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Published on June 19th, 2013 | by Nicholas Brown

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Forecast: Cost Of PV Panels To Drop To $0.36/Watt By 2017

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June 19th, 2013 by
 
The cost of photovoltaic solar panels is expected to drop to 36 cents per watt by 2017, according to new research by cleantech market research firm GTM Research.

Panels from the Jasper solar project. Image Credit: Solar Reserve.

Panels from the Jasper solar project.
Image Credit: Solar Reserve.

While this drop in solar panel prices will help to make solar affordable to more people, which will increase the size of the solar market, this ongoing cost reduction means much more than that.

Currently, solar panels are backed up by natural gas and various other types of power plants on the electricity grid. However, solar panel costs of $0.36 per watt make it more feasible to install additional solar panels to back each other up instead of using any other type of power plant (for off-grid setups), reducing the need for batteries.

For example: If you need 1,000 watts of power, and your 1,000 watt solar panel generates only generates 50% of its capacity (500 watts) due to cloudy weather, that can be compensated for by using two of those 1,000 watt panels instead of one, so you could still draw 1,000 watts from that 2,000 watt (nameplate capacity) array.

As long as the solar panel array is generating more current than is being drawn from it, there is no power disruption or power fluctuation (provided that voltage regulation is used).

Each 1,000 watt panel would cost $360 without factoring in installation costs, but they would last about 6 times longer than batteries.

Assuming the batteries required are charged at their recommended rate, they would end up costing $1,980 and they would have to be replaced more frequently than the extra solar panel — plus, there is an installation fee for the batteries as well, except for DIY people.

Suddenly, that $360 sounds good. Even after factoring in the fees required to install that extra panel, it is likely still much cheaper than expensive batteries.



Anyway, we can’t be certain about anything yet. We will have to wait and see. And these are simply market projections.

“Yesterday’s PV cost reduction roadmaps are no longer relevant today,” said Shyam Mehta, Senior Analyst at GTM Research and the report’s author. “Three or four years ago, the industry was targeting one dollar per watt costs in 2013; today we are at 50 cents per watt, and there is currently little consensus on what is a realistic goal for the module supply chain to set for itself over the next three to five years. This is not only important for these manufacturers and their investors, but for installers and project developers across the globe.”

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About the Author

writes on CleanTechnica, Gas2, Kleef&Co, and Green Building Elements. He has a keen interest in physics-intensive topics such as electricity generation, refrigeration and air conditioning technology, energy storage, and geography. His website is: Kompulsa.com.



  • Robert Flanary

    Why buy twice as many to compensate for poor conditions when you can connect with a neighbor across town who is getting plenty of sun? This is the power of the GRID! Twenty years ago I worked for a small solar company and was always amazed at the folly of the off the grid crowd. Getting off the grid is not only expensive it is an environmental disaster. In twenty years it seems as if the off the grid folks have not changed. Personally I thing they have hindered progress in the adaptation of solar in the U.S. Please remember, the grid is your friend when it comes to solar and wind.

    • Robert Flanary

      Here’s another point to consider: Wind can supply baseline needs if it is distributed over wide areas. This can happen with a DC smart grid. Wider area means less fluctuation and more reliability. It also means that the contribution of wind to the grid can be predicted days in advance so as to plan for natural gas or bio fuels back up. Distributed solar can supply much of the peak during the day. Again, wide distribution provides reliability and the ability to plan days in advance. These systems can be created for a lot less money than messing around with costly storage. Which means we make progress much more quickly and reduce atmospheric carbon much more quickly. There is no time to waste. I say to you off the grid folks to once and for all get with the program or get out of the way.

      • Bob_Wallace

        Come on Robert, stow the bitterness.

        Many of us off-gridders have been leading the push to make the grid green.

    • Bob_Wallace

      I’m off the grid. Have been for over 20 years.

      I totally agree with you. If the grid is available and the hookup cost is reasonable then one is best being on the grid. If your site isn’t good for solar then look for a community solar project you can buy into.

