PHOTOVOLTAIC SYSTEM PRICE QUOTES FROM SELECTED STATES

Transcription

1 State and Regional Pricing Information 11,000+ Prices Market Snapshot Series PHOTOVOLTAIC SYSTEM PRICE QUOTES FROM SELECTED STATES - WASHINGTON OREGON CALIFORNIA NEVADA ARIZONA COLORADO HAWAII MINNESOTA TEXAS WISCONSIN ILLINOIS MICHIGAN OHIO FLORIDA NEW HAMPSHIRE CONNECTICUT MARYLAND VIRGINIA NORTH CAROLINA GEORGIA MASSACHUSETTS RHODE ISLAND NEW JERSEY NEW YORK PENNSYLVANIA DC In partnership with:

2 TABLE OF CONTENTS Introduction... 1 Methodology... 2 Residential Pricing... 3 Summary of Residential Pricing Data... 4 Summary of System Size, Gross Cost, Incentive Value, and Mounting Details... 5 Nonresidential and Utility-Scale Pricing... 9 Summary of Nonresidential and Utility-Scale Rooftop Solar... 9 Summary of Nonresidential and Utility-Scale Ground-mount Solar Analysis Key Takeaways About the Authors Acknowledgments EnergySage Mercatus Appendix A: Data and Statistical Information Appendix B: Call for Data Tables Table 1: Residential, Commercial, and Utility-Scale Installed Solar Costs (USD/watt),... 1 Table 2: Factors Influencing Residential, Nonresidential, and Utility-scale Solar Pricing... 1 Table 3: Factors Influencing Residential, Nonresidential, and Utility-scale Solar Pricing Table 4: Number or Percent of Data Points by State from EnergySage and Mercatus Figures Figure 1: Average Residential Cost (USD/watt) by Region, Figure 2: Residential Cost (USD/watt) by State, Figure 3: Map of Average Residential Cost (USD/watt) by State, Figure 4: Residential System Size by State (kw), Figure 5: Gross Residential Cost by State (USD), Figure 6: Total Value of Residential Incentives (federal, state, and local) by State (USD), Figure 7: U.S. Nonresidential and Utility-Scale Project Development Costs (USD/watt), Figure 8: Nonresidential and Utility-Scale Rooftop Cost (USD/watt) by State, and Figure 9: Map of Nonresidential and Utility-Scale Rooftop Average Cost (USD/watt) by State, Figure 10: Nonresidential and Utility-Scale Ground-mount Cost (USD/watt) by State, and Figure 11: Map of Ground-mount Average Cost (USD/Watt) by State, Figure 12: Average Residential Gross Cost compared to Average Incentive Amount Figure 13: Average Residential Cost (USD/watt) compared to Average Residential Electricity Prices (USD/kWh) Figure 14: Nonresidential and Utility-Scale Average Cost (USD/watt) for rooftop PV compared to Average Commercial Electricity Prices (USD/kWh) by State Figure 15: Nonresidential and Utility-Scale Average Cost (USD/watt) for Ground-mount PV compared to Average Commercial Electricity Prices (USD/kWh) by State ii

