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Solar Energy Costs Fall in 2013

Analysts expect the trend of lower prices to continue for the next couple of years

The cost of solar electricity is falling, and by 2020 should be close to a key goal established by a government agency, according to a new report.

Prices for photovoltaic (PV) systems fell by between 12% and 19% last year, and should drop another 3% to 12% this year, a joint report from two national laboratories says.

The trend toward lower prices is keeping the country on track to meeting the targets of the U.S. Department of Energy’s SunShot initiative, the report said, which forecasts a price reduction of 75% in the cost of solar-generated electricity between 2010 and 2020, to 6 cents per kilowatt-hour.

The third edition of a joint report from the National Renewable Energy Laboratory and the Lawrence Berkeley National Laboratory on PV pricing was released on October 20.

“These price drops are consistent with previous annual reductions achieved since 2010, when the Energy Department’s SunShot Initiative was established,” NREL’s David Feldman, a lead author, said in a statement posted with a report summary.

Feldman also said there are “significant variations” in solar prices due to a number of factors, including local competition, differences in system specs, and geographic location.

Still, prices should continue to tumble. “There is still considerable uncertainty as to how low PV system prices will drop in the next five to 10 years,” Feldman’s statement said. “However, there appears to be an emerging consensus that the SunShot’s price reduction targets are within reach and more and more likely to be realized. We see this reflected in the fact that many of the current projections are far lower than projections made in the recent past by the same sources.”

Prices tracked for installed and planned systems

The authors looked at prices for PV systems that were completed last year, as well as prices for “modeled” systems that were quoted in the last quarter of 2012 and expected to be installed in 2013.

For completed systems, the median price for residential and small commercial systems (those with a capacity up to 10 kilowatts) was $4.69 per watt; for large commercial systems (those over 100 kW), the median price was $3.89/watt; and for utility-scale projects (ground-mounted systems with a capacity of more than 5 megawatts), the cost was $3/watt.

Prices have been trending downward since the late 1990s. Systems with a capacity of less than 10 kW cost about $12/watt in 1998, according to the report. The global module price index has shown a parallel decline and is now less than $2/watt, although prices were up 7 cents/watt between 2012 and 2013.

Researchers gathered information from 60 PV incentive programs in 32 states. Median costs for systems under 10 kW were lowest in Florida ($3.33/watt) and highest in North Carolina ($5.31/watt).

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