Price Of Going Solar In US Dropped By Half In The Last Five Years
Originally published on Cost of Solar.
If you’ve been waiting for the right time to go solar, you might want to rethink that and start exploring your solar options right now, because there’s never been a better time to install solar in the US.
The number of options available for choosing a solar installer is increasing, solar array efficiencies are rising, the vehicles for financing a solar photovoltaic (PV) system are many, and the average price for going solar has dropped continuously over the last few years. In fact, last year marked the fifth consecutive year that the pre-incentive cost for installed solar energy systems have significantly decreased, and the price has dropped by 50% over the last five years.
According to the latest edition of a publication from the US Department of Energy’s Lawrence Berkeley National Laboratory, Tracking the Sun VIII: The Installed Price of Residential and Non-Residential Photovoltaic Systems in the United States, the median price of installed residential solar in 2014 dropped by $0.40 per watt, or 9%, compared to 2013, and those declines in price are still “on pace” in 2015 to match those of recent years.
The report found that the recent price reductions are coming from reduced soft costs, not decreased solar module costs, which contrasts with the installed price declines seen from 2008 to 2012, which were primarily due to a “steep drop” in global PV module prices. These soft costs of solar include everything except solar module and hardware costs, ranging from permitting and inspection costs, system design and construction costs (labor), and marketing and customer acquisition costs, and reducing these costs have been the focus of a lot of initiatives over the last few years.
“Soft cost reductions are partly due to steady increases in system size and module efficiency, though likely also reflect a broad and sustained emphasis within the industry and among policymakers on addressing soft costs.”
Also highlighted in the report was the fact that these declines in installed solar prices have been partially offset due to falling financial incentives, such as rebates and performance-based incentives, which have fallen “substantially” since their initial peak 10 years ago. The incentive reductions are at least partly responsible for motivating the solar industry to reduce solar soft costs in recent years.
“Depending on the particular program, reductions in cash incentives over the long-term equate to roughly 70% to 120% of the corresponding drop in installed prices. This trend is partly a response to installed price declines and the emergence of other forms of incentives, but it has also been a deliberate strategy by program administrators to provide a long-term signal to the industry to reduce costs, and is likely among the many drivers for recent declines in solar soft costs.”
Although the report was bullish on the state of US solar, it also found that our solar costs are still higher than in most other major national solar markets, mostly attributable to soft costs.
“Compared to median U.S. prices, installed prices reported for residential systems and non-residential systems ≤500 kW in size are substantially lower in a number of other key solar markets – most notably Germany, China, and Australia.”
In addition, the report found that installed solar prices varied widely across different projects, with 20% of residential solar projects being priced above $5.30 per watt, and 20% of them being priced below $3.50 per watt. The price variances were said to have numerous potential underlying causes, including local market conditions, regulatory conditions, and differences in the characteristics of individual installers and projects.
Adam Browning, Executive Director of Vote Solar, a national solar advocacy organization, said the report “helps illustrate how far solar power has come” in the US, and called for a continued focus on affordable solar:
“Affordable solar is empowering families, schools and businesses to produce their own clean electricity, and this is in turn creating jobs and healthier communities. Let’s build on this success by continuing to enable more Americans to plug into the solar power they want.” – Browning
Reprinted with permission.