3 INTRODUCTION The Solar Electric Power Association (SEPA) routinely speaks with utilities and developers to gather information on average national installed costs for photovoltaic (PV) solar, as illustrated in Table 1. However, our information previously has not included state- or region-specific costs, which can be a valuable tool for utilities, consumers, regulators, and other stakeholders. Most publicly available reports are also limited to national prices. Free statelevel data sources are available online, but the data points are self-reported and potentially unreliable. To provide a more granular level of information on solar pricing, SEPA partnered with Mercatus and EnergySage to analyze nearly 11,000 aggregated residential, nonresidential (including commercial and industrial), and utilityscale solar prices from selected states. While recognizing the limitations of this relatively small sample of pricing information, we believe it provides a snapshot of the broader solar market. TABLE 1: RESIDENTIAL, COMMERCIAL, AND UTILITY-SCALE INSTALLED SOLAR COSTS (USD/WATT), Market Segment Capacity (DC) Installed USD/Watt Residential 3 kw 10 kw $3.00 to $4.50 Commercial 10 kw 1MW $2.25 to $3.50 Utility-Scale 1 MW 10 MW $1.75 to $2.50 Large Utility-Scale 10 MW and larger $1.40 to $1.75 Source: Solar Electric Power Association, Based on the provided data, average national residential prices ranged from $3 per watt to $4 per watt, while average national prices for nonresidential and utility-scale projects ranged from $2 per watt to $3 per watt between January and July. However, as discussed in sections 3 and 4, variation of pricing data between regions and states is likely due to limited price transparency, in which consumers may not have a complete understanding of competitive pricing information prior to making purchasing decisions. Additionally, the dynamic nature of the U.S. solar market lends itself to variation due to factors such as state policies and incentives, supply and demand within local markets, competition, labor costs, permitting costs, electricity prices, and transportation. SEPA analyzed the pricing data to determine if any of these factors had a strong influence on price. As shown in Table 2, we identified (1) a moderate to strong correlation between average commercial and industrial electricity prices and average price-per-watt for nonresidential systems and (2) a strong correlation between total incentive amount and total system cost for residential systems. For additional information about how these factors were calculated, please see Appendix A. SEPA has issued a call for data in Appendix B, which includes a wish list of data points for future reports. TABLE 2: FACTORS INFLUENCING RESIDENTIAL, NONRESIDENTIAL, AND UTILITY-SCALE SOLAR PV PRICING Factors Influencing Price Residential solar market potential, including solar capacity, electricity prices, incentives, and policies Incentives only Labor cost Incentive amount and total gross cost for residential systems Residential electricity prices Commercial and industrial electricity prices on nonresidential and utility-scale rooftop PV Commercial and industrial electricity prices on nonresidential and utility-scale ground-mount PV Correlation None None Weak Strong Weak Moderate Strong Source: Solar Electric Power Association, 1

4 METHODOLOGY SEPA analyzed aggregated residential, nonresidential, and utility-scale solar prices provided by Mercatus and EnergySage. The information drew upon approximately 11,000 price data points generated across 25 states, the District of Columbia, and Puerto Rico between January and July. The actual number or percent of data points by state and source are included in Appendix A. EnergySage provided nearly 9,500 data points for residential projects ranging from 1 kilowatt (kw) to 75 kw, including aggregated average (including standard deviation), median, maximum, and minimum cost data for 22 states. The information was derived from contractor quotes generated through its online solar PV marketplace. 1 For purposes of analysis, these states were grouped by regions: Midwest: Illinois, Ohio, Michigan, and Wisconsin Mid-Atlantic: Maryland, Pennsylvania, New Jersey, and New York New England: Connecticut, Massachusetts, New Hampshire, and Rhode Island South: District of Columbia, Florida, North Carolina, Texas, and Virginia Southwest: Arizona and California West: Colorado, Oregon, and Washington Data also included system size, gross cost (total and price per watt), incentive amounts, mount system type (ballast or penetrating), and mount location (ground or roof). Mercatus provided nearly 1,500 data points for commercial, industrial, and utility-scale projects ranging from 20 kw to 350 MW with commercial operation dates (CODs) targeted in and. It is important to note that although there are a few large utility-scale systems in this dataset, the average system sizes are 1-3 MW for rooftop systems and 6-8 MW for ground-mount systems. The data included aggregated average (including standard deviation), median, minimum, and maximum price-per-watt cost data for Puerto Rico and 15 states, including Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, North Carolina, and Rhode Island. Despite some limited data from certain states or regions, our analysis suggests some specific trends in solar pricing by region, discussed in more detail in sections 3 and 4. 1 Additional insights about average payback periods, monthly electrical bills, financing options, and percentage of usage offset can be found in the EnergySage Solar Marketplace Intel Report at 2

