ABSTRACTTracking systems can increase the amount of electricity generated by photovoltaic (PV) modules, by actively orienting each module to intercept more solar energy. We find that horizontal one‐axis tracking systems can increase PV generation by 12–25% relative to south‐facing fixed mount PV systems with 25° tilts in the contiguous USA, and two‐axis tracking systems can increase PV generation by 30–45% relative to fixed mount systems. Tracking systems increase PV generation more significantly in arid regions such as the southwest USA than in humid regions with persistent cloud cover such as the Pacific Northwest and coastal Atlantic states. We find that fixed and tracking PV systems have similar interannual variability in their generation profiles, and this variability is primarily driven by project location. Tracking PV projects cost more than fixed tilt systems, per unit capacity, and we explore how much more tracking projects could cost while generating similar levelized costs of energy as fixed tilt systems. We define this as the breakeven additional cost of tracking and find that it is primarily driven by three factors: (i) regional tracking performance, (ii) fixed tilt system costs that tracking projects compete against, and (iii) additional tracking operation and maintenance costs. Using this framework, we explore the relative competitiveness of tracking systems for a range of fixed and tracking PV prices and evaluate how tracking competitiveness varies by region. Copyright © 2013 John Wiley & Sons, Ltd.