Clean Power canadian-solar-reduction

Published on May 26th, 2015 | by Giles Parkinson

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Solar PV Costs To Fall Another 25% In Three Years

May 26th, 2015 by  

Originally published on RenewEconomy

The big fall in solar PV costs over the last five years is helping redefine the future of energy generation across the world, with grid parity in the retail market achieved in dozens of countries, and even beating wholesale prices in markets such as Chile and the Middle East.

And it seems that the cost falls will continue. Canadian Solar, one of the big three global solar PV manufacturers, this week delivered a detailed update of its outlook, including some interesting forecasts on the future of solar PV costs.

In short, Canadian Solar says the cost of solar PV modules will likely fall 25 per cent in the next three years, from US47c/watt at the end of 2014, to US36c/watt at the end of 2017.

canadian-solar-reduction

This is mainly going to be achieved by improvements in cell efficiency and the output of solar PV modules. Canadian says it has been able to increase cell efficiency at 0.5 per cent per year over the past five years, and it expects this to continue, or even accelerate.

It is now targeting cell efficiency of 22 per cent and module power outputs of 310W. Commercial efficiency will rise to around 20 per cent from 16-17 per cent today.

This comes as it plans to almost double solar module production to 5.5GW per annum by fiscal 2017. (That conforms then to the past experience that solar PV costs fall by 20 per cent for every doubling in capacity).

It’s not just the cost of modules that will drive a significant reduction in costs at the consumer end. UBS this week noted the huge number of “Yield-Co” being created by leading manufacturers such as Sunpower, First Solar, Trina, Jinko and Canadian Solar.

These YieldCos are essentially vehicles that can attract billions of dollars in investment, lowering financing costs.

Unlike Yingli, which pushed “upstream” into the poly-silicon market and is now having debt problems, the downstream push is seen as a key to retain profitability.

“We see this increased competition having the potential to drive development margins and PPAs down as the push to ‘own’ the project; we see a similar trend emerging among utilities, marketers, and IPPs alike seeking growth in the sector. We suspect those with scale and real depth in offtaker relationships will survive and thrive.

Direct sales to consumers are also likely to increase and boost profitability. Canadian Solar intends to treble its amount of direct sales to around $1 billion per annum by 2017. That will add 5-10 per cent to their margins, as they cut out the middle man, particularly in retail and micro grid sectors.

“This will involve selling modules and BoS products via online platforms, and we believe will force many resellers out of business, and eventually drive equipment costs down with suppliers eating some of the additional margin,” UBS analysts wrote in a recent note.

 
 
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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.



  • JamesWimberley

    It looks as if ¨cost¨ here means ¨cost to the manufacturer¨, not the consumer. This will follow, with swings.

  • newnodm

    Different estimator. There is not a single repository of opinion for future prices.

    It is interesting to go back and look past projections. It is all just a guess. The important concept, IMO, is understanding the implication of exponential trends. Particularly exponential trends in technology.

    • Bob_Wallace

      ” It is all just a guess. ”

      Yep. There are many different components to creating the cost of an installed solar system and no one could possibly know what developments might suddenly pop up out of nowhere.

      Two of the soft costs of US residential solar are permitting and customer acquisition/selling.

      Imagine, right now there might be a multi-state working group addressing permitting costs and they could trigger an abrupt change in permitting for many states. Something like a ‘fill in a form on line for no charge’. And as long as the installation was done by a licensed contractor/installer installations would be only randomly inspected. Very quickly costs drop.
      Or as we approach the end of the 30% subsidy millions of homeowners and commercial building owners decide to move installing solar up their ‘do list’ and start making calls. Other people see panels going up around them and decide that they want some too. Overnight we move from spending serious money selling solar to a state in which solar sells itself.

      Who could predict that?

  • Dag Johansen

    Solar PV prices have flat-lined lately. I hope they fall further but they are pretty damn cheap as is. As the other postings note, we need price cuts in other areas like inverters. And batteries.

    • eveee

      and BOS, in some areas. Lots of BOS.

  • Marion Meads

    By this time, someone should have thought of rapidly installing solar panels on rooftop already. For example, rooftop deliveries of ready to plug & play panels. The installation costs are still the major expense, and the most profitable too. If they get the installation more streamlined and reduced labor hours as much as possible, then real competition in lowering the price could begin. Right now, any improvements in the packaging of the panels and their ease of installations goes into the pocket of installers and are seldom passed down to owners or buyers.

  • AU_Battery

    Unfortunate when solar panels get so large they become hard to handle, the Canadian Solar 305 watt is too flexible and weak middle centre support need improving. I assume that 310 watt will use the same frame as 305 watt, sum suppliers are now selling less 30cent AUD a watt suppled.

