"They say they're about 60% of the way there because [of solar] panel prices.... They've come down 80% over the past five years," Ronen said.
The cost of solar panels, or solar hardware, used to represent two-thirds of the overall price to install solar power. Over the past five years, however, that has flipped to where "soft costs," which include labor, permitting and advertising, now represent the majority of the cost.
The U.S. has lagged behind some other countries in progressive solar energy policies that have been successful in lowering soft costs of solar installations.
Germany, for example, has a generous fee and tariff policy, that guaranteed if a residence or business installed solar, costs would remain fixed for 20 years. The uptick in installations lead to massive price drops in solar energy costs.
"Germany made this massive investment in solar even though they have relatively poor solar resources," Ronen said, referring to both a lack of solar hardware resources and sunny days. "For example, in the U.S. the worst place in the country for solar is Seattle. Germany's worse than Seattle."
After the Fukushima nuclear disaster in 2011, Germany also decided to shutter its oldest nuclear plants, and set its sites on phasing out all plants by 2022 in favor of renewable energy.
"So Germany is on the leading edge of high solar penetration rates," Ronen said. "Overall, the experience shows that it is possible even in a place like Germany with relatively poor [solar] resources."
Deutsche said solar system prices in the U.S. are expected to decline from just under $3 per watts today, to under $2.50 per watt over the next 18 months, leading to a further decline in the price per kilowatt-hour of solar to 9-14 cents, "driving further acceleration in solar shipments."
The U.S. solar installer market is still highly fragmented, Shah noted in his analysis. But he expect that to shift dramatically over the next three to five years as large solar manufacturers and installers, such as First Solar and SolarCity, grow to facilitate economies of scale in a post-ITC environment.
"We believe the availability of residential leasing options...also acts as a significant growth catalyst for the sector, considering the fact that solar leasing companies are highly profitable and have strong incentive to maximize the number of leasing customers ahead of ITC expiration in 2016," Shah said.
One area of concern is net metering, Shah noted. Net metering is the ability for residential and commercial solar installations to sell unused power back to utilities, making the electrical meter a two-way street.
Currently, 43 states and the District of Columbia have implemented net metering policies, some of which are more favorable than others.
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