BERKELEY, Calif. — Solar energy system pricing is at an all-time low, according to the latest editions of two recurring “state of the market” reports released by the U.S. Department of Energy’s (DOE’s) Lawrence Berkeley National Laboratory (Berkeley Lab).

Within the market for distributed solar photovoltaic (PV) systems, installed prices in 2015 declined by $0.20-per-watt (W) or 5 percent year-over-year for residential systems, by $0.30/W (7 percent) for smaller nonresidential systems, and by $0.30/W (9 percent) for larger nonresidential systems. Prices for utility-scale PV systems that came online in 2015 fell by $0.30/W (12 percent) from the prior year. Preliminary data for the first six months of 2016 suggest that prices have continued to fall in most states and market segments.

These and many other statistics can be found in the two new Berkeley Lab reports. “Tracking the Sun IX” focuses on installed pricing trends in the distributed PV market, including both the residential and nonresidential sectors. “Utility-Scale Solar 2015” focuses on the utility-scale market, describing installed prices, as well as trends related to the design, operating costs, capacity factors, and power purchase agreement (PPA) prices of utility-scale solar projects.

“This marked the sixth consecutive year of significant price reductions for distributed PV systems in the U.S.,” said Galen Barbose of Berkeley Lab’s Electricity Markets and Policy Group, the lead author of Tracking the Sun. The continued decline is noteworthy given the relatively stable price of PV modules since 2012. The report attributes recent system price declines, instead, to reductions in other hardware costs and to solar “soft” costs. The latter includes such things as marketing and customer acquisition, system design, installation labor, and permitting and inspections.

Both reports also highlight the significant variability in PV system pricing. For example, among residential systems installed in 2015, 20 percent sold for less than $3.30/W, while another 20 percent sold for more than $5.00/W. As Berkeley Lab’s Naïm Darghouth explained “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.”

Utility-scale projects completed in 2015 also vary widely in price, with the cheapest 20 percent priced below $1.60/W, compared to the most expensive 20 percent priced above $2.60/W. Berkeley Lab’s Joachim Seel noted, “Some of the observed price differences between projects can be explained by varying lag times between contract negotiation and project completion, as some of these projects have been under development, or even construction, for several years.”

Looking ahead, the improving economics of solar power demonstrated in these two reports, coupled with the extension of the 30 percent federal investment tax credit (ITC) through 2019, is expected to drive a continued expansion in all sectors of the U.S. solar market over the next few years.

Both reports can be downloaded for free at and

Publication date: 9/14/2016

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