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Published on October 10th, 2014 | by James Ayre


Installed Solar Power Prices Continue To Drop In US, Still Much More Expensive Than In Germany

October 10th, 2014 by  

The installed price of solar energy in the US is continuing to decrease steadily, but is still considerably more expensive than it is throughout much of Europe, according to the most recent Tracking the Sun report from the Lawrence Berkeley National Laboratory (LBNL).

US solar PV capacity growth

That report — Tracking the Sun VII — utilized data from more than 300,000 different residential, commercial, and utility-scale solar installations to deduce the current installed price of solar across the US. Altogether, the sample size accounts for roughly 80% of the US grid’s total solar PV capacity through 2013.

The main takeaway from the report is best stated in its own words: “Installed prices continued their precipitous decline in 2013, falling year-over-year by $0.7/W, or 12-15% depending on system size range. Among projects installed in 2013, median installed prices were $4.7/W for systems ≤10 kW, $4.3/W for systems 10-100 kW, and $3.9/W for systems >100 kW.”

There are other things worth noting though, including the previously mentioned reality that, even with the price falling, solar is still far more expensive in the US than it is in most of Europe. Here are the figures on that subject from the report: “The median installed price of residential PV installations in 2013 (excluding sales/value-added tax) was just $2.1/W in Germany, $2.7/W in the United Kingdom, $2.9/W in Italy, and $4.0/W in France, compared to $4.4/W in the United States.”

installed solar PV price by country

I suppose France has the excuse that the nuclear industry in the country still has too much clout. What the US’s excuse?

As to the low prices in Germany, that’s a subject that’s been discussed a great deal already, so I’ll just leave a short summary here: the cheaper prices are largely the result of a much more supportive policy environment on the permitting side and much greater market maturity leading to easier customer acquisition and more competitive financing.


Sustainnovate provides a bit more:

Also worth noting is that there’s a lot of variation in price by state, for similar reasons as mentioned above regarding countries. “Among ≤10 kW systems completed in 2013, median installed prices ranged from a low of $3.3/W in Florida to a high of $5.3/W in North Carolina. California, which constitutes a large fraction of the data sample and therefore heavily impacts the aggregate price trends, is a relatively high-priced state, with a median price of $4.9/W for ≤10 kW systems in 2013.”

There are many interesting findings and data presented in Tracking the Sun VII, and LBNL does an excellent job summarizing it in bullet points in the beginning.

Here are some of the highlights of the report, visualized clearly via some charts from LBNL:

The price trend 1998 to 2013:

installed solar power price over time

solar PV price trends 2013


Preliminary data of the price trend for the first half of 2014:

1 H 2014 solar power prices


Economies of scale in action:

installed solar PV price by system size


Solar modules from China are cheaper (for now):

chinese solar vs non chinese solar PV prices

The difference in cost between third-party owned and conventional, customer-owned solar is quite interesting and surprising. There’s actually almost no difference, despite the widely held assumption that third-party owner solar is much more expensive. “Third-party owned solar is associated with very slightly higher prices up to 100 kW, but then slightly lower prices for projects above 100 kW of capacity,” Sustainnovate notes. Here’s the chart:

third party owned solar prices


Microinverters provide a similar but more dramatic flip flop:

microverters solar price


Interesting findings. The full report from the Lawrence Berkeley National Laboratory can be found here.

Image Credits: LBNL

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About the Author

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy. You can follow his work on Google+.

  • Wayne Williamson

    Interesting to see the similarity between Japan and USA in the graphs. I wonder why….

  • Offgridman

    Does anyone know?
    It seems that I have heard that the micro inverters have a longer life than standard ones.
    So in residential use where the installation costs are slightly higher, is that balanced by reduced maintenance or replacement costs through the life of the system?
    Thanks in advance for any comments or info.

    • Ronald Brakels

      Household solar can use micro inverters or a central inverter. It is possible to purchase micro inverters that have a 25 year warranty. That compares well with a 5 or 10 year warranty for a typical solar inverter. Now I don’t think that micro inverters are cheaper to use at the moment, but some people do prefer them. The main advantage of rooftop solar is that is competes with the retail price of electricity and not the wholesale price of electricity as utility scale solar does.

  • JamesWimberley

    The summary omits the datum in a later table that the median price for utility solar over 1 MW was $3.1/watt. Since this category made up 40% of the total, it’s an important addition. US utility solar is still more expensive than German was before it collapsed.

