Government research shows that residential solar panel prices rose by about 10¢/W in the second half of 2021, and by 20¢/W in the first half of 2022. However, with inflation in mind, the prices of residential solar panels will not change or decrease.

Most of the United States has experienced double-digit inflation over the past two years. Some branches of industry, such as forestry, have now returned to their own pre-covid baseline. Others – such as residential electricity prices – can expect slightly more price increases. Residential solar prices have certainly seen some spikes, but adjusted for inflation, it looks like prices have actually fallen in 2021 and have fallen in 2022.

The US Department of Energy’s Lawrence Berkeley National Laboratory (LBNL) has published its annual release Tracking the Sun report documenting the fixed price of more than 2.5 million solar power projects under 5 MW.

LBNL found that since 2000, the average installed price for residential solar has declined by an average of 40¢/Wh/year. Since 2013, the price drop has decreased to 10-20 ¢/W/year.

As we can see from the chart above, these price trends were heavily dependent on the price of solar panels. LBNL reports that module prices have increased slightly in 2021-2022.

Adjusted for inflation, prices fell between 10 and 20¢/Wdc from 2020 to 2021, the report said. In 2022, again adjusted for inflation, pricing is unchanged from the previous year.

Of course, in nominal terms—the actual dollar amount written on the check—prices have gone up. In the second half of 2021, prices increased by a penny before adjusting for inflation – an increase of about 2.6%. In the first half of 2022, price inflation increased by 20¢/Wdc – an additional increase of 5.1%.

The Energy Information Administration predicts that Electricity for the population will become more expensive by 2.6% for all of 2022. If residential solar prices remain unchanged in the second half of 2022, solar and electricity prices will show similar annual growth.

This relatively flat price increase is more complicated when we look at it at the state level.

While average prices in all states have declined over the past five years, more than half of US states showed year-over-year price increases from 2020 to 2021. The researchers noted that we would have seen a much larger national price increase if not for the large price drop seen in the largest US market: California.

Cost increases were found in solar modules, solar racks, balance of system hardware such as copper and other electrical components, and labor costs.

Depending on the system, the set price varies significantly in the pool of approximately 1.2 million projects analyzed. More than 3.2 million installations in the US.

The biggest variable is the addition of a 5kW/10-15kWh battery to the residential storage project, which increased system prices by $1.90/W post. The second largest variable was the “fixed effects” condition, which ranged from plus $1/W to minus 50¢/Wdc. Adding a microinverter increased prices by about 50¢/Wdc, and optimizers added 40¢/Wdc.

An additional nuance linking the state effect and microinverters/optimizers is that states with more progressive solar policies tend to have a later iteration of the National Electrical Code (NEC), which tends to increase system costs . Some of these pro-solar states also have higher labor and union costs.

For example, Massachusetts and Rhode Island are among the states with higher costs. They have newer NEC code requirements, relatively high electricity prices, and pro-labor policies. All these factors affect the pricing of the system.

One of the points about LBNL’s pricing is that they are slightly higher than the prices put forward by other national groups.

The researchers noted that LBNL’s prices are higher than SunPower and EnergySage’s average costs, but lower than Sunrun’s. One explanation for Tracking Sun’s higher list prices is that they include dealer fees for loan-financed systems, which can increase prices by 10-25% – the result of instant financing, no-money-down deals. Sunrun’s prices remain high primarily because of customer acquisition costs, which continue to be among the highest in the industry.

LBNL prices exceed modeled prices from NREL and Wood Mackenzie, which see solar could value, assuming there are no adders or unique project-level variables.

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