Report Says Photovoltaic Prices Falling Rapidly In U.S. Market
April Flowers for redOrbit.com – Your Universe Online
According to the latest issue of Tracking the Sun, the installed price of solar photovoltaic (PV) power systems in the United States fell substantially in 2011 and through the first half of 2012. Tracking the Sun is an annual PV cost-tracking report produced by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory (Berkley Lab), funded by the U.S. Department of Energy’s Solar Energy Technologies Program of the Office of Energy Efficiency and Renewable Energy.
Berkeley Lab, managed by the University of California for the U.S. Department of Energy, conducts unclassified research across a wide range of scientific disciplines. They have a tradition of excellence in research, with thirteen Nobel Prize winners, thirteen National Medal of Science recipients, and fifty-seven members of the National Academy of Sciences who have all been on staff at one point or another. Founded 80 years ago, Berkeley Lab is the oldest of the National Laboratories and supports multidisciplinary scientific teams working to solve global problems in health, technology, environment and energy.
According to the report, the median installed price of residential and commercial systems fell by approximately 11 to 14 percent from 2010 to 2011, depending on the system size. California prices fell by an additional 3 to 7 percent in the first half of 2012. The report found that these price reductions are in a large part attributable to dramatic price decreases in PV module prices, which have been in a free fall since 2008.
Non-module costs such as installation labor, marketing, overhead, inverters and the balance of systems have been falling dramatically over time as well, the report says.
“The drop in non-module costs is especially important as these costs can be most readily influenced by local, state, and national policies aimed at accelerating deployment and removing market barriers,” notes Ryan Wiser of Berkeley Lab’s Environmental Energy Technologies Division.
From 1998 to 2011, the average non-module costs for residential and commercial systems declined by roughly 30 percent. Even at that rate, however, they have not declined as rapidly as module prices in recent years. This disparity means that non-module costs now represent a sizable portion of the installed price of PV systems. A continued deep price decrease in the price of PV will require a concerted effort to lower the portion of non-module costs that are associated with so-called “business process” or “soft” costs.
In 2011, the median price of PV systems installed in 2011 was $6.10 per watt for systems smaller than 10 kilowatts in size (for example, residential and small commercial systems). For larger commercial systems (over 100 KW in size) the cost was $4.90/W. Systems larger than 2,000 KW in size – mostly utility sector systems – averaged $3.40/W in 2011.
Galen Barbose of Berkeley Lab says that we need to keep those numbers in context, noting that “these data provide a reliable benchmark for systems installed in the recent past, but prices have continued to decline over time, and PV systems being sold today are being offered at lower prices.”
The authors suggest that PV prices in the United States may be driven lower through large-scale deployment programs, based on the data above and on installed price data from other major international PV markets. Other factors are important as well in achieving installed price reductions.
Over the past decade, as national, state and local governments have offered various incentives to expand the solar market and accelerate cost reductions, the U.S. market for solar PV systems has grown rapidly.
This edition of Tracking the Sun is the fifth in the series which reports historical trends in the installed price of PV in the U.S. It examines more than 150,000 residential, commercial and utility-sector PV systems across 27 states that were installed between 1998 and 2011. This represents approximately 76 percent of all grid-connected PV capacity installed in the U.S. currently.
“The study is intended to provide policy makers and industry observers with a reliable and detailed set of historical benchmarks for tracking and understanding past trends in the installed price of PV,” explains Naim Darghouth, also of Berkeley Lab.
In an interesting correlation, the report also found that the installed price for new homes is significantly lower than the price of similarly sized systems retrofitted to existing homes. Rack-mounted systems are generally priced lower than integrated PV systems, and systems installed at residential and for-profit commercial customer sites tend to be less expensive than those installed on tax-exempt customer sites.
Falling cash incentives somewhat offset the price reduction for PV system owners in 2011 as well. State agencies and utilities in many areas offer cash incentives or rebates for residential and commercial systems. The report found that the median pre-tax value of such incentives ranged from $0.90/W to $1.20/W, depending on the system size. Over the last decade, these incentives have fallen dramatically. The fall from 2010 to 2011 ranged from 21 to 43 percent. Some states with renewables portfolio standards provide financial incentives for solar PV by creating a market for solar renewable energy certificates (SRECs) rather than direct cash incentives. These SREC prices have fallen as well in recent years. To a significant degree, these declines in SREC prices and cash incentives have offset the falling price of installation, dampening any overall improvement in the consumer economics of solar PV.
Berkeley Lab and the National Renewable Energy Laboratory (NREL) have issued a jointly-authored summary report in conjunction with Tracking the Sun. The second report provides a high-level overview of historical, recent and projected near-term PV pricing trends in the United States, summarizing findings on historical price trends from both Tracking the Sun and several ongoing NREL research activities aimed at benchmarking recent and current PV prices and tracking industry projections for near-term PV pricing trends.
Photovoltaic (PV) Pricing Trends: Historical, Recent and Near-Term Projections documents further installed price decreases for systems installed and quoted in 2012.