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Solar Costs Drop 11% in First Half of 2011

The average cost of going solar in the U.S. fell dramatically in 2010 and through the first half of 2011, according to a report released yesterday by the Department of Energy’s Lawrence Berkeley National Laboratory.

The latest edition of Tracking the Sun, an annual report on solar photovoltaic costs in the U.S., found that the average pre-incentive cost of residential and commercial solar PV systems decreased 17 percent in 2010, the most significant annual reductions since the lab started tracking the data in 1998. Costs declined another 11 percent in the first half of 2011, according to the report.

Furthermore, market-building policies are effectively driving costs down, the report says. Reductions in the costs of installation labor, balance of systems, overhead and other non-module costs fell 18 percent from 2009 to 2010. This is significant because, unlike module costs, which are largely determined by the global market, non-module costs are most readily impacted by state and federal policies that accelerate deployment and remove market barriers, the report says.

And government policy, specifically solar incentives, is now delivering an increasing return on investment, according to the report. As a result of lower per-watt costs, the average size of direct cash incentives from states and utilities as well as dollar-per-watt value of the federal tax incentive have both steadily decreased since their peak.

So far Tracking the Sun has examined more than 115,000 PV systems installed between 1998 and 2010 across 42 states.

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5 thoughts on “Solar Costs Drop 11% in First Half of 2011

  1. Great news. Once we see the installed cost for residential PV systems achieve a 5-year simple payback on energy offset at Tier I and II rates the market will finally reach the tipping point. That still requires a reduction in excess of 2.5X current market pricing models in markets with high energy costs like SoCal.

  2. Good morning! I’d really appreciate help for better understanding – why does solar costing analysis use the term “module’ and ‘non-module’ instead of ‘inclusive of govt. ssistance” and “exclusive…” if the only difference between the two is being with or without federal and state policy impact?
    Many thanks in advance

  3. Jack – Just remember that with a “simple payback” we need to also continue to stress the ongoing savings over the full life of the system. Our language has to constantly work to beat down the short term thinking that is adversely affecting all energy and climate change mitigation discussions.

  4. In my view, the tipping point will be when we reach a five year simple payback for energy use in the home and there are several all electric cars on the market for customers to choose from. With that, users will see a way to save money on operating their home and their vehicle. It’s coming but it’s a frustrating wait for those wanting to take action now.

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