A new study on the installed costs of solar photovoltaic (PV) power systems in the United States shows that the average cost of these systems declined significantly from 1998 to 2007, but remained relatively flat during the last two years of this period.

Researchers at the Department of Energy’s Lawrence Berkeley National Laboratory, who conducted the study, say the overall decline in the installed cost of solar PV systems is mostly the result of decreases in nonmodule costs, such as the cost of labor, marketing, overhead, inverters and the balance of systems.

“This suggests that state and local PV deployment programs, which likely have a greater impact on nonmodule costs than on module prices, have been at least somewhat successful in spurring cost reductions,” states the report, which was written by Ryan Wiser, Galen Barbose and Carla Peterman of Berkeley Lab’s Environmental Energy Technologies Division.

Installations of solar PV systems have grown rapidly in the United States, and governments have offered various incentives to expand the solar market.

“A goal of government incentive programs is to help drive the cost of PV systems lower. One purpose of this study is to provide reliable information about the costs of installed systems over time,” Wiser said.

The study examined 37,000 grid--connected PV systems installed between 1998 and 2007 in 12 states. It found that average installed costs, in terms of real 2007 dollars per installed watt, declined from $10.50 per watt in 1998 to $7.60 per watt in 2007, an average annual reduction of 30 cents per watt, or 3.5 percent, per year.

The researchers found that the reduction in nonmodule costs was responsible for most of the overall decline. According to the report, this trend, along with a reduction in the number of higher cost “outlier” installations, suggests that state and local PV-deployment policies have achieved some success in fostering competition within the industry and in spurring improvements in the cost structure and efficiency of the delivery infrastructure for solar power.

The report indicates installed costs vary widely across states. Among systems completed in 2006 or 2007 and of less than 10 kilowatts, average costs range from a low of $7.60 per watt in Arizona—followed by California and New Jersey, which had average installed costs of $8.10 per watt and $8.40 per watt, respectively—to a high of $10.60 per watt in Maryland. Based on these data, and on installed-cost data from the sizable Japanese and German PV markets, the authors suggest that PV costs can be driven lower through sizable deployment programs.

The study also found that the new construction market offers cost advantages for residential PV systems. Among small residential PV systems in California completed in 2006 or 2007, those systems installed in residential new construction cost 60 cents per watt less than comparably sized systems installed as retrofit applications.

For more, visit eetd.lbl.gov.