Cost-Reduction Roadmap for Residential Solar Photovoltaics (PV), 2017-2030

Research output: NRELTechnical Report


The installed cost of solar photovoltaics (PV) has fallen rapidly in recent years and is expected to continue declining in the future. In this report, we focus on the potential for continued PV cost reductions in the residential market. From 2010 to 2017, the levelized cost of energy (LCOE) for residential PV declined from 52 cents per kilowatt-hour (cents/kWh) to 16 cents/kWh (Fu et al. 2017). The U.S. Department of Energy's (DOE's) Solar Energy Technologies Office (SETO) recently set new LCOE targets for 2030, including a target of 5 cents/kWh for residential PV. We present a roadmap for achieving the SETO 2030 residential PV target. Because the 2030 target likely will not be achieved under business-as-usual trends (NREL 2017), we examine two key market segments that demonstrate significant opportunities for cost savings and market growth: installing PV at the time of roof replacement and installing PV as part of the new home construction process. Within both market segments, we identify four key cost-reduction opportunities: market maturation, business model integration, product innovation, and economies of scale. To assess the potential impact of these cost reductions, we compare modeled residential PV system prices in 2030 to the National Renewable Energy Laboratory's (NREL's) quarter one 2017 (Q1 2017) residential PV system price benchmark (Fu et al. 2017). We use a bottom-up accounting framework to model all component and project-development costs incurred when installing a PV system. The result is a granular accounting for 11 direct and indirect costs associated with installing a residential PV system in 2030. All four modeled pathways demonstrate significant installed-system price savings over the Q1 2017 benchmark, with the visionary pathways yielding the greatest price benefits. The largest modeled cost savings are in the supply chain, sales and marketing, overhead, and installation labor cost categories. When we translate these installed-system costs into LCOE, we find that the less-aggressive pathways achieve significant cost reductions, but may not achieve the 2030 LCOE target. On the other hand, both visionary pathways could get very close to (for roof replacement) or achieve (for new construction) the 2030 target. Our analysis has two key implications. First, because installed-system soft cost reductions account for about 65 percent of the LCOE reductions in 2030 for both visionary pathways, residential PV stakeholders may need to emphasize these soft cost reductions to achieve the 2030 target. Second, capturing these savings will likely require considerable innovation in the technologies and business practices employed by the PV industry.
Original languageAmerican English
Number of pages44
StatePublished - 2018

NREL Publication Number

  • NREL/TP-6A20-70748


  • LCOE targets
  • levelized cost of energy
  • photovoltaics
  • residential PV
  • SETO


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