US: Installed prices continue rapid descent

The Lawrence Berkeley National Laboratory has released the eighth edition of the "Tracking the Sun" report. The annual report highlights the price changes of residential and non-residential PV systems in the U.S.and is based on data gathered from more than 400,00 residential and non-residential PV systems installed between 1998 and 2014. This represents about 80% of all distributed PV capacity installed in the U.S.

The national median installed prices for residential and small non-residential systems (?500 kW) that saw completion in 2014 were both $0.40/W lower year-over-year, a decrease of 9% and 10% respectively. Larger non-residential (>500 kW) system prices also saw a plunge of $0.70/W compared to 2013, a fall of 21%. Within the first half of 2015, installed prices fell by an additional $0.20 to $0.50 per W within a number of large market states.

One key finding of this year’s report is that installed prices for distributed PV systems in the U.S. have plunged further. But this time round, the most significant contributor to the price declines have been identified as "soft costs" such as marketing, customer acquisition, system design, installation labour, permitting and inspections.

The PV industry has been paying attention to such "soft costs" incurred, and thus companies have managed to come up with the appropriate cost reduction measures. The report says this is "noteworthy" because module price declines did not play much of a role for cost reductions this time round. Since 2012, module prices have remained relatively stable.

Variability of system pricing

An interesting point to note as well is the highly variable PV system pricing due to factors like differences in system design, component selection, market and regulatory conditions, as well as installer attributes, among others.

The report highlights that a good 20% of residential systems installed in 2014 sold for less than $3.50/W while another 20% were in the upward price periphery of $5.30/W.

As mentioned above, installer attributes have played a part in price disparity as well. The report compared installers across a number of large state markets and found price variations. In Arizona, for example, 20% of residential installers had median prices at or below $3/W in 2014. The U.S. median price was at $4.30. Such low-price leaders can potentially serve as benchmarks for possible installed price reductions according to the report.

Other drivers

The report also shed light on other factors that drive PV system prices such as the states they are installed in, retrofitting needs, tax exemptions and so on."The fact that such variability exists underscores the need for caution and specificity when referring to the installed price of PV, as clearly there is no single ‘price’ that uniformly and without qualification characterizes the U.S. market, or even particular market segments, as a whole," Galen Barbose of Berkeley Lab’s Electricity Markets and Policy Group states in the report.