Figure 1. Impact of a Sustained Solar Incentive Program on the Cost ($/W) of Installing a Residential Solar PV System (Assuming a Progress Ratio of 85 percent)

Using a conservative estimate of the rate at which production increases spur price decreases:

• With no residential incentive programafter 2005: California would install approximately 53 MW of residential PV systems on new and existing homes by 2015, with the system price in 2015 of $5.69/W – not yet within the range of being economically self-sufficient for the consumer.
• With a 10-year incentive program thatscales down $0.20/W each year fromits current level of $2.80/W: California would install about 1,278 MW of systems on new and existing homes by 2015, when the system price reaches $4.40/W – a price that would put solar within the range of cost-effectiveness for California homeowners without financial incentives. Getting to this point would require an average annual budget of $180 million for incentives to create the demand for residential installations.

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