      I don’t understand your “environmental disaster” claim. Yes, many of us off the grid do use generators for backup, is that what you mean? If so, I wouldn’t go as far as “disaster”.

      And in no way would I say that off-gridders have impeded grid-attached solar. Quite the opposite.

      • Robert Flanary

        My issue is with city planners in the Chicago area toying with the idea of getting people off the grid. Then there are the activists that will do anything to fight ComEd just because they own nuclear plants. These activists just helped to implement a long term gas contract between Integrys, the gas and coal company, and the city of Chicago based on the lie that everyone will now be getting all their electricity from wind. I guess they didn’t realize they were encouraging fracking and delaying the day that the coal plants will shut. I have had long discussions with others against the grid who are fighting the smart grid just because the grid is owned by ComEd, the nuclear giant. It is like they don’t realize that these fights are delaying the closing of coal plants. The truth is that we could close all coal plants in five years and never miss them. But the only way that will happen is if people start learning of the advantages of the grid and how we all would benefit from mandatory residential real time electricity pricing.

      • Robert Flanary

        With regard to the environmental disaster consider the cost of residential storage and how it is done. A ton of batteries in every house? What are those batteries made of? What is the cost of recycling them? Do people cut down trees to make sure their panels are not shaded? More land needed? That means more transit distance and more environmental destruction.

        In some instances off grid makes the most sense. But that would be true for only a small percent of the population – I don’t know what percent exactly but certainly less than 5 percent. Why on earth would we give the podium to those who will only help 5 percent of the population? It makes no sense.

        • Bob_Wallace

          Sound to me like you’ve got a local issue.

          The batteries in my house are lead-acid. Lead-acid are one of the most successfully recycled products manufactured with a >90% recycling rate. Everyone I know who is off-grid uses lead-acid.

          Processes are in place to recycle EV lithium-ion batteries but there aren’t enough of those yet to bother.

          I would guess that some people cut down trees so their panels aren’t shaded. I’m cutting a Doug fir this fall because it has grown tall enough to shade mine. I’m going to turn the ~1/8th acre south of my house into an oak grove by removing the firs. Firs are free to grow on the other 59 7/8ths.

          If you were in a residential setting one might take down a large tree and replace it with a species which doesn’t grow as tall.

          I agree. Off the grid makes sense in a few places. If you’re a quarter mile or more from the grid then going off grid may make sense. But that’s not less than 5 percent, if you’re talking about the world. There are billions of people who don’t have grid access. Millions of us are going solar. (Over a million households in Bangladesh are already off-grid solar.)

          In other places where grid prices are very expensive such as Germany and Australia people are starting to add some storage to their solar system. Enough to carry that day’s electricity into their late afternoon/evening use and using the grid for “deep storage”. For them personal storage is cheaper than purchasing from the grid if they are already producing surplus electricity and don’t have net metering.

          I suspect we’ll see end-user storage growing. Storage at the end-user level is offset by the retail, not wholesale, price of electricity. The math works better.

  • Bob_Wallace

    There’s a good writeup in this linked piece which should clear things up.

    http://www.greentechmedia.com/articles/read/GTM-Researchs-Module-Cost-Outlook-36-Cents-Isnt-As-Low-As-You-Think

  • Bob_Wallace

    Perhaps this will help. Second attempt…

  • Bob_Wallace

    Perhaps this will help…

  • http://soltesza.wordpress.com/ sola

    If such kind of overbuilding happen in a grid connected scenario, you will probably not need to heat away your un-feedable production for long.

    I bet that soon enough, electricity companies will offer to buy it from you and make synthetic gas with it or use it for managed demand. (like the new Audi/Wolkswagen syn-gas plants).

    If they can get it cheap enough there is no point in leaving it at you.

    • Bob_Wallace

      It comes down to how many hours per year overproduction occurs. Gas plants cost money and they need to operate enough hours to make them profitable.

