Installing Solar Panels on Your Roof: Prices Dropping, Solar Hopping

, , Senior energy analyst | October 20, 2014, 5:09 pm EDT
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Two new reports have a wealth of information about the cost of rooftop solar in the United States. Here are six important cost-related takeaways, with a whole lot of great news.

Recently Lawrence Berkeley National Laboratory (LBNL) released its annual Tracking the Sun assessment of solar in the U.S., and GTM Research and the solar industry association (GTM-SEIA) put out the latest installment of their quarterly Solar Market Insight reports. Both are consistently useful resources, including for solar cost information.

The latest on rooftop solar costs

Here’s what LBNL and GTM-SEIA have to say:

1. Costs for installed solar systems have continued to drop. Prices for rooftop solar fell yet again in the first half of 2014. We’ve already reported on the impressive recent-year drops in solar costs. For their latest report, GTM-SEIA calculated that, just between the first quarter of 2014 and the second, average residential solar prices dropped another 2.4 percent. LBNL found that in the first half of 2014 the larger state markets had smaller solar systems drop an average of 4 percent.

PV system costs have kept dropping, even when module costs haven't. (Source: LBNL)

PV system costs have kept dropping, even when module costs haven’t. (Source: LBNL)

2. Costs dropped even though module (solar panel) prices didn’t. LBNL reports that “Installed price reductions in 2013 occurred despite flattening of module prices.” Those continued drops, the report says, could be from lags in module price effects, the fact that the market is still feeling prior-year drops in solar panel costs. But LBNL suggests “possible growing contributions” from cuts in soft costs—costs for stuff like sales, permitting, inspection, and profits—and other technical components. (See #3.)

3. U.S. prices have lots more room to drop. Despite our great progress in recent years, we still have prices higher than those in Europe. LBNL reports that residential systems (less than 10 kilowatts) cost less than half as much per-watt in Germany, the world leader, as in the U.S.

And soft costs may be a big slice of the opportunity pie. LBNL says that “Lower installed prices in other countries largely reflects differences in ‘soft costs,’ which may be driven partly by differing levels of deployment scale, though other factors are also clearly important.”

Another LBNL work we cite in our recent Solar Power on the Rise report points out that soft costs in the U.S. still constitute more than half of a typical rooftop solar system’s cost, compared with one-fifth in Germany.

That suggests we can still do more (much more), particularly with the non-hardware aspects.

4. Cash incentives are falling, too. That isn’t necessarily a good thing, but it’s just what you expect to have happen as an industry matures, as solar is doing nicely. (Of course, long-standing and ongoing fossil fuel and nuclear subsidies—see here or here, for example—show those industries haven’t been given that message, not by a long shot.)

It pays to shop around: PV costs vary, across and within states. (Source: LBNL)

It pays to shop around: PV costs vary, across and within states. (Source: LBNL)

5. Prices and participation may vary. As with just about any product, what you find in your area may differ from national stats. There’s variation among suppliers, certainly.

But pricing also differs, pretty appreciably, based on your state, because of costs of living, or maybe penetration levels/competition. LBNL reports that costs for residential systems can be 25–35% cheaper in some areas (Florida, Texas, Maine, and D.C.) than in others (North Carolina, Minnesota, Illinois, and California).

6. Doing solar right from the start is cheaper. LBNL reports that factors such as economies of scale and economies of scope (homebuilders already got contractors and materials on site) mean that solar on new construction was 16 percent cheaper than retrofitted solar.

Tough to hear, maybe, for those of us in 80-year-old farmhouses, but we should celebrate: With 600,000 new single-family houses being built every year, that’s a whole lot of chances to get it right, solar-wise.

Great growth across the board. (Source: GTM-SEIA)

Great growth across the board. (Source: GTM-SEIA)

Converting savings into action

All the positive trends in rooftop solar costs have meant continued rampant growth. We’ve reported on the growth of rooftop solar from 30,000 homes in 2006 to 400,000 in 2013.

GTM-SEIA now reports that residential solar power capacity (megawatts) more than doubled from mid-2012 to mid-2014, and that installations done during Q2 2014 were 45 percent higher than those in Q2 2013.

LBNL and GTM-SEIA both also report on the great strides with commercial and large-scale systems—falling costs and growing capacity.

Add it all up, and you’ve got quite the picture of progress.

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  • kamaro

    solar energy is great power, we need to use it more.