    • harisA

      I think they mean that a 60cell panel will be 310Watt at 22% efficiency. These days 305W panels are generally 72cell panels which are larger and hence unwieldy.

      • AU_Battery

        Yes even the Canadian Solar 255 watt 60 cell is the same W as the 305 watt 72 cell, so L wise the new 310 most likely fit the same frame size, I don’t see why they would change production line currently setup.

    • Jason hm

      Carbon fiber has been coming down in price, someone will probable start making a integrated frame out the stuff with other composite material for PV panels. That way you can make the panels larger or more durable. Protecting higher efficiency PV cells for mobile applications like boats and RV’s.

      • Bob_Wallace

        One company is selling frameless panels and a racking system that does not require frames.

  • vensonata

    Yes, inverter prices are predicted to fall at 8% per year through 2019. Almost exactly parallel to Pv. roof mounting racks fall by 4% year and wiring by 1-3 % (price of copper is stubbornly high). Chinese inverters are sweeping in and improving in quality. I am particularly looking forward to disruption in inverter price as the Google inverter prize is announced in Feb 2016.

    • Heelstone

      Interesting. Do you have a source on this?

      • vensonata

        PV magazine. Just type in “decline in inverter price” in Google and there it is.

  • newnodm

    Are inverters going to get less expensive? Penny differences in panel costs doesn’t seem to mean much anymore.
    Are we going to have price competitive thin film for real again? Or will solarcity be protected by tariff from chinese competition?

    • Ronald Brakels

      Even if the cost of everything else doesn’t drop a cent, a 25% drop in PV panel prices is still a big deal. It would allow 25% more PV capacity to be installed for the same price. Keeping the inverter the same size would cause some output to be lost, but typically not a great deal. Very roughly total electricity production might go up by 20% with smoother output and a smaller difference between overcast and clear skies.

      Inverters have been getting less expensive. I’ve been impressed with their price declines here in Australia. I expect them to continue to fall in price, though not by as much as PV. And I expect to see quality improvements with 10 year warranties becoming more common.

      • AU_Battery

        I have notice that grid inverter have gone up in price on the top end of the market, while off grid type down by 15% last year, and grid inverter return rate of around 35% due to failure in the first year. Actually a study been done on failure rates and quality issues survey, but only like 29 people reported issue back, we don’t have a regulator requirement from installers on PV’s installation failures to report back issue.

        Improvements in PV and inverters can only be made if failures rates are sent back and surveyed in reports, Otherwise issue will continue.

        • Bob_Wallace

          Are you saying that the 35% failure rate is based on 29 cases?

          If so, throw that number away.

          Stuck pigs squeal….

          • AU_Battery

            Bob, we take pride in collecting data, some people just prefer that data was not collected. There all but none reporting fault reporting portals available in the public domain.

            A study at Tucson Electric Power showed that 69% of unscheduled maintenance costs for PV systems were attributed to inverters (Kurtz et al., 2009).

            However collecting PV field data is not easy, respondents can remain anonymous, however they are encouraged to provide at least one mode of communication in case a clarification is required over the failures of inverter or PV modules. We encouraged installers and wholesale outlet to take part of the survey; this also includes private operators to forward faults to the survey.

            Visual inspection is quite effective for identifying hot spots, delamination, encapsulant yellowing, back sheet blistering, junction box failure, etc, reduced performance are not visible and need more sophisticated tools.

            Problems that are found with different system components when they are exposed to Australian environments, which will highlight technical aspects of PV systems that need improvement, and allow suppliers, manufacturers and service providers to improve future PV system design, component selection, product development and product approvals for Australian conditions.

            So far respondents are little,

            RE:

            No 35% based from one wholesale outlet over a year of sales, that not apart of any report yet, and not related to the 29.

          • eveee

            We really need manufacturer warranty experience numbers. They probably don’t want to reveal it, but installers might. They have to deal with workmanship and would know if there is a product defect.

          • AU_Battery

            If anyone would like to take part in the Australian report finding survey “PV and inverter faults” or any concern around PV equipment not working can report the issue. Contact:

            School of Engineering and Information Technology Murdoch University, Murdoch WA 6150,

            Or

            School of Photovoltaic and Renewable Energy Engineering, The University of New South Wales, Sydney NSW 2052.

          • Bob_Wallace

            That’s not going to lead to valid data. Again, stuck pigs squeal.
            By asking people to submit information you are very likely to get an unrepresentative sample of those who have had problems.

            As eveee suggests, sample installers.

      • Matt

        If PV drop 25% you still need BOS cost to drop 25% to get a total drop of 25%. In US which has much higher BOS than Germany/Oz that should not be to hard. Ending the trade war (SolarCity support that is costly the industry), permitting simplification (lower cost), awareness of better finance option (3rd party makes US more expensive) would likely get the US the total 25% saving alone. Sorry to lazy to find the link to the BOS cost study.