5 RESIDENTIAL PRICING EnergySage provided aggregated residential solar pricing information from quotes generated through its online solar PV marketplace. 2 While other solar-related websites have exclusive partnerships with one or two installers, EnergySage partners with hundreds of prescreened solar installers across the country to provide a diversity of pricing information. Summary of Residential Pricing Data Residential pricing in states is driven by a combination of electricity prices, incentives, labor cost, permitting cost, competition, and supply and demand. Average prices ranged from $3 per watt to $4 per watt; however, there were some outliers within certain states, as shown in Figure 1. For example, according to EnergySage, Florida s inexpensive electricity and lack of solar incentives have generally kept prices quite low. Among the data analyzed from the state, the average price was $2.51 per watt. Washington state, on the other hand, has a solar power performance payment incentive, which is significantly higher for projects using panels manufactured in the state, resulting in the highest average price of $4.43 per watt. According to EnergySage, New York and Massachusetts both have vibrant solar markets with some limited price transparency among consumers and between vendors factors that pushed the average price of solar to $4.03 per watt and $4.20 per watt respectively. FIGURE 1: AVERAGE RESIDENTIAL COST (USD/WATT) BY REGION, $4.60 $4.40 $4.20 West Southwest South Midwest Mid-Atlantic Northeast WA MA Average Cost (USD/Watt) $4.00 $3.80 $3.60 $3.40 $3.20 $3.00 $2.80 $2.60 $2.40 CO OR AZ CA DC FL NC TX VA IL MI OH WI MD NJ NY PA CT NH RI $3.70 National Average $2.20 $2.00 Source: EnergySage,. 2 Additional insights about average payback periods, monthly electrical bills, financing options, and percentage of usage offset can be found in the EnergySage Solar Marketplace Intel Report at 3

6 FIGURE 2: RESIDENTIAL COST (USD/WATT) BY STATE, - AZ CA CO CT DC FL IL MA MD State MI NC NH NJ NY OH OR PA RI TX VA WA WI $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00 Source: EnergySage, Cost (USD/Watt) Range Standard Deviation Average Median 4

7 To best illustrate the variation among states and regions, the average price-per-watt is mapped in Figure 3. Higher prices tend to cluster in the New England, Southwest, and Western regions, while lower prices were found in the South, Mid-Atlantic, and Midwest. FIGURE 3: MAP OF AVERAGE RESIDENTIAL COST (USD/WATT) BY STATE, - Source: EnergySage, Average Cost (USD/Watt) Summary of System Size, Gross Cost, Incentive Value, and Mounting Details The average reported size for residential systems ranged from 5 kw to 10 kw, according to EnergySage. However, the data within each state contained a large standard deviation, reflecting the broad diversity of household types from small bungalows to mansions to multifamily residential properties using the EnergySage marketplace. 5

8 FIGURE 4: RESIDENTIAL SYSTEM SIZE BY STATE (KW), - AZ CA CO CT DC FL IL MA MD MI State NC NH NJ NY OH OR PA RI TX VA WA WI Source: EnergySage, System Size (kw) Range Standard Deviation Average Median The average gross purchase costs, defined as the price of the entire installed systems prior to incentives, ranged between $21,225 and $38,058 with the median price ranging from $18,360 to $30,500. 6

9 FIGURE 5: GROSS RESIDENTIAL COST BY STATE (USD), - AZ CA CO CT DC FL IL MA MD MI State NC NH NJ NY OH OR PA RI TX VA WA WI $50 $100 $150 $200 $250 Cost (in Thousand USD) Source: EnergySage, Range Standard Deviation Average Median The value of the incentives defined as a total of federal, state, and local incentives and rebates for a given quote were also diverse, ranging among states from an average of $7,275 to $19,674. The median incentive ranged from $6,288 to $18,485. 7

10 Figure 6: Total Value of Residential Incentives (federal, state, and local) by State (USD) - AZ CA CO CT DC FL IL MA MD MI NC State NH NJ NY OH OR PA RI TX VA WA WI $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 Cost (in Thousand USD) Source: EnergySage, Range Standard Deviation Average Median Among residential systems, the most common mounting method was a roof-penetrating system, representing over 97 percent of the quotes, with just under 3 percent from ballast mounted systems. Further, over 95 percent of the systems were roof-mounted with the remaining 5 percent of quotes for ground-mount systems. These mounting systems and locations are consistent with current installation trends in the residential sector to date. 8

