Report Says It’s True: California Solar Energy Costs Are Down

Oct 26 2009 | 9:53am ET

Scientists at Berkeley Lab’s Environmental Energy Technologies Division, the National Renewable Energy Laboratory, and Neenan Associates have reviewed data from 18,942 grid-connected photovoltaic (PV) systems in California and the results are in: PV system costs have declined substantially over time.

Their new report, Letting the Sun Shine on Solar Costs: An Empirical Investigation of Photovoltaic Cost Trends in California, provides an in-depth analysis of the costs of installing PV systems in the state.

“Local, state, and federal government incentives are the principal drivers for the recent growth in grid-connected photovoltaic capacity,” says Berkeley Lab’s Ryan Wiser, principal author of the report. “Their goal is to drive down the cost of PV over time to a level that does not require government stimulation. We were interested in uncovering historical cost trends from California’s PV market. Because California is the third-largest market for PV worldwide, and because the market is projected to expand dramatically, we expect that our results will have broad international interest.”

Funding in California has come from both the California Energy Commission (CEC) and the California Public Utilities Commission (CPUC). Among the systems funded by CEC, annual cost reductions averaged approximately 70 cents per watt, representing a 7.3% annual decline. Costs of systems funded under the CEC’s program have declined from more than $12 per watt (in 2004 dollars) in 1998 to less than $9 per watt for 2004-2005. Under the CPUC program, costs have declined more moderately, with annual reductions averaging 36 cents per watt, a 4.1% decline.

Greater cost reductions are possible, according to the Berkeley Lab report, if experience in Japan is any guide. There, costs for standard 3kW residential systems averaged roughly $7.4 per watt in 2004, which is $1.4 per watt lower than similar costs in California. The Berkeley Lab report finds that the cost of the solar modules – the solar panels alone, without the inverter or other system costs – have largely passed directly to PV system purchasers in California on a one-for-one basis, and that module costs have been declining worldwide (with a recent uptick because of shortages of silicon).

Scientists say much more significant reductions will be necessary before solar power becomes a significant contributor to the state’s electricity supply.


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