        • Ronald Brakels

          A drop of 25% in total cost won’t be obtained from a drop in PV price of 25%, but currently many new installations still only have PV panels equal to or slightly higher than inverter capacity. This means that if only PV prices fell, a very worthwhile increase in total output (very roughly perhaps 20% where I am) could be obtained from a 25% price fall in PV modules while holding the rest of the costs of the installation constant. Of course, PV to inverter ratios may be different where you are, and it is possible that inverters on the more poorly designed end of the spectrum that don’t handle heat well may fail sooner as a result of operating at full capacity for a longer period of time.

        • JamesWimberley

          Don´t blame SolarCity for the faults of SolarWorld.

      • GCO

        I think that you forget the elephant in the room: “soft costs”.
        In the US, those dominate PV installs, so modules dropping another 25% unfortunately wouldn’t make much of a difference, less than, say, a permitting process as streamlined as Germany.
        Illustration of the problem: http://www.forbes.com/sites/toddwoody/2012/07/05/cut-the-price-of-solar-in-half-by-cutting-red-tape/
        http://blogs-images.forbes.com/toddwoody/files/2012/07/Paperwork-300×225.jpg

        • Ronald Brakels

          Holy fetid dingo kidneys, dude! What is wrong with your country? If I want a gun I have to jump through hoops, but if I want solar I then as soon as 9:00 am rolls round I can pick up the phone and say, “Come and put solar on my roof.” Then Andrea, the person who will answer the phone, will stop by after work and eyeball the roof and electric meter box. They send us a quote and we sign it and send them a 10% deposit. We do have to fill in a form for the electricty distributor, but it is one form, and that’s all. Contractors will come and install the system in a few weeks or sooner if they’re not busy. We forward them the balance on the day it is installed, which takes maybe two blokes or blokettes about two hours, and that’s it. There is a small chance that it will be randomly inspected to make sure they’re not stuffing things up.

          So why is it that in Australia, a country where we can’t even buy machine guns, I own my own roof and can put solar panels on it if I want, but in the land of the free you you can’t do what you want with your own roof?

          • Offgridman

            Come on Ronald you must realize that there is a lot of variability to this. Some places have gone way over board on the regulations and permitting and some still have none at all other than getting the permission of the utility for the interconnect (which I admit can be a pain in the keester).
            What I think is humorous is

          • Ronald Brakels

            I think ridiculous statements are a perfectly reasonable response to the above picture. But Australians suffer just as much from red tape as Americans do, just in different areas. For example, there is now a 30 day wait on fetid dingo kidneys. And that’s no good because after 30 days I’m not sarcastic anymore.

          • Offgridman

            Yes over regulation can get to be a hassle no matter where you are, it’s looking like they are only going to let me harvest nine deer this next hunting season.
            Not sure how fetid deer kidneys would compare with those from the dingo’s, but if you want them let me know and they can be shipped over by slow freight to give them time to marinate. No matter how much the nutritional benefits are emphasized it just isn’t possible to get the family to eat them. 🙂

          • Ronald Brakels

            My god! We don’t eat them! We use them for sarcasm. For example, we might say to someone, “You might think I don’t give a fetid dingo kidney, but actually I do,” and then hand them one. Or, in state parliment, I might pull out a huge clear plastic sack of fetid dingo kidneys and say, “Clearly I could give a fetid dingo kidney, but I won’t.”

          • Offgridman

            Okay, no problem, but with your upcoming elections if dingo kidneys are in short supply let me know and I will send you a sack of the deer ones to hand to the politicians. Being in the plastic bags they probably won’t be able to tell the difference anyways, and I am always willing to do my part towards keeping the government employees honest.

          • Ronald Brakels

            Don’t send me deer kidneys! That could be terrible! Johnny Depp is currently facing 10 years in prison for smuggling four dog kidneys into the county inside two yorkshire terriers. They might even make you share a cell with him.

          • GCO

            Hey, please, it’s not my country, I just happen to live there today. 🙂 It’s slightly recomforting to know that you find the situation just as maddening as me though — and don’t even get me started on other similar topics.
            I only wanted to point out, and I can confirm from first-hand experience, that at least for Americans, the cost of PV modules is only a (small) part of the problem.
            Like you, I own my roof, but changes must be documented, justified, permitted and inspected at all key milestones; the city, the utility, the fire department, everyone came. A pain in the rear, but at least I’m quite confident that I won’t ever see a PV module fly off some DIYer neighbor’s roof.
            Well, and we have net metering, so there’s that…

  • jburt56

    Swanson’s Law.

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