According to a report coming out of the DoE's Lawrence Berkeley National Lab, the cost of installed solar energy has dropped over the past 10 years with the most recent decline in costs primarily from a decrease in PV module costs. "The reduction in installed costs from 2007 to 2008 marks an important departure from the trend of the preceding three years, during which costs remained flat as rapidly expanding U.S. and global PV markets put upward pressure on both module prices and non-module costs. This dynamic began to shift in 2008, as expanded manufacturing capacity in the solar industry, in combination with the global financial crisis, led to a decline in wholesale module prices," states the report.
In contrast, cost reductions from 1998 through 2007 were largely from a decline in non-module costs, such as the cost of labor, marketing, overhead, inverters, and the balance of systems.
The study examined 52,000 grid-connected PV systems installed between 1998 and 2008 in 16 states. It found that average installed costs, in terms of real 2008 dollars, declined from $10.80 per watt (W) in 1998 to $7.50/W in 2008, equivalent to an average annual reduction of $0.30/W.The cost reduction over time was largest for smaller PV systems, such as those used to power individual households. Also, installed costs show significant economies of scale—small residential PV systems completed in 2008 that were less than 2 kilowatts (kW) in size averaged $9.20/W, while large commercial systems in the range of 500 to 750 kW averaged $6.50/W.
Among systems completed in 2008 and less than 10 kW in size, average costs range from a low of $7.30/W in Arizona, followed by California, which had average installed costs of $8.20/W, to a high of $9.90/W in Pennsylvania and Ohio. Based on these data, and on installed cost data from the sizable German and Japanese PV markets, the authors suggest that PV costs can be driven lower through large-scale deployment programs.
More information: The report "Tracking the Sun II: The Installed Cost of Photovoltaics in the U.S. from 1998 - 2008," by Ryan Wiser, Galen Barbose, Carla Peterman, and Naim Darghouth may be downloaded from http://eetd.lbl.gov/ea/emp/re-pubs.html .