Lately, there has been a lot of good news coming out of the various research institutions that follow the solar industry. Solar photovoltaic (PV) module prices are plummeting, and PV system installations are increasing in the United States and globally. Lawrence Berkeley National Laboratory (Berkeley Lab) has chimed in with the recent release of its “Tracking the Sun IV” report. And the findings are conclusive: The average pre-incentive cost of residential and commercial solar PV systems in the United States fell by a whopping 17 percent in 2010, and continued to decline by another 11 percent in the first half of 2011. This is the largest annual cost reduction experienced since the lab began tracking prices in 1998.

PV module prices explained part of the decline, but not all of it;  installation labor, balance of systems (mounting, electronics, etc.), overhead and other nonmodule costs together fell 18 percent from 2009 to 2010. Berkeley Lab called this significant because, unlike module costs, which are largely determined by the global market, these costs are heavily influenced by state and federal policies that remove market barriers. These cost reductions have also led to a reduction in the average size of direct cash incentives and tax credits claimed from states, utilities and the federal government, the lab said.

image via NREL

As steep as the declines were, the United States still has a long way to go if it plans to catch up with Germany. In 2010, the average installed cost of U.S. small residential PV systems was $6.90 per watt, compared to $4.20 per watt in Germany. The cumulative grid-connected PV capacity in the through 2010 totaled roughly 2,100 MW in the United States and 17,000 MW in Germany.

“Tracking the Sun IV” analyzed the installed cost of approximately 116,500 U.S. residential, commercial and utility-sector PV systems from 1998 to 2010. The summary represents 1,685 MW in 42 states – a total of 79 percent of all grid-connected PV capacity installed in the nation. The entire report can be found here.

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