Cost of Installed Solar Power is Sinking Like a Stone

new report tracks rapid drop in installed cost of solar powerHere’s some good news if you’re thinking of installing solar panels on your property. According to a new report from the Lawrence Berkeley National Laboratory, the cost of installed solar power dropped significantly in 2011, going into 2012, compared to 2010 prices.

The facts and figures are all in the latest edition of Berkeley Lab’s annual photovoltaic price report, Tracking the Sun, which also includes historical trends going back to 1998 for more than 150,000 solar installations in 27 states.

The “soft costs” of installed solar power

The report zeroes in on the overall cost of installing a photovoltaic system rather than on just the cost of the solar cells themselves, and that’s an important distinction.

The Department of Energy has estimated that solar cells currently account for only half the total cost of a typical solar installation. The other half consists of “soft costs” including permits, inspections, grid connections and other add-ons.

What this means is that developing new low cost, high efficiency solar cells helps to lower the overall cost of solar power, but it only gets you so far along the road. The other half of the equation is streamlining the installation process.

Fortunately for consumers, the solar industry has not been left to tackle the problem on its own. In his first term, President Obama launched the SunShot Initiative under the Department of Energy, with the goal of supporting both new solar cell technologies and more efficient, less costly installation models.

That includes a new competition to develop low cost rooftop solar installations, and another competition to develop simple “plug and play” solar modules.

How far did the cost of solar power fall?

For residential and commercial solar installations completed in 2011, Berkeley Lab reported a drop of about 11 to 14 percent compared to 2010, depending on the size of the system. California prices fell another 3 to 7 percent in the first six months of 2012.

Berkeley Labs attributes much of the drop to the reduced price of solar cells, which have been “falling precipitously” since 2008.

Looking at the long term trend since 1998, soft or “non-module” costs fell an impressive 30 percent by 2011, though not much of that decline has occurred in recent years.

For the cost of installed solar power, size matters

For residential and commercial systems smaller than 10 kilowatts (kW), the installed cost was $6.10 per watt in 2011. For commercial systems of 100 or more kW, the cost was only $4.90 per watt.

The utility scale installations of more than 2,000 kW did even better, at $3.40 per kW, and the report’s authors noted just yesterday that prices have dropped even further in recent months.

Aside from size, the report also noted a number of other factors. The installed cost of solar power varied substantially from state to state, installations on newly constructed homes were typically much lower than retrofits on existing homes, and building-integrated solar systems were typically more expensive than rack-mounted systems.

Interestingly, Berkeley Labs found that solar installations at tax-exempt sites were generally more expensive than at residential or commercial sites.

The extra-soft cost of solar power

On a somewhat sour note, Berkeley Labs found that the reduced cost of solar installations has been offset by the expiration or reduction of state-based rebates and other incentives for solar power.

In other words, from a solar customer perspective you could look at the whole thing as a wash.

On the plus side, many residential and commercial customers have been motivated by considerations other than raw costs. For residential customers who can afford to invest in “extra-soft” costs, the satisfaction of reducing one’s personal carbon footprint contributes a non-cash value to the ledger books.

For businesses, on site solar installations can provide a significant promotional and public relations tool that makes up for the lack of government incentives.

On balance, though, if the solar industry is going to be truly competitive, it deserves the same level of government support that has long benefited the oil, gas and coal industries.

[Image (cropped): solar ininstallation courtesy USDA, flickr]

Follow me on Twitter: @TinaMCasey





Tina writes frequently for Triple Pundit and other websites, with a focus on military, government and corporate sustainability, clean tech research and emerging energy technologies. She is a former Deputy Director of Public Affairs of the New York City Department of Environmental Protection, and author of books and articles on recycling and other conservation themes. She is currently Deputy Director of Public Information for the County of Union, New Jersey. Views expressed here are her own and do not necessarily reflect agency policy.

16 responses

  1. Can anybody figure out, based on this article, how much it would cost to install solar panels on their house? Of course not! So this article is just a bunch of useless garbage talk.

    1. Everyone’s house and solar needs are different, so you would need to talk to an installer about that.

      3p covers industry news, and learning that panel costs are going down while install costs remain the same is highly useful for many people in our audience.

