Content displaying: CAPEX Definition

Commercial PV

CAPEX Definition

Capital expenditures (CAPEX) are expenditures required to achieve commercial operation in a given year. For commercial PV, this is modeled for a host-owned business model only with access to debt.

For the ATB, and based on EIA (2016b) and the NREL Solar-PV Cost Model (Fu, Feldman, and Margolis 2018), the distributed solar PV plant envelope is defined to include:

  • Hardware
  • Module supply
  • Power electronics
  • Racking
  • Foundation
  • AC and DC materials and installation
  • Balance of system (BOS)
  • Site and/or roof preparation
  • Permitting, inspection, and interconnection costs
  • Project indirect costs, including costs related to engineering, distributable labor and materials, construction management start up and commissioning, and contractor overhead costs, fees, and profit
  • Financial costs
  • Owners costs, such as development costs, legal fees, and insurance costs
  • Depreciation and interest on debt (ConFinFactor).

CAPEX can be determined for a plant in a specific geographic location as follows:

CAPEX = ConFinFactor × (OCC × CapRegMult + GCC)
(See the Financial Definitions tab in the ATB data spreadsheet)

Regional cost variations are not included in the ATB (CapRegMult = 1). Because distributed PV plants are located directly at the end use, there are no grid connection costs (GCC = 0). In the ATB, the input value is overnight capital cost (OCC) and details to calculate interest during construction (ConFinFactor).

In the ATB, CAPEX represents a typical distributed residential/commercial PV plant and does not vary with resource. Regional cost effects associated with labor rates, material costs, and other regional effects as defined by EIA (2016b) expand the range of CAPEX. Unique land-based spur line costs based on distance and transmission line costs are not estimated. The following figure illustrates the ATB representative plant relative to the range of CAPEX including regional costs across the contiguous United States. The ATB representative plants are associated with a regional multiplier of 1.0.

R&D Only Financial Assumptions (constant background rates, no tax changes)

Standard Scenarios Model Results

ATB CAPEX, O&M, and capacity factor assumptions for the Base Year and future projections through 2050 for Constant, Mid, and Low technology cost scenarios are used to develop the NREL Standard Scenarios using the ReEDS model. See ATB and Standard Scenarios.

CAPEX in the ATB does not represent regional variants (CapRegMult) associated with labor rates, material costs, etc., but dSolar does include state-level cost multipliers (EIA 2016b).


References are specific to this page, see all references page for all references.

EIA. (2016b). Capital Cost Estimates for Utility Scale Electricity Generating Plants. Retrieved from U.S. Energy Information Administration website:

Fu, R., Feldman, D., & Margolis, R. (2018). U.S. Solar Photovoltaic System Cost Benchmark: Q1 2018.