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Rooftop solar prices fall 'precipitously'

And the trend shows no sign of stopping. That's good news if you're thinking about making solar power part of your household energy setup.

Martin LaMonica Former Staff writer, CNET News
Martin LaMonica is a senior writer covering green tech and cutting-edge technologies. He joined CNET in 2002 to cover enterprise IT and Web development and was previously executive editor of IT publication InfoWorld.
Martin LaMonica
3 min read
Martin LaMonica/CNET

The upside to the brutal global competition in the solar industry is a steady and sizable price drop for homeowners and utilities.

The Lawrence Berkeley National Laboratory yesterday released the latest figures in a multiyear study of price trends for solar photovoltaic equipment and installation. Overall, the study, commissioned by the Department of Energy and the Clean Energy States Alliances, paints a picture of a maturing industry and falling product prices.

From 2009 to 2010, the price of a residential solar electric system fell 17 percent to $6.20 per watt, or a $1.30 decline. Measured from 1998, the installed costs fell 43 percent. The data is garnered from more than 100,000 installations of commercial and grid-tied residential solar panels, which are usually under 10 kilowatts in capacity. The costs don't include a 30 percent federal tax rebate and state incentives.

"Wholesale PV module (panel) prices have fallen precipitously since about 2008, and those upstream cost reductions have made their way through to consumers," Galen Barbose of Berkeley Labs' Environmental Energy Technologies Division and report co-author said in a statement.

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The trend will continue this year as the average cost of systems has already fallen 70 cents per watt, or 11 percent in the first half of 2011, the study found. Larger systems, including commercial arrays and utility-scale plants, saw the lowest price declines. The average installed costs for systems over 500 kilowatts fell 26 percent from 2009 to 2010.

Lawrence Berkeley National Laboratory

The data should not be a surprise to solar industry followers who have seen three U.S. solar companies declare bankruptcy in the past few weeks and ongoing industry consolidation. In another indication of tough times, solar industry analyst Jesse Pichel of Jefferies this morning cut his ratings for three Chinese solar manufacturers, citing questions over demand in Europe and "adrift" prices.

Another notable finding from Berkeley's data is that costs separate from the panels, or modules, are moving downward as well. About half of the cost of a solar installation is tied to other equipment, such as inverters, and the installation.

"The drop in non-module costs is especially important as those are the costs that can be most readily influenced by solar policies aimed at accelerating deployment and removing market barriers, as opposed to research and development programs that are also aimed at reducing module costs," report co-author Ryan Wiser said in a statement.

Systems prices can vary by state significantly and new homes have significantly lower installed costs compared to retrofits, the study found.

Analysts say that lower prices will help entice homeowners and businesses to buy panels, but the bigger impact may well be on solar leasing financing programs. Because solar installers have lower equipment costs, they can offer financing services, which avoid upfront costs, in more regions.

Waiting for prices to fall further, however, does not seem to be the best strategy. The Berkeley study notes that price declines were offset by changes to state incentives for renewable energy. Pre-incentive prices dropped $1 per watt for residential customers and $1.50 for commercial customers last year, but incentive changes resulted in net installed cost decreases of 40 cents per watt and 80 cents per watt.