  • inductancereluctance

    Prices have come way down and performance is way up and here’s an example. Hyper X 2 solar panels that produce energy from both sides of the solar panels have now dropped to a levels that is lower than most standaed mono facial solar panels. This advanced technology has been around for the past 6 years but it was always considered to be far too expensive to install. Now because of new technological advances Hyper X 2 Bifacial solar panels can be purchased at a much lower cost than many standard single sided solar panels.

    Instead of boxy looking 1 1/2 to 2 inch thick framed Gen 1 solar panels, these new higher performance Gen 2 solar panels are only 1/4 inch thin and are made with a stronger, see through, glass on glass, frameless, construction that allows sunlight to pass through and reflect off the roof’s surface, thus illuminating the backside of the double sided solar cells, producing additional power.

    A mere 10% boost in reflected light can raise this 340 watt solar panel’s output to 374 watts without taking up anymore roof space. New Hyper X 2 solar offers a better PTC to STC ratio “Real World” performance according to the California Energy Commission’s performance rating listings than over 100 of SunPower’s solar panel models.

    And they offer a very high 92.88% PTC to STC performance ratio. Hyper X 2 also offers a heat resistant -0.31%/degree C temperature coefficient for better performance in warm/hot climates. And when it comes to aesthetics, nothing even comes close to Hyper X 2’s glass on glass, see through, frameless construction.

    With N-type mono-crystalline bifacial cells for double sided power production, up to a 21.5% efficiency rating, superior aesthetics, and a price that out competes the solar lease and PPA company’s offerings, very few products on the market compares to Hyper X 2 Solar.

  • Vee

    I understand that – under pressure from guess who? – some states are making it illegal to install solar on domestic properties. Now THAT is a something which needs addressing pronto.
    Here (UK) we have two systems. One – third party installation i.e. they hire your roof and then pay you for the privilege. Two – you pay for it to be done; what you generate is fed into the grid, and then you receive a payment at one level for half what you produce and a payment at a second level for the other half.

    We also have encouragement (although not yet enough) for businesses and factories etc to install solar. Each one can then provide energy for itself and surrounding houses.

  • Joseph May

    There is an ignorance of how renewables are marketed to the end consumer that prevents the rapid acceptance of new products by artificially distorting the end price. And by artificially distorting I mean increasing the price to the user.

    These new products are priced beyond the affordability of the general public. I give as an example a recent solar installation of my neighbor. He installed a 22 panel installation on the roof of his house for the price of $37000. He got a tax rebate of $10000 which is soon to disappear in California. He has a $10000 1 year balloon payment. This pricing is based on the current average electric bill my neighbor is paying. He will be able to amortize his solar plant over a ten year period for somewhat less that his current electric bill and his payments will never increase no matter how much the cost of electricity increases. People are given a choice of leasing or buying with similar results. Sounds like a good deal.

    There are two aspects of this marketing concept that increase the cost of such systems to the consumer by at least double and sometime quadruple. That is the general public is paying two to four times what the actual system costs.

    I am a retired general contractor. I have priced my neighbors system. Solar panels cost from 75 cents to a dollar twelve per watt depending on the manufacturer. There are other costs including the inverter, wiring, framework and miscellany that approximately double the materials cost. The total materials cost is at the most $9000.

    These guys are walking away with about $25000 to hire a crew and a sales person.

    A person who installs his own system is not eligible for the rebate.

    People who can’t make the $10 grand balloon payment are priced out of the market.
    People in lower tax brackets can’t use the rebate.
    Get this it is cheaper for a person to install his own system even without the rebate.

    The point is that the industry is pricing huge numbers of people out of the market. and the rebates are only helping the industry raise the cost of the product. The consumer never receives the benefit of the rebates nor the benefit of the manufacturing efficiencies that are lowering the product costs.

    • ucsjrogers

      Thanks for your thoughts, Joseph. You’re right that few of us are in a position to make that kind of balloon payment. There are also lots of us who couldn’t begin to think about installing it ourselves, as you might be able to do.

      That’s why most people get someone else to install it, and that’s why the rise of third-party ownership in recent years has been such a boon for solar installations and would-be customers. And there are an increasing range of financing options available.

      On the incentives issue, a different recent LBNL report is right on topic. C.G. Dong, Ryan Wiser, and Varun Rai looked at California’s incentives and how much they get passed through to customers (report and presentations here:

      And what they found was that the rebates are actually getting passed through: “The results show a high historical pass-through rate of nearly 100% for California’s rebate programs…” There are some caveats, though (including variation among counties), so the study is worth a closer look.

      – John