Clean Power The Installed Price of Solar Photovoltaic Systems in the U.S. Continues to Decline

Published on November 27th, 2012 | by Joshua S Hill


Cost Of Solar Systems In US Continues To Decline

November 27th, 2012 by  

A new report from the Department of Energy’s Lawrence Berkeley National Laboratory has shown that the installed price of solar photovoltaic (PV) power systems across the United States fell substantially in 2011 and continued the decline through the first half of 2012, supplanting solar as an integral part of the American economy and mindshare.

The news was reported in the latest edition of Tracking the Sun, an annual PV cost-tracking report released by Berkeley Lab.

The report found that the median installed price of residential and commercial PV systems which were completed in 2011 fell by approximately 11-14% from the year before.

The Installed Price of Solar Photovoltaic Systems in the U.S. Continues to DeclineAdditionally, prices in California fell by an additional 3-7% within the first six months of 2012.

The drop in price for installed systems is due in part to the massive reduction in PV module prices, which have been falling dramatically since 2008, and part of the reason why balance of system manufacturers are now accounting for 68 percent of the total costs for the average PV project.

Even though balance of system is making up a higher percentage of project costs, overall prices have fallen. The report notes that non-module costs such as balance of system, labour, marketing, overhead, and inverters have all 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.”

The median installed price of PV systems installed throughout 2011 was $6.10 per watt (W) for residential and small commercial systems less than 10 kilowatts (kW) in size, and was $4.90/W for larger commercial systems of 100 kW or more in size, whereas utility-sector PV systems which are 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.”

The authors of the report also believe that US PV prices will continue to drop as a result of large-scale deployment programs, but that other factors are also important in achieving installed price reductions.

There were variations in the PV system pricing when compared across states. The median installed price of PV systems less than 10 kW in size that were completed during 2011 ranged from $4.90/W to $7.60/W depending on which state they were being constructed in.

Additionally, the report shows that PV installed prices are good indicators of economies of scale, with the median price for systems smaller than 2 kW coming in at $7.70/W while the median price for a large commercial system greater than 1,000 kW in size was only $4.50/W. Utility-scale systems larger than 10,000 kW were even lower, with most systems ranging from $2.80/W to $3.50/W.

Sadly, as the cost of installed PV systems have fallen, so have the incentives. 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. But these numbers have decreased by roughly 80% over the past ten years, and by a massive 21-43% from just 2010 to 2011.

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:

Source: Department of Energy’s Lawrence Berkeley National Laboratory

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  • So solar in the EU went down from 5€/W in 2006 to 1.7€/W in 2012; meanwhile we’re cheering about 14%/yr decreases.

    Worse, the incentives are already fading.

    We can do better.

    • Bob_Wallace

      14% isn’t as bad as you think. A drop from 5€/W in 2006 to 1.7€/W 2012 would take an average of 16.5% price decrease.

      A 14% drop over the same time frame would have produced 2€/W.

      I’m willing to bet that our rate increases. Others have already shown what is possible.

  • Stan Stein

    I’m in the Pa, Nj area….my company will provide a full retail installation @ $3.25 per watt within 50 miles over 10kw, $3.35, for smaller systems, and just a slight surcharge, depending on the distance, when over 50 miles…for fuel, lodging if too far to drive home for the next day’s work, etc. so maybe $100 to $500 or so.

    • I’m not very savvy on the whole solar system installation so pardon my naivity. Is this a backup to the traditional electricity or can it fully replace it? Also, like the traditional electricity companies, is there a monthly subscription involved or once you pay for the sytem/installation, you are free of any further obligations. Finally, is this just for electricity or would it take care of other things around the house powered by electricity i.e. TV, electric circuits so you can plug your iron in and iron etc. Thanks.

      • Bob_Wallace

        Most people do “grid-tied” solar. They put panels on their roof (or in their back yard) and when the Sun is shining they send their extra electricity to the grid for others to use. When the Sun isn’t shining they take back the electricity they need.

        A few people do “off-grid” solar. They install batteries to store their extra sunny hour power and then use it when the Sun isn’t shining.

        Off-grid is more expensive than grid-tied and generally isn’t worth the extra cost unless you live at least a quarter mile from the grid and going off grid would let you avoid connection costs.

        Electricity is electricity. If it’s the right voltage and frequency (about 120 volts AC and 60 cycles (Hertz) in the US) and you’ve got enough of it you can run whatever you want to run. I’m off the grid and run a full woodworking shop in addition to all the normal household stuff with solar. During the winter I have to use a generator some days when there isn’t enough sunshine.

        Determining the size of your solar system needs –

        Start with figuring out your daily average electricity usage. Use your statements to find out how much you use. (And this would be a great time to think about how you might lower your use.)

        Then look up your average daily solar hours. Find your place on this map –

        Let’s say you live in Louisiana or Nebraska which are Zone 4. You average 4.5 solar hours per day over the entire year.

        Then take your average daily usage, say 30 kWh, and divide by your average solar hours. 30 kWh divided by 4.5 solar hours means you would need about 7,000 watts (7 kW) of panels to produce as much electricity as you use a year.

        (Another good time to figure out ways to cut your electricity usage. The less you use, the fewer panels you need to buy.)

  • Ronald Brak

    Ouch! Installed solar is about $3 a watt in Australia and that’s before our Renewable Energy Certificates lower the price further. The good news is that US installation costs are where Australian was not long ago and so it shouldn’t take the US long to catch up.

    • Ronald Brak

      I see Sam Stein will install solar at Australian style prices for you. Good on you, Sam!

      • Ronald Brak

        And Stan Stein will do the same! What a great pair of guys!

      • NJ is special. 😀

        Want to get a post up on that, but need up to date state installation numbers. Stan, know where those are?

    • Do you recall when it was at this rate in Australia (or have a good timeline to share)?

      • Ronald Brak

        Ah. It was about $3.20 a watt in April and then I read a more recent report about a month ago that said the price was around $3. Unfortunately, unlike Germany, people don’t make nice graphs of the cost of solar in Australia that are easy to find on the internet, so I’m afraid I haven’t been able to find a timeline for you. Sorry. I would guess the price is below $3 a watt at the moment, but I don’t actually know.

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