Price for solar at all-time low — lab report

Source: Christa Marshall, E&E reporter • Posted: Friday, August 26, 2016

The purchase price of U.S. solar energy systems is at a record low, according to two new reports from the Lawrence Berkeley National Laboratory.

The “state of the market” reports examine both distributed solar photovoltaic systems, such as those commonly found on residential rooftops, and utility-scale solar. The median installed price of solar systems in the United States fell about 5 to 12 percent last year, according to the lab. For example, the price of utility-scale systems last year fell by roughly 12 percent from 2014. Prices for large nonresidential systems fell by about 9 percent.

“Preliminary data for the first half of 2016 show a mixed picture, but generally suggest that installed prices have continued to fall at a modest pace, at least within a number of key states and market segments,” said one of the annual reports, “Tracking the Sun,” which focuses on distributed solar trends.

There are multiple reasons for 2016’s modest pace, including import tariffs and a shift in the data sample toward more expensive states like California. With the extension of the federal investment tax credit last year, the solar market should grow through the end of the decade, the lab said.

Galen Barbose, a co-author of the report at Berkeley Lab, said in a statement that it’s the sixth consecutive year of “significant” price reductions for U.S. solar PV systems.

The price plunge with distributed solar hinged largely on declining “soft” costs, for things such as permitting and installment. That’s a shift from 2009, when a decrease in the costs of solar panels themselves drove price declines.

Larger solar arrays and technology advancements also are driving prices down for utility-scale projects by boosting power output, according to the lab.

The market “continues to move towards tracking technology, even in less-sunny locations like the Midwest. Partly as a result, project performance, as measured by capacity factor, has improved on average among more recently built projects,” said Mark Bolinger, a research scientist at the lab and author of the second report, on utility-scale trends.

Tracking technology follows the sun’s path from east to west each day and thus increases the amount of the sun’s energy that is captured by the modules, he said.

There are ongoing cost challenges for the industry, too. Even though power purchase agreements for utility-scale solar have dropped dramatically over the past few years, PV still cannot compete with much existing gas-fired generation because of low natural gas prices, for example. “When stacked up against new gas-fired generation (i.e., including the recovery of up-front capital costs), PV looks more attractive,” the report says.

Also, there are wide price fluctuations around the country, in both distributed and utility-scale PV. “The potential underlying causes for this variability are numerous, including differences in project characteristics, installers, and local market or regulatory conditions,” the report states.

The lab analyzed PV systems only for distributed solar, and all types of technologies — including solar thermal plants — for utilities.