The cost of installing solar panels on your roof has dropped significantly, according to a report by the Lawrence Berkeley National Laboratory, and not just because of the notorious crash in photovoltaic panel prices. Materials and labor costs have fallen for typical solar installations as well, according to a different report the lab released in late November.
The report, Tracking the Sun V: An Historical Summary of the Installed Price of Photovoltaics in the United States from 1998 to 2011, is the fifth in a series gauging the affordability of photovoltaic systems. Authors Galen Barbose, Naïm Darghouth, and Ryan Wiser compiled data from more than 150,000 grid-connected photovoltaic systems ranging from residential setups to utility-scale PV "farms" throughout the U.S. installed before the end of 2011. Of those 150,000 systems studied, 80 were utility-scale, meaning the vast majority of the solar panel installations the report analyzes are smaller distributed-generation type setups.
The fall in photovoltaic module prices, due to a combination of economies of scale in production, technological advances, and recent massive government subsidies of Chinese manufacturers, is well documented. However, it turns out that "non-module" costs of installation have fallen as well. The report lists those costs as including "inverters, mounting hardware, labor, permitting, and fees, customer acquisition, overhead, taxes, and installer profit," and says that reductions in those aggregated non-module costs have meant an overall drop in installation costs of around $2 per watt of installed capacity from 1998-2011. That's about a third of the overall drop in costs of putting solar on your roof in that period. In 2011, the costs per watt of installing a small residential solar array ran around $6, about half what it was at the turn of the century.
The drop in non-module costs makes sense. In 1998, there were far fewer contractors with experience in installation of solar modules, and inexperience means more time taken means higher labor and setup costs. The drop in such costs is welcome news, though the U.S. still has a long way to go to trim the fat there.
The Lawrence Berkeley Lab report does include some preliminary data for 2012. The drop in overall prices has continued, but the report's authors warn that those reductions may not be enough to get the U.S. converted to solar as quickly as we need to:
Preliminary data for California systems installed in the first half of 2012 indicate that installed prices have continued to decline. Notwithstanding this success, further price reductions will be necessary if the U.S. PV industry is to continue its expansion, given the expectation that PV incentive programs will also continue to ratchet down financial support. Lower installed prices in Germany and other major international markets suggest that deeper near-term cost reductions in United States are, in fact, possible and may accompany increased market scale. It is also evident, however, that market size alone is insufficient to fully capture potential near-term cost reductions, as suggested by the fact that many of the U.S. states with the lowest installed prices have relatively small PV markets. Targeted policies aimed at specific cost barriers (for example, permitting and interconnection costs), in concert with basic and applied research and development, may therefore be required in order to sustain the pace of installed price reductions on a long-term basis.