Coordinating technology, policy, and business innovations

Improving costs and scale reflect looming opportunities

energy.gov/sunshot NREL/PR-6A20-67142(1) NREL has been modeling U.S. photovoltaic (PV) system costs since 2009. This year, our report benchmarks costs of U.S. solar PV for residential, commercial, and utilityscale systems built in the first quarter of 2016 (Q1 2016). Costs are represented from the perspective of the developer/installer; thus all hardware costs represent the price at which components are purchased by the developer/installer. Importantly, the benchmark this year also represents the sales price paid to the installer; therefore, it includes profit in the cost of the hardware and the profit the installer/developer receives, as a separate cost category. However, it does not include any additional net profit, such as a developer fee or price gross-up, which are common in the marketplace. We adopt this approach owing to the wide variation in developer profits in all three sectors, where project pricing is highly dependent on region and project specifics such as local retail electricity rate structures, local rebate and incentive structures, competitive environment, and overall project/deal structures (2) Our methodology includes bottom-up accounting for all system and projectdevelopment costs incurred when installing residential, commercial, and utility-scale systems, and it models the capital costs for such systems. In general, we attempt to model typical installation techniques and business operations from an installed-cost perspective, and our benchmarks are national averages of installed capacities, weighted by state. The residential benchmark is further averaged across installer and integrator business models, weighted by market share. All benchmarks assume non-union construction labor, although union labor cases are considered for utility-scale systems.(3) This report was produced in conjunction with several related

This report benchmarks U.S. solar photovoltaic (PV) system installed costs as of the first quarter of 2017 (Q1 2017). We use a bottom-up methodology, accounting for all system and projectdevelopment costs incurred during the installation to model the costs for residential, commercial, and utility-scale systems. In general, we attempt to model the typical installation techniques and business operations from an installed-cost perspective. Costs are represented from the perspective of the developer/installer; thus, all hardware costs represent the price at which components are purchased by the developer/installer, not accounting for preexisting supply agreements or other contracts. Importantly, the benchmark also represents the sales price paid to the installer; therefore, it includes profit in the cost of the hardware, 1 along with the profit the installer/developer receives, as a separate cost category. However, it does not include any additional net profit, such as a developer fee or price gross-up, which is common in the marketplace. We adopt this approach owing to the wide variation in developer profits in all three sectors, where project pricing is highly dependent on region and project specifics such as local retail electricity rate structures, local rebate and incentive structures, competitive environment, and overall project or deal structures. Finally, our benchmarks are national averages weighted by state installed capacities. Table ES-1 summarizes the first order benchmark assumptions. Table ES-1. Benchmark Assumptions Unit Description Values 2017 U.S. dollars (USD) System Sizes In direct current (DC) terms; inverter prices are converted by DC-to-alternating current (AC) ratios. PV Sector Description Size Range Residential Residential rooftop systems 3-10 kW Commercial Commercial rooftop systems, ballasted racking 10 kW-2 MW Utility-Scale Ground-mounted systems, fixed-tilt and one-axis tracker >2 MW

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