Installed price of solar photovoltaic systems in the U.S. continues to decline at a rapid pace


(Nanowerk News) 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 (“Tracking the Sun V: An Historical Summary of the Installed Price  of Photovoltaics in the United States from 1998 to 201”; pdf), 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 percent from the year before, depending on system  size, and, in California, prices fell by an additional 3 to 7 percent 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 percent 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 percent 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  SystemThe 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.s

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 IncentivesState 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  percent over the past decade, and by 21 percent to 43 percent 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.

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.

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