## C2 Photovoltaic Costs

Question

What is the basis for the Energy Commission’s $3.10 photovoltaic (PV) installed cost by 2020, and what is the evidence that the PV prices are continuing to drop?

Answer

The Energy Commission used three sources to establish the cost for newly constructed residential PV system installations. The primary source of cost information was the National Renewable Energy Laboratory (NREL) report titled U.S. Solar Photovoltaic System Cost Benchmark: Q1 2017. NREL estimated an installation cost of $2.80 in Q1 2017. The complete report is located at: https://www.nrel.gov/docs/fy17osti/68925.pdf.

To corroborate these cost estimates, the Energy Commission also examined cost data from the Solar Energy Industries Association (SEIA). SEIA data track installed PV costs in all 50 states, including California. SEIA estimated an installation cost of $2.94 in Q4 2017.

Finally, the Energy Commission considered the California New Solar Home Partnership (NSHP) program data, which include thousands of California new construction installations since 2015. The table below summarizes the findings based on the most recent NSHP data.

2015-2018 NSHP PV Installation Costs for New Buildings
Year | Number of Systems Installed | Median PV Size, kilowatt (kW) | Average PV Size, kW | Median Cost/Watt | % Reduction, Median | Average Cost/Watt | % Reduction, Average
2015 | 7,150 | 2.6 | 3.0 | $4.85 | 0% | $4.82 | 0%
2016 | 5,924 | 2.7 | 3.3 | $4.31 | 11% | $4.30 | 11%
2017 | 7,973 | 2.7 | 3.2 | $3.58 | 26% | $3.98 | 17%
2018 | 2,922 | 2.7 | 2.9 | $3.00 | 38% | $3.66 | 24%

The NSHP data also indicate that the downward trend for PV prices is continuing at a strong pace through mid-2018. These data also show that the Energy Commission’s assumed $3-per-watt average for the installed cost of PV systems in newly constructed buildings is in keeping with the current PV price trends.

The Energy Commission projections are conservative. The PV requirement will remove many of the “soft costs” of the PV market, such as customer acquisition costs and customer-specific design, which can be significant. Bulk equipment procurement and factory-like installation (similar to windows and roofing) in a “production build” housing development are highly likely to reduce costs to well below Commission estimates by 2020.