Photovoltaic System Pricing Trends: Historical, Recent ...July 16, 2013 . Photovoltaic System Pricing Trends: Historical, Recent, and Near -Term Projections . 2013 Edition . David

July 16, 2013

Photovoltaic System Pricing Trends: Historical, Recent, and Near-Term Projections

2013 Edition

David Feldman1, Galen Barbose2, Robert Margolis1, Naïm Darghouth2, Ted James1, Samantha Weaver2, Alan Goodrich1, and Ryan Wiser2

1National Renewable Energy Laboratory 2Lawrence Berkeley National Laboratory NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

PR-6A20-60207

Contents

2

• Introduction and Summary • Historical and Recent Reported Prices • Recent Prices from Bottom-Up Cost Analysis • Comparison Between Reported and Bottom-Up Price Estimates • Near Future Price Trends • Conclusion

• There exists a need for reliable and comprehensive information on PV system pricing • Rapid market growth and changes to PV system pricing in recent years

• Policy support for PV deployment premised on stimulating cost reductions through market scale and development

• DOE SunShot Initiative seeks to reduce PV system prices 75% over the 2010-2020 period.

• This briefing provides a high-level overview of historical, recent, and projected near-term PV system pricing trends in the United States, drawing on several ongoing research activities at LBNL and NREL: • LBNL’s annual Tracking the Sun report series

• NREL’s bottom-up PV cost modeling

• NREL’s synthesis of PV market data and projections.

Introduction

3

• Reported pricing data that, among ~50,000 PV systems installed in 2012:

• Res. and small com. (≤10 kW) was $5.30/W (median)

• Large com. (>100 kW) was $4.62/W (median)

• Utility-scale (crystalline, fixed-tilt, >2 MW) was $3.35/W (capacity weighted average).

• Modeled overnight capital cost for systems quoted in Q4 2011 (expected to be installed in 2012):

• Residential (5.1 kW) was $4.22/W • Commercial (221 kW) was $3.22/W • Utility-scale (191.5 MW) was $2.50/W.

• Delta between reported pricing and modeled cost is due to various factors, such as inefficient pricing, timing, geographic location, and project specifics.

• Reported installed prices of residential and commercial PV systems declined 6%–7% per year, on average, from 1998–2012, and by 6%–14% from 2011–2012, depending on system size.

• In near future analysts expect system prices to continue to fall, but for module prices to stabilize (Module ASP projected to be between $0.50/W - $0.75/W by 2014 ).

• Modeled overnight capital cost for systems quoted in Q4 2012 (expected to be installed in 2013):

• Residential (5.1 kW) was $3.69/W, a reduction of 13% from Q4 2011

• Commercial (222.5 kW) was $2.61/W, a reduction of 19% from Q4 2011 • Utility-scale (192.8 MW) was $1.92/W, a reduction of 23% from Q4 2011.

Executive Summary

4 Note: All PV installed price data are reported in terms of real 2012 dollars per Watt-DC.

Reported, Bottom-Up, and Analyst-Projected Average U.S. PV System Prices over Time

5

Note: The reported system price for the residential market is representative of the median price reported for systems less than or equal to 10 kW in size. The modeled residential system price represents a ~5 kW system. The reported system price for the commercial market is representative of the median price reported for systems greater than 100 kW in size. The modeled commercial system price represents a ~220 kW rooftop system. The reported system price for the utility-scale market represents the capacity-weighted average reported price for ground-mounted systems greater than 2 MW in size, with an average project size of 16.4 MW. The modeled system price of utility-scale systems represents a ~190 MW fixed-tilt ground-mounted system. Bottom-up system prices are representative of bids by an installer in the fourth quarter of the previous year. The Global Module Price Index is the average module selling price for the first buyer (P Mints SPV Market Research).

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 P2014 P

2012

$/W

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Installation Year

Analyst Expectations, Distributed PVAnalyst Expectations, Utility-ScaleReported System Price, Residential (Median)Reported System Price, Commercial (Median)Reported System Price, Utility (Cap-Wtd. Avg.)Modeled System Overnight Capital Cost, ResidentialModeled System Overnight Capital Cost, CommercialModeled System Overnight Capital Cost, Utility

Analyst Expectations of Module Price

Global Module Price Index

Contents

6


Derived from project-level data reported for residential, commercial, and utility-scale PV systems installed through year-end 2012, with a limited set of results presented for the first half of 2013

Distributed PV: 47 PV incentive programs spanning 24 states provided project-level installed price data for PV systems funded through current and previous programs

Utility-scale PV: Data sourced from Section 1603 Grant Program, FERC Form 1, SEC filings, company presentations, trade press articles

All projects for which the reported installed price was deemed likely to represent an appraised value rather than an actual transaction price were eliminated from the data sample

Final cleaned data sample consists of >200,000 PV systems totaling 4.7 GW of installed capacity; represents approximately 65% of all grid-connected PV capacity installed in the United States through 2012 and about 50% of all 2012 capacity additions.

