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Executive Summary
As installations of grid-connected solar photovoltaic (PV) systems have grown, so too has the desire
to track the installed cost of these systems over time, by system characteristics, by system location,
and by 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 2007.1 The report is based on
an analysis of installed cost data from nearly 37,000 residential and non-residential PV systems,
totaling 363 MW of capacity, and representing 76% of all grid-connected PV capacity installed in
the U.S. through 2007.
Key findings of the analysis are as follows:2
? Among all PV systems in the dataset, average installed costs - in terms of real 2007 dollars
per installed watt (DC-STC) and prior to receipt of any direct financial incentives or tax
credits - declined from $10.5/W in 1998 to $7.6/W in 2007. This equates to an average
annual reduction of $0.3/W, or 3.5%/yr in real dollars.
? The overall decline in installed costs over time is primarily attributable to a reduction in
non-module costs, calculated as the total installed cost of each system minus a global annual
average module price index. From 1998-2007, average non-module costs fell from $5.7/W
to $3.6/W, representing 73% of the average decline in total installed costs over this period.
This suggests that state and local PV deployment programs - which likely have a greater
impact on non-module costs than on module prices - have been at least somewhat successful
in spurring cost reductions.
? Average installed costs have declined since 1998 for systems <100 kW, with systems <5 kW
exhibiting the largest absolute reduction, from $11.8/W in 1998 to $8.3/W in 2007. Cost
reductions for systems >100 kW are less apparent, although the paucity of data for earlier
years in the study period may limit the significance of this finding.
? The distribution of installed costs within a given system size range has narrowed
significantly since 1998, with high-cost outliers becoming increasingly infrequent, indicative
of a maturing market.
? Both the decline in average costs and the narrowing of cost distributions halted in 2005, with
average costs and cost distributions remaining essentially unchanged from 2005-2007.
? PV installed costs exhibit significant economies of scale, with systems <2 kW completed in
2006 or 2007 averaging $9.0/W and systems >750 kW averaging $6.8/W (i.e., about 25%
less than the smallest systems).
? Average installed costs vary widely across states; among systems <10 kW completed in
2006 or 2007, average costs range from a low of $7.6/W in Arizona (followed by California
and New Jersey, which had average installed costs of $8.1/W and $8.4/W, respectively) to a
high of $10.6/W in Maryland. | 