Global solar energy capacity surged in 2024, but behind the impressive expansion lies a complicated question that industry experts are still trying to answer: why does installing the same solar technology cost dramatically different amounts depending on where it is built? New research examining solar photovoltaic infrastructure suggests that the answer may lie in how project costs are reported and defined across markets.
The latest Trends report from the International Energy Agency Photovoltaic Power Systems Programme shows that more than 600 gigawatts of solar capacity were added worldwide last year. Yet headline deployment figures often fail to explain why identical technologies can carry sharply different price tags across countries and even within the same nation.
Research Examines Real Cost Differences
Kshitiz Raj, an industrial engineering graduate from Delhi Technological University who later completed graduate studies at Duke University, has dedicated much of his professional work to examining the financial structures behind renewable energy projects. Working on the structured finance side of the renewable energy industry, Raj has spent years analysing discrepancies between reported solar project costs and their actual financial structures.
Raj analysed 164 commercial solar projects operating across multiple U.S. states in what appears to be the first peer reviewed study to treat inconsistencies in reporting boundaries as the main analytical focus rather than a secondary constraint. The research, published in the journal Scientific Culture, found that project costs varied dramatically even among systems of similar size.
Within the dataset, costs ranged from less than two dollars per watt to more than six dollars per watt. Variations in system size accounted for less than six percent of that difference.
“Project cost might have a material difference in underlying content,” said Raj. “There are some figures that represent the EPC scope only. Others amortise structural improvements, interconnection labour and developer overhead in what can hardly be called cleanly.”
Transparency Challenges Across Global Markets
Raj’s findings suggest that inconsistent reporting definitions are not limited to the United States. Similar transparency issues appear in solar markets around the world.
In India, utility scale solar auction prices have fallen sharply in recent years. However, rooftop and commercial installations present a different picture. Interconnection procedures differ across state distribution companies, and projects can face months long commissioning delays due to administrative processes.
Government initiatives such as the PM Surya Ghar subsidy scheme can cover up to 60 percent of residential rooftop installation costs. Despite these incentives, comprehensive data comparing advertised solar prices to actual delivered costs remains limited.
Europe provides another contrast. According to the IEA PVPS Snapshot, the continent reached 339 gigawatts of cumulative solar capacity by the end of 2024. However, higher labour costs, complex permitting requirements, and grid congestion often push total project costs significantly higher than those seen in India or parts of the United States.
Financing Risks Linked to Project Delays
The study also highlights how delays and hidden costs can affect project financing. Raj and collaborators found that even moderate setbacks can significantly alter a project’s financial outlook.
Their analysis showed that a three-month delay in obtaining grid approval, combined with moderate cost overruns, could reduce a project’s first year debt repayment capacity by between 15 and 20 percent.
These findings are influencing how financial institutions assess solar investments. Raj’s approach separates cost categories and highlights risks tied to unclear reporting boundaries, helping finance teams model project pipelines more accurately. Instead of relying on a single cost per watt metric, developers and lenders are increasingly evaluating factors such as system configuration, project scope and procurement channels.
Raj cautions that direct comparisons between projects in different regions can be misleading if reporting standards differ.
“On a project which in California has factored interconnection upgrades into the cost per watt, and on a project in Gujarat has quoted only the EPC contract price, that comparison is not inaccurate,” said Raj. “It is misleading. The industry should have minimal scope-disclosure fields to ensure that cost data is available to inform the decisions it is being requested to.”
Growing Need for Clear Cost Standards
Industry leaders say the disconnect between reported research costs and real transaction costs remains a persistent challenge.
Michael Walton, Managing Director of Precursor, which focuses on scaling first of a kind clean technology, believes the industry still struggles to reconcile academic cost definitions with real world financial structures.
According to projections from the International Energy Agency, solar photovoltaic power could account for about 80 percent of global renewable capacity growth by 2030. As solar deployment accelerates across regions with widely varying regulatory and grid environments, consistent reporting standards may become increasingly critical for investors and policymakers making cross border energy decisions.
(This copy has been produced by the Infotainment Desk)
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