Solar Prices Fell 10-20 Percent in 2014, with Trend Continuing in 2015
This marked the fifth consecutive year of significant price reductions
BERKELEY, Calif. — The installed price of distributed solar photovoltaic (PV) power systems in the United States continues to fall significantly. This is according to the latest edition of Tracking the Sun, an annual PV cost tracking report produced by the U.S. Department of Energy’s (DOE’s) Lawrence Berkeley National Laboratory (LBNL).
Installed prices for residential and small nonresidential systems completed in 2014 were $0.40-per-watt (W) lower, and prices for large nonresidential systems were $0.70/W lower, than in the prior year. “This marked the fifth consecutive year of significant price reductions for distributed PV systems in the U.S.,” said Galen Barbose of LBNL’s Electricity Markets and Policy Group, the report’s lead author. In the first six months of 2015, installed prices within a number of large state markets fell by an additional $0.20 to $0.50/W, or 6 to 13 percent, maintaining the steady pace of solar price declines in recent years.
LBNL said the continued decline in PV system pricing is especially noteworthy given the relatively stable price of PV modules since 2012. The report attributes recent system price declines, instead, to reductions in solar soft costs. These include such things as marketing and customer acquisition, system design, installation labor, and permitting and inspections. Attention in the industry has homed-in on soft costs, and the report suggests that these efforts are partly responsible for recent price declines.
The report also highlights the significant variability in PV system pricing. Among residential systems installed in 2014, for example, 20 percent sold for less than $3.50/W, while another 20 percent sold for more than $5.30/W. Similar variability exists among nonresidential systems as well. As LBNL’s Naïm Darghouth, another of the report’s authors, said, “This variability reflects a host of factors: differences in system design and component selection, market and regulatory conditions, and installer characteristics, to name a few.”
Comparing across installers in a number of large state markets, the report finds substantial heterogeneity in pricing, and suggests that “low-price leaders” in these states can serve as a benchmark for installed price reductions that could be achieved more broadly. In Arizona, for example, 20 percent of residential installers had median prices at or below $3.00/W in 2014, compared to the median price of $4.30/W across all U.S. residential systems in 2014.
The report examines various other drivers for PV system prices, such as system size, the state in which the system is installed, whether it is owned by the site host or a third party, whether it is installed in new construction or on existing buildings, whether the site host is a for-profit commercial or tax-exempt entity, the module efficiency level, whether the system uses a microinverter or a standard string inverter, and whether the system is installed on a rooftop or is ground-mounted, either with or without tracking.
To varying degrees, these many factors are all found to impact PV system prices. As Barbose noted, “The fact that such variability exists underscores the need for caution and specificity when referring to the installed price of PV, as clearly there is no single ‘price’ that uniformly and without qualification characterizes the U.S. market, or even particular market segments, as a whole.”
Looking for quick answers on air conditioning, heating and refrigeration topics? Try Ask ACHR NEWS, our new smart AI search tool. Ask ACHR NEWS
The latest edition of Tracking the Sun, along with a summary slide presentation and data file, may be downloaded at http://trackingthesun.lbl.gov.
Publication date: 8/31/2015
Want more HVAC industry news and information? Join The NEWS on Facebook, Twitter, and LinkedIn today!
Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!
