Tracking the Sun IX The Installed Price of Residential and Non-Residential

Photovoltaic Systems in the United States

Galen Barbose and Naïm DarghouthLawrence Berkeley National Laboratory

— Report Summary —August 2016

This analysis was funded by the Solar Energy Technologies Office, Office of Energy Efficiency and Renewable Energy of the U.S. Department of Energy under Contract No. DE-AC02-05CH11231.

trackingthesun.lbl.gov

Report Overview

• Focus on projects installed through 2015 with preliminary data for the first half of 2016

• Describe:o Historical trends in national median priceso Variability in pricing across projects

• Including:o Key drivers for decline in median priceso Summary and comparison to other PV

system price and cost benchmarkso Comparison to international marketso Installed price variation with system size and

design, location, installer, and sector

2

Summarize trends in the installed price of grid-connected residential and non-residential PV systems in the United States

New this yearThe full dataset developed

for Tracking the Sun is available for download via NREL’s Open PV Project

Related National Lab Research Products

• Utility-Scale Solar: LBNL annual report on utility-scale solar (PV and CSP) describing trends related to project characteristics, installed prices, operating costs, capacity factors, and PPA pricing

• The Open PV Project: Online data-visualization tool developed by NREL that hosts the public version of the dataset developed for Tracking the Sun, along with additional data.

• In-Depth Statistical Analyses of PV pricing data by researchers at LBNL, NREL, and several academic institutions examining PV pricing dynamics by applying more-advanced statistical techniques to the data in Tracking the Sun. These and other solar energy publications are available here.

• PV System Cost Benchmarks developed by NREL researchers, based on bottom-up engineering models of the overnight capital cost of residential, commercial, and utility-scale systems.

3

Tracking the Sun is produced in conjunction with several related and ongoing research activities by LBNL and NREL

Outline

• Data Sources, Methods, and Sample Description• Historical Trends in Median Installed Prices• Variation in Installed Prices• Conclusions

4

Key Definitions and Conventions

Installed price: The up-front $/W price paid by the PV system owner, prior to incentives (see next 2 slides for discussion of TPO and data limitations)

Customer Segments*:• Residential PV: Single-family residences and, depending on the

conventions of the data provider, also multi-family housing• Non-Residential PV: Non-residential roof-mounted systems of any size,

and non-residential ground-mounted systems up to 5 MWAC

• Utility-Scale PV (not included in this report): Ground-mounted ≥5 MWAC*These customer segment definitions are independent of whether systems are connected to the customer- or utility-side of the meter, and may differ from other market reports

Units:• Monetary values expressed in real 2015 dollars• System size and capacity data expressed in DC units (module nameplate)

5

Data Sources and Limitations

6

Installed price trends are based on project-level data:• Derived primarily from state agencies and utilities that administer PV

incentive programs, solar renewable energy credit registration systems, or interconnection processes (~60 entities in total)

• Supplemented with data from other public sources (FERC Form 1, U.S. Treasury Department’s Section 1603 Grant Program, trade press, etc.)

Key Data Limitations Self-reported by PV installers and therefore susceptible to inconsistent reporting

practices Differs from the underlying cost borne by the developer or installer (price ≠ cost) Historical and therefore may not be representative of systems installed more

recently or current quotes for prospective projects Excludes a sub-set of third-party owned (TPO) systems, for which reported

prices represent appraised values (see next slide)

Data Cleaning and Standardization

• Standardize spellings of installer, module, and inverter names• Assign attributes based on equipment data: module efficiency and type,

building integrated vs. rack-mounted, module-level power electronics• Infer system ownership (host-owned or TPO) if data not provided directly• Remove systems from final analysis sample if:

– Missing valid data for installed price or system size– Battery back-up– Self-installed– Integrated TPO systems (see below)

7

Treatment of Third-Party Owned (TPO) Systems in the Data Sample and Analysis Integrated TPO. A single company provides both the installation service and customer

financing. Reported prices represent appraised values. Excluded from analysis. Non-Integrated TPO. Customer finance provider purchases system from installation

contractor. Reported prices represent sale price to customer finance provider. Retained in analysis.

Sample Size Compared to Total U.S. Market

Final Analysis Sample: Unless otherwise noted, this is the sample used in this analysis

• ~450,000 systems installed through 2015 and 110,000 systems installed in 2015• Gap between final sample and full data sample primarily reflects:

– Removal of appraised value TPO systems– Removal of systems with missing installed price data; most of those are in California and

installed from 2013 to mid-2015, when data collection was under transition

8

Total U.S. grid-connected PV system installations are based on data from IREC (Sherwood 2016) for all years through 2010 and data from GTM Research and SEIA (2016) for each year thereafter.

