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Clean Power gtm-solar-costs

Published on July 24th, 2012 | by Giles Parkinson

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Solar PV Close to 50c/Watt

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July 24th, 2012 by  

 
US Energy Secretary Stephen Chu earlier this year suggested that solar PV without subsidies will be cheaper than both coal and gas if it could get its costs down to around $1/watt by the end of the decade – an event that would trigger a total re-examination of the way electricity was produced in the world’s largest economy.

That meant cutting the cost of modules to round 50c/W, and then bringing the balance of module costs down with it. The latest research says that the module cost target will happen by 2016. Which also means that forecasts by Chinese officials and the Indian government that solar PV would reach wholesale parity with fossil fuels by 2020 (or 2017 in the case of India) are likely to occur even earlier.

GTM Research this week published the latest version of its five-year cost outlook for solar PV. Its first take was to admit that its previous predictions about costs, deployment and consolidation in the industry had been wildly misplaced. Like others, it has struggled to get its spread sheets around the stunning reduction in costs over the last few years, and misread the impact of feed-in tariffs, consumer demand, and the ability of Chinese manufacturers to lower costs.

“How wrong we were,” wrote GTM analyst Shyam Mehta. “We didn’t really have an accurate, even semi-quantitative, understanding of the relationship between pricing, incentives, finance and demand.” And by “we”, GTM could include not just its own researchers, but nearly the entire global energy industry.

And predictions on how the solar market is going to play out are not getting any easier. “Truth be told, we are not a long way farther along in developing an understanding of the PV market than we were back in 2008,” he writes.

But some things can be noted: “That industry has sheer momentum behind it in terms of interested, well-capitalized parties, that technology innovation will happen at breathtaking speed, helping to push c-Si (silicon-based) module costs toward the $0.50/W mark at 17% module efficiencies over the next half-decade.

“We also don’t plan to underestimate the lucre that even cooling uncapped FIT markets still have, especially in an era when system costs are fast approaching $2.00/W. We also don’t think that pricing and demand have a nice, simple relation in terms of elasticity: customers will wait to purchase equipment for months if they think prices will come down further, but then install gigawatts of PV in a few weeks if those weeks precede a major tariff reduction.” (Hello Germany, Italy, and last week, Queensland).

The report includes a few notable graphs. The first is the cost path for module – now estimated at around 75c/W and heading down to 50c/W at a rate of knots. GTM, and most others in the industry, believe it will get to the 50c/W mark by 2016 at the latest, most likely 2015.

The second graph shows how the deployment of solar PV will move away from Europe as subsidies wind down, to Asia (where feed in tariffs have just been introduced in China and Japan), and then to those countries where solar PV can thrive with no subsidies (competing on rooftops at socket parity against fossil fuel generation delivered via the grid, or, later, by matching fossil fuels in utility scale deployment).

So which companies will survive over the next few years? GTM says that the next four years will be difficult for the global PV manufacturers. “Fundamentally, this is because of the sheer magnitude of capacity in the industry that exists in the value chain today and the speed with which feed-in tariff programs in historically vital markets in Western Europe are being ratcheted down. We are in a transitional time in the history of the PV market: the training wheels of subsidies have come off, and the next few years will represent the industry’s first, uncertain attempts to ride without support.” The table shows its estimates of module costs for most of the major manufacturers by the end of 2013. Some will have already nearly made it to 50c/W.

This article was originally published on REnew Economy, and has been reposted with full permission.

 

 

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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.



  • Captivation

    Communist saves Capitalist.  News at 11:00

    • Bob_Wallace

      Communism died.  Old news.

      • Captivation

        Totalitarian State saves Democracy. News at 12:00

        • Bob_Wallace

          Totalitarian states are falling to democratic movements.

          That’s new to you?

        • Captivation

          World loses all sense of irony.  News at 13:00 

          • Bob_Wallace

            World enjoys jerking your chain. (Apparently news to you. ;o)

          • Captivation

            Glad you’re only joking ;)  Needless offense flows fast in this world of text without context.  Text is essentially a narrow band disguised as broadband.  Humor pushes the bandwidth to its limit and often backfires.  But like drivers at the racetrack, we all eventually push the metal until the next crash and then return temporarily to cautious motoring.

        • http://cleantechnica.com/ Zachary Shahan

          lol.

    • http://cleantechnica.com/ Zachary Shahan

      lol :D

  • http://pvinsights.com/ PVinsights

    According to PVinsights, it is possible to achive this target by 2020.

    • Ross

      You’ll have to give us more than that.

  • tibor strausz

    when looking at prices for solar, i don’t understand that that can be done without a metion of where these will be planted. in italy there is 80% more result than here in holland.
    so where you place a solar cell is very importand!

    • RobS

      $/W is largely unaffected by location except where import tariffs etc are concerned. Levellized cost of the energy produced on the other hand is heavily influenced by solar insolation and therefore location.

