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US solar prices continue decline

The installed price of solar photovoltaic (PV) power systems in the United States fell substantially in 2012 and through the first half of 2013, according to the latest edition of Tracking the Sun, an annual cost report produced by the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab).

Installed prices for PV systems in 2012 fell by a range of roughly US$0.30 per Watt (W) to US$0.90/W, or 6-14 per cent, from the prior year, depending on the size of the system. 
 
“This marks the third year in a row of significant price reductions for PV systems in the US,” said Galen Barbose of Berkeley Lab’s environmental energy technologies division, one of the report’s co-authors. Within the first six months of 2013, PV system prices in California fell by an additional 10 to 15 per cent, and the report suggests that PV system price reductions in 2013 are on pace to match or exceed those seen in recent years.
 
The report indicates that the median installed price of PV systems completed in 2012 was US$5.30/W for residential and small commercial systems smaller than 10 kilowatts (kW) in size and was US$4.60/W for commercial systems of 100 kW or more in size. Utility-scale systems installed in 2012 registered even lower prices, with prices for systems larger than 10,000 kW generally ranging from US$2.50/W to US$4.00/W. The report also highlights the wide variability in PV system pricing, detailing the installed price differences that exist across states and across various types of PV applications and system configurations.
 
According to the researchers, recent installed price reductions for PV systems are primarily attributable to steep reductions in the price of PV modules. From 2008 to 2012, annual average module prices on the global market fell by US$2.60/W, representing about 80 per cent of the total decline in PV system prices over that period.
 
Non-module costs – such as inverters, mounting hardware, and the various non-hardware or “soft” costs – have also fallen over the long term but have remained relatively flat in recent years. As a result, they now represent a sizable fraction of the total installed price of PV systems. This shift in the cost structure of PV systems has heightened the emphasis within the industry and among policymakers on reducing non-module costs.
 
The report compares PV system pricing in the United States to a number of other major international markets, and finds that US prices are generally higher. The differences are particularly stark in comparison to Germany, Italy and Australia, where the price of small residential PV systems installed in 2012 was roughly 40 per cent lower than in the United States.
 
Rebates and other forms of cash incentives for residential and commercial PV systems are offered by state agencies and utilities in many regions. However, these incentives have declined significantly over time, falling by roughly 85 per cent over the past decade. Within the span of just 2011 to 2012, median cash incentives from state and utility programs fell by US$0.40/W to US$0.60/W, depending on PV system size.
 
The study also highlights the significant variability in PV system pricing. For example, among PV systems less than 10 kW in size and completed in 2012, 20 per cent of systems had an installed price less than US$4.50/W while another 20 per cent were priced above US$6.50/W.
 
The report, Tracking the Sun VI: An Historical Summary of the Installed Price of Photovoltaics in the United States from 1998 to 2012, is based on data from more than 200,000 residential, commercial, and utility-scale PV systems installed between 1998 and 2012 across 29 states, representing roughly 72 per cent of all grid-connected PV capacity installed in the United States. It is available here (pdf).
 

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

 

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