The Installed Price of Solar PV Systems Continues to Decline

The installed price of solar photovoltaic (PV) power systems in the United States fell substantially in 2011 and through the first half of 2012, according to the latest edition of Tracking the Sun, an annual PV cost-tracking report produced by the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab). 

The median installed price of residential and commercial PV systems completed in 2011 fell by roughly 11% to 14% from the year before, depending on system size, and, in California, prices fell by an additional 3% to 7% within the first six months of 2012. These recent installed price reductions are attributable, in large part, to dramatic reductions in PV module prices, which have been falling precipitously since 2008.

The report indicates that non-module costs—such as installation labor, marketing, overhead, inverters, and the balance of systems—have also fallen significantly over time. “The drop in non-module costs is especially important,” notes report co-author Ryan Wiser of Berkeley Lab’s Environmental Energy Technologies Division, “as these costs can be most readily influenced by local, state, and national policies aimed at accelerating deployment and removing market barriers.” According to the report, average non-module costs for residential and commercial systems declined by roughly 30% from 1998 to 2011, but have not declined as rapidly as module prices in recent years. As a result, non-module costs now represent a sizable fraction of the installed price of PV systems, and continued deep reduction in the price of PV will require concerted emphasis on lowering the portion of non-module costs associated with so-called “business process” or “soft” costs.

The report indicates that the median installed price of PV systems installed in 2011 was $6.10 per watt (W) for residential and small commercial systems smaller than 10 kilowatts (kW) in size and was $4.90/W for larger commercial systems of 100 kW or more in size. Utility-sector PV systems larger than 2,000 kW in size averaged $3.40/W in 2011. Report co-author Galen Barbose, also of Berkeley Lab, stresses the importance of keeping these numbers in context, noting that “these data provide a reliable benchmark for systems installed in the recent past, but prices have continued to decline over time, and PV systems being sold today are being offered at lower prices.”

Based on these data and on installed price data from other major international PV markets, the authors suggest that PV prices in the United States may be driven lower through large-scale deployment programs, but that other factors are also important in achieving installed price reductions. 

The market for solar PV systems in the United States has grown rapidly over the past decade, as national, state and local governments offered various incentives to expand the solar market and accelerate cost reductions. This fifth edition in Berkeley Lab’s Tracking the Sun report series describes historical trends in the installed price of PV in the United States, and examines more than 150,000 residential, commercial, and utility-sector PV systems installed between 1998 and 2011 across 27 states, representing roughly 76% of all grid-connected PV capacity installed in the United States. Naïm Darghouth, also with Berkeley Lab, explains that “the study is intended to provide policy makers and industry observers with a reliable and detailed set of historical benchmarks for tracking and understanding past trends in the installed price of PV.”

Prices Differ by Region and by Size and Type of System

The study also highlights the significant variability in PV system pricing, some of which is associated with differences in installed prices by region and by system size and installation type. Comparing across U.S. states, for example, the median installed price of PV systems less than 10 kW in size that were completed in 2011 and ranged from $4.90/W to $7.60/W, depending on the state.

It also shows that PV installed prices exhibit significant economies of scale. Among systems installed in 2011, the median price for systems smaller than 2 kW was $7.70/W, while the median price for large commercial systems greater than 1,000 kW in size was $4.50/W. Utility-scale systems installed in 2011 registered even lower prices, with most systems larger than 10,000 kW ranging from $2.80/W to $3.50/W. 

The report also finds that the installed price of residential PV systems on new homes has generally been significantly lower than the price of similarly sized systems installed as retrofits to existing homes, that building integrated PV systems have generally been higher priced than rack-mounted systems, and that systems installed on tax-exempt customer sites have generally been priced higher than those installed at residential and for-profit commercial customer sites.

Price Declines for PV System Owners in 2011 Were Offset by Falling Incentives

State agencies and utilities in many regions offer rebates or other forms of cash incentives for residential and commercial PV systems. According to the report, the median pre-tax value of such cash incentives ranged from $0.90/W to $1.20/W for systems installed in 2011, depending on system size. These incentives have declined significantly over time, falling by roughly 80% over the past decade, and by 21% to 43%  from just 2010 to 2011. Rather than a direct cash incentive, some states with renewables portfolio standards provide financial incentives for solar PV by creating a market for solar renewable energy certificates (SRECs), and SREC prices have also fallen dramatically in recent years. These declines in cash incentives and SREC prices have, to a significant degree, offset recent installed price reductions, dampening any overall improvement in the customer economics of solar PV.

Learn more:

  • The report Tracking the Sun V: An Historical Summary of the Installed Price of Photovoltaics in the United States from 1998 to 2011, by Galen Barbose, Naïm Darghouth, and Ryan Wiser, may be downloaded from: http://emp.lbl.gov/sites/all/files/LBNL-5919e-REPORT.pdf.
  • In conjunction with this report, LBNL and the National Renewable Energy Laboratory (NREL) have also issued a jointly authored summary report that provides a high-level overview of historical, recent, and projected near-term PV pricing trends in the United States. That report summarizes findings on historical price trends from LBNL’s Tracking the Sun V, along with several ongoing NREL research activities to benchmark recent and current PV prices and to track industry projections for near-term PV pricing trends. The summary report documents further installed price reductions for systems installed and quoted in 2012. 
  • The joint NREL/LBNL report, Photovoltaic (PV) Pricing Trends: Historical, Recent, and Near-Term Projections, may be downloaded from: http://www.nrel.gov/docs/fy13osti/56776.pdf

 

-Allan Chen

Allan Chen is the leader of the Communications Office in the Environmental Energy Technologies Division at Lawrence Berkeley National Laboratory in Berkeley, California.

