Tracking The Sun

Solar Panels On Rooftops, Ohta, Japan, Focus Solar, 2008

Solar Photovoltaic Power Costs In USA Drop 30 Percent Over Past Decade

The Environmental Energy Technologies Division, Lawrence Berkeley National Laboratory in California released a new report, “Tracking the Sun,” that documents the installed costs of solar photovoltaic (PV) power in the USA from 1998-2007.

The February 27, 2009 revision of the 42-page document indicates a positive outlook for the future of customer economics of solar PV. Primary indicators include an oversupply of solar PV modules in the near future together with lifting the cap on the Federal Investment Tax Credit (ITC) for residential PV will reduce costs for residential installations. Large commercial solar PV promises to be the dominant growth market because of economies of scale, but both large and small solar PV systems stand to make major gains in reduced costs per unit of energy generated.

The report examines 37,000 grid-connected solar PV systems installed in 12 USA states from 1998-2007. Among these, average costs before financial incentives or tax credits declined from $10.50 per watt in 1998 to $7.6 per watt in 2007 – roughly a 35 percent cost reduction over ten years.

Non-module costs such as inverters, mounting hardware, labor, permitting and fees, shipping, overhead, taxes and profit were responsible for the bulk of cost reductions.

Systems less than 5 kilowatts in size exhibited the largest cost reductions; however, data are lacking for larger solar PV systems with output greater than 100 kilowatts.

Average costs for all systems flattened and remained almost unchanged from 2005-2007.

Installed costs of solar PV show economies of scale. Systems less than 2 kilowatts averaged about $9.00 per watt in 2006-2007, and systems greater than 750 kilowatts averaged about $6.80 per watt during the same period.

State and utility cash incentives for solar PV installations declined from 2002 through 2007.

The increase in the Federal ITC in 2006 tended to stimulate commercial-scale solar PV from 2007-2009; however, residential solar PV should gain cost advantages in 2009 with changes in the Federal residential ITC.

In its introduction, the report says: “Despite the significant year-on-year growth, however, the share of global and U.S. electricity supply met with PV remains small, and annual PV additions are currently modest in the context of the overall electric system.”

Nonetheless, the growth of solar PV is encouraging. The data on its declining costs with time offer a promise of even more accelerated growth in the next few years.

A February 25, 2009 brief at WorldChanging expands upon the following:

Business Green reported on February 23, 2009 that the price of solar PV panels could fall by as much as 40 percent by the end of this year. Other analysts have been predicting this price drop that is based on huge increases in polysilicon supplies leading to a drop in production costs.

New Energy Finance also predicts a fall in solar PV module prices because of recent global investments in increasing silicon production.

China-based solar PV panel manufacturer Suntech Power Holdings estimates that demand from the USA could reach 700 megawatts (MW) during 2009 as a result of President Obama’s new stimulus package.

Climate Progress suggests if the dramatic price drop for solar PV panels materializes, solar PV will become "...one of the largest job-creating industries of the century, projected to grow from $20 billion two years ago to a $74 billion industry by 2017."