In 2011, the U.S. Department of Energy (DOE) set an ambitious target through its SunShot program for the United States to reach an average installed cost of US$1 per watt for utility-scale solar by 2020. Today, a report by GTM Research predicts that the SunShot program will meet that goal, with installed system costs for large-scale, fixed-tilt systems falling to US$0.99 by 2020.
According to U.S. Solar PV Price Brief H1 2016, installed system costs for such systems have already fallen to $1.26 per watt in the first half of 2016, mostly due to ongoing declines in PV module costs. Currently modules represent around 1/2 of the total cost, with balance of system components representing another 22%.
The company expects improvements in both of these categories. Among the larger changes, GTM Research expects adoption of 1500 volt system architecture to substantially reduce the amount of wiring and electrical components.
So-called soft costs make up the remaining 28%, and GTM Research says that these represent the biggest opportunities but also the most significant challenges for future reductions. The company notes that this is doubly true for the residential and commercial market segments, where soft costs make up a larger portion of the total.
Residential and commercial PV are much more expensive than utility-scale PV, with average costs of $3 per watt for residential and $1.88 per watt for commercial systems in the first half of 2016.
GTM Research expects that implementation of software solutions will reduce design and engineering costs by 60% through 2020, largely through saving time. However, GTM Research Solar Analyst Ben Gallagher, lead author of the report, notes that for other soft costs the pathway is less clearly defined.
This will be true for both residential and commercial installations. Commercial PV installers need to find more ways to shorten the length of the project cycle and de-risk aspects of the project cycle in order to substantially reduce origination and overhead costs, notes Gallagher.