Report: Home Solar Costs Hit Historic Low in U.S.


Good news for consumers who are looking to go solar: The average cost of home solar systems in the U.S. fell to a historic low in 2009, reversing a trend of rising prices seen in previous years, according to a report released by the Lawrence Berkeley National Laboratory. Preliminary data showed that the cost of home solar systems also fell during 2010 in at least two states.

After taking into account rebates and other incentives, the average cost hit $4.10 per watt in 2009, a 24 percent drop from the average cost in 2008.  The decline coincided with a change in a federal policy that allowed residential solar electric system owners to use a tax credit that is worth 30 percent of a system’s cost. Before January 2009, the policy capped the tax credit at $2,000.

The report, called “Tracking the Sun: The Installed Cost of Photovoltaics in the United States from 1998 -2009,” analyzed data involving roughly 78,000 grid-connected solar panel systems. These systems added up to 874 MW that had been installed by the end of 2009 and accounted for 70 percent of all solar panel-based systems in the U.S.

The numbers came from statewide and utility-run incentive programs from 16 states. These programs typically offered payments based on the size or the anticipated power production of each system, or the amount of electricity produced over time. The sizes of the installations ranged from 100-watt to 2.3 MW.

The report, authored by Galen Barbose, Naïm Darghouth and Ryan Wise, underscored yet again the importance of government largesse to help make solar more affordable for consumers. Since the federal investment tax credit rule didn’t change for commercial systems, the average cost to business owners who went solar in 2009 remained essentially unchanged from 2008 and was up by 11 percent from a historic low of $3.7 per watt in 2006, the report said.

Without counting any federal, state or local incentives, the average cost of solar electric systems overall also remained virtually unchanged from 2008 to 2009. That cost, at $7.50 per watt, was $0.30 per watt lower than the averages in 2006 and 2007. From 1998 to 2009, the cost did fall by roughly 3.2 percent, or $0.03 per watt, per year.

The report also looked at preliminary data for 2010 in two states. Data from the California Solar Initiative showed that, for the first 10 months, the average cost was $1 per watt less than the 2009 average (without counting any incentives). In New Jersey, the average cost fell by $1.2 per watt for systems installed between the first half of this year and in 2009.

State incentive programs have always played a key role in boosting solar energy generation. Not all states offer subsidies, so those that do naturally see more of its residents embracing solar. California and New Jersey are the two largest markets in the country, so the average costs in the two states tend to be lower than many. But they weren’t always the lowest.

The average cost in California and New Jersey from 1998 to 2009 was $7.70 per watt (without counting any incentives). That was higher than the $7.20 per watt in Arizona and $7 per watt in Texas, for example, but lower than 10 other states. In 2009, the average costs for small systems, which were at or below 10-kilowatt, ranged from $7.10 per watt in Texas to $9.60 per watt in Minnesota.

Residential systems tend to cost less than systems installed at businesses and government agencies. In 2009, average cost for residential systems was $0.50 per watt lower than non-residential systems of similar sizes. On the other hand, the average cost for systems that ranged from 10-kilowatt to 100-kilowatt and were installed at public agencies during 2009 was $0.70 per watt higher than systems of similar sizes that were  installed for businesses.

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Photo courtesy of krossbow

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