Data Sources and Methodology for Reported Installed Prices

7

Median Reported Installed Price of Residential and Commercial PV Systems over Time

8

• Since 1998, installed PV system prices have fallen by 6-7% per year on average • From 2011 to 2012, installed prices fell by $0.88/W (14%) for systems ≤10 kW and by

$0.30/W (6%) for systems >100 kW • By comparison, global annual average module prices fell by $0.52/W from 2011-2012.

Note: Median installed prices are shown only if 15 or more observations are available for the individual size range. The Global Module Price Index is the average module selling price for the first buyer (P Mints SPV Market Research).

$0

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$14

1998n=34

0.2 MW

1999n=165

0.8 MW

2000n=186

0.8 MW

2001n=1,3086 MW

2002n=2,44918 MW

2003n=3,46131 MW

2004n=5,62644 MW

2005n=5,75464 MW

2006n=8,88791 MW

2007n=12,936133 MW

2008n=14,165241 MW

2009n=24,664288 MW

2010n=36,780494 MW

2011n=42,397878 MW

2012n=49,717940 MW

Inst

alle

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stem

Pric

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d

Glo

bal M

odul

e Pr

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012$

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Installation Year

≤10 kW 10-100 kW>100 kW

Residential & Commercial PV (Median Values)

Global Module Price Index

Preliminary Price Trends for Systems Installed in 2013: A Focus on California

9

• Data from the California Solar Initiative (CSI) program show that installed prices have continued to fall into 2013

• Median installed prices in CSI fell by roughly $0.53-0.77/W (10-15%) during the first half of 2013, relative to 2012, across the three size ranges shown.

$5.69 $5.30 $5.00 $4.97 $4.77 $4.23 $0

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≤10 kW 10-100 kW >100 kW

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CSI Program (Median Values)

Variation in Installed Price by System Size: Residential and Commercial PV Systems in 2012

10

• Installed prices exhibit clear economies of scale, with the median installed price for the largest commercial systems 38% lower than for the smallest residential systems (and lower installed prices for utility-scale PV, as shown on later slides)

• Scale economies are especially pronounced at the small end of the size spectrum • Substantial variability in installed prices exists within each size range, reflecting regional,

local, project/site-specific, and installer-specific drivers.

$7.12 $5.56 $5.10 $4.94 $4.90 $4.64 $4.64 $4.54 $4.44 $0

$2

$4

$6

$8

$10

≤2 kW n=1,986 3 MW

2-5 kWn=17,66864 MW

5-10 kWn=21,931154 MW

10-30 kWn=5,38977 MW

30-100 kWn=1,31472 MW

100-250 kWn=687

109 MW

250-500 kWn=429

151 MW

500-1000 kWn=200

138 MW

>1000 kWn=113

173 MW

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System Size Range (kWDC)

Residential & Commercial PV Systems Installed in 2012

(Median and 20th/80th Percentiles)

Variation in Installed Price by State: Residential and Small Commercial (≤10 kW) PV in 2012

11

• The median installed price differs by roughly $2.0/W between the lowest- and highest-priced states, though similar variability also exists within individual states

• California, a relatively high cost state, pulls the overall sample median upward • Installed price differentials across states reflect a wide array of potential factors: market

size and maturity, incentive levels, regulatory costs, sales tax, and others.

Note: Numbers in parentheses below each state indicate the number of observations; median installed prices are shown only if 15 or more observations are available for a given state. CO and MN data are based on aggregated statistics provided the PV program administrator rather than project-level data.

