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Price of photovoltaic systems continues to drop, lab reports

From the December 7, 2012 issue of Public Power Daily

Originally published December 7, 2012

The median installed price of residential and commercial solar photovoltaic systems completed in 2011 fell by roughly 11 to 14 percent from the year before, depending on system size, according to an annual PV cost-tracking report produced by the Department of Energy’s Lawrence Berkeley National Laboratory. In California, prices fell by an additional 3 to 7 percent within the first six months of 2012. The price reductions are attributable, in large part, to dramatic reductions in photovoltaic module prices, which have been falling precipitously since 2008, the lab said in the latest edition of Tracking the Sun.

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, the report said. Utility-sector PV systems larger than 2,000 kW in size averaged $3.40/W in 2011. The 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," said Galen Barbose, a co-author of the report.

Non-module costs—such as installation labor, marketing, overhead, inverters and the balance of systems—have also fallen significantly over time, the lab said. 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 fallen 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 photovoltaic systems will require concerted emphasis on lowering the portion of non-module costs associated with so-called "business process" or "soft" costs, the report said.

The study found 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 states, for example, the median installed price of PV systems less than 10 kW ranged from $4.90/W to $7.60/W, depending on the state. The report said 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 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 found 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 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.

The report Tracking the Sun V: An Historical Summary of the Installed Price of Photovoltaics in the United States from 1998 to 2011, may be downloaded from the lab’s website.


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