US Has an Average Photovoltaic Solar Power Price of $5.20/W

Average weighted photovoltaic solar energy installation price decreased just 3 percent in the second quarter of 2011 to $5.20 per watt, according to GTM Research and the Solar Energy Industries Association’s latest quarterly U.S. Solar Market Insight report.

Residential system prices were virtually flat quarter over quarter, increasing slightly from $6.39 per watt in the first quarter to $6.42 per watt in the second quarter of 2011. Residential systems are typically slow to adjust downward to price declines due to a more extended and dispersed value chain, including distributors, integrators, electrical contractors, etc. Additionally, there is a higher proportion of non-component costs associated with residential systems, so the emphasis tends to be on reducing soft costs (i.e., permitting, interconnection, incentive applications, financing, and other fees) as opposed to module price drops.

Non-residential system prices fell by 2.3 percent quarter over quarter, decreasing from $5.32 per watt to $5.20 per watt. Cost improvements, such as streamlining project development and installation procedures, influenced this decrease. A continued decrease of non-residential system prices can be expected in future quarters as solar renewable energy credit (SREC) prices continue to decline — lower SREC prices force integrators to lower installed price quotes in order to offer attractive customer terms.

In the utility segment, system prices declined for the sixth quarter in a row. Prices decreased from $3.85 per watt in the first quarter of 2011 to $3.75 per watt in the second quarter. A continued decline in module prices (especially when purchased in large quantities), streamlined project development, and more efficient construction processes all contributed to the lower installed cost. On the whole, installed PV prices varied greatly on both a state-by-state and project-by-project basis.