Chart of the day: sliding U.S. solar prices

The average installed price of solar PV has fallen for the third straight year. But what about those incentives?

The average cost of solar installed on rooftops and at major power plants in the United States continues to fall, a drop largely driven by a decrease in module costs, according to a report by the Department of Energy's Lawrence Berkeley National Laboratory.

The annual Tracking the Sun report, which examined more than 208,000 solar photovoltaic systems installed between 1998 and 2012, found the average installed price of solar PV in 2012 fell by a range of $0.30 per watt to $0.90 per watt, or about 6 percent to 14 percent from the previous year, depending on the size of the system.

The median installed price of PV systems completed in 2012 was $5.30 per watt from residential and commercial systems smaller than 10 kilowatts in size. It was $4.60 per watt for commercial systems of 100 kW or more in size. Utility-scale systems registered even lower prices. Prices for systems larger than 10,000 kW ranged from $2.50 per watt to $4 per watt.

The precipitous fall in module prices was responsible for much of the drop in total system costs, the report says. Module prices fell by $2.60 per watt from 2008 to 2012, representing roughly 80 percent of the drop in total PV system prices in installations that were 10 kW and smaller.

Keep in mind, the report focuses on the installed price of PV. Meaning, the upfront price paid by the homeowner or business prior to receiving incentives.

This is the third consecutive year PV system costs have fallen significantly in the U.S., according to the report's co-author Galen Barbose. And it appears that trend will continue this year as well. PV system prices in California fell an additional 10 percent to 15 percent in the first six months of 2013, the report says.

Meanwhile, cash incentives provided by states and utilities have fallen substantially over time, offsetting much of the installed price reduction from a customer perspective, the report says. The median pre-tax value of cash incentives in the report's sample declined by an amount equivalent to 50 percent to 150 percent of the corresponding drop in installed systems.

One final note: U.S. solar prices still lag behind other countries, including Italy, Germany and Australia. Check out the graphic for a comparison.

Graphics: Department of Energy's Lawrence Berkeley National Laboratory

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