Full Data Sample: Prior to excluding integrated TPO and systems with missing data*• ~820,000 systems

through 2015• 85% of all U.S. PV

systems; 82% of 2015 additions

* The basis for the public data file

0

50

100

150

200

250

300

350

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Installation Year

Total U.S. Grid-Connected PVFull Data SampleFinal Analysis Sample

Num

ber

of P

V Sy

stem

s (T

hous

ands

)

Residential & Non-Residential PV

Data Sample Characteristics: System size trends and distribution among states

• Residential system sizes growing steadily over time (6.1 kW in 2015)

• Non-Res. systems in the sub-500 kW class are generally small (20-40 kW)

• Non-Res. systems >500 kW also growing in size (1,100 MW in 2015)

9

Distribution Across States

System Size Trends

• Sample spans 33 states, though heavily weighted toward CA , MA, NY, NJ, AZ, NC

• Dominance of CA has fallen long term, but rose sharply in 2015 (for res)

0

1

2

3

4

5

6

7

1998 2002 2006 2010 2014

Residential

Med

ian

Size

(kW

DC)

0

10

20

30

40

50

60

1998 2002 2006 2010 2014Installation Year

Non-Res. ≤500 kWDC

0

200

400

600

800

1,000

1,200

1998 2002 2006 2010 2014

Non-Res. >500 kWDC

0%

20%

40%

60%

80%

100%

1998

2002

2006

2010

2014

Perc

ent o

f Sam

ple

Syst

ems

OtherNJAZMANYCA

Residential

1998

2002

2006

2010

2014

Installation Year

OtherNHNJMANYCA

Non-Res. ≤500 kWDC

2002

2006

2010

2014

OtherCTNJMANCCA

Non-Res. >500 kWDC

Data Sample Characteristics: Distribution by system ownership

Residential: • Total TPO shares grew to

~60% of sample by 2012, remaining near that level through 2015

• Much higher TPO shares of sample for some states (80-90% in AZ, NJ)

• Integrated TPO shares have continued to grow; increasing percentage of systems excluded from final data sample

• Most pronounced for AZ and MA (60% of 2015 residential sample is integrated TPO)

10

Distribution by System Ownership

Notes: This figure is based on the full data sample in order to show explicitly how exclusion of integrated TPO systems impacts the final data sample used for analysis; unless otherwise indicated, all other figures are based on the final data sample.

Non-Residential: • TPO emerged somewhat earlier than residential, but

plateaued at lower level• Negligible presence of integrated TPO

Perc

ent o

f Pre

limin

ary

Sam

ple

Installation Year

Customer-Owned Non-Integrated TPO (Retained in Sample)Integrated TPO (Excluded from Sample)

0%

20%

40%

60%

80%

100%

1998

2002

2006

2010

2014

Residential

1998

2002

2006

2010

2014

Non-Res. ≤500 kWDC

2002

2006

2010

2014

Non-Res. >500 kWDC

Outline

• Data Sources, Methods, and Sample Description• Historical Trends in Median Installed Prices• Variation in Installed Prices• Conclusions

11

Installed Prices Continued to Fall in 2015, but at a Somewhat Slower Pace Than in Recent Years

12

National median installed prices in 2015 declined YoY by $0.2/W (5%) for residential systems, by $0.3/W (7%) for non-residential systems ≤500 kW, and by $0.3/W (9%) for non-residential systems >500 kW

Notes: Median installed prices are shown only if 20 or more observations are available for a given year and customer segment.

$0

$2

$4

$6

$8

$10

$12

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Installation Year

ResidentialNon-Residential ≤500 kWNon-Residential >500 kW

Median Installed Price

2015

$/W

DC

Preliminary Data for 2016 Are Mixed in Terms of Near-Term Installed Price Trajectory

National trends are complicated by growing CA-share in data sample; excluding CA systems, residential and small non-res. installed prices fell in the first half of 2016, while large non-res. shows slight uptick

13

Notes: The figure is based on data from only a subset of programs from the larger dataset, and therefore cannot be directly compared to other figures in the slide deck. Within the residential sample, the California-share grows from 36% in H1-2015 to 70% in H2-2015 and 60% in H1-2016. For the sample of smaller non-residential systems, the progression is 41%, 64%, 64%. For the larger non-residential systems, the California-share progresses from 55% to 22% to 55%.

$0

$1

$2

$3

$4

$5

H1-2015

n=22373,14430

H2-2015

n=57941,17618

H1-2016

n=46178,18537

H1-2015

n=813, 478

H2-2015

n=1312,478

H1-2016

n=1183,428

H1-2015

n=99, 45

H2-2015

n=138, 108

H1-2016

n=135, 61

Residential Non-Residential ≤500 kW Non-Residential >500 kW

Including CA

Excluding CA

Median Installed Price(AZ, CA, CT, MA, NC, NJ, NY)

2015

$/W

DC

Installed Price Declines Have Continued Despite Flat Module Prices• Steep reductions in module prices were the primary driver for installed price

reductions from 2008 to 2012 (~80% of the total installed price decline)• Since 2012, however, module prices have remained relatively flat, and installed

price declines have been driven primarily by reductions in non-module costs (including installer margins)

14

Notes: The Module Price Index is the U.S. module price index published by SPV Market Research (Mints 2015). Implied Non-Module Costs are calculated as the Total Installed Price minus the Module Price Index, and therefore include installer profit margin.

