by Brianna Crandall — October 19, 2016 — The modeled costs to install solar photovoltaic (PV) systems continued to decline in the first quarter (Q1) of 2016 in the U.S. residential, commercial, and utility-scale sectors, according to updated benchmarks from the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL). Driving the cost reductions were lower module and inverter prices, increased competition, lower installer and developer overheads, improved labor productivity, and optimized system configurations.
“The continuing total cost decline of solar PV systems demonstrates the sustained economic competitiveness of solar PV for the industry across all three sectors,” said NREL Senior Analyst and Project Lead Ran Fu.
NREL graph of U.S. PV system cost benchmarks, from Q4 2009 to Q1 2016.
The modeled costs for Q1 2016 were down from Q4 2015 by 6%, 4%, and 20% in the residential, commercial, and utility-scale sectors, respectively. The costs fell to $2.93 per watt of direct current for residential systems, $2.13 per watt of direct current for residential systems, and $1.42 per watt of direct current (Wdc) for residential systems for fixed-tilt utility-scale systems, and $1.49 Wdc for one-axis-tracking utility-scale systems.
“Because our cost model categorizes hardware and non-hardware costs with a high degree of resolution, the results can also be used to identify specific cost-reduction investment opportunities and assess regional levelized costs of energy,” Fu added
The new results also highlight the importance of non-hardware, or “soft,” costs. As the pace of cost reductions for modules and inverters has slowed in recent years, the proportion from soft costs — such as labor, overhead, and permitting costs — has grown. In Q1 2016, soft costs accounted for 58% of residential system costs, 49% of commercial system costs, and 34% of utility-scale system costs.
NREL uses a “bottom-up” modeling method to construct total capital costs by quantifying the typical cost of each individual system and project-development component. The results represent total installed system costs from the perspective of the PV project developer or installer, including net profit in the cost of the hardware.
NREL has produced the annual benchmarks since 2009. The full technical report, U.S. Solar Photovoltaic System Cost Benchmark Q1 2016, as well as a presentation about the new results and a data file are available from the NREL Web site.