    Notice how cheap solar is in the UK, France, and Italy – not much higher than Germany. None have stable policy. The UK has wave-through permitting for residential, but France has plenty of red tape. One possible explanation for the US difference is strategic reporting, or in technical language lying. European incentives are for production. so the customer has an incentive to pursue low cost on installation and no reason to misreport. US incentives are mostly for installations, so there are incentives to pad actual and reported costs.

    • jonesey

      Many US incentives, including the large federal tax credit, are based on the total system cost, not on the total system size in kW. Incentivizing, as some states and utilities do, on a per-kW basis, might provide incentives to installers to bring prices down.

      A well-defined annual glide path with lower incentives each year should also motivate people to install systems as soon as they can afford them, while also motivating installers and permitting agencies to reduce prices.

      • Frank

        I believe that’s exactly the point, lying about the cost of install brings greater tax credits. In PA, I can say for sure that I’ve been offered well below $4/W installed for the last 2-3 years while the “reported average” install cost was much higher.

        Seems to make sense. Everyone want to just rip off the federal tax credit program. Subsidy should be either pennies per W installed or a feed in tariff like Germany.

        • Bob_Wallace

          That’s not lying about the cost of installing. That’s setting ones price as high as the market allows.

          All companies attempt to maximize profit, Competition tends to bring profits down,

          • Frank

            Reporting the cost of an install as being higher than it’s actual cost in order to receive a larger tax credit would be the absolute definition of lying about the cost of installing. Unless I’m missing something here.

          • Bob_Wallace

            I’m a little confused here.

            Are you saying that installers and owners are colluding to defraud the government by claiming higher installation costs than what the installer actually charged the buyer?

          • Frank

            I believe the original poster was implying something to that effect and I agreed that there seems to be a large gap between the statistics that get quoted for my state and what I actually get quoted by installers. A very large gap.

  • Brian

    We should get rid of permits. It’s not like you are buying a gun. Solar power installations must meet electrical codes, but this expensive burdensome permitting process the USA uses for solar power installations, is making it much more expensive than Germany. The soft cost must come down, for solar installations to become more mainstream, and adopted by more people.

    • Bob_Wallace

      There needs to be a permit pulled at some level. You’re tying into the electricity grid and that needs to be inspected.

      A ‘notice to install’ that could be a form filled out on line along with a required inspection prior to switching on would be an adequate minimum requirement and cost little.

      • Ronald Brakels

        There’s no need for a permit or inspection. I would say there is a need for regulation to help ensure things are done safely, but I don’t see a need for any official permission to install a typical rooftop solar system or have someone to check it. We don’t even inspect our cars here.

        • Matt

          Ronald, you live down under, correct? I was under the impression that many cities in Oz have like 6 rules and then you can install without permit or inspection.

          • Ronald Brakels

            Last time I checked the requirements for permitless installation for the City of Adelaide were:

            Development approval will be required if the total weight of the solar panels exceeds 100 kg unless:

            * the weight of the panels is distributed so that it does not exceed 100 kg at any one point of attachment to the roof
            * the panels, and any part of its associated components, do not overhang any part of the roof
            * the panels are fitted parallel to the roof with their underside
            surface located no more than 100 mm above the surface of the roof.

            The solar system must also be installed by an installer accredited by the State Government.

            You can read a badly written article about it here: http://cleantechnica.com/2013/02/05/america-cast-off-the-shackles-of-mandatory-permitting-for-rooftop-solar-2/

        • Bob_Wallace

          In most of the US you’re required to have an inspection any time you mess with the building’s electrical system.

          Having seen the way some people cobble stuff together I think it’s a reasonable rule.

          • Ronald Brakels

            Ah, in Australia we’re not allowed to do that. No amatuer fiddling with wiring is allowed. Everything has to be done by someone who is qualified. Except I think in South Australia. We are just wild and crazy here. But rooftop solar always requires a qualified installer. So even if you put in the solar system yourself you would still need a qualified electrician to legally connect it to the grid.

          • Wayne Williamson

            Or any major property modification. I wonder if panels on the roof fall into that category….

  • MarTams

    Simple reason, the US installers are the bottleneck because of too much greed. PG&E for example do not want a 15% IRR, it must be 20% or more. Solar City wanted a profit margin of 200% or more.

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