Pricing for Solar Systems in the US Dropped 17% in 2015
Tuesday, March 15, 2016 at 12:08PM 
Residential system prices hit $3.50 per watt in Q4 2015, according to GTM Research.
According to GTM Research and SEIA's U.S. Solar Market Insight 2015 Year in Review, overall PV system pricing in the United States fell by up to 17 percent over the course of 2015. The price varied by market segment, with the largest declines in the utility fixed-tilt sector.
FIGURE: Modeled U.S. National Average System Costs by Market Segment, Q4 2014-Q4 2015
Source: GTM Research / SEIA U.S. Solar Market Insight 2015 YIR
On a quarterly basis, pricing continues to trend downward but with some leveling off in the residential sector. The was due in particular to strong investment in customer acquisition and the stubbornness of other residential soft costs. In the non-residential and utility sectors, there were annual declines of 10 percent and 17 percent, respectively. This reflects continued aggressive cost reductions (both in hardware and soft costs) in national system pricing on an aggregate basis.
Moreover, as installers and EPCs expand to regions with lower labor and regulatory compliance costs, these regions will have a larger impact on aggregate pricing. Due to advantages from scale, variations in utility system costs are much smaller than variations in residential and non-residential solar costs.
FIGURE: Modeled U.S. Average System Costs by Market Segment, Q4 2014 vs. Q4 2015
Source: GTM Research / SEIA U.S. Solar Market Insight 2015 YIR
Average pricing for residential rooftop systems landed at $3.50 per watt in the fourth quater of 2015, with nearly 65 percent of costs coming from on-site labor, engineering, permitting and other soft costs. While residential hardware costs have fallen by over 16 percent in the past year, soft costs have actually risen on an industry-average basis by 7 percent, primarily due to rising customer acquisition costs among national and local players alike.
In the non-residential market, soft costs remain a challenge as well. Hardware costs fell 15 percent year-over-year, while soft costs saw a modest decrease of 6 percent. In Q4 2015, soft costs accounted for approximately 50 percent of total system pricing. These costs can be even higher for projects in areas with strict labor requirements and particularly high in jurisdictions with stringent permitting and interconnection requirements. In order to continue reducing costs, developers and EPCs are looking to squeeze additional power density for commercial sites and amortize fixed costs over more power output -- and therefore reduce dollar-per-watt and dollar-per-kilowatt-hour costs.
by Ben Gallagher for GreenTech Media
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