Preliminary data in January-June suggests that the rate of decline in overall PV system costs is slowing.

This apparent trend may reflect the increasing prevalence of solar loans with origination fees embedded in the installed price, greater use of module-level power electronics, module import tariffs, and a shift in the underlying geographical mix of the data sample in Tracking the Sun IX towards more-expensive states such as California.

In 2015, the median installed price for residential PV systems declined 5%, or $0.20 per watt (W), versus a year earlier; 7% ($0.30/W), for smaller non-residential systems, and by 9% ($0.30/W) for larger non-residential systems.

"This marked the sixth consecutive year of significant price reductions for distributed PV systems in the US," said Galen Barbose, lead author of the report and a research scientist at Berkeley Lab in California.

Soft or “plug-in” costs account for as much as 64% of the total cost of a new solar system, according to the federal government. They include such things as supply chain costs, installation labor and permit fees.

The report attributes much of the decline in soft costs to increases in system size and module efficiency, and efforts within the industry and among policymakers to target them.

Since 2012, module costs have remained relatively flat, the report notes. Global over-supply this year may see a reduction in module costs resume.

The final analysis sample in the report consists of roughly 450,000 systems installed through year-end 2015 (55% of the full data sample) and more than 110,000 systems installed in 2015 (43% of the full data sample).

More than 260,000 grid-connected residential and non-residential PV systems were installed in the US last year.

The report notes that installed price declines have been partially offset by falling incentives including those for cash such as rebates and performance provided through state and utility PV programs. Depending on the particular program, reductions in cash incentives over the long-term equate to roughly 60% to 120% of the corresponding drop in installed prices.

Installed PV system prices are substantially higher in the US than in other key international solar markets such as Germany, which the authors attributed primarily to differences in soft costs.

In Germany, for example, typical pricing for residential systems was around $1.70/W in 2015, compared to the median pre-sales tax installed price of $4.0/W among residential projects in the report sample in the US. It is $1.80/W in Australia, $2.80/W in France and $2.90/W in Japan, according to the report.

Although installed price distributions in the US have generally narrowed over time, considerable pricing variability continues to persist. Among residential systems installed in 2015, roughly 20% of them were priced below $3.3/W, while 20% were priced above $5.0/W (80th percentile).

The potential underlying causes for this variability are numerous, including differences in project characteristics, installers, and local market or regulatory conditions, according to the report.

It also found installed prices in 2015 differ widely among states, ranging from a low of $3.2/W in Nevada to a high of $4.8/W in Minnesota.

Pricing in most states is below the aggregate national median price. This is because some of the largest state markets – California, Massachusetts, and New York – are relatively high-priced, which tends to pull overall US median prices upward.

There was also considerable variance in prices across residential installers operating with the same state last year. In five large residential markets (Arizona, California, Massachusetts, New Jersey, and New York), installer-level median prices within each state differ by anywhere from $0.8/W to $1.2/W between the upper and lower 20th percentiles.