Last year was a good one for the photovoltaic (PV) industry and it customers. Prices continued to fall, and the amount of installed capacity was up.

According to the latest U.S. Solar Market Insight Report from GTM Research and the Solar Energy Industries Association, the cost of a residential PV system dropped to an average of $3.48 per installed watt, a drop of 9 percent from the previous year’s average of $3.83.

The residential market also saw its best year of growth, with more than 1 gigawatt of capacity installed — the equivalent of 200,000 systems each with a capacity of 5 kW.

“Soft costs,” which includes marketing, labor and permitting, still make up 60 percent of the cost of a retail system, the report notes, “and there is ample opportunity for improvements and efficiencies which will continue to lower system costs.”

Commercial and utility systems even cheaper

Commercial installations were down by 6 percent in 2014, but prices also were lower, with an average medium-scale project at $2.25 per installed watt at the end of the year. In the first quarter of the year, the average price was $2.53 per installed watt, the report said.

Utility-scale projects showed the biggest growth, representing 63 percent of all new capacity brought on line, and also the lowest pet-watt price: $1.55 per watt in the fourth quarter of 2014, down from an average of $1.77 per watt in the first quarter of the year.

GTM Research Director M.J. Shiao said total installation costs for utility and large commercial systems are now below what the solar modules alone cost in 2011, “underscoring the magnitude of the falling module prices and incremental balance-of-system reductions.”

Despite recent strides, PV accounts for a tiny fraction of total U.S. energy production. But PV accounted for 32 percent of new generating capacity in 2014, second only to natural gas, the report said.