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Published on October 16th, 2012 | by Andrew

11

Ongoing Sharp Drop in Solar PV Cost Overlooked Amidst Trade Wars & Insolvencies



Lawsuits, insolvencies, price wars, intensifying international trade disputes, disruption of highly regulated power markets and the business of utilities — all these headline-grabbing current events miss the most important point when it comes to solar photovoltaic (PV) power technology, systems, and markets, asserts Giles Parkinson in a RenewEconomy blog post yesterday. That critical, overlooked point is that solar PV costs continue to fall, and sharply.

Parkinson points out a key, neglected point in an announcement made by the troubled Suntech, China’s and the world’s largest manufacturer of crystalline silicon PV cells and panels: its manufacturing costs are expected to fall another 30% in 2012, to 55 cents per kilowatt (kW), excluding the cost of raw, solar-grade silicon. This year’s drop is in addition to a 75% fall in the previous two years.

Intense Competition Driving Innovation, Downward Shift in PV Costs

Intense competition — private and government sector — to gain a dominant share of the fast-growing global market for solar PV is driving manufacturers and businesses all along the supply and value chain to do all they can to lower prices, and that’s leading to innovation, Parkinson points out.

He also notes that in a solar PV industry report last week, Deutsche Bank managing director and senior analyst Vishal Shah wrote that “the cost of utility-scale solar is coming down so quickly that developers are in a position to sign power purchase agreements of less than 10 cents/kWh. This was not expected to occur until closer to the end of the decade.”

Yes, headwinds persist, Shah continues. They’re considerable when it comes to deploying rooftop solar, including resistance and political lobbying by well established, highly regulated, and well funded electric utilities. Regulatory hurdles shield these utilities from competition and rising nationalist protectionism.

While Shah remains “very cautious” about investing in solar energy stocks, innovative retail financial models, such as third-party ownership and community solar investments, combined with rapidly declining retail costs are driving rapid growth. “Although we agree solar is starting to become competitive with conventional power generation sources in several regions worldwide, it may be still too early to step in,” Shah was quoted as saying. “The key reason is that while costs are falling, so too are prices,” Parkinson adds.

ArkX Investment Management analyst Tim Buckley doesn’t believe solar PV prices will rise even when the price wars end. “We’re not going to see a price rebound,” Buckley told RenewEconomy. “Margins have been crunched to zero, but Suntech shows that dramatic cost reductions are still coming through system – whether it is the manufacturing system, or installation cost, or even on silicon. That still leaves double-digit price deflation as base case for the next 2 to 3 years.”

Graph Credit: IMS Research

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About the Author

I've been reporting and writing on a wide range of topics at the nexus of economics, technology, ecology/environment and society for some five years now. Whether in Asia-Pacific, Europe, the Americas, Africa or the Middle East, issues related to these broad topical areas pose tremendous opportunities, as well as challenges, and define the quality of our lives, as well as our relationship to the natural environment.



  • tibi stibi

    here in Holland a friend if mine installed a 6 panel solar set for 500 €. that is including all electrical wires

    • http://cleantechnica.com/ Zachary Shahan

      whoa, didn’t realize we had another Dutch reader! :D several of you. :D hmm, maybe we could come pay you all a visit…. my partner and i met while doing 5 months of our graduate degrees there and fell in love with the country…. (well, i’ve loved the country since i was a soccer-obsessed kid watching marco van basten and ruud gullit.) always thinking of heading back for a visit or longer.

      anyway, will have to keep track of you all in case we do. :D

  • Ronald Brak

    And they’ve shut down another 360 megawatts of coal power in Australia, thanks to solar and wind and efficiency. This time very dirty brown coal at Yallourn power station in Victoria Latrobe valley.

  • Joe Real

    The top priority in solar industry is no longer in the manufacturing but how to tremendously reduce installation cost. Even if the cost of production has been brought down to zero, or even if the solar panels are now freely given, the cost to install them can’t justify the value of the electricity they produce. For example, the interest rates on the finance charges of the installation costs alone would be higher than the value of the electricity the installed panels will produce.

    In fact, the last bottleneck that is hindering the wide adoption of solar energy is the exorbitant price of installation. If these solar PV can be made into easier plug and play modules that can be installed by people of average skills, prices of installation would come down as an example. Manufacturing is no longer the profit center for solar PV, it is how to effectively lower the cost of installation.

    • Bob_Wallace

      Joe, there probably are some installers that are ripping people off, but there are others who are installing at retail grid parity prices.

