Median installed price of PV in the United States fell by 5-12% in 2015

25.08.2016
The prices for distributed PV systems in the United States have been falling for the sixth year in a row. (Graphic: Berkeley Lab)
The prices for distributed PV systems in the United States have been falling for the sixth year in a row. (Graphic: Berkeley Lab)

Despite nearly stable prices for PV modules over the last four years, the median installed price of photovoltaics in the United States fell by 5 to 12% in 2015. This was shown by two reports of the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab).

According to two state-of-the-market reports by the Berkeley Lab, solar energy system pricing in the U.S. is at an all-time low. In 2015, prices declined by $0.20/W or 5% year-over-year from $4.3 to $4.1 for residential systems. For smaller non-residential systems, prices per Watt declined by 7% or $0.30 from $3.8 to $3.5 and for larger non-residential systems prices declined by 9% or $0.30 from $2.8 to $2.5 per Watt. Utility-scale PV systems that were connected to the grid in 2015 had a 12% lower price ($0.30/W less) than systems in 2014. Preliminary data suggests that prices in most states and within most market segments have fallen in the first half of 2016 as well.

Prices continue falling

“This marked the sixth 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 lead author of the first report “Tracking the Sun”.

Instead of the prices of PV modules (which have been relatively stable since 2012), the study attributes recent system price declines to reductions in other hardware costs and to solar “soft” costs. So-called “soft” costs include for example marketing and customer acquisition, system design, installation labor, permitting and inspections. You can download the full report “Tracking the Sun IX” here.

High variability of system prices

The second Berkeley Lab study “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.

Both reports also highlight the immense range of PV system prices. While 20% of the residential systems installed in 2015 sold for less than $3.30/W, another 20% were priced at more than $5.00/W. “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,” says Berkeley Lab’s Naïm Darghouth.

When it comes to utility-scale projects, there is another factor, which greatly influences the price of the system: time. “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,” explains Joachim Seel of Berkeley Lab. The cheapest 20% of the utility-scale projects connected in 2015 were priced below $1.60/W, compared to the most expensive 20% priced above $2.60/W.

Increasing project performance

Over the last few years, PV project performance (capacity factor) has improved. This was due to several factors, including the use of tracking technology, aiming for higher inverter loading ratios (ILR) or installing the PV system at sites with a higher global horizontal irradiance (GHI).

Due to this, the mean capacity factors increased from 21% in 2010/2011 to 26.7% for 2014 projects (whose first full operating year was in 2015).

Further expansion of U.S. solar market

Lower project costs and higher capacity factors also influenced the prices of power purchase agreements from utility-scale projects. On average, those prices declined by $20-$30/MWh between 2006 and 2013 and by approximately $10/MWh per year between 2014 and 2015.

Berkeley Lab researchers expect a continued expansion of solar power in all sectors of the U.S. solar market over the next few years, especially with regard to the extension of the 30% federal investment tax credit (ITC) through 2019.

Highlights of both reports will be presented through two separate webinars. More information can be found at trackingthesun.lbl.gov and utilityscalesolar.lbl.gov. The research was supported by funding from the U.S. Department of Energy SunShot Initiative.

Berkeley Lab / Tanja Peschel

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