The rapid deployment of solar PV, working in combination with high learning rates (for every doubling of cumulative installed capacity PV module costs decline by 20-22%) has led to dramatic cost declines in the last 10 years. Crystalline silicon (c-Si) PV module prices have fallen by over 65% over the last two years alone. This is driving reductions in installed costs. Utility-scale solar PV projects can now have lower installed costs than for wind in some markets and have lower installed costs than for coal-fired power stations in virtually all OECD countries.
The weighted average cost of electricity from grid-connected solar PV varies from as little as USD 0.15/kWh to a high of around USD 0.31/kWh depending on the region for utility-scale projects. With solar PV module prices of around USD 0.75/W for crystalline silicon modules, future cost reductions will increasingly be determined by cost reductions in the balance of system (BoS). As a result, markets with higher than average cost structures for BoS today could see dramatic reductions in installed prices by 2020, lowering the weighted average costs of solar PV lowering the global weighted average cost of solar PV significantly.
Solar PV has a high remaining cost reduction potential, particularly when BoS differences across markets are taken into account. Total installed costs have been falling rapidly in the most competitive markets, driven by falling module prices and competitive pressures to reduce BoS costs. Total installed costs for residential PV systems in the second quarter of 2012 were as low as USD 1 600/kW for the cheapest systems (Germany), but less competitive markets can have costs as high as USD 8 000/kW.