$0

$2

$4

$6

$8

$10

$12

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Installation Year

Total Installed Price (Median)Module Price IndexImplied Non-Module Costs

Residential PV

2015

$/W

DC

Recent Non-Module Cost Reductions Are Associated Primarily with Declining Soft Costs

• Inverters and racking prices have fallen significantly in recent years, representing 20% of non-module cost reductions since 2010 (GTM Research and SEIA 2016)

• Remainder is attributable mostly to soft costs reductions, stemming partly from technical factors (that can be readily quantified): – Increasing module efficiency (~8% of non-module cost reductions since 2010)– Increasing system size (~10% of total non-module cost reduction since 2010)

15

• Soft cost reductions also associated with:– Widespread policy and

industry efforts aimed at reducing soft costs

– Steady reductions in incentives (next slide)

Notes: “All Systems” is based on all residential systems in the data sample, regardless of module technology, while “Poly Systems” is based on only those systems with poly-crystalline modules.

13%

14%

15%

16%

17%

2010n=22889

2011n=26448

2012n=34395

2013n=35446

2014n=27008

2015n=70529

Mod

ule

Effic

ienc

y

Installation Year

All Module TechnologiesPoly Modules Only

Residential SystemsMedian Module Efficiency

Non-module cost have fallen by $1.9/W since 2010, roughly $0.4/W per year on average, with a $0.2/W drop from 2014 to 2015

Installed Price Declines Have Been Partially Offset by Falling State and Utility Incentives

Reductions in rebates and PBIs since their peak equate to 60% to 120% of the corresponding drop in installed prices

16

Notes: The figure depicts the pre-tax value of rebates and PBI payments (calculated on a present-value basis) provided through state/utility PV incentive programs, among only those systems that received such incentives. Although not shown in the figure, a growing portion of the sample received no direct cash incentive. Also note that the data are organized according to the year of installation, not the year in which incentives were reserved.

• Rebates and performance-based incentives (PBIs) have declined from $3-8/W at their peak to less than $1/W (or zero) in most major markets

• Incentive reductions partly a response to installed price declines and the emergence of other forms of incentives (SRECs, ITC, improved monetization of tax benefits)

• Ratcheting down of incentives also a deliberate strategy by some states to induce cost reductions

$0

$2

$4

$6

$8

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

2015

$/W

DC

Installation Year

CA (ERP, SGIP, CSI) NJ (CORE, REIP)NY (NYSERDA) AZ (APS, SRP, TEP)MA (MassCEC) All Other Programs

Residential and Non-Residential PVMedian Pre-Tax Rebate or PBI (Present Value)

National Median Installed Prices Are Relatively High Compared to Other Recent Benchmarks

Medians differ from other benchmarks due to:• Timing: Systems installed vs.

quoted in 2015• Location: Most systems in

relatively high-cost states• Price vs. cost: SolarCity and

Vivint data represent costs• Value-based pricing: Prices

in some locations may reflect supra-normal margins

• System size/components: high-efficiency modules, microinverters, etc.

• Scope of costs included: loan origination fees, re-roofing costs, etc.

• Installer characteristics: size, experience, business model

17

National median prices for systems installed in 2015: $4.1/W (res.), $3.5 /W (sm. non-res.), $2.5/W (lg. non-res.)

Notes: LBNL data are the median and 20thand 80th percentile values among projects installed in 2015. NREL data represent the national average and range in statewide average modeled turnkey costs, not including installer profit, for 5.2 kW residential and 200 kW commercial systems, representative of bids issued circa Q1 2015 (Chung et al. 2015). GTM/SEIA data are modeled turnkey prices for Q1 and Q4 2015; residential price is for 5-10 kW system with standard crystalline modules, while commercial price is for a 300 kW “minimalist” flat-roof system, with further details available from the reference source (GTM Research and SEIA 2016). EnergySage data are the 20thand 80th percentile range among price quotes issued in 2015, calculated by LBNL from data provided by EnergySage. Petersen-Dean data are the minimum and maximum values from a series of online price quotes for turnkey systems across a range of sizes (3.3 to 8.3 kW) and states (AZ, CA, and TX), queried from the company website by LBNL in May 2015. SolarCity, SunRun, and Vivint data are the companies’ reported average costs, inclusive of general administrative and sales costs, for Q1 and Q4 2015. SolSystems data are the lowest and highest “developer all-in asking prices” among the company’s monthly Sol Project Finance Journal reports issued in 2015.

$0

$1

$2

$3

$4

$5

$6

NR

EL

GTM

/SE

IA

Ene

rgyS

age

Pet

.-Dea

n

Sol

arC

ity

Sun

Run

Viv

int

LBNL ModeledPrice

QuotesInstaller-Reported

Average Costs

2015

$/W

DC

Residential

≤500

kW

>500

kW

NR

EL

GTM

/SE

IA

Ene

rgyS

age

Sol

Syst

ems

(≤50

0 kW

)

Sol

Sys

tem

s(5

00 k

W -

2 M

W)

LBNL Modeled Price Quotes

Non-Residential

Quarterlyturnkey pricesBenchmark-specific range

Quarterlyaverage cost

Installed Prices in the United States Are Higher than in Most Other Major National PV Markets

• Yet smaller countries suggest that other factors also likely contribute(e.g., solar industry business models, customer awareness, incentive levels and incentive design, building architecture, systems sizing and design, interconnection standards, labor wages, and permitting and interconnection processes).

