Over the past decade, the solar sector has made monumental strides in cost-effectiveness, expansion, and technological advancements, enabling rapid generation growth and a major drop in the levelized cost of electricity (LCOE). But as solar power continues its impressive expansion and LCOE continues its dramatic decline, utility-scale developers and EPCs face increasing pressure to find new ways to lower costs further and boost project value.

Against this backdrop, energy storage systems (ESS) have emerged as a crucial option to tackle these urgent goals. ESS can enhance the value of solar PV systems and provide additional flexibility, revenue-generating opportunities, and system reliability while driving further reductions in LCOE.

Utility-Scale Generation Rises as Solar LCOE Declines

Recent data from the U.S. Department of Energy's Energy Information Administration (EIA) and the Solar Energy Industries Association (SEIA) underscores the rapid growth in solar generation and its impact on the broader energy market as a vital component of the electricity grid. Over the past 12 months, solar power accounted for 6.22% of the U.S. electricity mix, a 20% increase compared to the previous year. In July 2024 alone, utility-scale solar generated 32.3 TWh of electricity, a 23.3% jump from July 2023.

The average solar capacity factor — a PV system’s actual electricity production compared to its maximum potential — also improved from 13.8% to around 17% between 2010 and 2023. Enhanced panel efficiency, better racking systems, more advanced tracking technologies, and superior monitoring have all optimized solar plant performance.

While solar generation and efficiency continue to increase, solar’s LCOE continues to decline.

Solar’s global average LCOE dropped by an astonishing 89% from 2010 to 2023, according to the International Renewable Energy Agency (IRENA). Once considered a costly alternative to traditional energy sources, solar was 56% cheaper than fossil fuel-fired electricity in 2023, a stark contrast to 2010 when it was 414% more expensive. 

Improvements in solar panel efficiency, cost reductions in components like modules and inverters, and significant operational gains have fueled this precipitous plummet in LCOE. In the U.S., operations and maintenance (O&M) costs for utility-scale solar plants dropped by 74% between 2011 and 2022, from $42.3 per kW annually to $11.2 per kW.

As the share of solar energy grows, utility customers increasingly benefit from lower LCOE, but EPCs and project developers must now look beyond traditional cost-cutting measures like component prices and O&M to maintain this momentum. The challenge lies in optimizing system value through smart technologies and innovations, with ESS emerging as a potent tool for unlocking additional value.

How Energy Storage Systems Can Improve PV System Value

As solar penetration increases, ESS provides a critical buffer to absorb excess generation, manage grid imbalances, and provide backup power when solar generation is low. For EPCs and project developers, integrating ESS offers several key benefits that directly impact LCOE and system performance:

1. Capacity Firming: ESS overcomes intermittency issues by smoothing out fluctuations via discharging stored energy during periods of low sunlight or unexpected weather changes and ensuring a more reliable and predictable power supply, which is important for utility customers seeking stability and performance guarantees.

2. Frequency Regulation: Many utilities require power plants, including solar PV systems, to participate in frequency regulation markets to stabilize the grid. ESS can provide real-time response services to balance supply and demand and improve grid resilience.

3. Grid Deferral and Reliability: ESS can defer costly infrastructure upgrades by storing and dispatching electricity locally in regions with constrained transmission and distribution systems to reduce congestion on the grid, improve reliability, and offer utilities a more cost-effective solution than building new lines or substations.

As ESS costs continue to decline — with battery storage project costs falling by 89% between 2010 and 2023, from $2,511 per kWh to $273 per kWh — the case for integrated solar and storage projects becomes even more compelling.

A Total Solar Solution to Further Lower LCOE

While ESS offers undeniable advantages in optimizing energy yields and improving dispatchability, it’s only part of the equation for driving down LCOE and maximizing project value. EPCs and project developers must also consider the broader ecosystem in which these systems operate and the challenges associated with sourcing high-power and high-efficiency solar panels, advanced solar trackers, and energy storage systems while dealing with various vendors and component interoperability design issues.

The TrinaPro total solar solution does just that by bundling high-efficiency Vertex PV modules, advanced Vanguard 1P trackers from TrinaTracker, and the TrinaStorage Elementa from a single vendor. The one-stop shop approach simplifies the solar supply chain, ensures seamless integration, and leverages economies of scale to reduce the number of vendors for EPCs and developers and eliminate potential compatibility issues on the job site.

Interested in learning how TrinaPro total solution speeds up construction timelines, minimizes installation risks, and drives down costs to deliver lower LCOE? Contact us today.