Installed prices for solar photovoltaic (PV) systems in the U.S. in 2012 fell for the third straight year by a range of roughly 6% to 14% compared to the prior year.

In its latest edition of “Tracking the Sun,” the Department of Energy’s Lawrence Berkeley National Laboratory (LBNL) reports installed prices for PV systems fell by a range of $0.30/W to $0.90/W in 2012 from 2011. Within the first six months of 2013, PV system prices in California fell by an additional 10% to 15%, and the annual PV cost tracking report suggests that PV system price reductions in 2013 are on pace to match or exceed those seen in recent years.

The median installed price of PV systems completed in 2012 was $5.30/W for residential and small commercial systems smaller than 10 kW and $4.60/W for commercial systems of more than 100 kW. Utility-scale systems installed in 2012 registered even lower prices, with prices for systems larger than 10 MW generally ranging from $2.50/W to $4.00/W.

But the report also highlights the wide variability in PV system pricing, detailing the installed price differences that exist across states and across various types of PV applications and system configurations. For example, among PV systems less than 10 kW in size and completed in 2012, 20% had an installed price less than $4.50/W while another 20% were priced above $6.50/W.

Installed price reductions for PV systems are primarily attributable to steep reductions in the price of PV modules, LBNL says. From 2008 to 2012, annual average module prices on the global market fell by $2.60/W, representing about 80% of the total decline in PV system prices over that period. “Non-module costs – such as inverters, mounting hardware, and the various non-hardware or ‘soft’ costs – have also fallen over the long-term, but have remained relatively flat in recent years. As a result, they now represent a sizable fraction of the total installed price of PV systems. This shift in the cost structure of PV systems has heightened the emphasis within the industry and among policymakers on reducing non-module costs,” it says.

Further cost reductions could come from reducing more “soft costs,” including marketing and customer acquisition, system design, installation labor, and the various costs associated with permitting and inspections. “Soft costs are especially important from the perspective of public policy efforts,” said Galen Barbose of LBNL’s Environmental Energy Technologies Division, one of the report’s co-authors. “Unlike module prices, which are established based on global supply and demand, soft costs can be influenced more directly by local, state and national policies aimed at accelerating deployment and removing market barriers.”

Compared to other countries, U.S. PV prices are generally higher, the report shows. In Germany, Italy, and Australia, for example, the price of small residential PV systems installed in 2012 was about 40% lower than in the U.S. ““These international experiences suggest that deep near-term reductions in soft costs are attainable in the United States,” says report co-author, Naïm Darghouth, also with LBNL. He adds: “Reductions in soft costs may naturally accompany growth in market size, as we’ve seen in some of the largest markets such as Germany and Italy, though other factors are also clearly important.”

The sixth edition of LBNL’s report surveyed data from 200,000 residential, commercial, and utility-scale PV systems installed between 1998 and 2012 across 29 states, representing roughly 72% of all grid-connected PV capacity installed in the U.S.

Sources: POWERnews, LBNL, DOE