11 NONRESIDENTIAL AND UTILITY-SCALE PRICING Mercatus provided aggregated state pricing information based on outputs from its Energy Investment Management (EIM) software platform. The Mercatus data was predominately within the ranges depicted in Table 1, albeit on the higher side, particularly compared to large utility-scale. Unfortunately, as the data was aggregated by state, it was not possible to break out nonresidential and utility-scale projects to compare to SEPA pricing information. Consistent with information from other pricing publications, average costs, according to Mercatus, declined between and, with lower average costs for ground-mount than rooftop systems. Mercatus data also included costs for total engineering, procurement, and construction (EPC), interconnection, and development as shown in Figure 7. The bulk of costs were associated with EPC, although Mercatus noted that some users did not differentiate interconnection and development costs within the software, which may have ultimately skewed the final results. As reported by users, although interconnection and development costs comprise a very small portion of the total project cost (between 1 percent and 6 percent), interconnection costs were higher on average for ground-mount systems than for rooftop systems. The difference here may be a function of the larger average size of the ground-mount systems, 6-8 MW, compared to 1-3 MW for rooftop. FIGURE 7: U.S. NONRESIDENTIAL AND UTILITY-SCALE PROJECT DEVELOPMENT COSTS (USD/WATT), - $3.00 Cost (USD/Watt) $2.50 $2.00 $1.50 $1.00 $ Average Roof Average Ground Average Roof Average Ground Source: Mercatus, Summary of Nonresidential and Utility-Scale Rooftop Solar As shown in Figure 8, the average cost for a rooftop system ranged from $2 per watt to $3 per watt for most states in and. With the exception of Arizona, Florida, Hawaii, and Puerto Rico, almost every state and territory saw a slight downward trend in average prices. Outliers, such as the high rooftop price in Minnesota, may have been skewed by the small sample size. Overall, the range of prices was also far narrower compared to the quoted residential prices possibly the result of procurement sophistication and acumen of large commercial consumers, compared to the average residential consumer. 9

12 FIGURE 8: NONRESIDENTIAL AND UTILITY-SCALE ROOFTOP COST (USD/WATT) BY STATE, AND Average: $2.45 Average: $2.87 PA State AZ CA CO CT FL GA HI MA MD MN NC NJ NV NY RI $0.00 $1.00 Source: Mercatus, $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 Cost (USD/watt) Range Standard Deviation Average Median 10

13 As shown in Figure 9, nonresidential rooftop prices also reflect far less regional variation compared to the residential markets. Anecdotal evidence points to a range of factors here nonresidential developers that often operate in multiple states or nationally, the competitive nature of the large-scale solar market, and the lower soft costs for nonresidential systems due to the larger scale of projects. FIGURE 9: MAP OF NONRESIDENTIAL AND UTILITY-SCALE ROOFTOP AVERAGE COST (USD/WATT) BY STATE, $3.46 Hawaii Source: Mercatus, Average (USD/Watt) 11

14 Summary of Nonresidential and Utility-Scale Ground-mount Solar Ground-mount prices on average are slightly more competitive than nonresidential and utility-scale rooftop, a trend which follows average national trends from most price reporting entities. Rooftop solar projects typically carry a cost premium due to the higher soft costs associated with safety protocols, logistics and material handling (e.g., cranes), additional engineering design costs, permitting, building codes, interconnection arrangements, and other factors. Further, the size of installations is typically limited for rooftop projects, which may reduce any economies of scale. FIGURE 10: NONRESIDENTIAL AND UTILITY-SCALE GROUND-MOUNT COST (USD/WATT) BY STATE, AND Average: $2.44 Average: $2.60 State PA AZ CA CO CT FL GA HI MA MD MN NC NJ NV NY RI $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 Cost (USD/Watt) Source: Mercatus, Range Standard Deviation Average Median 12

15 Similar to nonresidential and utility-scale rooftop systems, pricing for ground-mount systems shows less variability among states and regions, with the exception of Hawaii (see Figure 11). Nearly all of the prices were within the $2 per watt to $3 per watt range, with average prices trending slightly higher in the New England and Mid-Atlantic regions in. However, average prices declined between and, with the exception of Arizona, Georgia, New Jersey, and Puerto Rico, where prices increased. FIGURE 11: MAP OF NONRESIDENTIAL AND UTILITY-SCALE GROUND-MOUNT AVERAGE COST (USD/WATT) BY STATE, $4.29 Hawaii Source: Mercatus, Average (USD/Watt) 13