      Panels and racks are already largely ‘plug and play’. Labor costs are a modest part of the overall cost.

      Probably the place we need to concentrate is on permitting and paperwork fees. That seems to be one place that Germany has really outdone us.

    • Ronald Brak

      Joe, I can borrow money at about 7% and I’m Australian. Borrowing costs are less in the US. The average cost of installed solar is about $3 a watt here and falling, making it the cheapest source of electricity available to Australians. It’s even cheaper in Germany. I don’t know what the average cost is in the United States, but I do know installations are being done for $3.75 a watt. That makes is competitive with grid electricity for millions of Americans right now, without free panels. At German installion costs point of use solar is competitive just about everywhere in the US. Currently US solar is where Australia was a year or so ago. Prepare to be amazed. Or if you’re not so easily amazed, just put in a solar system when it will save you money on your electricity bill, which, depending on where you live, might be now.

    • Britsolar Ltd

      You need a qualified roofer, a pre-installation survey, a structural survey, certificated scaffolding, a working at heights certificate, a risk analysis, consumer finance insurance, an annually inspected quality and control paperwork system, employers and public liability insurance a ticketed solar installer and a ticketed electrician and ongoing training for apprentices. You also have to include sales, finance, marketing, administration, purchasing and delivery costs. Most customers get at least three quotes which means that if the supplier is lucky he gets one third of the business he surveys and quotes for. If you buy cheap panels there is a warranty risk long term. You virtually always hit roof issues when you start fastening to the rafters . . and so it goes on. You typically get 600 DC volts off a panel array so wiring, connecting and verifying the inverter is not a trivial matter and safety rules have to be understood and observed. Every panel has to be independently tested and logged on-site using an irradiance meter before it is hoisted to the roof and the customer has to be supplied with all the system and warranty details including serial numbers in a comprehensive manual within 7 days of commissioning. You have to notify the DNO before installation and you then have to register with the DNO for the FIT after signoff. You also have to return to the installation a couple of months later to check everything is safe.

      Installation costs are not trivial unless you want a cowboy industry and people standing out in the street at two in the morning watching their house burn down or water pouiring through the roof. In the UK the solar PV trade is one of the most highly regulated and regulation is a significant cost.

      Were it so straightforward as simplifying roof fastenings we would all be happy but sadly it isn’t.

      • http://cleantechnica.com/ Zachary Shahan

        Wow, most detailed explanation of what goes on there that we’ve ever received in the comments. And is quite a list.

        • Bob_Wallace

          “You need a qualified roofer, a pre-installation survey, a structural survey, certificated scaffolding, a working at heights certificate, a risk analysis, consumer finance insurance, an annually inspected quality and control paperwork system, employers and public liability insurance a ticketed solar installer and a ticketed electrician and ongoing training for apprentices. ”

          A solar installation company should have a qualified roofer and a electrician on staff or on call. They should own the tools of the trade such as scaffolding, or rent it for unusual conditions. They should carry insurance. This is the sort of stuff any contractor deals with.

          Germany isn’t burning down houses and they install for much better prices.

      • http://profiles.google.com/vandammes James Van Damme

        If I could get micro-inverter panels that I could put in the back yard where I have half an acre of weeds right now, I could do the installation myself and wouldn’t need any of that expensive stuff. 600 volts??!

        • Bob_Wallace

          Sure, you could do it with on-panel micro-inverters or with a single grid-tie inverter. The latter might be the cheapest.

          I have no idea what the 600 volt stuff is about. Perhaps large commercial rooftop arrays are wired up that high in order to minimize connecting wire size. I’ve never seen residential voltages higher than ~120. It does make sense to wire panels in series in order to ship higher voltage/lower amperage watts and minimize wire size.

          You’d need to check with your building department and figure out their requirements. They might require that you run the wire in conduit (not a hard job) and you might need to hire a licensed electrician to check your panel wiring and do the final hookup to your house.

          If you do set up your own system remember that it’s likely to be putting out power for 30, 40, a bunch more years. Don’t build your rack out of something that will rot away.

          And make your rack adjustable so that you can go out about four times each year and tilt the panels toward the Sun as it rises and falls in the sky.

          Here’s a company that seems to have a good reputation and great prices -

          http://www.sunelec.com/index.php?main_page=index&cPath=1

          They’ve got grid-tied systems for under $2/watt. That does not include racks, but they will help you design your rack and they sell parts at good prices.

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