  2. It would be far more informative if this article specified whether it was talking about the AC rated cost per watt or the DC rated cost per watt. As compensation/rebates are offered is most often based on the derated AC per watt. 15% loss of rated watts is significant in the overall planning and most articles do not address the issue. The other major issue for residential installations is the quality of the work, what good does it do you to get your system up quickly, then find leaks or that the racking wasn’t tied to the framing of the house and blows off in a wind storm. The industry is so new that not much of a track record has been established by the current raft of installers, many of which are in it for a quick buck and won’t stand behind their work for the long term of a ten year requirement.

  3. Thanks for the informative article Tina. It is nice to see the trend going in the right direction. I think as the cost of solar goes down it will help with the transition away from fossil fuel.

  4. Apparently the cost of residential rooftop solar in Australia is getting close to $3/watt. About half what we are paying.

    There’s one company in New Jersey that is installing rooftop for $3.25/watt.

    Our prices will continue to fall.

    1. I am looking for an installer in new jersey can you give me this companies name and number if you have it.

      1. Sorry, I got nuttin’…

        Check Yelp. I’ve noticed that some people are posting ratings for solar installers there.

        (And everyone should, along with prices.)

    2. I am looking for an installer in new jersey can you give me this companies name and number if you have it.

  5. Another cost that may soon be factored in is the cost of storage solutions. In the wake of storms like Superstorm Sandy, the value of being able to operate separate from the grid is being pushed to the forefront. (see While solar panels held up fairly well with limited damage from the storm, many were rendered useless when the grid went down. However, those systems with battery backup and advanced inverter technology were able to continue providing power, off-grid. Battery storage is not cheap but hopefully we will eventually see the same cost reductions noted in Berkeley Lab’s report as technology advances and demand and competition in the market increases.

    1. A storage solution worth considering is driving an EV or PHEV.

      Buying a bunch of batteries which you might not even use once a year is a hard call.

      Buying a bunch of batteries which you use every day to haul you around (and save you a bundle on gas bills) should make a lot more sense.

      If the grid is down you can use output from your panels to charge your car batteries and then use your car batteries to power your house when the Sun is not shining. A PHEV has the additional advantage of being a very efficient generator if you need more that what the panels give.

      1. Bob, I like the idea of this solution and agree that it makes sense. I think at this point the challenge would be cost. I know the technology exists, but I’ve read that a set-up like that requires an inverter that is much more expensive (50 – 100% more) then the standard inverter. Also, I wonder if a homeowner could consistently rely on the solar array to charge an electric vehicle or would the set up only be used as emergency back up.

        1. I’m a bit out of my knowledge base here, I haven’t had a grid-tied solar setup. My experience is totally off-grid. But let me, in the best tradition of Click and Clack, not let that get in my way….

          If your system is set up so that you can feed power from your panels to your house even when the grid is down/disconnected then you could charge an EV/PHEV. The DC power that your panels are producing are changed into 120 vac by the inverter so that it can be used in your house and fed back to the grid. It’s a matter of figuring out how to access it.

          Some/all systems may be set up to automatically disconnect if grid power is absent. That you’d have to check.

          Some EVs/PHEVs are coming with built in inverters so that they give you a 120 vac outlet. I believe the Leaf has this feature.


          “The Leaf batteries have a capacity of 24 kilowatt hours when fully charged, equivalent to the electricity used by the average Japanese household in two days, said the company.

          The output from the vehicle comes to six kilowatts, enough to power electricity-guzzling appliances such as a refrigerator, air conditioner and washing machine at the same time, the company said.”

          You’d need to talk to someone familiar with grid-tied systems to see how to get panels to feed to your car when the grid is down. It might take a different style inverter. But if you’re considering battery backup then you’re going to have to have a different inverter anyway.

    1. Plug-in Hybrid Electric Vehicle. Like the Chevy Volt.

      A vehicle that has a moderate sized battery pack that can be charged by plugging it in to an outlet and then can run some miles on that charge. The Volt has roughly a 40 mile range on electricity alone. The Toyota Prius PHEV has a shorter (20 mile?) range.

      Once the batteries have been used a regular gas engine comes on to drive the vehicle.

      Hybrid because there are multiple ways to power the vehicle. A EV/gasmobile hybrid.

      PHEVs make a lot of sense for some people, especially as “first car”. If you can do most of your regular driving with electricity you save a lot in fuel costs. And you still have vehicle that can drive unlimited distances on fuel.

      About 85% of all American driving days are less than 40 miles, which is what helped determine the Volt range.

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