      That’s a major flaw in a lot of the CO2 -> fuel dreaming. They often base their input costs on “surplus” wind/solar energy. Surpluses might occur only 10%, 20% of the time as we add storage and load-shifting.

      Can’t have a plant and labor sitting around for 3 hours of input energy on Tuesday night from 1 to 4AM and then nothing until Thursday afternoon for an hour and a half.

      • http://soltesza.wordpress.com/ sola

        Yes, labor would be a problem but only if the plant requires a lot of it. If the plant is highly automated, this may not be such a big problem.

        Also, they may not be completely dependent on ultra-cheap surplus. They may work with a mix of “normal” priced electricity (possibly their own windfarms) AND the ultra-cheap (possibly negative-priced) surplus electricity. This would somewhat ease the labor problem because the plant would always produce at a certain capacity but it would peak when surplus is available.

        If the plant is cheap enough / prod.capacity W, it may still be worth it, especially if they don’t see competing cheap storage building up in the capital repayment period.

        Moreover, H2 and methane can provide seasonal load-shifting while I don’t think that even the most promising new electric storage solutions will do that. Just the other day a CT article said that the German gas infrastructure can provide storage for 200TWh which available right now, without any investment whatsoever.

        My country, Hungary, has built huge nat-gas storage facilities in response to the Russia-Ukrain bickering which disrupted supply in some of the recent years. Our nat-gas storage / average country consumption ratio is probably much higher now than that of Germany.

        In an environment like this, it may be worth doing syn-gas or syn-H2.

        • Bob_Wallace

          Just keep in mind that unless the capex, fixed operating costs, and standby labor costs are very low a plant is going to have to run a lot of hours per day to stay in business. A few hours per night during part of the year isn’t going to be enough cheap power to carry anything but the very cheapest of manufacturing.

          I’d be very wary of anyone claiming that they can make an affordable fuel or store energy in some sort of a fuel form if they are basing their calculations on cheap, surplus electricity. They should be using the industrial price of electricity in order to have any credibility.

      • Martin Vermeer

        > Surpluses might occur only 10%, 20% of the time as we add storage and load-shifting

        It would be great if you were right… but it’s good to know that there’s a back-stop. And as I understand it, the major cost item of an electrolyzer is the membrane electrode assembly which needs frequent replacement — but only in terms of the hours the plant actually runs.

        • Bob_Wallace

          Let’s do this another way.

          Let’s say that I know how to build a factory that can make liquid fuel from electricity. I need ten million dollars to build one.

          You have ten million dollars to invest, you’re interested, so you ask me about what you might earn from your investment.

          I tell you that I can make a return of 10% on your investment during the hours of operation.

          Sounds good to you, but then you ask how many hours I expect to be able to operate.

          Well, the Sun shines on average 5 solar hours per day on average. Out of that perhaps 15% of the time there will be surplus electricity. So on average we can operate 45 minutes a day. And make a 10% return on your investment.

          You contemplate a moment and ask “What about the other 23.25 hours per day?”

          I reply “We get eaten up by fixed operating costs and you lose your ten million”.

          Backstops have to be affordable. They have to make enough money to pay for their capex and opex.

  • jburt56

    Right. You install more panels and peg the meter at sunrise.

    • Satorical

      Dumb question: You still need the grid or a battery at night, though, right? So lower prices wouldn’t exactly be a backup, although I see the point about more affordable panels.

      • jburt56

        It depends on the extent of the grid East to West. The East exports surplus power in the morning, the West surplus power in last afternoon.

        • Bob_Wallace

          Moving massive amounts of power from the East to West Coast in the morning and back in late afternoon is probably not practical.

          But putting panels on east- and west-facing roofs would significantly extend the solar day. Aiming panels east or west lowers their daily output by about 20%, but they start producing earlier/later.

          We can give up that 20% in order to extend the solar day if the price of panels is cheap.

          A longer solar day means less need for storage.

          (And the grid? It’s a good thing. It just needs to be drug into the 21st Century.)

