The installed cost of solar power fell to record lows in the first quarter of 2017 in the USA because of the continuing decline in PV module and inverter prices, higher module efficiency, and lower labor costs, according to an analysis by the US Energy Department's National Renewable Energy Laboratory (NREL). While utility-scale solar costs have declined nearly 30 percent, residential- and commercial-scale solar system prices have lagged behind at 6 percent and 15 percent reductions, respectively, according to a new report.

The report shows that the levelized cost of electricity (LCOE) benchmarks without subsidies for the first quarter of 2017 fell to between 12.9 and 16.7 cents per kWh for residential systems, 9.2 to 12.0 cents a kWh for commercial systems, 5.0 to 6.6 cents a kWh for utility-scale fixed-tilt systems, and 4.4 to 6.1 cents a kWh for utility-scale one-axis tracking systems.

NREL estimates that the total installed system cost has declined to $2.80 per Watt (dc) for residential systems, $1.85 per watt for commercial, $1.03 per watt for fixed-tilt utility-scale systems, and $1.11 per watt for one-axis tracking utility-scale systems. Compared to the first quarter of last year, the benchmarks fell by 6 percent for residential, 15 percent for commercial, and 29 percent for utility-scale systems.

According to the analysts, these results suggest that the DOE’s Sunshot Initiative, which was launched in 2011 to make solar cost-competitive with other forms of energy, has met its 2020 cost target for utility-scale solar systems three years early. The industry is more than 85 percent of the way toward achieving the 2020 commercial-scale and residential-scale solar cost targets.

While the PV module price has reached a new low level, the proportion from soft costs - such as labor and overhead costs - has grown. In the first quarter of 2017, soft costs accounted for 68 percent of residential system costs, 59 percent for a commercial system, and 41 percent of a utility-scale system.