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Solar PV system costs significantly down in 2010 and 2011

The cost of installed solar photovoltaic (PV) systems in the USA fell “substantially” in 2010 and the first half of 2011, according to the Lawrence Berkeley National Laboratory.

By Kari Williamson

For residential and commercial solar PV system completed in 2010, the price fell on average around 17% and another 11% in the first half of 2011 – partly due to the large drops in solar PV module prices.

Galen Barbose of Berkeley Lab's Environmental Energy Technologies Division and co-author of the report explains: "Wholesale PV module prices have fallen precipitously since about 2008, and those upstream cost reductions have made their way through to consumers."

Non-module costs down 18%

Non-module costs – such as installation labour, marketing, overhead, inverters, and the balance of systems – fell on average 18% from 2009 to 2010.

"The drop in non-module costs is especially important," adds report co-author Ryan Wiser, "as those are the costs that can be most readily influenced by solar policies aimed at accelerating deployment and removing market barriers, as opposed to research and development programmes that are also aimed at reducing module costs."

Utility-scale costs vary

In the utility-sector, solar PV costs varied over a wide range for systems installed in 2010, with the cost of systems larger than 5 MW ranging from US$2.90/W to US$6.20/W, reflecting differences in project size and system configuration, as well as the unique characteristics of certain individual projects.

Consistent with continued cost reductions, current benchmarks for the installed cost of prototypical, large utility-scale solar PV projects was generally in the range of US$3.80-4.40/W.

Geography and size matters

Comparing across US states, the average cost of solar PV systems under 10 kW installed in 2010 ranged from US$6.30/W to US$8.40/W depending on the state. Furthermore, residential solar PV systems installed on new homes had significantly lower average installed costs than those installed as retrofits to existing homes.

Based on these data and on installed cost data from the sizable German and Japanese PV markets, the report suggest that solar PV costs may be driven lower through large-scale deployment programmes, but that other factors are also important in achieving cost reductions.

The report also shows that solar PV installed costs exhibit significant economies of scale. Among systems installed in 2010, those smaller than 2 kW averaged US$9.80/W, while large commercial systems >1 MW averaged US$5.20/W; partial-year data for 2011 suggests that average costs declined even further in 2011.

Large utility-sector systems installed in 2010 registered even lower costs, with a number of systems in the US$3.00-4.00/W range.

Falling incentives

The average size of direct cash incentives provided through state and utility solar PV incentive programmes has declined steadily since their peak in 2002, however.

The dollar-per-Watt benefit of the Federal Investment Tax Credit (ITC) and Treasury grant in lieu of the ITC, which are based on a percentage of installed cost, also fell in 2010 as a result of the drop in average installed costs for solar PV.

The reduced value of Federal, state, and utility incentives in 2010 partially offset the decline in installed costs. Therefore, while pre-incentive installed costs fell by US$1.00/W and US$1.50/W for residential and commercial solar PV in 2010, respectively, the decline in net installed costs fell by US$0.40/W for residential PV and by US$0.80/W for commercial solar PV, Berkeley Lab says.

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Photovoltaics (PV)  •  Policy, investment and markets  •  Solar electricity