Originally published in Interiors & Sources


Price of Solar Declining Rapidly

Solar energy may become an even more viable renewable energy option as prices continue to decline.

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 percent 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.

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