The average installed cost for residential solar is now at $2.93 per watt in the first quarter of 2016. That’s according to the latest U.S. Solar Photovoltaic System Cost Benchmark Q1 2016 just published by the National Renewable Energy Laboratory (NREL). When the lab started issuing the report, in 2009, the installed cost of residential solar was $7.06 per watt, nearly three times as high.
In fact, the cost of solar power continues to fall across all segments, the report found. For commercial systems (systems between 10 kilowatts and 2 megawatts) the cost of solar fell to $2.13 per watt installed and for fixed tilt utility-scale systems (systems over 2 megawatts) the cost fell to $1.42 per watt in the first quarter of 2016. Those prices fell from $5.23 per watt and $4.46 per watt, respectively, in 2009.
"The continuing total cost decline of solar PV systems demonstrates the sustained economic competitiveness of solar PV for the industry across all three sectors," said NREL Senior Analyst and Project Lead Ran Fu.
The lab found that the lower prices were driven by lower module and inverter prices as well as increased competition, lower installer and developer overheads, improved labor productivity and optimized system configurations. However, the soft costs of solar power remained stagnant.
"Such accurate cost benchmarks are critical for tracking the progress of PV systems toward cost-reduction goals. Because our cost model categorizes hardware and non-hardware costs with a high degree of resolution, the results can also be used to identify specific cost-reduction investment opportunities and assess regional levelized costs of energy," Fu said.
According to the report, the soft costs of solar power, which include labor, overhead, and permitting, now comprises most of a home solar system’s costs. Whereas in 2009, soft costs were less than half of a solar system’s costs, they now represent 58 percent of a residential solar installation’s costs, 49 percent of a commercial system’s costs and 34 percent of utility-scale system’s costs. The report shows that soft costs represent the greatest opportunity for cost reductions, particularly in home solar.Tweet