October 21, 2009
Solar Power Cost Decline Steeper

The cost of solar panels dropped almost in half in the last year in Germany. PV prices were down a lot less over the previous 10 years..

Researchers at the Department of Energy's Lawrence Berkeley National Laboratory (Berkeley Lab) released a new study on the installed costs of solar photovoltaic (PV) power systems in the U.S., showing that the average cost of these systems declined by more than 30 percent from 1998 to 2008. Within the last year of this period, costs fell by more than 4 percent.

The number of solar PV systems in the U.S. has been growing at a rapid rate in recent years, as governments at the national, state, and local levels have offered various incentives to expand the solar market. With this growth comes a greater need to track and understand trends in the installed cost of PV.

The 2008 decline was in module costs whereas the previous 10 years saw declines mostly in installation and other non-module costs.

According to the report, the most recent decline in costs is primarily the result of a decrease in PV module costs. "The reduction in installed costs from 2007 to 2008 marks an important departure from the trend of the preceding three years, during which costs remained flat as rapidly expanding U.S. and global PV markets put upward pressure on both module prices and non-module costs. This dynamic began to shift in 2008, as expanded manufacturing capacity in the solar industry, in combination with the global financial crisis, led to a decline in wholesale module prices," states the report, which was written by Wiser, Galen Barbose, Carla Peterman, and Naim Darghouth of Berkeley Lab's Environmental Energy Technologies Division.

During those 10 years of fairly flat PV module prices the manufacturing costs declined as economy of scale increased and companies like First Solar developed new PV fabrication methods. Thin films and other innovations promise large production cost drops in the next 10 years. Solyndra, Nanosolar, and other newer PV makers have developed other ways to cut PV costs and these innovative VC-funded start-ups are changing the economics of solar power. I expect unsubsidized solar to become cost competitive in especially sunny markets such as Southern California and Arizona.

You can download the full study as a PDF.

Share |      Randall Parker, 2009 October 21 09:11 PM  Energy Solar

random said at October 22, 2009 7:14 AM:

I just hope the cost of PV shingles drops significantly in the next couple years (before I need a new roof).

OffGridder said at October 22, 2009 11:32 AM:

I'm seeing more dramatic price drops this year than in any of the years covered by the study.

DMSolar is my personal bellwether of solar prices. Their web site lists a panel that will be available by the end of the year for $1.75 per watt.

I have no affiliation with DMSolar.

Night Ranger said at October 22, 2009 12:28 PM:

You can't go by the "cost/watt" of a given cell type. Need to look at the levelized cost of system over its life span. A lot of thin-film systems are far less efficient requiring much bigger footprint; concrete & steel for supports; maintenance required etc.

Neville said at October 22, 2009 12:57 PM:

This may not mean what you think it means.

If total manufacturing costs, including capital costs, are falling rapidly then we can expect to see more solar energy.

If, instead, these plants are having to sell at or close to their variable costs, so that their owners will never recover the capital cost of building the solar panel factories, then this is just the fire sale before the end, when the manufacturing plants wear out and are shut down.

So far, all I'm seeing is the latter. Today this is a 'faux industry' built on a few real but small scale applications, massive subsidies and over-enthusiastic investment.

Rob said at October 22, 2009 12:58 PM:

There have been rumblings, however, that the Chinese have driven down the cost of solar panels in the EU and US by unfairly dumping product into the market:


This would mean that true costs aren't really coming down, China is just looking to run some companies out of business. That said, I can't see any way for Germany's expensive labor force to compete in the making of high-volume commodities.

srp said at October 22, 2009 5:06 PM:

Neville has the better of the interpretation, I'm afraid. The math is not going to work out very well for solar PV. Check out Severin Borenstein's studies out of Berkeley--the numbers aren't pretty.

Randall Parker said at October 22, 2009 10:12 PM:


First Solar is claiming a manufacturing cost below $1 per watt. Nanosolar's CEO claims their capital costs for their manufacturing method will be a third of First Solar's (qualifier: they haven't scaled up that far and so this claim is unproved). Solyndra's costs look promising as well.

Plus, Dow's solar roof shingles look to be cutting installation costs on residential solar - which is much more expensive than utility scale solar.

Also, installed costs show significant economies of scale—small residential PV systems completed in 2008 that were less than 2 kilowatts (kW) in size averaged $9.20/W, while large commercial systems in the range of 500 to 750 kW averaged $6.50/W.
Ben Leske said at October 27, 2009 2:33 PM:

I am a residential general contractor and looking to get in the Solar Power business in Washington State. The cost of panels seem expensive, though I am just now doing research. I have inquired with SunPower. Any advice would be helpfull.


Randall Parker said at October 28, 2009 9:58 PM:


Contact Dow about their roof PV shingles. They take less labor to install.

Some of the PV makers market only to large industrial sites such as utilities trying to comply with regulations which set goals for renewable energy usage. What you've got to look for are the PV makers who are trying to develop module bracketing and wiring that makes their panels easier to install on residences.

I know there's action to cut installation costs because I come across articles about it. I don't remember the names of the companies but there are PV cell makers who are teaming up with companies that are making brackets designed for easier installation. Look for them.

Chad Wilgus said at November 9, 2009 8:05 PM:

I have started to research renewable energy myself and I have seen a new concept that revolutionizes the industry. An Austrailan invented a magnetic generator that is kinetic. Imagine no cost to run and generates 24kw a day.


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