As shown in the chart, photovoltaic (PV) solar cell prices have come down by a factor of 100 over the last 35 years; and down by a factor of 10 over the last 15 years. (The reason for the small increase between 2005 and 2008 was because of a polysilicon shortage.) The sharp drop in 2009 and 2010 was because of too much capacity, especially in China, which has caused prices to collapse. (See the Overcapacity Issues section.)
The 2015 Q1 average solar cell price was $0.31 per watt and the average solar module price was $0.72 per watt.
Since costs after installation are minimal for solar electricity, the relevant costs are the purchase price, installation costs, and the cost of land (capital costs). Cost components that make up a residential solar system are: system design, solar modules, and the balance of system (BOS) which consists of an inverter, bi-directional billing meter, connection devices, and installation labor. In the southwest, installed residential solar prices are competitive with residential electricity prices after incentives.
The average residential household in the southwest installs a 5 kWh system and during Q1 2015, it cost about $3.40 per DC watt or $17,000 (5000 times $3.40) before incentives. Utilities on the other hand typically install systems in the 100 mega-watt or greater range. The installed utility system cost during Q1 2015 was $1.58 per watt (average) and is expected to gradually drop some more.