18

Notes: Installed price data for Japan, France, and Australia are based on the IEA Photovoltaic Power Systems Programme’s National Survey Reports (IEA-PVPS 2016) and for Germany are based on data compiled by the Center for Solar Energy and Hydrogen Research Baden-Württemberg (ZSW 2016). Data for cumulative distributed PV capacity additions are based on IEA-PVPS (2016) and SPE (2016).

$1.7 $2.9 $4.0 $1.8 $2.8$1.2 $2.1 $3.5 $1.6 $2.10

10

20

30

40

$0

$2

$4

$6

$8

Germany Japan USA Australia France

Residential Installed Price (left-axis)Small Non-Res. Installed Price (left-axis)Cumulative Distributed PV Capacity (right-axis)

GW

DC

2015

$/W

DC

Installed Prices for 2015, Excluding Sales Tax or VAT• Hardware costs are largely (though not entirely) uniform across countries

• Installed prices differ largely due to soft costs

• Soft cost differences may be driven partly by deployment scale

The starkest differences are in comparison to Germany, where typical pricing for residential systems was around $1.7/W in 2015

Outline

• Data Sources, Methods, and Sample Description• Historical Trends in Median Installed Prices• Variation in Installed Prices• Conclusions

19

Installed Prices Vary Widely Across Projects Though have narrowed over time

Wide distributions in system pricing reflect variation in:• Project characteristics• Local market and regulatory

environment• Installer size, experience,

business model• Labor rates, taxes, permitting

and interconnection processes

Narrowing is consistent with a maturing market characterized by increased competition and better-informed consumers

20

Installed Price Distributions for Systems Installed in 2015

Installed Price Percentile Ranges over Time

Note: Percentile bands are shown only if 20 or more observations are available for a given year and customer segment.

1 2 3 4 5 6 7 8 9 100%5%

10%15%20%25%30%35%40%45%

Freq

uenc

y

Residential

n=106,983

1 2 3 4 5 6 7 8 9 10

Non-Res. ≤500 kWDC

Installed Price (2015$/WDC)

n=2,880

1 2 3 4 5 6 7 8 9 10

Median

20th/80thPercentiles

Non-Res. >500 kWDC

n=243

-$4

-$2

$0

$2

$4

$6

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Installation Year

ResidentialNon-Residential ≤500 kWNon-Residential >500 kW

Median

2015

$/W

DC

80th Percentile

20th Percentile

Percentile Range for Installed Price Distributions(Vertical axis shows distance from median)

Recent Studies Shed Light on Installed Pricing Variation and Dynamics for Residential PV

Gillingham et al. (2014) estimated the effects of a broad set of drivers on residential PV pricing, including variation in system size ($1.5/W effect), density of installers ($0.5/W effect), consumer value of incentives and electricity bill savings ($0.4/W effect), and installer experience ($0.2/W effect)Nemet et al. (2016a) and Nemet et al. (2016b) collectively showed that high consumer incentives for solar tend to increase installed prices as a general matter, consistent with the earlier findings of Gillingham et al. (2014), yet the lowest-priced systems (within the lowest 10th percentile) are also associated with relatively high consumer incentivesDong and Wiser (2013) found installed price differences of $0.3/W to $0.8/W between cities in California with the least- and most-onerous permitting practicesBurkhardt et al. (2014) found that local permitting procedures alone impact installed prices by $0.2/W, while the combination of permitting and other local regulatory procedures impacts prices by $0.6/W to $0.9/WDong et al. (2014) found that, historically, 95% to 99% of rebates in California were passed through to consumers, rather than retained as increased installer margins

Studies available at http://emp.lbl.gov/projects/solar

21

LBNL and academic partners (Yale, U. of Wisconsin, U. of Texas) applied more-advanced statistical and econometric methods to the Tracking the Sun dataset, focusing on residential systems

• For residential systems installed in 2015, median prices were roughly 16% lower for 8-10 kW systems than for 2-4 kW systems

• Among non-res. systems installed in 2015, median installed prices were 43% lower for the largest (>1,000 kW) than for the smallest (≤10 kW) non-res. systems

• Even greater economies of scale arise when progressing to utility-scale systems, which are outside the scope of this report

Economies of Scale Occur Among Both Residential and Non-Residential Systems

22

Residential Systems

Non-Residential Systems

$4.3 $4.5 $4.2 $4.0 $3.8 $3.7 $3.7 $3.6 $3.7 $3.7 $3.6$0

$2

$4

$6

$8

≤2 kWn=3,115

2-4 kWn=18,246

4-6 kWn=30,941

6-8 kWn=25,171

8-10 kWn=15,680

10-12 kWn=7,404

12-14 kWn=3,196

14-16 kWn=1,490

16-18 kWn=726

18-20 kWn=370

>20 kWn=644

2015

$/W

DC

System Size Range (kWDC)

Residential Systems Installed in 2015Median Installed Price and 20th/80th Percentiles

