It’s a lot cheaper than it was 6 months ago to become a solar customer. A recent report released by Green Tech Media Research (GTM), U.S. PV System Pricing H2 2016: System Pricing, Breakdowns and Forecasts, showed a reduction in cost of 8.6 percent for residential solar, 12.5 percent for commercial and up to 17.4 percent for utility-scale solar installations during the second half of 2016. GTM cites dramatic reductions in cost to drops in the price of solar panels, inverters, trackers and labor costs.
“In the past six months, these price drops have been more dramatic than anything we've seen since 2011 or 2012. It's not just the price drop for modules, but the entire balance-of-system hardware ecosystem that's seeing tremendous price pressure,” said GTM Research solar analyst Ben Gallagher.
Despite a rise in soft costs such as permitting, inspection expenses and paying for sales leads, of 10 percent, the overall cost of rooftop solar has seen an 8.6 percent decrease. That means an array that cost homeowners $3.16 per watt six months ago, now costs, on average, $2.89 per watt. For instance, if a homeowner installed a 5-kilowatt rooftop solar array that cost $15,800 at the beginning of 2016, it would now cost $14,450. That is a $1,350 savings within 6 months.
Looking at the costs of solar in 2016 compared to a year ago or even as far back as 2014, solar installation prices have continued to drop. In 2015, EnergySage’s Solar Marketplace Intel Report showed that between July 2014 and June 2015 residential solar system costs dropped 6 percent from $3.86 per watt to $3.79 per watt.
While price drops in the solar industry have been normal for the past decade cost reductions have not been this dramatic since 2011 and 2012, GTM observed. The company found that PV module pricing has fallen 33.8 percent this year. Primarily because of oversupply and a reduction of labor costs of $0.01 per watt installed. The most dramatic price drop was for utility-scale projects with fixed-tilt panels, which dropped by 17.4 percent, while utility-scale projects using trackers fell a significant 14.9 percent.
It looks like price drops will continue at least through 2020. In GTM’s previous solar pricing outlook report, U.S. Solar PV Price Brief H1 2016: Pricing, Breakdowns and Forecasts, it predicted that the price per watt is predicted to drop to less than $1.00 per watt by 2020 for utility-scale solar farms, in turn fulfilling goals set by President Obama’s administration under the SunShot Initiative.Tweet