Solar PV study shows government policies reduce installed costs, expand solar market

Washington, D.C., October 21, 2009 — Researchers at Lawrence Berkeley National Lab released a new report that found that the average cost of going solar in the U.S. declined by more than 30 percent from 1998 to 2008, a trend that can be largely attributed to the success of market-building policies at the state and local level.

Findings also show that, after a three-year plateau, costs decreased by 3.6 percent from 2007 to 2008, marking a pivotal year for the American solar industry.

“This report confirms that as a policy investment, solar is one of the best values for the American taxpayer,” said Rhone Resch, president and CEO of the Solar Energy Industries Association, the industry’s national trade association based in Washington, D.C. “This year we’ve already seen solar PV panel prices drop another 17 percent. Congress must prioritize the use of solar in the current energy bill, which will stimulate further investments in manufacturing and installation of solar equipment. This in turn will create good-paying jobs, while bringing the cost of solar in line with traditional sources allowing more consumers to go solar now.”

“Tracking the Sun II: The Installed Cost of Photovoltaics in the U.S. from 1998–2008″ is a comprehensive cost analysis of grid-connected photovoltaic systems in the U.S. This second edition analyzes data from more than 52,000 residential and non-residential PV systems that were installed between 1998 and 2008.

In 2008, the U.S. solar market experienced record growth, nearly doubling the amount of grid-connected PV installed annually. Key findings of “Tracking the Sun II” include:

Average installed costs as paid by the system owner prior to receipt of any incentives, declined from $10.80 per watt (W) in 1998 to $7.5/W in 2008, equivalent to an average annual reduction of $0.3/W, or 3.6 percent per year in real 2008 dollars.

  • ·        The primary driver over that 10-year period was a reduction in non-module costs such as the cost of labor, marketing, overhead, inverters, and the balance of systems.

    ·        In contrast, the decline in costs from $7.8/W in 2007 to $7.5/W in 2008 is primarily attributable to wholesale module costs, which decreased by approximately $0.5/W over this period.

    ·        PV installations benefit from significant economies of scale, suggesting support for larger systems and larger markets drives down costs.

    ·        The installed cost of solar varies widely by state with low costs found in Arizona, California, and New Jersey, an indicator that more mature markets driven by strong incentives help reduce the cost of solar.

    ·        Total after-tax incentives from federal, state and local governments also declined from 2007 to 2008; the decreased incentives outpaced the drop in installed costs leading to a slight rise in the net installed cost of both residential and commercial systems.

Though the report only analyzes trends through the end of 2008, the continued decline of module prices and improved federal incentives for solar energy in 2009 mean there has never been a better time for Americans to go solar.


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