US Residential Solar Prices Drop in Second Half of 2023 Amid Slowing Demand

Median battery storage prices also fall for the first time since 2020


Solar prices fell for the first time since mid-2021 in the U.S., dropping 3.5% to $2.80/W in the second half (H2) of 2023, highlighting a residential solar market plagued by high inflation and changes to net metering policies, according to a report by EnergySage.

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The company analyzed quotes submitted by solar companies to shoppers, comparing trends throughout the year.

Despite the downturn, consumer demand remained strong. The median quoted solar system size increased by half a kilowatt to 11.3 kW in H2 of 2023 as homeowners looked to offset higher-than-average electricity bills. Installers also quoted larger, 400+ watt solar panels, which were included in 90% of EnergySage’s quotes, up from just 2% in 2020.

“Despite the slowdown in 2023, we continue to see strong consumer demand for solar energy solutions,” said EnergySage CEO Vikram Aggarwal.

Arizona has had the lowest median quoted solar costs for three consecutive years, while Tennessee surpassed Indiana as the state with the highest median solar cost.

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The growth in the residential solar market was facing headwinds from rising interest rates, notably impacting price-sensitive markets like Texas, Arizona, and Florida, according to a Wood Mackenzie report published late last year.

Battery Storage Takes Off

The report also found that storage attachment rates rose by 10% to 61% in the country, and the median storage pricing fell for the first time since 2020, dropping 6.4% to $1,265 per kWh stored. The decrease in pricing was driven primarily by Tesla and FranklinWH.

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California saw the biggest jump in storage attachment rate, by nearly 45%, following the implementation of the controversial Net Billing Tariff in April, which significantly reduces the savings benefit of solar-only systems.

Of the companies EnergySage tracks, Enphase and Tesla were the two most quoted battery brands, appearing in two-thirds of storage quotes. FranklinWH gained the most market share, growing from 1% of quotes in H2 2022 to 11% of quotes in H2 2023.

Financial savings, maximizing self-consumption, and backup power were the main contributors to consumer interest in storage. Seven out of 10 solar shoppers requested battery quotes on EnergySage throughout 2023.

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Brand Preference

During H2 2023, REC became the top quoted solar panel brand on EnergySage, overtaking QCells. At the same time, SolarEdge‘s share dropped from over 30% in early 2022 to under 10% in late 2023.

Waaree panels were in 5% of quotes, which were usually paired with SunPower inverters and quoted for $0.78/W more than the lowest-priced option. SunPower was the most expensive equipment package on the marketplace.

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In 2022, France-based Schneider Electric acquired a controlling stake in EnergySage.