Back in 2011 the Obama Administration announced the SunShot Initiative, which was named after John F. Kennedy’s MoonShot Initiative to send humans to the moon by the end of the 1960s. The SunShot Initiative also had a stellar, if not more terrestrial goal—to bring the cost of utility-scale solar power down to less than $1.00 per watt by the end of the decade, 2020.
Now, according to GTM Research’s latest report, U.S. Solar PV Price Brief H1 2016: Pricing, Breakdowns and Forecasts, it looks like that will will happen. The report found that is things go as expected for the next few years the cost of fixed-tilt ground-mount photovoltaic (PV) solar systems will drop to 99 cents per watt by 2020. That will make solar power cost competitive with pretty much every other energy source available.
Solar power has seen a remarkable price decline over the first half of the initiative. When the program launched utility-scale solar cost $3.80 per watt. Last month the Department of Energy reported that the cost of utility-scale solar power had dropped to $1.64 per watt by the end of 2015—putting the industry more than 70 percent toward the SunShot goal.
GTM estimated that the price for a utility-scale fixed-tilt ground-mount PV system is now around $1.25 per watt. The greatest drop in costs have come from the solar panels themselves, which now represent half of the cost, according to GTM. “Additional hardware such as inverters and balance-of-system components represent 22 percent, and the remaining 28 percent is made up of soft costs,” the research firm said.
The report also found that the cost of residential solar averages $3.00 per watt in the first half of 2016. as of the first half of this year. According to the report, soft costs make up 64 percent of residential system costs today, and despite system prices falling by a third by 2020, soft costs will still account for 60 percent of the total system price. Commercial solar prices also have fallen and are now under $2 per watt.
“Commercial PV installers need to find more ways to shorten the length and de-risk aspects of the project cycle in order to substantially reduce origination and overhead costs,” said Ben Gallagher, GTM Research solar analyst and lead author of the report.
The soft costs of solar installations, which include things like permitting, legal costs and inspections, are still the biggest opportunity for cost reductions. They’re also the largest hurdle such cost reductions, both the new report and the Energy Department have observed. This is particularly the case for residential and commercial solar installations, where soft costs are an even higher portion of the solar costs. For instance in the residential segment soft costs still account for 64 percent of the overall costs of a solar array, GTM found.Tweet