16 ANALYSIS SEPA tested a variety of hypotheses to tease out any correlations between residential, nonresidential, and utility-scale solar prices and labor costs, state incentives, average electricity prices, and solar market potential. First, SEPA compared average state prices with a proprietary tool for ranking state-level residential solar markets, including composite factors of solar capacity, average electricity prices, incentives and policies. 3 This analysis found little, to no, correlation between average prices and solar market potential. Second, SEPA compared average state prices to labor costs, based on figures for solar installer mean hourly wages developed by the U.S. Bureau of Labor and Statistics. 4 At best, we found a weak correlation between labor costs and high average residential, nonresidential, and utility-scale solar costs, but not sufficient to make any strong conclusions. Third, SEPA compared states with richer incentives. Just based on incentive level, we could find no correlation to price-per-watt. However, we were able to determine a stronger correlation between higher total gross cost (i.e., total price of the system absent incentives) and higher total incentives (see Appendix A). This trend would suggest that consumers are strongly motivated by incentives, and while that might not translate to lower per-watt pricing, it leads to a higher likelihood of making a larger PV investment in those states with rich incentives. Local permitting costs and regulatory barriers also differ across cities, states, and regions, resulting in increased price dispersion. Finally, SEPA compared the average price to average electricity prices posted by the U.S. Energy Information Administration 5 for both residential and commercial and industrial customers. After removing outliers (Florida and Washington), the regression plots in Appendix A reflect a weak positive relationship of average price and residential electricity prices. However, when comparing average price for nonresidential and utilityscale projects to average commercial and industrial electricity prices, we saw a moderate to strong positive correlation, for rooftop and ground-mount respectively. 6 This trend may be linked to a few possible hypotheses, but SEPA believes that it is related to the sophistication of the commercial procurement process. Residential buyers often do not receive the same quote volume and have limited comparative levels of financial acumen. TABLE 3: FACTORS INFLUENCING RESIDENTIAL, NONRESIDENTIAL, AND UTILITY-SCALE SOLAR PRICING Factors Influencing Price Residential solar market potential, including solar capacity, electricity prices, incentives, and policies Incentives only Labor cost Incentive amount and total gross cost Residential electricity prices Commercial and industrial electricity prices on nonresidential and utility-scale rooftop PV Commercial and industrial electricity prices on nonresidential and utility-scale ground-mount PV Correlation None None Weak Strong Weak Moderate Strong Source: Solar Electric Power Association, 3 The methodology and ranking map is outlined in Solar Fundamentals Volume 2: Markets. State average electricity prices were sourced from the Energy Information Administration, state average solar irradiance was provided by the National Renewable Energy Laboratory, and state incentive program analysis was developed by SEPA. 4 Solar PV Installer hourly mean wage, SOC code through May. 5 Note: These are not utility specific actual rates but only state averages from EIA since we don t have the location of these projects to identify service territory and compare against actual utility rates. 6 SEPA compared average price-per-watt to both commercial and industrial prices separately as Mercatus data likely contains both types of projects. Both industrial and commercial electricity prices showed a strong positive relationship to average price-per-watt. 14

17 KEY TAKEAWAYS Information about potential drivers for state and regional pricing variability is largely anecdotal. In states with fewer solar incentives, we see lower average prices. In areas with higher average prices, it could be the result of higher retail rates, supply and demand imbalances, and limited price transparency. For example, when comparing EnergySage data to publicly available state data in California, Connecticut, Massachusetts, and New York, analysts found that EnergySage prices were approximately 20 percent lower than state averages. 7 This wide gap is possibly due to comparison shopping online, which increases price transparency. While the pricing data provided through EnergySage and Mercatus allow us to make some useful market observations, SEPA is seeking additional data that will allow us to answer more questions about individual solar markets within each state. For example: Are we seeing a selectivity bias based on the types of customers using the EnergySage website (e.g., those more comfortable with technology)? In states without incentives, are the only installed solar systems those with shorter payback periods? Do incentives offer the ability for wider deployment of projects that otherwise would not get built? Do other factors make projects cheaper, such as age of housing stock or common roof type? Are prices a function of market competitiveness within a certain state or region? SEPA looks forward to expanding this pricing research to investigate additional data trends in the future and potentially answer these, and other questions. We have issued a call for data as outlined in Appendix B. If you are interested in participating in our 2016 pricing report, please contact us. 7 Forbes Energy, With Residential Solar, It Pays to Shop Around, June 19,, online at 06/19/with-residential-solar-it-pays-to-shop-around/. 15

