The Executive Summary from the report:
Benchmarking and tracking installed photovoltaic (PV) prices informs research and investment decisions, as well as supporting the creation of policies aimed at further reducing costs. Previous work by Goodrich, James, and Woodhouse (2012) relied on industry-validated cost models to benchmark fourth quarter (Q4) 2010 residential PV system prices in the United States. It also examined several cost-reduction opportunities for achieving the U.S. Department of Energy’s SunShot Initiative targets of $1.50 per watt-direct current (W) for residential systems. This report provides a Q4 2013 update for residential PV systems, incorporating declines in equipment costs since the previous report. Several cases are benchmarked to represent common variation in business models, labor rates, and module choice. Our results should not be viewed as endorsing any particular business model. Rather, we aim to illustrate key sources of cost variation across scenarios (module efficiency, system location and business model). We estimate the following for U.S. residential PV systems installed in Q4 2013:
• The weighted-average cash purchase price for modeled standard-efficiency, polycrystalline-silicon residential PV systems installed in the United States is estimated at $3.29/W. This is a 46% decline from the 2013-dollar-adjusted price reported in the Q4 2010 benchmark report.
o The cash purchase price for a system installed by a typical U.S. installer (using national-average labor rates) is estimated at $3.16/W.
o The cash purchase price for a system installed by a large integrated company (using national-average labor rates) is estimated at $3.38/W.
o The cash purchase price for a system installed by an installer in a higher-wage region (California) is estimated at $3.26/W; installed by a vertically integrated company, it is $3.51/W.
• The cash purchase price for a system installed by a large installer (using national-average labor rates) and employing high-efficiency monocrystalline modules is estimated at $3.98/W.
In addition, this report frames the cash purchase price in the context of key price metrics relevant to the continually evolving landscape of third-party-owned PV systems by benchmarking the minimum sustainable lease price and the fair market value of residential PV systems. We estimate the following for third-party-relevant metrics—assuming standard-efficiency modules:
• The minimum sustainable lease price (net of incentives), for a modeled California system is estimated at $1.93/W for an installer and $1.72/W for an integrator in Q4 2013. A sample of historical lease data indicates that mean leases over the 2010–2012 period transacted from $1.94/W–$2.45/W in California, with an overall mean across the period of $2.22/W.
• The typical fair market value for a California system is estimated at $4.59/W in Q4 2013.
Although these figures are distinct, they are linked, and each is relevant to different stakeholders involved in a solar installation. The cash purchase price represents the all-in cost to install a system and is the key economic driver that can be influenced by installers, manufacturers, and research and development investment. The minimum sustainable lease price provides the minimum upfront payment required, from the customer, for an installer to cover all costs (including margins) associated with providing the solar leasing service. The historical data of lease transactions indicate the prices that customers have been willing to bear to power their homes with solar electricity. Finally, the fair market value can be considered representative of investor/owner value, incorporating all sources of economic value accruing to the system.