$3.9 $4.1 $4.6 $4.6 $4.6 $4.7 $4.8 $4.8 $5.0 $5.0 $5.0 $5.1 $5.1 $5.2 $5.3 $5.4 $5.7 $5.7 $5.7 $5.8 $5.9 $0

$2

$4

$6

$8

$10

TX(803)

CO(2,431)

NJ(3,320)

NH(175)

FL(33)

DC(234)

AZ(5,010)

NV(52)

PA(501)

VT(378)

MD(431)

MA(2,733)

OR(1,114)

CT(226)

NM(684)

NY(1,246)

MN(112)

CA(24,094)

NC(344)

IL(105)

WI(99)

Inst

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State (Sample Size)

Systems ≤10 kWDC Installed in 2012 (Median and 20th/80th Percentiles)

Variation in Installed Price by State: Large Commercial (>100 kW) PV Systems in 2012

12

• A large disparity in median installed price ($2.9/W) between the lowest- and highest-priced states also exists among large commercial systems (though some caution is warranted, given small sample sizes)

• Partly reflects differences across states in customer segments (e.g., roughly 2/3rds of CA large commercial projects in 2012 were government/non-profit).

Note: Numbers in parentheses below each state indicate the number of observations; median installed prices are shown only if 15 or more observations are available for a given state. CO data are based on aggregated statistics provided by the PV program administrator rather than project-level data.

$3.21 $3.70 $3.97 $3.99 $4.15 $4.49 $5.01 $6.12 $0

$2

$4

$6

$8

CO(19)

PA(26)

MA(121)

NC(63)

NV(16)

NJ(489)

CA(546)

AZ(119)

Inst

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(201

2$/W

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State (Sample Size)

Systems >100 kWDC Installed in 2012 (Median and 20th/80th Percentiles)

Installed Price Data for Utility-Scale PV: Important Notes and Caveats

13

• Utility-scale PV is defined as ground-mounted systems ≥2 MW, regardless of whether electricity is delivered to utility or customer

• Analysis considers only entire projects (not individual phases) • Project sample consists of 191 fully operational projects installed through year-

end 2012, totaling roughly 1,600 MW (~70% of U.S. total) • A few important caveats:

• Small sample size that includes many 2-10 MW systems as well as a number of larger “one-off” projects with atypical characteristics

• Lag in component pricing and market conditions between the time that a project was contracted and when it was installed

• Data reliability is somewhat mixed depending on the data source available for any individual project

• Focus is on installed price rather than levelized cost of electricity, and thus ignores performance differences across system configurations.

Installed Price of Utility-Scale PV Projects Over Time

14

• Capacity-weighted average installed price was $3.35/W for crystalline, fixed-tilt projects installed in 2012, down from $3.59/W in 2011, a 7% decline YoY

• Capacity-weighted average installed price was $3.60/W for crystalline tracking systems and $3.23/W for thin-film, fixed-tilt systems completed in 2012

• A wide distribution in installed prices is observed, partially reflecting variation in system size (shown on following slide) and other project characteristics.

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n=11 (103 MW) n=18 (236 MW) n=53 (502 MW) n=106 (744 MW)

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Installation Year

Crystalline, Fixed-Tilt Crystalline, Tracking Thin-Film, Fixed-Tilt Other Configurations

Cap-Wtd. Averages

Ground-Mounted Systems ≥2 MWDC

2007-2009 2010 2012 2011

Variation in Installed Price of 2012 Utility-Scale PV Projects by Size and Configuration

15

• Larger (>10 MW) utility-scale systems vary in price within a relatively narrow range from roughly $2.50/W to $4.00/W, while smaller utility-scale projects span a much broader range that includes a number of high-priced systems (>$5/W)

• Among the relatively small number of >10 MW systems, capacity-weighted average prices were $3.08/W for crystalline, fixed-tilt; $3.56/W for crystalline with tracking; and $3.14/W for thin-film, fixed tilt systems.

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System Size (MWDC)

Crystalline, Fixed-TiltCrystalline, TrackingThin-Film, Fixed-TiltTrendline (All Systems)

Ground-Mounted Systems ≥2 MWDC Installed in 2012

Contents

16


• Detailed cost models for specific PV system designs account for all materials, labor, overhead and profit, land acquisition and preparation costs, and regulatory costs for a PV system up to the point of grid tie-in

• Better able to determine individual components’ contributions to total system cost

• NREL cost models are compiled from numerous industry and primary sources, for each component of a system incurred by a manufacturer and/or installer, and validated with manufacturers and installers

• Dialogue created differentiates the interview method from the survey method by allowing for greater specificity and feedback of results

• The area of each modeled system is kept constant across years, but it increases in capacity based on improved module efficiencies.

