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US laboratory examines break-even cost for residential photovoltaic in the USA

The key drivers for solar electric systems to break even in the United States are non-technical, according to a report from the National Renewable Energy Laboratory.

The current break-even cost for solar PV ranges from less than US$1 per watt to more than US$10, despite a small variation in the solar resource, concludes ‘Break-Even Cost for Residential PV in the US: Key Drivers & Sensitivities.’ The report examines the break-even cost for residential rooftop photovoltaic technology, or the point where the cost of solar-generated electricity equals the cost of electricity purchased from the utility grid.

The paper examines the break-even cost for the largest 1,000 utilities in the United States, as of late 2008 and early 2009. It also examines how break-even costs may change over time, examining a 2015 scenario and the key drivers that will affect the cost of solar PV.

“Overall, the key drivers of the break-even cost of PV are non-technical factors, including the cost of electricity, the rate structure, and the availability of system financing, as opposed to technical parameters such as solar resource or orientation,” the report concludes. The authors caution that their analysis represents “neither a market depth analysis nor an estimate of likely consumer adoption, but it does provide insight about the potential viability of PV markets.”

The break-even price for residential PV varies by more than a factor of ten, although the solar resource varies by less than a factor of two, it concludes. The difference is largely driven by incentives which can exceed US$5 per watt, and the difference in electricity prices, which can vary by a factor of eight (or more when considering tiered rates in California).

“Even without incentives, large variations in break-even cost will remain given the range of financing options and other non-technical factors,” it states. The trend is for break-even conditions to appear first in the southwest where they are driven by resource, and in the northeast where they are driven by high electricity prices, but not in the southeast and midwest until PV system prices decline.

“Very low electricity prices will preclude break-even conditions in certain areas in the northwest and midwest even with PV prices at US$3.5/W and continuation of the federal investment tax credit,” it adds. “PV breakeven does not imply that customers will necessarily adopt PV, and only a fraction of customers in each utility will have the necessary combination of good solar access and attractive financing options.”

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Photovoltaics (PV)  •  Solar electricity