          • Lisa

            Yes but you still need storage, no not so, putting panels to the east and west, got to factor the weather in.

            We got to advance further then 20% if we are going to reduces C02 level.

            Yes the solar panels are cheap but that still haven’t prevented loading to the level that we all like to see.

  • Ivor O’Connor

    Any way we can change the wording from “natural gas” to “poisonous gas”?

    • Bob_Wallace

      How about a name that includes “carbon that is sequestered and we need to leave it where it is”?

  • globi

    Since 2012 small German PV-systems have already not been allowed to feed-in more than 70% of their nameplate capacity. (Same concept essentially).

  • JamesWimberley

    ” ..drop another 36 cents per watt by 2017″ is presumably a typo, you mean “drop to 36 cents”. The current price cited by Mehta is 50c, making a drop of 14c. But other sources give a current average module price of 73c/w, making your assertion correct! Perhaps Mehta is talking about solar cell prices, which the same source gives as 41c/w on average, in a range of 52c to 35 c.

    Mehta’s assertion “there is no roadmap, it’s all chaotic” combined with a firm contrarian prediction for a radical and rapid price drop in the next few years do not inspire confidence. All I take away from this is that there are ways that major manufacturers can cut costs further if and when they have the money to invest in upgrading their factories, which at present they do not. They are all treading water, selling more or less at cost, and waiting for demand to pick up. The medium-term price trend is still down, we knew that, but with large cyclical swings around it.

    • Bob_Wallace

      36 cents is the predicted cost of manufacturing. Current cost of manufacturing is around 50 cents. 73 cents is the current average selling price.

      The scuttlebutt I’ve read says that there is new equipment waiting in the wings for demand to increase. Panel manufacturing will be more highly automated and more efficient, helping to cut costs.

      We’re still in the shakeout period in which the least efficient manufactures are being forced out of business but we apparently haven’t cleared all their produce out of the stream. In a few months we should be past this stage in the evolution of panel manufacturing and prices should start down once more.

      Overbuilding wind and solar capacity is one way to reduce the amount of storage needed. At peak production times there may be “too much” electricity generated and some capacity would have to be curtailed. But the amount lost can be quite bit less costly compared to the value of the electricity generated when wind/sunshine inputs are less optimal.

      The Budischalk, et al. paper (look in the 100% Renewables section on the right) gives a good example how, when building a ~100% grid, it can make sense to overbuild generation. Unless storage becomes dirt cheap.

      • JamesWimberley

        Bob: “Current cost of manufacturing is around 50 cents. 73 cents is the current average selling price.” So they have a gross margin of nearly 50%? That’s not what their financials say. Or am I missing something in the definitions?

        • Bob_Wallace

          I haven’t seen their financials.

          Are you looking at them? Do they separate cost of manufacturing from other business costs?

          I would think “cost of manufacturing” would be cost of inputs (materials, labor, energy) and not interest on capital, clerical costs, etc. Cost of manufacturing and cost of “doing business” would be different, I would expect.

        • arne-nl

          James,

          Gross margin is calculated as a percentage from the selling price. So that would make it 31.5%.

          Current average cost of manufacturing is not 50 cents. The report states that 50 cents is the ‘best in class’ module price, iow the lowest price they could find. The 73 cents that Bob quoted is the average selling price, including the perhaps the not so ‘best in class’. I think these numbers are from different sources and can not be compared.

          Add the extra costs for transport, traders, etc and you’ll see that not the entire 23 c per W can be claimed by the manufacturer as margin.

          The question is, are these 73 c/W factory gate prices or end user prices?

          If I am to believe the reports, most manufacturers have margins close to zero or even negative.

          • JamesWimberley

            My source, pvinsights, is I think quoting wholesale prices at say Shanghai docks.

            The most reliable evidence must be the financial reports of the big producers, since these are regulated by financial exchanges ad false data have severe consequences. For Q1 2013, Yingli 4.3%, Trina 1.7%, First Solar 8.1%, Canadian Solar 9.7%. And those are the ones in the black.

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