$4.2 $3.7 $3.5 $3.2 $3.2 $2.9 $2.5 $2.4$0

$2

$4

$6

$8

≤10 kWn=618

10-20 kWn=474

20-50 kWn=747

50-100 kWn=467

100-250 kWn=393

250-500 kWn=181

500-1000 kWn=108

>1000 kWn=135

2015

$/W

DC

System Size Range (kWDC)

Non-Residential Systems Installed in 2015Median Installed Price and 20th/80th Percentiles

Installed Prices Differ Among States Relatively high prices in some large state markets

• Some of the largest markets (CA, MA, NY) are relatively high-priced, pulling overall U.S. median prices upward

• Pricing in most states is below the national median

• Cross-state variation may reflect differences in installer competition and experience, retail rates and incentive levels, project characteristics particular to each region, labor costs, sales tax, and permitting and administrative processes

• High degree of variability also occurs within states

23

Note: Results shown only if 20 or more observations are available for the state

Residential Systems

Non-Residential Systems

$2.8

$3.0

$3.0

$3.1

$3.1

$3.1

$3.2

$3.3

$3.4

$3.4

$3.5

$3.5

$3.7

$3.8

$2.2

$2.4

$2.6

$2.7

$0

$2

$4

$6

$8

CO35

DE23

NV40

NJ176

TX103

CT33

WI24

NH124

MA264

OR98

AZ63

NY474

MN42

CA1294

NJ23

NC69

MA55

CA88

Non-Residential ≤500 kW Non-Residential >500 kW

2015

$/W

DC

State and Sample Size

Non-Residential Systems Installed in 2015Median Installed Price and 20th/80th Percentiles

Non-Res. ≤500 kW Non-Res. >500 kW

U.S.

$3.2

$3.4

$3.5

$3.5

$3.6

$3.6

$3.6

$3.7

$3.9

$3.9

$3.9

$3.9

$3.9

$4.0

$4.1

$4.2

$4.4

$4.4

$4.5

$4.7

$4.8

$0

$2

$4

$6

$8

NV4559

TX2093

FL77

NJ5279

WI346

AZ8497

CO1778

CT3547

NH1068

MD761

OR1057

DE837

RI191

MA8708

NY12098

IL87

CA52808

VT349

NC1693

NM902

MN239

2015

$/W

DC

State and Sample Size

Residential Systems Installed in 2015Median Installed Price and 20th/80th Percentiles

U.S.

Installed Prices Reported for TPO Systems Are Generally Similar to Customer-Owned Systems• At the national level, installed

price differential between non-integrated TPO and customer-owned systems has varied over time, but has generally been small (top figure)

• For residential systems in 2015, TPO systems were $0.5/W less than customer-owned systems; possible effect of loan origination fees?

• At state level, installed price comparison between TPO and customer-owned systems is much more scattered (bottom figure); may partly reflect different TPO models

24

Notes: The values shown here for TPO systems are based on systems financed by non-integrated TPO providers, for which installed price data represent the sale price between the installation contractor and customer finance provider.

$6.1

$5.4

$4.7

$4.3

$3.7

$5.3

$5.1

$4.5

$4.0

$3.4

$5.1

$4.5

$3.6

$2.8

$2.5

$6.4

$5.3

$4.6

$4.2

$4.2

$6.0

$4.9

$4.2

$3.7

$3.6

$4.4

$4.3

$3.5

$2.7

$2.4

$0

$2

$4

$6

$8

2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

Residential Non-Residential ≤500 kW Non-Residential >500 kW

TPO Customer-Owned

2015

$/W

DC

Median Installed Price and 20th/80th Percentiles

$3.0

$3.9

$2.4

$3.5

$4.0

$3.9

$3.5

$2.7

$4.3

$3.9

$3.3

$4.5

$4.0

$3.9

$3.3

$4.0

$3.7

$3.7

$4.0

$3.9

$0

$2

$4

$6

$8

AZn=2820,

2557

CAn=14269,

38309

COn=434,1344

CTn=2196,

1351

DEn=545,

178

MAn=3093,

5433

NJn=4498,

779

NVn=3463,

1096

NYn=5590,

6507

ORn=62,989

TPO Customer-Owned

Residential Systems Installed in 2015Median Installed Price and 20th/80th Percentiles

2015

$/W

DC

Prices Vary Considerably Across Residential Installers Operating within the Same State

• “Low-price leaders” provide a benchmark for what may be achievable in terms of near-term installed price reductions within the broader market (e.g., 20% of installers in Arizona have median prices below $3.0/W)

• High-priced installers may specialize in “premium” systems or may include in their reported prices additional items beyond what is typically counted as part of the PV system (e.g., loan origination fees, re-roofing costs, etc.)

25

Notes: Each line includes only installers that completed at least 10 residential systems in the given state in 2015.

Within each of the five states shown, installer-level median prices differ by $0.8/W to $1.2/W between the 20th & 80th percentiles (and by more across the full set of installers)

$0

$2

$4

$6

$8

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percent of Installers

ArizonaCaliforniaMassachusettsNew JerseyNew York

Residential Systems Installed in 2015 Median Installed Price by Installer

2015

$/W

DC

Each dot represents the median installed price of an individual installer in the specified state. Each line consists of installer-medians, rank ordered from lowest to highest.

