Cost of installed solar photovoltaic systems in the US fell in 2008

Researchers at the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) have released a new study on the installed costs of solar photovoltaic (PV) power systems in the US, showing that the average cost of these systems declined by more than 30% from 1998 to 2008. Within the last year of this period, costs fell by more than 4%.

The number of solar PV systems in the US has been growing at a rapid rate in recent years, as governments at the national, state and local levels have offered various incentives to expand the solar market. With this growth comes a greater need to track and understand trends in the installed cost of PV.

“A goal of government incentive programs is to help drive the cost of PV systems lower. One purpose of this study is to provide reliable information about the costs of installed systems over time,” says report co-author Ryan Wiser.

According to the report, the most recent decline in costs is primarily the result of a decrease in PV module costs. “The reduction in installed costs from 2007 to 2008 marks an important departure from the trend of the preceding three years, during which costs remained flat as rapidly expanding US and global PV markets put upward pressure on both module prices and non-module costs. This dynamic began to shift in 2008, as expanded manufacturing capacity in the solar industry, in combination with the global financial crisis, led to a decline in wholesale module prices,” states the report, which was written by Wiser, Galen Barbose, Carla Peterman and Naim Darghouth of Berkeley Lab’s Environmental Energy Technologies Division.

In contrast, cost reductions from 1998 through 2007 were largely due to a decline in non-module costs, such as the cost of labour, marketing, overhead, inverters and the balance of systems.

The study - the second in an ongoing series that tracks the installed cost of PV - examined 52,000 grid-connected PV systems installed between 1998 and 2008 in 16 states. It found that average installed costs, in terms of real 2008 dollars, declined from $10.80 per watt (W) in 1998 to $7.50/W in 2008, equivalent to an average annual reduction of $0.30/W, or 3.6% per year in real dollars.

Costs differ by region and type of system

Other information about differences in costs by region and by installation type emerged from the study. The cost reduction over time was largest for smaller PV systems, such as those used to power individual households. The study also found that the new construction market offers cost advantages for residential PV systems.

The report, Tracking the Sun II: The Installed Cost of Photovoltaics in the U.S. from 1998-2008, by Ryan Wiser, Galen Barbose, Carla Peterman and Naim Darghouth, may be downloaded from http://eetd.lbl.gov/ea/emp/re-pubs.html. The research was supported by funding from the US Department of Energy’s Office of Energy Efficiency and Renewable Energy (Solar Energy Technologies Program) and by the Clean Energy States Alliance.