18 ABOUT THE AUTHORS Erika Myers, Senior Manager, Research Erika joined SEPA as Senior Manager of Research in July. In this role, Erika is responsible for developing research reports and tools to drive the integration of solar and other distributed energy resources into utility resource portfolios and business operations. Prior to joining SEPA, Erika spent nearly four years as a consultant with ICF International and five years with the South Carolina Energy Office specializing in renewable energy and alternative transportation fuel policy and regulatory planning and development. Erika has a masters in earth and environmental resources from the University of South Carolina and a B.A. in biology from Clemson University. Vazken Kassakhian, Research Analyst vkassakhian@solarelectricpower.org Vazken joined SEPA as a Research Analyst in August. Prior to that, as an Energy Analyst at the Sierra Club, he analyzed state compliance pathways for the Clean Power Plan (CPP) and completed a national analysis of the impact of mandated state and local policies and voluntary purchases on utility scale renewables and distributed solar for the Sierra Club. He has also held research and analysis positions with the Colorado Public Utilities Commission advising on regulatory policy on Smart Grid and at the National Renewable Energy Laboratory analyzing policy and market impacts in the electric sector. Vazken has an MBA and a certificate in renewable and sustainable energy from the University of Colorado at Boulder and a B.A. in english from the University of California at Berkeley. Acknowledgments SEPA would like to thank the following organizations and individuals for their assistance, particularly the teams at Mercatus and EnergySage. Special thanks goes to Sam Brown and Dean Granoff from Mercatus and Vikram Aggarwal and Luke Tarbi from EnergySage. These individuals spent significant time working with SEPA staff to define the pricing data parameters, collect and aggregate the data, and review the draft reports. They will also provide ongoing support to promote and update future editions of the report. Within SEPA we would also like to thank our dedicated staff, particularly Daisy Chung, Dan Chwastyk, Tanuj Deora, K Kaufmann, Bob Gibson, and John Sterling. 16

19 ENERGYSAGE Prepared by EnergySage EnergySage is the leading online marketplace for solar PV systems, and connects thousands of solar shoppers with hundreds of solar installers every month through its transparent platform. EnergySage s independent, unbiased approach helps consumers understand the available solar options in their area, as well as going market rates. The EnergySage platform offers a robust selection of impartial content to educate consumers regarding a range of relevant topics, from the basics of solar electric system technologies to the complexities of how systems are financed. For consumers at the early stages of their solar buying journey, EnergySage provides them with an instant estimate of their potential savings based on their property address and average monthly electricity bill. This instant calculator uses market pricing data, incentive data, and utility rate data to generate a comparative financial analysis of the installation decision across all financing options: cash purchase, loan-financed purchase, zero-down lease, and power purchase agreement. For solar shoppers ready to buy, EnergySage enables them to receive and compare competitive quotes from high-quality, pre-screened solar installers in the EnergySage Solar Marketplace. All quotes are presented to consumers in a side-by-side format that simplifies the comparison-shopping experience amongst multiple proposals. EnergySage s standardized format equips shoppers with the information they need to make the decision best for their households. Consumers pay nothing to participate in the EnergySage Solar Marketplace, and solar installers provide EnergySage with a small fee only after being selected by a solar shopper. While other solar-related websites have exclusive partnerships with one or two installers, EnergySage s model of partnering with hundreds of installers across the country positions the company as a neutral and unbiased solar marketplace. EnergySage has won the support and backing of the U.S. Department of Energy, New York State Energy Research & Development Authority, Connecticut Green Bank, and Massachusetts Clean Energy Center. EnergySage currently operates in over 30 states, including all states where solar activity is significant, and is expanding quickly. Data from the EnergySage Solar Marketplace can provide insight into the ever-changing dynamics of the U.S. solar industry, including trends on installation pricing, financing options, equipment sizes, and much more. Contact data@energysage.com or visit to see what EnergySage data can do for you. 17

