US sees "substantially" decreased PV installation costs

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According to the Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab’s) fourth annual PV cost tracking report, "Tracking the Sun", the cost of installing photovoltaics in the country fell by around 17 percent between 2009 and 2010. Furthermore, in the first half of 2011, costs are said to have decreased by a further 11 percent.

The primary reason for these falling costs, say the Berkeley Lab researchers, is the "dramatic" reductions in photovoltaic module prices. However, non-module costs, including labor, marketing, overheads, inverters, and the balance of systems, are said to have also fallen by around 18 percent between 2009 and 2010, both for residential and commercial photovoltaic systems.

"The drop in non-module costs is especially important," explains report co-author and Berkeley Lab scientist Ryan Wiser, "as those are the costs that can be most readily influenced by solar policies aimed at accelerating deployment and removing market barriers, as opposed to research and development programs that are also aimed at reducing module costs."

Cost breakdown

The Berkeley Lab report indicates that in terms of utility-scale photovoltaics, 2010 installation costs varied widely. For example, of the 20 utility-scale projects examined in the report – ranging from one to 34 MW in size – installed costs ranged between USD2.90 per Watt (/W) and USD$7.40/W.

Furthermore, the cost of a photovoltaic system less than 10 kilowatts (kW) installed across different states, in 2010, varied between USD$6.30/W and USD$8.40/W.

"Partial-year data for 2011 suggests that average costs declined even further in 2011," add the researchers. "Large utility-sector systems installed in 2010 registered even lower costs, with a number of systems in the $3.00/W to $4.00/W range."

Differences

The differences in costs, say the researchers, are dependent on project size, type and location. Whether a residential system is installed on a new or old home, can also significantly impact cost.

Equally, installed photovoltaic costs exhibit "significant" economies of scale. Among systems installed in 2010, say the researchers, those smaller than two kW averaged USD$9.80/W, while commercial systems over 1,000 kW averaged USD$5.20/W.

In terms of the utility sector, installed costs decline as the systems get larger. For example, among the five fixed-tilt, crystalline photovoltaic systems installed between 2008 and 2010 examined, say the Berkeley researchers, costs ranged from USD$3.7 to$5.6/W for systems between five and 20 MW. This is in comparison to the USD$4.7 to $6.3/W for the three systems examined under one MW.

Installation costs for thin film systems, on the other hand, for the two over 20 MW projects completed between 2008 and 2010 examined, ranged from USD$2.4 to $2.9/W, compared to $4.4- to $5.1/W for the two under one MW projects examined.

Furthermore, says the report, installed costs are higher for crystalline systems with tracking than for their thin film counterparts.

"Consistent with continued cost reductions, current benchmarks for the installed cost of prototypical, large utility-scale PV projects generally range from $3.80/W to $4.40/W," continues the report.

PV incentives

The PV cost tracking report went on to examine the photovoltaic incentives available in the U.S. Overall, it found that the average size of direct cash incentives provided both through state and utility programs has steadily declined since 2002.

"The dollar-per-Watt benefit of the federal investment tax credit (ITC) and Treasury grant in lieu of the ITC, which are based on a percentage of installed cost, also fell in 2010 as a result of the drop in average installed costs," says the report, which adds, "The reduced value of federal, state, and utility incentives in 2010 partially offset the decline in installed costs.

"Therefore, while pre-incentive installed costs fell by $1.00/W and $1.50/W for residential and commercial PV in 2010, respectively, the decline in ‘net’ (or post-incentive) installed costs fell by $0.40/W for residential PV and by $0.80/W for commercial PV."

The Berkeley report examined over 115,000 residential, commercial and utility-scale photovoltaic systems installed between 1998 and 2010, across 42 states, and representing around 78 percent of all grid-connected photovoltaic capacity installed in the U.S.