Distributed Solar Prices Continue to Fall as Systems Become Larger and More Efficient

November 5, 2019

The latest edition of Lawrence Berkeley National Lab’s annual Tracking the Sun report finds that prices for distributed solar power systems continued to fall in 2018, that industry practices continue to evolve, and that systems are getting bigger and more efficient.

The report, now in it’s twelfth year, describes price and technology trends for distributed solar projects nationally, collecting project-level data from approximately 1.6 million systems, representing roughly 80% of all systems installed through the end of 2018.  More than 2 million distributed solar projects are currently operating in the United States.

The report finds that prices continued to fall through 2018 and into 2019, with national median installed prices dropping 5-7% across the market, continuing trends seen over the past five years. Prices in 2018, before any incentives, were $3.70 per Watt for residential, $3.00 for small non-residential, and $2.40 for large non-residential systems.

However, prices were not uniform nationally, with residential systems ranging from a low of $2.80 in Wisconsin to a high of $4.40 in Rhode Island. Small non-residential systems saw a similar range, from $2.50 in Washington to $3.70 in Minnesota. State differences stem from underlying market conditions, such as market size and competition, as well as differences in permitting and interconnection processes, taxes, and incentives. Direct cash incentives in the form of rebates or performance-based incentives have phased out in most of the major markets, and dropped to less than 50¢ a Watt elsewhere.

Prices can also be affected by system size, the type of module, inverter, and mounting, the location, installer, host customer-type, and new construction vs. retrofits. This year’s report has a new analysis to isolate the effects of individual pricing drivers, including characteristics of the local PV market related to market size, competition, and installer experience, among other factors.

While some customers choose to have a third party own their system, buying the power rather than the equipment, this trend has declined. Third-party ownership of systems dropped to 38% of residential, 14% of small non-residential, and 34% of large non-residential systems in the sample in 2018. Tax-exempt customers, such as schools, government, and nonprofit organizations, made up a disproportionately large share (roughly 20%) of all non-residential systems.

And as prices drop, customers are buying bigger and more efficient systems. Median system sizes in 2018 grew to 6.4 kilowatts (kW) for residential and roughly 50 kW for non-residential systems, with 20% of the latter larger than 200 kW. The larger power output partly reflects a steady growth in module efficiencies, which rose a full percentage point to a median of 18.4% among systems installed last year. The report also covers system design trends, including panel orientation, inverter loading ratios, combining solar with batteries, and the use of module-level power electronics.

The report, along with an accompanying slide deck, summary data tables, and a public version of the underlying dataset, is at trackingthesun.lbl.gov. The report authors will summarize key findings from the report via webinar on November 12, at 10:00 am Pacific / 1:00 pm Eastern: register here.

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