      • tibi stibi

         ok but to compete with other energy sources the $/W is not really importand than. but the levelized cost of the energy is.

        • Bob_Wallace

          And how does one calculate LCOE?

          Last time I ran some numbers for solar the first thing I entered was $/W.  That, of course, was $/Installed watt but panel price is part of that number.

          Just a very few years ago the price of panels was what kept solar from being competitive on almost all grids.  Several dollars per watt have gone away very rapidly.

        • RobS

          Yes but unless you want to have an unreadable headline that has an LCOE listed for every city, village, town and hamlet in the world then you need a catch all metric. A certain $/W will correspond to a different c/Kwh LCOE in different areas but as $/W falls the LCOE will fall everywhere commensurately, therefore it provides a far more consistent reproducible metric for tracking cost over time.

        • http://cleantechnica.com/ Zachary Shahan

          it’s still a very important input to LCOE.

          Many grid parity assumptions are based on it.

          And it is a globally relevant figure.

    • Dcard88

      The article is about the price to manufacture the panels, which is only affected by the cost of labor, not whether the sun comes out from behind the clouds.

    • Bob_Wallace

      As prices drop, solar works in more places.  You might want to look at this article for a great graphic…

      http://cleantechnica.com/2012/04/05/solar-policy-can-change-solar-hitting-grid-parity-by-a-decade/ 

    • Anne

      I have a PV system in The Netherlands. System prices that are now being offered can give you electricity at 15 eurocents per kWh. And that is a fixed price for at least 20 years. Try finding an energy company that offers you such a contract! Normal consumer prices are 22 eurocents per kWh.

      • http://cleantechnica.com/ Zachary Shahan

        that’s great to hear. hopefully that will result in a big boom in solar in the NL.

        • Anne

          Solar PV is growing in The Netherlands, but slowly, without feed in tariffs. There are some municipal subsidies. Most people have short term vision and will only consider solar if the payback time is about 5-7 years. That is still not feasible. 10-15 years is doable now.

          • http://cleantechnica.com/ Zachary Shahan

            Thanks for the update.

      • http://cleantechnica.com/ Zachary Shahan

        Oh, just realized this was you, Anne. Are you in the NL? Thought you were American (and in the US) for some reason.

      • Bob_Wallace

        At a 3% inflation rate 22 e-cents electricity is going to average 29.5 e-c over a 20 year period.  Just barely under twice as much for electricity as your 15 e-c.

        Your electricity purchased at half retail.Assume your solar system is pumping out power 40 years from now (a relatively safe assumption), electricity buyers would have paid an average of 37 e-c per kWh to your 20 years of 15 e-cents.  Averaged over 40 years you’re going to spend only 7.5 e-cents per kWh to retail purchasers 37 e-cents.Anyone find an 80% discount on electricity attractive?

        • Anne

          The panels can last a very, very long time if the seals stay intact and no delamination occurs. Then you quickly get cell corrosion and it’s game over.

          But I’ll likely have to replace the inverters after 10 years. Especially the electrolytic capacitors have a limited life span.

          • Bob_Wallace

            I wouldn’t bet on  a ten year lifespan for the inverters.  Off the grid, inside the building, inverters are lasting longer than ten years and my understanding is that the technology has improved over the last few years.

            I think you might be reading a ten year warranty as a life expectancy.  The SMA Sunny Boy inverter, for example, comes with a ten year warranty but a 20 year life expectancy.

            Twenty years from now inverter prices are likely to be very much less than today.  They will likely have become a commodity.  Replacing them once in 40 years shouldn’t increase the cost of electricity very much.

            Panel life, the best field data we have right now is for panels that are over 30 years old.  The delam problem has been minor (1% -2% of all panels failed due to delam and connection corrosion problems, IIRC).

            And that’s with 30+ year old technology.

            Perhaps it will only be 70% cheaper to go solar rather than 80% cheaper….  ;o)

        • http://cleantechnica.com/ Zachary Shahan

          damn, you just gave me another article to write. :D

          Title: 80% Discount on Electricity Now Available

          • Bob_Wallace

            Someone has to keep you on task…

            To quickly/easily calculate average grid price over a number of years you can use this page…

            http://www.nrel.gov/analysis/tech_lcoe.html
            Plug years into the Period (Years) at the top.

            Then enter current electricity price and expected inflation rate in the Today’s Utility Electricity Cost section.

            The answer will pop up as Levelized Cost of Utility Electricity. 

            (You don’t need to mess with any of the other numbers just to use this function.)

            Mess with people.  Calculate for 30, 40, 50, 60…  years.  We really don’t know how long solar panels last.  After all, they’re just a thin piece of rock underneath a pane of glass.  And glass can last hundreds of  years.

          • http://cleantechnica.com/ Zachary Shahan

            Thanks! :D

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