Evaluating the impact of third-party price reporting and other drivers on residential photovoltaic price estimates

Aim Policy-makers typically track the rapidly evolving U.S. residential photovoltaic (PV) market by relying on price data reported by PV installers/integrators to incentive programs. Recent years have witnessed a shift toward third-party-owned (TPO) business models, in which the absence of a cash purchase price obscures data interpretation. Appraisals—often based on estimates of the average fair market value across a diverse fleet of systems—are one way TPO prices are reported. Scope This study investigates residential PV system price drivers to improve the accuracy, consistency, and relevance of PV price-tracking efforts. Our econometric approach evaluates system price drivers using California Solar Initiative data, controlling for system, installer, and geographic variables. Conclusions We find that reported prices for confirmed appraised systems are $1.13/W higher than non-appraised systems and do not respond to hypothesized price drivers. For non-appraised systems, we find preliminary evidence of market distortions based on the impact of the incentive level, module cost and household income on reported price. Further, unspecified installer heterogeneity—possibly due to differences in products, cost structure or reporting practices—is a substantial price driver. Using estimates, we develop a price model to approximate non-appraised system prices.