Will Solar Prices Continue Their incredible Fall?
Solar prices have dropped in the US by 75% over the last 5 years
Swanson’s Law is an observation that the price of solar photovoltaic modules tends to drop 20% for every doubling of cumulative shipped volume. This was misstated by The Economist in  and,which said that photovoltaic cell costs drop 20% for every doubling of industry capacity. Effectively, costs half about every 3 years. The Law is named after Richard Swanson, the founder of SunPower Corporation a solar panel manufacturer. Swanson’s Law has been compared to Moore’s Law. Crystalline silicon photovoltaic cell prices have fallen from $76.67/watt in 1977 to a forecast $0.74/watt for 2013, lending support to the law. –wikepedia.
In the US solar industry, California has been the driver. But perhaps there is good news for the American homeowner if we look a bit further west to Australia.
The Aussies have figured out a way to bring the cost of solar down dramatically further. All prices in the table below are inclusive of the federal incentive given homeowners for solar development. accounted for a incentive of approximately $.65 – $.70 per watt. These numbers are exclusive or incentives and are on average 30% less than US prices. (AUS$1.00 = US$.90)
Economies of Scale? No.
Since Australia’s solar market is fractional compared to the other counties like Germany.
Using low cost equipment? No.
Though the range in equipment cost could be attributed to a range in equipment. Solar panels and inverters are generally the same as installed in the US.
|City||Panel brands used||Inverter brands used|
|Adelaide, SA||ReneSola, Hanover, Q-Cells, Munchen, BenQ/AU Optronics, EC Solar
||SolarMax, SMA, Power-One Aurora, Fronius, Growatt, Samil, Delta|
|Brisbane, QLD||ReneSola, Perlight, Canadian, Q-Cells, ZNshine, EC Solar, REC, LG, Seraphim,||SolarMax, JFY, Eltek, SMA, Samil, Growatt, Power-One Aurora, Zever, Fronius, Think Power|
|Canberra, ACT||ReneSola, Q-Cells, Phoenix, BLD||JFY, Growatt, Power-One Aurora|
|Melbourne, VIC||Trina, ReneSola, Q-Cells, Phono Solar, BenQ/AU Optronics, SolarWorld, Ulica, Yingli, Aleo, Hyundai||SolarMax, Power-One Aurora, Latronics, Samil, Growatt, Fronius, SMA,Enphase|
|Tasmania||ReneSola, Munchen, Q-Cells||Samil, Growatt, SolarMax, Fronius, Delta, Power-one Aurora|
|Sydney, NSW||Conergy, Hanover, ReneSola, Trina, Munchen, Phono Solar, Yingli, Tianwei||SMA, Power-One Aurora, Growatt, SolarMax, Sungrow, Fronius, Delta, Samil, JFY, KStar|
|Perth, WA||GY, Hanover, Yingli, ReneSola||JFY, Growatt, SMA, Power-One Aurora, SolarMax, Samil, Fronius|
Cutting Red Tape? Yes
The study shows variation in cost from city to city. It is the conclusion of a study last year that the greatest savings in cost is due in large part to savings in soft costs, more specifically – red tape. The cost of permitting etc can account for as much as 25%-30% of installation costs. In certain parts of the US, New York City for instance, permitting costs can add over $1000 to a residential installation. Many states are aware of this issue and are looking to make uniform the permitting process.
POS cost saving. Yes
Australian installers are also said to have been able to generate savings by adapting a strategy of installing smaller standardized sizes, reducing the costs associated with customized solar systems. This cookie cutter approach has been utilized by Vivint Solar in the states to increase their efficiency. Vivint has quickly grown and is the fastest growing solar installation company in the US.
Although PV cell prices have declined significantly over the last 36 years, the true benefits of PV system innovation are on the horizon in “Plug and Play” solar systems. This concept is designed to standardize and simplify PV systems so that panel installation is as simple as installing a washing machine. A PV manufacturer would supply a “solar kit” that includes panels, wiring, inverters, controllers and mounts with directions for manual installation. This immediately eliminates the need to hire a professional electrician/line worker, which can lead to reductions of approximately $0.59 per watt. Plug and play solar systems could also eliminate the need for permitting and commissioning, which NREL estimates could potentially reduce costs by an additional $0.23 per watt.
Department of Energy (DOE) is already evaluating these technologies for the PV market. The DOE should continue encouraging private companies to develop plug and play systems and should work to standardize permitting, inspection, and installation policies to make solar installation as simple — and safe — as possible.
Finally, customer acquisition and system design, which represent approximately 45 percent of soft costs, present an enormous opportunity for innovative cost reductions to residential PV installations. Companies like Clean Power Research are developing software tools to help companies provide customers with clear and simple information on incorporating PV into their homes. These tools would help customers search online for the best PV system and financing mechanism to meet their budget and other needs.
However, additional tools are still needed. We should develop a comprehensive solar database that will act as a reliable and unbiased source of information on PV vendors and financing opportunities. This database would help consumers evaluate the costs and benefits of competing solar systems in competitive markets based on location, home model, and budget. This would reduce the cost of generating leads and would encourage companies to continue improving their products in a competitive market.
Although the US solar industry still depends on federal support, there are plenty of effective, market-based solutions to reduce solar soft costs that do not require tapping into the federal purse. As long as the US encourages both smart public policies and private innovation, soft-cost reductions are clearly achievable in the PV market.
Excerpt below was originally published on RenewEconomy
One of the most comprehensive reports on the decline in solar PV prices has just been released by the US Department of Energy’s Lawrence Berkeley National Labs. Its Tracking the Sun report details the history of solar PV prices from 1998 to 2012, and one of its more interesting findings for Australian readers is the comparatively low cost of rooftop solar PV in this country.
Since 1998, installed system prices have been falling thanks to reductions in the costs of solar energy that do not include the panels themselves: inverters, mounting hardware, labor, permitting and fees, customer acquisition, overhead, taxes, and installer profit. Prices have been falling in the short-term because of the decline of the cost of solar panels, which fell by $2.6/W from 2008 through 2012. This represents an 80 percent price drop for PV systems generating less than 10 kW.
The steady drop in costs have helped to enable a steep increase in the pace of installation over the last several years.
However, module prices are established based on supply and demand. “There simply are limits to how much further module prices can fall, and so it stands to reason that continued reductions in PV system prices will need to come primarily from the soft cost side.
The soft costs, or non-hardware prices, can be influenced by local, state, and national policies. Countries like Italy, Australia, and Germany have generally incentivized solar adoption through long-term policies, which have in turn helped to reduce soft costs. In fact, residential PV systems installed last year in Italy, Australia, and Germany are nearly 40 percent lower than in the U.S. The report directly cites the pricing of soft costs for this glaring difference. These costs represent approximately half of the total installed cost of residential solar systems, so having the right policies in place at all levels of government remains the greatest opportunity for cost reductions, which Climate Progress discussed last month.
Even so, the U.S. achieved many significant accomplishments last year, installing a record 3,313 megawatts of PV in 2012. Additionally, the market size for the U.S. industry grew from $8.6 billion in 2011 to $11.5 billion in 2012, according to GTM Research. And in California, PV system prices have decreased by an additional 10 to 15 percent just within the first six months of 2013 — leading the report authors to suggest that PV price reductions in 2013 are on pace to match or exceed recent years. In order to continue the downward price trend over the long term, the U.S. solar market will have to focus on reducing soft
Historic solar PV system prices (since August 2012)
Tables and charts included in this article were compiled from Solar Choice.