Solar PV Cost Trends in California Detailed

 

January 31, 2006

"Given the size of California's solar power market, we expect our findings to have broad international interest," said report co-author Ryan Wiser.

The report's findings are based on a statistical analysis of the installed cost of nearly 19,000 installed or waiting-to-be-installed PV systems in California, totaling 254 MW. These solar systems have been supported by one of the state's two largest solar rebate programs, overseen by the California Energy Commission (CEC) and the California Public Utilities Commission (CPUC).

The report's findings are particularly important given the recent announcement that California will establish an ambitious new 11-year, $3.2 billion incentive program for customer-sited solar installations.

"PV costs have declined substantially, especially among smaller (<30 kW) systems funded by the CEC's program," said report co-author Mark Bolinger. "The report finds that costs under the CEC program have dropped by an average of 7.3% a year, while the larger (30 kW and above) CPUC-funded systems have had average cost declines of around 4%.

"Experience from Japan shows that greater cost reductions are possible, but with the state's new incentive program designed to reduce rebate levels by roughly 10% a year, future cost reductions will need to outpace historical experience," said Bolinger.

The report also finds that larger solar systems have come in at significantly lower costs, on average, than smaller installations within each program. Systems installed in large new residential developments and in affordable housing have also had significantly lower average costs. The report uncovers a link between the pre-rebate installed cost of PV systems and the design and magnitude of the policy incentives offered to those systems.

"We find that heavy subsidies have dampened, to some degree, the motivation of installers to provide, and/or customers to seek, lower installed costs," Wiser said. "We hope the findings of this work will help stakeholders to understand important cost trends in California's dominant solar market, and policymakers to design more effective solar incentive programs.

The report can be downloaded at the following link.