The installed price of distributed solar photovoltaic (PV) systems in the US continues to fall precipitously. This is according to the latest edition of Tracking the Sun, a PV cost tracking report produced by the Department of Energy’s Lawrence Berkeley National Laboratory).
Installed prices for residential and small non-residential systems completed in 2014 were $0.40-per-watt (W) lower, and prices for large non-residential 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.," notes Galen Barbose of Berkeley Lab’s Electricity Markets and Policy Group, the report’s lead author. Within 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.
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 tremendous 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 non-residential systems as well. As Berkeley Lab’s Naïm Darghouth, another of the report’s authors explains, "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.