Reposted January 16, 2013 – Across the U.S., installed system cost declines have also led to PV-generated power coming closer to matching retail rates in both the residential and commercial sectors. In fact, solar PV systems in Hawaii are already able to produce power at levels below retail. The graphic below clearly indicates the progress being made in these markets with respect to PV systems approaching power generation costs close to retail rates.
It is also clear that commercial systems greatly benefit in LCOE calculations from their lower installed costs, which in turn lowers their power generation rate equivalent. In the past year, systems in every market have benefitted from the decline in PV component – and thus total installed system – pricing. As such, LCOE rates have declined in each market, often by double-digits.
LCOE and Retail Tariff Rates in Selected US States
Source: Adapted from NPD Solarbuzz North America PV Markets Quarterly
A consideration that is beyond this simple graphic is the fact that in several markets it is often the case that real-world tariff structures are designed such that PV can already meet peak power pricing, in terms of both usage tiers and time-of-use. For example, in California the tiered structure of the market means that power prices can vary from approximately $0.11-0.34/kWh depending on usage. This is particularly important for high-usage residential customers as it means that PV systems are effectively competing Tier 4 or 5 electricity rates rather than baseline. The ability for PV to defer electricity costs is one of the primary economic motivating factors in the U.S. market, especially in markets with high retail tariffs or tariff structures which expose customers to higher pricing depending on time or usage.