Larger Residential Installers Seemingly Do Not Have Lower PricesThe figure segments projects according the number of in-state systems the associated installers completed in 2015• Arizona: Notably lower prices

for highest-volume installers• Other states: Small

differences, with no discernible or logical relationship between price and installer volume

26

Notes: Each bin includes at least 3 installers and, with the exception of the ≤10 systems bin, at least 10% of all residential systems in the sample installed in-state in 2015. Installer volumes are calculated from the full data sample, and therefore include integrated TPO systems and other excluded systems that are not used for the purpose of calculating installed price statistics.

What to conclude?• Installer size effects arise at geographical scales other than the state-level?• Installer size effects are simply obscured by other unrelated factors?• Installer size effects are offset by countervailing factors (e.g., higher customer

acquisition costs for high-volume installers)?

$3.8

$3.7

$3.8

$2.9

$4.2

$4.3

$4.5

$4.7

$4.2

$4.0

$4.1

$4.4

$3.9

$3.8

$3.5

$3.4

$3.9

$3.9

$4.0

$4.0

$3.9

$0

$2

$4

$6

$8

≤10

11-5

051

-250

251-

1000 ≤10

11-5

051

-250

251-

1000

>100

0

≤10

11-5

051

-250

251-

1000 ≤10

11-5

051

-250

251-

1000 ≤10

11-5

051

-250

251-

1000

Arizona California Massachusetts New Jersey New York

Number of In-State Residential Systems per Installer in 201520

15$/

WDC

Residential Systems Installed in 2015Median Installed Price and 20th/80th Percentile

Each bar represents the median installed price among all systems installed by companies within the specified range of in-state residential systems completed in 2015.

Residential New Construction Offers Significant Installed Price Advantages Compared to Retrofit• PV systems installed in new

construction tend to be small and have high incidence of premium modules (top chart)

• Nevertheless, residential new construction systems in CA were $0.5/W less than retrofits in 2015 (bottom chart)

• Price advantage is even greater ($0.8/W) if comparing among 1-4 kW systems with premium efficiency modules

• Illustrates economies of scale and scope in new construction (particularly for large housing developments)

27

$6.3

$5.2

$4.6

$4.1

$3.9

$6.2

$4.9

$4.6

$4.1

$4.0

$6.7

$5.8

$5.1

$4.7

$4.4

$8.3

$7.2

$5.6

$5.2

$4.8

$0

$2

$4

$6

$8

$10

2011n=1484,17774

2012n=2829,23266

2013n=3630,25287

2014n=2345,13670

2015n=2647,48698

2011n=561,

910

2012n=1750,

957

2013n=2852,

693

2014n=1795,

239

2015n=1419,

2345

All Systems 1-4 kW, Rack-Mounted, Premium Efficiency

New ConstructionRetrofit

2015

$/W

DC

California Residential SystemsMedian Installed Price and 20th/80th Percentiles

01234567

2011 2012 2013 2014 2015

kWDC

RetrofitNew Construction

California Residential Systems

Median System Size

0%

20%

40%

60%

80%

100%

2011 2012 2013 2014 2015

Percent with Premium Efficiency Modules

Installed Prices Are Higher for Systems at Tax-Exempt Customer Sites than at For-Profit Commercial Sites

Compared to systems installed at for-profit commercial sites• Median prices at tax-exempt sites in 2015 were $0.3/W higher for systems ≤500

kW and $1.1/W higher for systems >500 kW• May reflect smaller sizes; concentration in California; less-stringent financial

criteria or less negotiating power; more onerous permitting and procurement; and higher incidence of prevailing wage/union labor requirements, domestically manufactured components, and shade or parking structures

28

Tax-exempt customers• Schools, government

facilities, non-profits, religious organizations

• Represent 18% of non-res. systems ≤500 kW and 26% of non-res. systems >500 kW in sample

$6.8

$5.8

$5.1

$4.1

$3.5

$5.3

$4.4

$4.1

$3.3

$2.3

$7.3

$6.0

$5.3

$4.7

$3.8

$6.7

$5.4

$5.1

$4.2

$3.4

$0

$2

$4

$6

$8

$10

2011n=2461,

1284

2012n=2928,

1372

2013n=2905,

854

2014n=1956,

650

2015n=2191,

467

2011n=80,

50

2012n=219,

110

2013n=198,

125

2014n=182,

94

2015n=154,

53

Non-Residential ≤500 kW Non Residential >500 kW

Commercial Site HostTax-Exempt Site Host

2015

$/W

DC

Non-Residential SystemsMedian Installed Price and 20th/80th Percentiles

Installed Prices Are Substantially Higher for Systems with High-Efficiency Modules

• Roughly 30% of 2015 systems in the sample have module efficiencies >18% (top chart)

• Systems with >18% efficiency modules had a median installed price $0.5-0.6/W higher than systems with mid/low-efficiency modules in 2015

• Cost premium for high-efficiency modules appears to outweigh associated reduction in BOS costs (though tradeoffs between module technologies entail a broader set of considerations)