20 MERCATUS Prepared by Mercatus Mercatus is a cloud based software company that serves the unique needs of global power producers. The leader in Energy Investment Management (EIM) solutions, Mercatus is the only integrated software platform that systematizes all phases of the energy investment life cycle, enabling power producers to drive faster capital returns, gain structural cost advantages, and optimize portfolios. Mercatus customers are some of the largest global power companies that collectively manage over 80 gigawatts (GW) of projects, across 35 countries, using 8 advanced energy technologies on Mercatus EIM platform. Mercatus is headquartered in Silicon Valley. Mercatus analytics consolidates data from over 4,000 projects processed in the Mercatus EIM platform constituting over 80 GW of power generating capacity in order to provide energy investors with key insight into conditions and trends that are emerging in the market. As the industry s most robust resource for DG solar development data, Mercatus is proud to partner with SEPA in order to drive better insight and business practices in a rapidly transforming energy landscape that is characterized by increasing opportunities in the solar vertical. A Changing Market Energy companies are in the midst of a rapid transformation as solar power penetrates larger and larger portions of global electricity markets. While one of the most formidable investment opportunities of the century, financing this new generation of power producing technologies fundamentally challenges legacy business practices. At its core, the competitive dynamics of investment into solar projects is different. As power producers incorporate solar and other DG technologies into their portfolios, they are faced with investment into smaller and smaller projects, necessitating a larger volume of projects in order to meet growth targets. This paradigm shift challenges the scalability of project development, acquisition, and asset management as it increasingly places a burden on corporate overhead, the cost of capital, investment speed and operational expenditure tightening margins and challenging profitability. Energy companies incorporating solar power need business models and execution strategies that reflect the unique dynamics of the sector. In a commodity market, this is achieved by a wholesale commitment to operational excellence that can be translated into growth with fewer relative resources. 18

21 APPENDIX A Data and Statistical Information EnergySage and Mercatus both aggregated data before providing it to SEPA due to nondisclosure agreements with their respective clients. SEPA assumes that any anomalies within the datasets were identified and corrected prior to receiving them. Data aggregated in this manner prevented some level of statistical analysis by state. The pricing information indicates certain trends with the caveat that data is potentially skewed towards individual consumer demographics. For example, as EnergySage is a web-based tool, the data will be limited to consumers with a certain level of online competence. The number of data points or the percent of total data points by state from January through July are provided in the table below. TABLE 4: NUMBER OR PERCENT OF DATA POINTS BY STATE FROM ENERGYSAGE AND MERCATUS State EnergySage Mercatus AZ 3.6% 31 CA 25.8% 459 CO 2.1% 50 CT 21.6% 14 DC 0.026% N/A FL 0.098% 9 GA N/A 39 HI N/A 31 IL 1.1% N/A MA 11.3% 365 MD 4.8% 38 MI 0.043% N/A MN N/A 15 NC 3.5% 123 State EnergySage Mercatus NH 0.082% N/A NJ 5.5% 81 NV N/A 12 NY 3.6% 162 OH 0.07% N/A OR 0.048% N/A PA 4.7% N/A PR N/A 28 RI 0.028% 27 TX 2.8% N/A VA 0.076% N/A WA 2.6% N/A WI 0.02% N/A TOTAL ~9,500 1,484 Source: EnergySage and Mercatus, As discussed below, SEPA prepared a variety of regression plots to understand correlations between the prices and various factors, such as state and federal policies and incentives, labor costs, and electricity prices. Referenced regression plots are illustrated below. 19

22 FIGURE 12: AVERAGE RESIDENTIAL GROSS COST COMPARED TO AVERAGE INCENTIVE AMOUNT $40 $38 $36 Average Gross Cost (in Thousand USD) $34 $32 $30 $28 $26 $24 $22 $20 $6 $7 $8 $9 $10 $11 $12 $13 $14 $15 $16 $17 $18 $19 $20 Average Incentives (in Thousand USD) r2 value = (weak positive relationship) Source: EnergySage, 20

23 FIGURE 13: AVERAGE RESIDENTIAL COST (USD/WATT) COMPARED TO AVERAGE RESIDENTIAL ELECTRICITY PRICES (USD/KWH) (EXCLUDING OUTLIERS OF WA & FL) $4.4 $4.3 $4.2 $4.1 $4.0 Average Cost (USD/Watt) $3.9 $3.8 $3.7 $3.6 $3.5 $3.4 $3.3 $3.2 $3.1 $3.0 $0.10 $0.11 $0.12 $0.13 $0.14 $0.15 $0.16 $0.17 $0.18 $0.19 $0.20 Average Residential Prices (USD/kWh), $0.21 r2 value = (weak positive relationship) Source: EnergySage,. Energy Information Administration, for Average Residential Prices. 21

