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The installed price of distributed solar photovoltaic (PV) power systems in the United States continues to fall precipitously. This is according to the latest edition of Tracking the Sun, an annual PV cost tracking report produced by the Department of Energy's Lawrence Berkeley National Laboratory (Berkeley Lab).
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.
The report examines various other drivers for PV system prices, such as system size, the state in which the system is installed, whether it is owned by the site host or a third party, whether it is installed in new construction or on existing buildings, whether the site host is a for-profit commercial or tax-exempt entity, the module efficiency level, whether the system uses a microinverter or a standard string inverter, and whether the system is installed on a rooftop or is ground-mounted, either with or without tracking.
To varying degrees, these many factors are all found to impact PV system prices. As Barbose stresses, "The fact that such variability exists underscores the need for caution and specificity when referring to the installed price of PV, as clearly there is no single 'price' that uniformly and without qualification characterizes the U.S. market, or even particular market segments, as a whole."
The report, Tracking the Sun VIII: The Installed Price of Residential and Non-Residential Photovoltaic Systems in the United States, is the eighth edition in Berkeley Lab's Tracking the Sun report series. It is based on data collected from more than 400,000 residential and non-residential PV systems installed between 1998 and 2014 across 42 states, representing more than 80 percent of all distributed PV capacity installed in the United States. The report is produced in conjunction with a number of other related and ongoing research activities at Berkeley Lab and at the National Renewable Energy Laboratory that collectively analyze trends in PV system pricing.
The latest edition of Tracking the Sun, along with a summary slide deck and data file, may be downloaded at trackingthesun.lbl.gov.
Benefitting from high energy costs
Hugh Bailey
Updated 4:53 pm, Friday, May 15, 2015
The high cost of electricity in Connecticut, often cited as a factor in driving businesses out of the state, turns out to have an unexpected benefit: It's helping power a boom in solar energy at state businesses.
As the price of installing panels has declined in recent years, the state has achieved something close to grid parity, meaning the cost of solar is competitive with buying power from the grid. Connecticut has the second-highest electricity costs in the country, trailing only Hawaii.
"The economics of solar make enough sense for a much larger scale of expansion," said Scott L. Licamele, senior vice president at MSL Group, which handles solar installations for businesses.
His company was at the headquarters of Columbia Elevator in Bridgeport, where a massive array of panels is being installed through financing from C-PACE, or Commercial Property Assessed Clean Energy. The program is run by Connecticut's Green Bank, formerly known as the Clean Energy Finance and Investment Authority, a quasi-public agency that uses private funding to provide 100 percent of the financing for a company's solar projects, paid back over a 20-year period.
The Horace Street building is also used by Unger Enterprises, a German company that makes cleaning supplies whose main offices are next door. The 140,000-square-foot roof will have 2,500 solar panels when the project is completed in the next two months, providing 600 kilowatts of electricity, Licamele said, adding that it is the largest private solar project in Bridgeport.
The stability of the financing is a major draw, said Genevieve Sherman, acting director of commercial and industrial programs at the Green Bank. Companies can also sell renewable energy credits to the local utility, which helps offset costs. Utilities are required to procure a certain amount of power from renewable sources or purchase credits for the same amount.
"We've been able to finance a lot of solar projects," Sherman said. "It's a great investment if you use a lot of energy."
Connecticut's electricity costs are pushing the program's popularity, she said. "High energy prices are driving it," she said. "In other states, the rates aren't as high. In this state, we're grid constrained, natural-gas-pipeline constrained -- we have all kinds of challenges."
Columbia Elevator moved to Bridgeport in 2011 from Port Chester, N.Y. It employs about 65 people producing elevator cabin boxes and doors.
The C-PACE financing goes beyond solar panels. L.J. Bliaotta, president of MDL Realty, which owns the building, said the facility is in the process of replacing all its lights with 10-year LED fixtures, which save electricity and provide better lighting, and has put in a new boiler that he said has the building paying about 20 percent of its old heating costs.
Bliaotta, whose father founded Columbia Elevator 50 years ago, said Connecticut energy prices make the difference. "We have facilities in Kansas and Florida and it doesn't make the same kind of sense to do it there," he said, because the cost of solar is still much higher than traditional sources.
He said the work has Unger considering installing solar panels at its building on Asylum Street. "It's contagious," Bliaotta said. "You get that green bug and you want to do more."