This research was supported by funding from the U.S. Department of Energy’s Solar Energy Technologies Program of the Office of Energy Efficiency and Renewable Energy.

This blog originally appeared on www.HomeEnergy.org.

Views: 362

Comment

You need to be a member of Home Energy Pros Forum to add comments!

Join Home Energy Pros Forum

Comment by Scott Kunkel on December 7, 2012 at 11:31am

I've seen this trend here in CA & welcome the price drop.  What are the expectation of solar pricing as the 30% import tax is implemented to the Chinese in 2013?  When will this start affecting the homeowner's costs & how much will the price go back up, if any?  Great article, thanks.

Forum Discussions

Mini split installation location

Started by Jan Green in HVAC. Last reply by Franco Oyuela 18 hours ago. 5 Replies

Think of the house as a really big duct

Started by Frank Spevak in HVAC. Last reply by John White yesterday. 2 Replies

Mini split air conditioners and ceiling fans

Started by Beverly Lerch in General Forum. Last reply by Beverly Lerch on Thursday. 13 Replies

Condensation on ceiling and walls of master bedroom

Started by Jerry Needham in General Forum. Last reply by John Nicholas on Thursday. 10 Replies

What's the Most Profitable HVAC Job for Your Company?

Started by Wayne Melancon in HVAC. Last reply by Franco Oyuela on Tuesday. 4 Replies

Latest Activity

Franco Oyuela commented on David Byrnes's video
Thumbnail

Why One Room Is Hotter Than Others

"If the temperature difference between your bedroom and your living room feels like walking from a…"
18 hours ago
Franco Oyuela replied to Jan Green's discussion Mini split installation location
"First: Mini split are a great option. Second:vI agree with David that installing on the south…"
18 hours ago
Pearl Home Certification's blog post was featured
yesterday
John White replied to Frank Spevak's discussion Think of the house as a really big duct
"Thanks for sharing this helpful information. Want to read more on duct cleaning pros and cons.…"
yesterday
Jan Green replied to Jan Green's discussion Mini split installation location
"Thank you, thank you!  I appreciate your insights.  I agree with the idea that installing…"
yesterday
David Butler replied to Jan Green's discussion Mini split installation location
"Hi Jan, in a room like that with a relatively balanced aspect ratio, flat ceiling and not much…"
yesterday
Rick Blair joined Kyle Brown's group
Thumbnail

Wrightsoft - Manual J / Manual D

If you use Wrightsoft to calculate loads or design ducts, you likely have questions.  Get answers…See More
yesterday
Jan Green replied to Jan Green's discussion Mini split installation location
"This is a very rough diagram of the detached casita.  There are currently no windows in this…"
yesterday
Sean Wiens liked Jerry Needham's discussion Condensation on ceiling and walls of master bedroom
yesterday
Andrea Simmonsen liked David Byrnes's video
Thursday
Beverly Lerch replied to Beverly Lerch's discussion Mini split air conditioners and ceiling fans
"Thanks.  A very reasonable, practical answer.  We have done our experimenting and ceiling…"
Thursday
Pearl Home Certification posted a blog post
Thursday
John Nicholas replied to Jerry Needham's discussion Condensation on ceiling and walls of master bedroom
"Jerry, ;Have you opened the cathedral ceiling?  "
Thursday
Blake Reid replied to Beverly Lerch's discussion Mini split air conditioners and ceiling fans
"Good opinions in these replies!  I'll just add a few: * Experiment.  It's your…"
Wednesday
John White replied to Jerry Needham's discussion Condensation on ceiling and walls of master bedroom
"Condensation on ceiling occurs when the attic space above is poorly ventilated or insulated. The…"
Wednesday
Joshua P Murphy is now a member of Home Energy Pros Forum
Tuesday
Franco Oyuela replied to Frank Spevak's discussion Think of the house as a really big duct
"THANKS for the information. Ducted mini splits offer hidden benefits."
Tuesday
Franco Oyuela replied to Wayne Melancon's discussion What's the Most Profitable HVAC Job for Your Company?
"Get into commercial, it's more money!"
Tuesday
David Byrnes's video was featured

Why One Room Is Hotter Than Others

Ever wonder if your air conditioner is working right because one room never gets a cool or warm as others? Do you need a bigger air conditioner to fix a room...
Tuesday
Profile IconEric MacCallum, Adam Morgan and Caolan Hutchens joined Home Energy Pros Forum
Monday

Photos

  • Add Photos
  • View All

© 2018   Created by Home Performance Coalition (HPC)   Powered by

Badges  |  Report an Issue  |  Terms of Service