29

13% 15% 17% 19% 21%0%

5%

10%

15%

20%

25%

30%

35%

Freq

uenc

y

Residential

Med

ian n=70,529

13% 15% 17% 19% 21%Module Efficiency

Non-Res. ≤500 kWDC

n=1,703

13% 15% 17% 19% 21%

Non-Res. >500 kWDC

n=84

$6.3

$5.3

$4.6

$4.0

$3.9

$5.8

$5.1

$4.3

$3.8

$3.6

$7.0

$5.8

$5.1

$4.9

$4.5

$6.4

$5.9

$4.8

$4.4

$4.1

$0

$2

$4

$6

$8

$10

2011n=21260,

5188

2012n=23939,

10456

2013n=23263,

12183

2014n=18681,

8327

2015n=50197,

20332

2011n=1945,

165

2012n=2113,

264

2013n=1669,

193

2014n=1084,

183

2015n=1324,

379

Residential Non-Residential ≤500 kW

Module Efficiency ≤18% Module Efficiency >18%

2015

$/W

DC

Median Installed Price and 20th/80th Percentiles

Module Efficiency Distributions for Systems Installed in 2015

Installed Price Differences Based on Module Efficiency

Microinverters Have an Apparently Small Effect on Installed Prices• Penetration of module-level

power electronics (MLPE) has grown substantially among residential and smaller non-residential systems (top chart)

• Despite additional hardware costs, differential in total system prices relative to systems without MLPE has generally been small, or even negative (bottom chart)

• Suggest that MLPE devises may offer some offsetting reductions in other BOS and soft costs

30

Perc

ent o

f Sam

ple

Installation Year

Microinverter DC Power Optimizer No MLPE

0%

20%

40%

60%

80%

100%

2011

2012

2013

2014

2015

Residential

2011

2012

2013

2014

2015

Non-Res. ≤500 kWDC

2011

2012

2013

2014

2015

Non-Res. >500 kWDC

$6.7

$5.6

$4.7

$4.2

$4.1

$5.7

$5.1

$4.6

$4.2

$3.8

$6.3

$5.3

$4.7

$4.3

$4.1

$0

$2

$4

$6

$8

$10

2011n=6515,173,

24607

2012n=11541,344,

30412

2013n=15370,1333,

30862

2014n=14538,4475,

19296

2015n=33302,24788,

35172

Microinverter

DC Optimizer

No MLPE

2015

$/W

DC

Residential SystemsMedian Installed Price and 20th/80th Percentiles

Notes: The DC power optimizer share includes only systems using SolarEdge inverters, and therefore understates the actual share of DC power optimizers in the data sample.

Installed Prices for Non-Residential Systems Vary with Use of Tracking Equipment• A relatively high percentage

of large (>500 kW) non-residential systems in the data sample are ground-mounted (68% in 2015), often with tracking (13% in 2015)

• A smaller portion, but still significant number, of non-res. systems <500 kW are also ground-mounted

31

Notes: The figure is derived from the relatively small subsample of systems for which data were available indicating both whether the system is roof- or ground-mounted and whether or not it has tracking.

• As expected, systems with tracking have higher installed prices than those without, though small sample sizes create somewhat erratic results

• Over the five-year period shown, the differential in median installed prices between systems with and without tracking averaged roughly $0.6/W (18%) for large non-residential systems and $0.8/W (21%) for smaller non-residential systems

$6.3

$5.6

$5.1

$5.5

$3.9

$4.8

$4.6

$4.0

$3.1

$3.7

$5.7

$5.3

$4.6

$3.2

$3.6

$4.3

$4.4

$3.4

$2.8

$2.5

$5.6

$4.8

$4.0

$3.5

$3.2

$4.3

$4.4

$3.5

$2.3

$2.2

$0

$2

$4

$6

$8

$10

2011n=38,102,

1343

2012n=39,160,

1491

2013n=15,103,

801

2014n=6,115,

386

2015n=20,162,

507

2011n=31,41,

87

2012n=50,56,

98

2013n=24,87,

60

2014n=15,57,

36

2015n=8,36,

20

Non-Residential ≤500 kW Non-Residential >500 kW

Ground, TrackingGround, FixedRooftop

2015

$/W

DC

Non-Residential SystemsMedian Installed Price and 20th/80th Percentiles

Outline

• Data Sources, Methods, and Sample Description• Historical Trends in Median Installed Prices• Variation in Installed Prices• Conclusions

32

Conclusions

• Installed prices for distributed PV have fallen dramatically over time, with reductions in recent years attributable mostly to declines in soft costs

• Suggests that recent efforts by industry and policymakers to target soft costs have begun to bear fruit

• Significant further reductions in soft costs will be needed to sustain continued declines in PV system pricing

• Lower installed prices in other major national PV markets and in some U.S. states, as well as the high degree of variability in U.S. system pricing, suggests that deeper reductions in soft costs are possible in the near term

• Achieving dramatic reductions in soft cost may accompany market scale, but also likely requires targeted policies aimed at specific soft costs, as well as applied research to identify barriers to and opportunities for lower soft costs

33

For more information

Download the report along with a briefing and summary data tables:trackingthesun.lbl.gov

Download the “Public Data File” with project-level data for more than 800,000 individual systems

https://openpv.nrel.gov/search

Search other renewable energy publications and join our mailing list to receive notice of future publications:

http://emp.lbl.gov/reports/re

Follow us on Twitter @BerkeleyLabEMP

Contact the authors:Galen Barbose, GLBarbose@lbl.gov, 510-495-2593Naïm Darghouth, NDarghouth@lbl.gov, 510-486-4570

34

References

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Bolinger, M. and J. Seel. 2016. Utility-Scale Solar 2015. Berkeley, CA: Lawrence Berkeley National Laboratory.

