US DOE national lab report finds that cost of PV system installations has dropped significantly

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According to the new Tracking the Sun report released by the US Department of Energy’s Lawrence Berkeley National Laboratory, the cost of installing a solar system in the US considerably shrunk in 2010 and through the first half of 2011. The annual report looked at solar PV costs in the US and examined over 115,000 PV systems that were installed between 1998 and 2010 across 42 states.

The Berkeley National Lab report, which studied nearly 1,685MW of installed PV systems from the residential, commercial and utility sectors, found that over the past 18 months, the average pre-incentive cost of residential and commercial solar PV systems dropped 17% in 2010 and fell another 11% in the first half of 2011. The report noted that this was the largest annual reduction it had seen since the Berkeley Lab began tracking data.

The report also claims that the drop in the costs of installation labor, balance of systems, overhead and other non-module costs sank 18% from 2009 to 2010. The researchers noted that since non-module costs are mostly impacted by state and federal policies, the 18% drop was a significant milestone in the deployment of further PV installations. Furthermore, it was stated that as the per-watt costs get lower, the average size of direct cash incentives from states and utilities as well as dollar-per-watt value of the federal tax incentive have both steadily fallen since their peak, leading to US solar incentives delivering an larger return on investment.

“Solar is ready to play a significant role in our nation’s energy economy. It’s reliable, it’s scalable, it’s safe, and now we’re seeing that it’s cost-competitive with conventional electricity resources in many parts of the country. The American solar industry has achieved these tremendous cost reductions and economic benefits while still supplying less than 1% of our national energy mix. Just imagine what the coming years could have in store if the US solar market is allowed to continue its robust growth,” said Carrie Hitt, president of the Solar Alliance, a state-focused alliance of solar manufacturers, integrators and financiers.

During the 1998 – 2010 period studied, the capacity-weighted residential and commercial installations saw costs drop by US$4.8/W (43%) in real 2010 dollars, from US$11/W in 1998 to US$6.2/W in 2010. The report notes that this is an average annual reduction of US$0.4/W (4.6%) per year, but highlights that cost reductions over the 13-year period saw the first big drop between 1998-2005. Between 2005 and 2009, the price was stagnate until 2010, which brought a with average installed costs drop of US$1.3/W (17%), compared to 2009.

The full report and accompanying presentation can be downloaded here.

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