Methodology for Bottom-Up Modeling

17

$6.81

$5.97

$4.22 $3.69

$5.04 $4.67

$3.22 $2.61

$4.30 $3.68

$2.50 $1.92

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Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2009 Q4 2010 Q4 2011 Q4 2012

Residential Commercial Utility ground mount (Fixed axis)

2012

$/W

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BOSInverterModule

Bottom-up Modeled Overnight Capital Cost of PV Systems by Sector, Q4 ’09 - Q4 ‘12

18

• Since Q4 2009, the overnight capital cost of systems has fallen between 14% – 18% per year • 50% - 75% of reduction attributed to module price reductions

• From Q4 ‘11 to Q4 ‘12, the overnight capital cost of systems fell between $0.53/W - $0.61/W, or 13% to 23%.

were chosen based on typical system sizes, then adjusted for optimal inverter configuration. System sizing for utility-scale benchmarks were chosen for comparison purposes against pricing reported from DOE’s Energy Information Administration (2010).

Note: Standard crystalline silicon modules (13.5% efficiency in Q4 2009 to 15.0% in Q4 2012). System size (residential: 4.6 kW in Q4 2009 to 5.1 kW in Q4 2012; commercial: 202.0 kW in Q4 2009 to 222.5 kW in Q4 2012; utility-scale: 174.6 MW in Q4 2009 to 192.8 MW to Q4 2012). The increase in module efficiency is the cause for increased system size. Modeled system sizes in the residential and commercial rooftop sectors

Bottom-up Modeled Overnight Capital Cost of Utility-Scale PV Systems by Size

19

• Efficiencies of scale achieved in PV utility-scale bottom-up modeled overnight capital costs • 22-26% reduction in costs from 5 MW to 185 MW

• Most of this cost reduction achieved by increasing size from 5MW to 20 MW (72%).

Note: Standard crystalline silicon modules (14.9% efficiency in Q4 2011 and 15.0% in Q4 2012).

$3.16 $2.80

$2.65 $2.45 $2.59

$2.25 $2.11 $1.92

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5 MW 10 MW 20 MW 185 MW

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Q4 2011

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Contents

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$5.3 $4.1

$5.7 $4.2 $4.6

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$3.2 $3.4 $3.1 $2.5

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Medianreported

price - U.S.

Medianreported

price - CO

Medianreported

price - CA

Modeledovernight

capital cost- U.S.

Medianreported

price - U.S.

Medianreported

price - CO

Medianreported

price - CA

Modeledovernight

capital cost- U.S.

Cap. w. avg. reported price -

Fixed Tilt (≥2 MW)

Cap. w. avg.reportedprice -

Fixed Tilt(>10MW)

Modeledovernight

capital cost- U.S.

Residential Commercial Utility-Scale Grount-Mounted

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2012 Reported Median (Residential/Commercial) and Capacity-Weighted Average (Utility-Scale) Prices vs. Q4 2011 Bottom-Up Benchmark Overnight Capital Cost

21 overnight capital cost = 5.1 kW; median commercial reported size (> 100 kW) = 258 kW; commercial bottom-up benchmark overnight capital cost = 221 kW; cap.-weighted average ground-mounted system (≥2 MW) reported size= 16 MW; utility-scale bottom-up benchmark overnight cap. cost = 191.5 MW.

Note: Many factors contribute to the reported price and overnight capital cost differing values including the additional costs above and beyond the overnight capital cost of a project, such as third-party financing; different system sizing; installation time lag; and various methods for calculating system sales price. Error bars for reported price data represent 20/80 percentile of datasets. The costs included in the bottom-up benchmarks represent national averages; there is significant cost variation for each component, depending on the installer, market, or time frame. The above data is representative of the following system sizing: median residential reported size= 5.1 kW; residential bottom-up benchmark

Reasons for Deviations Between Reported Price and Bottom-Up Benchmark Overnight Capital Cost

22

• Price vs. cost

• Reported pricing reflects what a customer will pay for a system (i.e., what the market will bear). A customer’s purchase price may be significantly higher than it would be elsewhere, regardless of the underlying cost to the installer, due to:

• Higher electricity rates (e.g., CA)

• Greater incentive programs (which may lower a customer’s upfront cash outlay, though not the price paid to the installer)

• Barriers to entry within specific markets, etc.

• The bottom-up benchmarks are reflective of consistent, transparent assumptions of the cost and representative margins of each subcomponent to an installer, regardless of market conditions or incentives.

• Timing

• Reported pricing generally reflects module and other component pricing at the time that installation contracts were signed (could precede installation date by more than a year for large projects)

• Bottom-up benchmark costs are contemporaneous with time subcomponent pricing estimates. Q4 benchmarks are compared with the following year, but may not fully capture lag between price quote and installation date.

