$1 per watt solar – it’s here now

One of Australia’s larger and more reputable retailers is selling a 5kW fully installed solar system at $1 per watt - the holy grail price point. With batteries coming down in cost it prompts the question - why bother with utility-scale solar?

It’s been seen as the holy grail target for cost competitiveness of solar PV – achieving costs of less than $1 per watt for a fully installed solar system.

The US Department of Energy even has this target as the driving focus of its solar PV R&D efforts under the SunShot initiative.

Yet such system prices are already available to Australian households.

Climate Spectator has sighted a firm quote for a specific 5 kilowatt solar rooftop installation in Melbourne from one of Australia’s larger and more reputable solar PV retailers priced at $4990, or basically $1 per watt (post renewable energy certificate or STC rebate).   

Climate Spectator is not at liberty to reveal the name of the retailer, but the system quoted involves solar panels from a tier one producer with a good reputation for quality and a Growatt inverter (rated at 5kW) on a corrugated iron, single story roof. Such a price lies substantially below the average prices cited in the SolarChoice's benchmark index.

What’s quite incredible is that the quote was provided without any negotiation or playing off of the supplier against others, it was simply provided in response to an email quote request from a customer who mentioned they were looking to price match against other suppliers. 

To what extent this is a one-off event is hard to say as the supplier isn’t about to reveal their pricing strategy to Climate Spectator. It may be partly a function of an effort to push out temporary excess stock, or perhaps the installer had another job nearby that made the installation site attractive. However, supporting the case that this is, in fact, not a once-off is that TrueValueSolar – the largest solar retailer in the country – has publicly advertised prices close to $1 per watt for 5kW systems in recent times as well. While this may not be reflective of average prices in the market, it serves to illustrate that Australian rooftop installers are offering small rooftop systems at prices that were thought to be impossible just a few years ago. And this is possible using quality components and a reputable installer. 

It also shows that what’s on offer in public is clearly not the best deal possible if customers are willing to shop around.

Of course, tempering the excitement one needs to recognise that the true cost of the system is not $1 per watt once we take into account the Renewable Energy Target rebate. This adds about $0.65 to the cost – to make $1.65 per watt with no government support.

Yet this cost still blows away what the US is managing to achieve with massive ground-mount utility-scale projects over 2013 that have the benefit of considerable economies of scale. The chart below details costs per watt (on a direct current basis) for megawatt-scale projects in the US, showing that the lowest cost achieved for any project is $US1.70 per watt, still above our 5kW household system. Although the Public Service Company of New Mexico recently filed for regulatory approval of two projects, to be completed in 2015, each with a turnkey price of $US1.60 per watt (DC).  

Installed cost of utility scale solar projects in the United States (US$/watt-DC)

Source: Lawrence Berkeley National Laboratory (2014) Tracking the sun VII

Given the reasonable prospect of affordable kilowatt-scale battery systems in around a decade or possibly less, and the large premium for delivered electricity over wholesale generation, it prompts the question: why bother with utility-scale solar?

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