The installed price of distributed solar power fell by 40 cents per watt for U.S. residential and small-scale photovoltaic (PV) systems between 2013 and 2014, while large nonresidential systems saw costs fall by an average of 70 cents per watt, according to new Energy Department data released this week.

And in some major U.S. markets, plummeting prices for solar PV continued into the first six months of this year, with drops of an additional 20 to 50 cents per watt, or 6 to 13 percent, according to DOE's latest "Tracking the Sun" report, published this week by the Lawrence Berkeley National Laboratory.

Galen Barbose, a research scientist with LBNL's Electricity Markets and Policy Group and the report's lead author, said in a statement that the findings mark the fifth consecutive year of significant price reductions for distributed PV systems in the United States.

Much of the downward price pressure for installed PV systems came from a reduction in "soft costs" and did not result from lower module prices, which have been mostly stable since 2012, according to the analysis. Soft costs include factors such as marketing and acquisition costs, system design, installation, permitting, and inspections.

Yet even with the overall trend toward lower costs, analysts still found considerable price variability in distributed PV systems, with 20 percent of residential systems priced below $3.50 per watt, while another 20 percent sold for more than $5.30 per watt.

"This variability reflects a host of factors," Naïm Darghouth, an LBNL principal research associate and report co-author, said in a statement, including "differences in system design and component selection, market and regulatory conditions, and installer characteristics."

Wide price swings from state to state
When comparing installed PV prices across a number of large state markets, LBNL found substantial heterogeneity in pricing, leading analysts to conclude that "low-price leaders" in top solar states can serve as a benchmark for other states with maturing markets. In Arizona, for example, 20 percent of residential installers had median prices at or below $3 per watt in 2014, compared with the median price of $4.30 per watt across all U.S. residential systems.

The report examined various other drivers for PV system pricing, including system size and configuration (rooftop versus ground-mounted), location by state, whether a system is owned by the site host or by a third party, and whether the host is a for-profit commercial or tax-exempt entity.

Barbose noted, "The fact that such variability exists underscores the need for caution and specificity when referring to the installed price of PV, as clearly there is no single 'price' that uniformly and without qualification characterizes the U.S. market, or even particular market segments, as a whole."

The "Tracking the Sun" report, now in its eighth edition, is based on data collected from more than 400,000 residential and nonresidential PV systems installed between 1998 and 2014 across 42 states, representing more than 80 percent of all distributed PV capacity installed in the United States.

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC., 202-628-6500