solar panels in a field of the sun

The value proposition of solar energy is driving great opportunities for homeowners looking to invest in sustainable power production.  In fact, the average installed cost of a solar PV system completed in 2010 fell by 17% from the prior year, and the cost has also dropped an additional 11% so far in 2011, according to the Lawrence Berkeley National Laboratory.

In “Tracking the Sun IV: An Historical Summary of the Installed Cost of Photovoltaics in the United States from 1998 to 2010,” LBNL authors Galen Barbose, Naïm Darghouth, and Ryan Wiser detail trends they’ve uncovered by researching 78% of all grid-connected PV capacity installed in the United States.  That’s 115,000 PV systems installed between 1998 and 2010.

They found that a residential PV system has a lower installed cost when placed on a new home, as compared to a retrofit or existing home.  The average cost of a PV system installed in 2010 and less than 10 kW ranged from $6.30 per watt to $8.40 per watt, depending on the state.

Among systems installed in 2010, PV solar systems smaller than 2 kW averaged $9.80 per watt.  Thus, with economies, the larger the installation, the lower the installed cost.

This being said, the report authors indicate that state and utility incentives have declined since a peak in 2002, and the federal incentives have fallen since 2010.  While pre-incentive installed costs fell by $1.00 per watt for residential PV in 2010, the decline in post-incentive installed costs fell by only $0.40/W for residential PV.  The reduced value of federal, state, and utility incentives in 2010 partially offset the decline in installed costs.

Yet the solar industry is creating tons of green jobs.  More than 100,000 Americans are employed in the U.S. solar industry, according to The Solar Foundation, and the industry took on about 6,735 new solar industry jobs in the last year from August 2010 to August 2011.

[+] Download the Tracking the Sun IV report.