• Geographic location • Reported price is weighted heavily toward California and New Jersey • Bottom-up benchmark based on national averages.

• Project specifics • Projects within dataset of report pricing includes systems not currently

modeled in bottom-up benchmark, such as those using high-efficiency panels, high proportion of government facilities, and relatively small utility-scale projects.

Reasons for Deviations Between Reported Price and Bottom-Up Benchmark Overnight Capital Cost (cont’d.)

23

Contents

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Installed Price of Residential & Commercial PV Systems: U.S. Systems Installed in 2012 vs. German Systems Quoted in 2012

25

• Installed prices in the United States are high compared to most other major international PV markets, due largely to differences in soft costs

• The disparity is particularly stark in comparison to Germany, where installed prices are $2.61-2.68/W (51-56%) lower across the three size ranges shown (on a pre-tax/VAT basis)

• Suggestive of potential for near-term cost savings in the United States.

$5.03 $4.75 $4.46 $2.35 $2.14 $1.87 $0

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System Size Range (kWDC)

U.S. Systems Installed in 2012German Systems Quoted in 2012

Residential & Commercial PV (Median Values)

$4.12

$2.46 $1.95

$1.38

$0.73 $0.59 $0.54

$0.0$0.5$1.0$1.5$2.0$2.5$3.0$3.5$4.0$4.5

2008 2009 2010 2011 2012 2013P 2014P

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Median and Range of Analyst Expectations of Module Average Selling Price

26

Note: P = projection. Data represent the median, max., and min. figures from: BNEF (02/08/13, 03/25/13); Goldman Sachs (01/03/13); GTM Research (Oct. 2010, Jan. 2013); Photon Consulting (Jan. 2011, March 2012, March 2013), UBS (03/10/13). Inflation adjusted 2008-2012: CPI; inflation adjusted 2013-14: EIA, AEO, Table 20, Gross Domestic Product, August 2012.

• Module prices in 2012 continued recent trend of dramatic reductions • Since 2008 has fallen on average 35% per year

• Mixed forecasts on future module ASP • However, not expected to increase or decrease dramatically in price • By 2014 ASP projected to be between $0.50/W - $0.75/W

• Major system price reductions are not expected to come from PV module price alone, as was the case in previous years.

Historic Projection

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Distributed Systems

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Utility-Scale Systems

Range of AnalystProjections

Analyst Estimates (2012) and Projections (2013–2014) of Global Average System Price

27

• Analysts expect the system prices of both utility-scale and distributed systems to continue to fall in the near future • Distributed systems are expected to reach between $2/W - $4.75/W by 2014 • Utility-scale systems are expected to reach between $1.50 - $3.15/W by 2014.

Note: P = projection. Data represent the max. and min. figures from: Bloomberg New Energy Finance (05/13/13); Cowen & Company (05/16/13); Deutsche Bank (03/14/13, 05/07/13, 05/16/13); GTM Research (Feb. 2013); Navigant Consulting (Q2 2013); Photon Consulting’s The Wall (06/14/13); Stifel Nicolaus (05/07/13). Inflation adjusted 2013-14: EIA, AEO, Table 20, Gross Domestic Product, August 2012.

Historic Projection Historic Projection

Contents

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• Continued system price reductions in 2012; more expected in the near-term, despite tensions on trade issues • Reported system pricing fell 6-14% from 2011-2012 • Modeled overnight capital costs fell 13-23% from Q4 2011 to Q4 2012.

• Despite general downward trend, large variation in reported pricing within market segment in 2012 • A difference of roughly $2/W in median installed price between the lowest- and

highest-priced states for residential & commercial systems ≤10 kW, but similar variability also exists within individual states

• Ground-mounted systems ≥2 MW ranged in price from $2/W to above $6/W. • Difference between reported price and bottom-up benchmark overnight capital cost for

similarly segmented systems in 2012 • Residential ($5.30/W reported price, $4.22/W bottom-up benchmark overnight

capital cost); commercial ($4.62/W reported price, $3.22/W bottom-up benchmark overnight capital cost); utility-scale ($3.35/W reported price, $2.50/W bottom-up benchmark overnight capital cost)

• Delta between reported pricing and modeled cost is due to various factors, such as inefficient pricing, timing, geographic location, and project specifics.

Conclusion

29

Documents

Photovoltaic System Pricing Trends: Historical, Recent ...July 16, 2013 . Photovoltaic System Pricing Trends: Historical, Recent, and Near -Term Projections . 2013 Edition . David