24 FIGURE 14: NONRESIDENTIAL AND UTILITY-SCALE AVERAGE COST (USD/WATT) FOR ROOFTOP PV COMPARED TO AVERAGE COMMERCIAL ELECTRICITY PRICES(USD/KWH) BY STATE (EXCLUDING OUTLIER OF MN) $6.00 $5.50 $5.00 $4.50 Average Cost (USD/Watt) $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 Average Commercial Rates (USD/kWh), $0.40 r2 value = (moderate positive relationship) Source: Mercatus,. Residential Prices from Energy Information Administration,. 22

25 FIGURE 15: NONRESIDENTIAL AND UTILITY-SCALE AVERAGE COST (USD/WATT) FOR GROUND-MOUNT PV COMPARED TO AVERAGE COMMERCIAL ELECTRICITY PRICES (USD/KWH) BY STATE $5.0 $4.5 $4.0 $3.5 Average Cost (USD/Watt) $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 Average Commercial Rates ( USD/kWh) () r2 value = (strong positive relationship) Source: Mercatus,. Residential Prices from Energy Information Administration,. 23

26 APPENDIX B Call for Data SEPA recognizes a variety of costs comprise the final installed solar system cost. We seek partners willing to share cost component information for one or all of these individual costs. If you would like to participate, please contact Erika Myers at emyers@solarelectricpower.org. Hardware Costs Module Influenced by preference for particular design/manufacturer, such as domestic panels (e.g., consumer preference for domestic panels, WA incentive for local panels) compared to foreign panels Material (e.g., multi/polycrystalline, thin-film, CIGS (copper indium gallium selenide)) Efficiency rating Inverter Influenced by availability, preference for inverter type Module-level hardware - DC optimizers or microinverters Racking/BOS/Installation Materials Influenced by site specifics, ground-mount or rooftop, housing stock, tracking or fixed, racking material (e.g., steel, aluminum), and wiring protection Large-scale systems may have additional components necessary for interconnection, including: Transformers Switchgear Shipping costs Soft costs Customer Acquisition including system design and marketing (captured in overhead) Influenced by market maturity, market competitiveness, installer business model, system financing options available to consumer, transaction costs, consumer awareness, available incentives Permitting and Commissioning including inspection and interconnection Influenced by regional jurisdictional differences in objective and subjective requirements, regulation, and policy Commissioning cost directly affected by local authorities having jurisdiction (AHJ); may potentially require multiple re-commissioning audits Size and siting of project (higher permitting cost for larger and harder to operate sites) Installation Labor Influenced by diversity of installation platforms, roof materials, electric systems, utility requirements, customer preferences, cost of accommodating shading, roof obstructions, and load limitations Influenced by availability of inexpensive and/or skilled labor Financing Influenced by diversity of financing structures and models available to consumers (e.g., non-ppa state) Loan responsibility depends on loan recipient (e.g., customer-owned, third party-owned, or utilityowned residential rooftop) Underwriting Supply Chain costs Influenced by regional supply/demand imbalances Retailer-installer partnerships Other Profit and Other Overhead Costs Influenced by competition Policy and incentives Utility interconnection and net energy metering options O&M variations Warranty Sales Tax Influenced by jurisdiction Siting Land lease/purchase Brownfields (e.g., landfills) References: National Renewable Energy Laboratory (NREL), Non-Hardware ( Soft ) Cost Reduction Roadmap for Residential and Small Commercial Solar Photovoltaics, , Rocky Mountain Institute (RMI), Lowering the Cost of Solar PV: Soft Costs with Hard Challenges, Part One ( and Part Two ( blog_2013_09_26_lowering_the_cost_of_solar_pv_part_two). NREL/U.S. Department of Energy, Q2/Q3 Solar Industry Update 24

27 ANSWER THE CALL CONTRIBUTE YOUR DATA SEPA recognizes a variety of costs comprise the final installed solar system cost. We seek partners willing to share cost component information. Contact Erika Myers at emyers@solarelectricpower.org th Street NW, Suite 800, Washington, DC 20036