After we published the GTM Research projection that the cost of photovoltaic solar panels would drop to 36 cents per watt by 2017, I of course shared the article on Google+. I received the following comment from Per Siden, which I thought was very interesting and worth a share here on CleanTechnica (image added):
I calculated a plausible cost of generating electricity from PV panels this cheap and the result surprised me.
At $0.36/W the manufacturing cost is $360,000/MW nominal capacity ($0.36 times 1,000,000). With an additional 50% cost to get the panels on site and in operation, which I think is plausible for a system this big, the total cost amounts to $540,000/MW.
Assuming a capacity factor of 18% and an expected lifetime of 30 years, the system will produce a total of 47,336 MWh/MW (18% of 24 times 365.25 times 30). Electricity production cost would be around $11/MWh ($540,000/47,336 MWh). That’s less than half of what CitiGroup predicted!
For comparison, the average (base) spot price on the major European wholesale market, EEX, the European Energy Exchange, was €42.6/MWh, or $55.4/MWh, in 2012. $11/MWh is only 1/5 of the EEX average price!
At EEX average prices, ROI for a 1 MW PV system would be 6 years ($540,000 in costs divided by $87,420 revenue per year based on 1578 MWh produced per year times the average EEX price of $55.4). After that follows 24 years of practically no costs and pure profit.
I know I have left some parameters out, but still, PV is becoming astonishingly cheap!