Burkhardt, J., R. Wiser, N. Darghouth, C. Dong, and J. Huneycutt. 2014. Do Local Regulations Matter? Exploring the Impact of Permitting and Local Regulatory Processes on PV Prices in the United States. Berkeley, CA: Lawrence Berkeley National Laboratory.

Chung, D., C. Davidson, R. Fu, K. Ardani, R. Margolis. 2015. U.S. Photovoltaic Prices and Cost Breakdowns: Q1 2015 Benchmarks for Residential, Commercial, and Utility-Scale Systems. Golden, CO: National Renewable Energy Laboratory. NREL/TP-6A20-64746.

Deline, C., J. Meydbray, M. Donovan, and J. Forrest. 2012. Partial Shade Evaluation of Distributed Power Electronics for Photovoltaic Systems. Golden, CO: National Renewable Energy Laboratory. NREL/CP-5200-54039.

Dong, C. and R. Wiser. 2013. The Impact of City-level Permitting Processes on Residential Photovoltaic Installation Prices and Development Times: An Empirical Analysis of Solar Systems in California Cities. Berkeley, CA: Lawrence Berkeley National Laboratory. LBNL-6140E.

Dong, C., R. Wiser, and V. Rai. 2014. Incentive Pass-through for Residential Solar Systems in California. Berkeley, CA: Lawrence Berkeley National Laboratory.

Drury, E., A. Lopez, P. Denholm, and R. Margolis. 2013. Relative performance of tracking versus fixed tilt photovoltaic systems in the USA. Progress in Photovoltaics: Research and Applications. Early View (Online Version of Record published before inclusion in an issue).

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References

DSIRE. 2015. Database of State Incentives for Renewable Energy. http://www.dsireusa.org/ Accessed June 1, 2015.

Friedman, B., R. Margolis, J. Seel. 2014. Comparing Photovoltaic (PV) Costs and Deployment Drivers in the Japanese and U.S. Residential and Commercial Markets. Golden, CO: National Renewable Energy Laboratory. NREL/TP-6A20-60360.

Fu, R., D. Chung, T. Lowder, D. Feldman, K. Ardani, and R. Margolis. 2016. U.S. Solar Photovoltaic System Cost Benchmark Q1 2016. Golden, CO: National Renewable Energy Laboratory. NREL/PR-6A20-66532.

Gillingham, K., H. Deng, R. Wiser, N. Darghouth, G. Nemet, G. Barbose, V. Rai, C. Dong. 2014. Deconstructing Solar Photovoltaic Pricing: The Role of Market Structure, Technology and Policy. Berkeley, CA: Lawrence Berkeley National Laboratory.

Goodrich, A., T. James, and M. Woodhouse. 2012. Residential, Commercial, and Utility-Scale Photovoltaic (PV) System Prices in the United States: Current Drivers and Cost-Reduction Opportunities. Golden, CO: National Renewable Energy Laboratory. NREL/TP-6A20-53347.

GTM Research and SEIA. 2016. U.S. Solar Market Insight 2015 Year-in-Review. Boston, MA: GTM Research and Solar Energy Industries Association.

IEA-PVPS. 2016. National survey reports of PV power applications for 2015. International Energy Agency – Photovoltaic Power Systems Programme.

Mints, P. 2016. Photovoltaic Manufacturer Shipments: Capacity, Price & Revenues 2015/2016. SPV Market Research.

Nemet G., E. O’Shaughnessy, R. Wiser, N. Darghouth, G. Barbose, K. Gillingham, and V. Rai. 2016a. Characteristics of Low-Priced Solar Photovoltaic Systems in the United States. Berkeley, CA: Lawrence Berkeley National Laboratory. LBNL- 1004062.

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Nemet G., E. O’Shaughnessy, R. Wiser, N. Darghouth, G. Barbose, K. Gillingham, and V. Rai. 2016b. What Factors Affect the Prices of Low-Priced U.S. Solar PV Systems? Berkeley, CA: Lawrence Berkeley National Laboratory.

RMI and GTRI. 2013. Reducing Solar PV Soft Costs: A Focus on Installation Labor. Boulder, CO: Rocky Mountain Institute and Georgia Tech Research Institute.

RMI and GTRI. 2014. Lessons from Australia: Reducing Solar PV Costs through Installation Labor Efficiency. Boulder, CO: Rocky Mountain Institute and Georgia Tech Research Institute.

PVInsights. 2016. Spot market pricing for the week of July 27, 2016. http://pvinsights.com/Price/SolarModulePrice.php(accessed August 2, 2016).

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37