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US: Meaningful improvements in PV system pricing

GTM Research’s Andrew Krulewitz details the factors that contributed to price declines in each U.S. photovoltaic market segments in Q4 2012.

Since GTM Research’s last quarterly update, the national weighted-average price for photovoltaic systems in the U.S. fell by 19.8%, from US$4.44/W to $3.56/W. It should be noted that these prices are weighted averages based on all systems that were completed in a given quarter across many states and localities in the U.S.

In Q3 2012, residential system prices fell from $5.45/W to $5.21/W. Installed prices came down in all major residential markets – California, Arizona, New Jersey, Massachusetts and Colorado – and it was not uncommon for final installed prices to be in the $4.00/W range. We have also seen major price gains in the residential market with systems installed by integrated third-party installers such as SolarCity and Sungevity.

Non-residential (commercial, governmental, non-profit) system prices improved from $4.31/W to $4.18/W. SREC states, such as New Jersey and Massachusetts, helped to drive down the overall national price.  For projects in excess of 100 kW, final project prices were consistently in the $2.25/W to $2.75/W range, leaving limited margins for developers and installers.

Utility system prices once again declined, dropping from $2.60/W in Q2 2012, to $2.40/W in Q3 2012. First Solar, which has very low turn-key costs, brought a large majority of new utility capacity online in Q3, helping to drive down the average.

On the whole, however, installed photovoltaic prices vary greatly, not only state-to-state, but also project-to-project. The figure above displays this wide range of installed prices in Q3 2012. Note that the lowest installed cost does not necessarily yield the lowest levelized cost of energy (LCOE), an important metric for measuring project returns.

Read the full article in the January edition of pv magazine, out on January 8.