Tracking the Sun IV: An Historical Summary of the Installed Cost of Photovoltaics in the United States from 1998 to 2010 [report]

Naim Darghouth, Ryan Wiser
2011 unpublished
Executive Summar y As the deployment of grid-connected solar photovoltaic (PV) systems has increased, so too has the desire to track the installed cost of these systems over time and by location, customer type, system characteristics, and component. This report helps to fill this need by summarizing trends in the installed cost of grid-connected PV systems in the United States from 1998 through 2010, with preliminary data for 2011, and includes, for the first time, installed cost trends for
more » ... cost trends for utility-sector PV. The analysis is based on installed cost data for approximately 116,500 behind-the-meter (i.e., residential and commercial) and utility-sector PV systems, totaling 1,685 megawatts (MW) and representing 79% of all grid-connected PV capacity installed in the United States through 2010. 1 It is essential to note at the outset the limitations inherent in the data presented within this report. First, the cost data are historical, focusing primarily on projects installed through the end of 2010, and therefore do not reflect the cost of projects installed more recently (with the exception of a limited set of results presented for behind-the-meter projects installed in the first half of 2011); nor are the data presented here representative of costs that are currently being quoted for prospective projects to be installed at a later date. For this reason and others (see Text Box 1 within the main body of the report), the results presented herein likely differ from current PV cost benchmarks. Second, this report focuses on the up-front cost to install PV systems; as such, it does not capture trends associated with PV performance or other factors that affect the levelized cost of electricity (LCOE) for PV. Third, the utility-sector PV cost data presented in this report are based on a small sample size (reflecting the small number of utility-sector systems installed through 2010), and include a number of relatively small projects and "one-off" projects with atypical project characteristics. Fourth, the data sample includes many third party-owned projects where either the system is leased to the site-host or the generation output is sold to the site-host under a power purchase agreement. The installed cost data reported for these projects are somewhat ambiguousin some cases representing the actual cost to install the project, while in other cases representing the assessed "fair market value" of the project. 2 As shown within the report, however, the available data suggest that any bias in the installed cost data reported for third party-owned systems is not The report separately describes cost trends for behind-the-meter PV systems and utility-sector systems. Key findings regarding the installed cost of behind-the-meter PV systems are as follows: likely to have significantly skewed the overall cost trends presented here. • The capacity-weighted average installed cost of all behind-the-meter systems installed in 2010 -in terms of real 2010 dollars per installed watt (DC-STC) 3 • Average installed costs vary widely across states; among ≤10 kW systems completed in 2010, average costs range from a low of $6.3/W in New Hampshire to a high of $8.4/W in Utah. The country's largest state PV markets, California and New Jersey, were near the center of this range, suggesting that, in addition to absolute market size, other state and local factors (e.g., permitting requirements, labor rates, the extent of third party ownership, and sales tax exemptions) also strongly influence installed costs. • International experience suggests that greater near-term cost reductions in the United States are possible, as the average installed cost of 3-5 kW residential PV installations in 2010 (excluding sales/value-added tax) was significantly lower in Germany ($4.2/W) than in the United States ($6.9/W), where cumulative grid-connected PV capacity in the two countries through 2010 totaled roughly 17,000 MW and 2,100 MW, respectively. • The new construction market offers cost advantages for small residential PV systems. Among 2-3 kW residential systems (the size range typical for residential new construction) installed in 2010 and funded through California's incentive programs, new construction systems cost $0.7/W less, on average, than comparably sized residential retrofit systems (or $1.5/W less if comparing only rack-mounted systems). Manual Data Cleaning: Module manufacturer/model and inverter manufacturer/model data were reviewed in order to correct obvious misspellings and misidentifications, and to create standardized identifiers for individual module and inverter models. Completion Date: The data provided by several PV incentive programs did not identify the system completion date. In lieu of this information, the best available proxy was used (e.g., the date of the incentive payment or the post-installation site inspection). Identification of Residential New Construction and Residential Retrofit Systems: Section 3 compares the cost of systems installed in residential new construction to those installed in residential retrofit applications, focusing specifically on systems installed through two California programs in 2010: the California Energy Commission (CEC)'s New Solar Home Partnership (NSHP) program and the California Solar Initiative (CSI). All systems installed through NSHP are assumed to be residential new construction, while all residential systems installed through CSI are assumed to be retrofit. Identification of Building-Integrated and Rack-Mounted Residential Systems: The comparison between residential new construction and residential retrofit systems funded through NSHP and CSI is further differentiated between building-integrated PV (BIPV) and rack-mounted systems. The raw data provided by PV incentive program administrators did not include explicit identifiers for these categories; thus, systems were identified as either BIPV or rack-mounted by cross-referencing data provided on the module manufacturer and model for each system with the California Solar Initiative (CSI)'s List of Eligible Modules, which identifies whether modules are BIPV or rack-mounted. 44 44 Based on this procedure, 2,154 of the 2,164
doi:10.2172/1050985 fatcat:6vq4p4mh4bab7k6pbtkrnyu5hu