, include certain roof repairs, main panel upgrades, and battery storage (which were attached to 10% of residential PV in 2022). NREL 32#332022 USD per Wdc✶ 2.0 1.91 1.8 1.6 Utility-Scale PV Installed Costs by Country, 2022 1.4 1.22 1.2 1.12 1.05 1.0 0.8 0.6 0.4 0.2 Japan (7) Netherlands (10) United States (2) Poland (8) Top 10 Global PV Markets in 2022 Source: International Renewable Energy Agency. 2023. Renewable Power Generation Costs in 2022 Other Soft Costs Installation Labor Balance of System Inverters Modules • Average component costs as a The global capacity-weighted average total installed cost of utility-scale projects commissioned in 2022 was $0.88 (USD)/Wdc. percentage of total costs: - Module and inverter 37% - Balance of system hardware 23% ― Installation labor 19% - Other soft costs 21%. 1.00 Germany (6) 0.92 Australia (9) 0.78 Spain (5) 0.75 Brazil (4) 0.72 China (1) 0.64 India (3) Costs and cost components varied across countries: India had the lowest cost ($0.64 (USD)/Wdc) and Japan the highest ($1.91 (USD)/Wdc). The ratio of highest-cost to lowest-cost country declined from 3.5 in 2019 to 3.0 in 2022, suggesting that global PV costs are converging. Labor costs varied the most across countries. NREL 33