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The average cost of installing solar power in the US dropped a record amount in the past 18 months, spurring growth in demand and jobs, as a mix of private industry initiative, government support, and public-private collaboration fostered industry and market development.

Clean Power

Record Cost Reductions in US Solar Power Spurs Growth, in Green Jobs Too

The average cost of installing solar power in the US dropped a record amount in the past 18 months, spurring growth in demand and jobs, as a mix of private industry initiative, government support, and public-private collaboration fostered industry and market development.

Photo credit: Lawrence Berkeley National Lab

The average cost of installing residential and commercial solar photovoltaic (PV) systems in the US dropped a record 17% in 2010 and it continues to drop in 2011, an additional 11% through June, according to the Lawrence Berkeley National Lab’s “Tracking the Sun IV”report.

Slowly but surely, the US market for solar PV power is growing and developing. Actually not so slowly. The US solar power market continued to grow at a record-breaking 66% pace in 2011’s first half. Domestic solar manufacturing rose 31%, while 1.1 gigawatts (GW) of utility-scale solar power is under construction, according to GTM Research and the Solar Energy Industries Association’s (SEIA) “US Solar Market Insight.”

Green jobs are growing as well. Some 93,500 Americans worked in the US solar industry in 2010, and more than half of the country’s solar companies are planning to expand hiring in 2011, according to
The Solar Foundation’s “The National Solar Jobs Census.”

“The solar power industry is the fastest growing industry in America. We are delivering strong economic returns and good jobs at increasingly competitive prices, as this National Lab report shows. This report is further proof of what Americans from across the country already know: smart solar policy creates jobs and economic growth for communities hit hard by the recession,” said Rhone Resch, SEIA president and CEO.

The drastically lower cost of solar PV modules has been a big, but not the sole, factor in spurring growth. Costs outside of modules, which make up a significant percentage of overall costs, have been dropping as well, the report authors note.

Government support and public-private collaboration have been key to the success. The cost of labor for installation, overhead, balance of systems and other non-module costs decreased 18% year-to-year in 2010. While module costs are driven by global supply and demand, non-module costs are “most readily impacted by state and federal policies that accelerate deployment and remove market barriers,” they write.

“The impressive cost reductions highlighted in this report did not happen by accident. It took business innovation and market-building policies at all levels of government to achieve the necessary economies of scale,” commented Adam Browning, executive director of the grassroots Vote Solar Initiative.

“There has never been a better time for customers or utilities to harness the sun for power. It’s time to double down on our nation’s investment in this job-creating, homegrown energy resource.”

US solar power incentives are also delivering greater returns for investors, while government and industry incentives are falling, the researchers found. The average size of direct cash incentives from states and utilities, as well as dollar-per-watt value of the federal tax incentive “have both steadily decreased since their peak,” according to the Berkeley National Lab’s report.

Additional cost reductions in solar PV costs over the near-term are likely to be realized, given that current initiatives and support are sustained, the report authors conclude.

Germany has built the world’s leading solar market and industry, both on the supply and demand side. At $6.9/Watt, average installed solar PV systems costs in the US is significantly higher than in Germany, where the average cost to install a residential or commercial solar PV system was $4.2/W. Germany’s cumulative grid-connected solar PV capacity far surpasses that in the US — 17,000MW vs. 2,100MW.

The full report and supporting materials are available for download on the Lawrence Berkeley National Lab website.

 

 
 
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