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March 17, 2006

Comments

bean

I suspect that economies of scale in PV manufacture are but one of several elements bearing on PV competitiveness. Try this thought experiment: if PV cells now cost nothing, would a typical consumer buy a PV system, complete with mounting, installation, inverter and controls?

When the day arrives that PV systems are leaving factories in gigawatt quantities and displacing noticable amounts of grid power, the most-expensive peak generators will be losing market share. That will depress power prices and move PV's competitive objective farther away.

On the other hand, fluctuations in fossil fuel prices and supplies (as with natural gas, oil, and coal in 2005) could easily swamp incremental cost changes in PV and might make it economical overnight. So I submit there is little to distinguish a "four to five year" prediction from a "7 to 10 year" one.

Robert McLeod

The price of PV has fallen quite consistantly by a 0.8 power rule for every doubling of production. I.e. for every time global production doubled the price dropped 20 %. Failing any breakthroughs (which certainly could occur in this field), that would imply that even with 50 % growth every year it would take about 14 years for the cost to drop from about $0.40/kWh to $0.08/kWh. Of course the associated costs of mounts and such are already a big portion of the price.

Engineer-Poet

It's my understanding that PV is already down to $0.25/kWh in some sunny areas (on par with afternoon rates), and in many others power from conventional sources costs at least that much.

The US really needs time-of-day or auction-based pricing for all consumers.  This would put PV on a level playing field with peaking generation and make solar power competitive on its own merits.

bean

Indeed the US does need time-of-day or auction-based pricing for all consumers. But there are obstacles: retail rates are designed by each state, with wildly varying (and sometimes economically irrational) results. Hourly pricing for wholesale power prevails only in about two-thirds of the US at present and isn't likely to expand anytime soon, due to ferocious political opposition. Without rational wholesale pricing, there is little hope for retail rates that would give consumers accurate price signals.

amazingdrx

http://www.nrel.gov/news/press/2005/2405_pv_concentrators.html

"At the conference, NREL announced a new record efficiency of 37.9 percent at 10 suns, a measure of concentrated sunlight. Soon thereafter Boeing-Spectrolab, under contract to NREL and the Department of Energy, surpassed the NREL record with 39.0 percent at 236 suns announced at the European photovoltaic conference in Barcelona, Spain."

This really drops the cost way down for solar. Concentrators take a fraction of the expensive silicon portion of the system. And also yield high temperature heat as a cogeneration product that can be used for cooking, hot water heating, and home heating/cooling.

The addition of infrared PV cells to the design may increase the efficiency another substantial amount.

Nick

I get costs from $.25 to $.30 with the following assumptions (I can't get the table to look right..).

$/Watt 7 7
Yrs Life 30 30
Interest rate 5.0% 6.5%
%Utilization 21% 21%

Cost $0.25 $0.294

Does that look right?

Chet Esium

PV is currently cost-effective in Japan without subsidies (other than net metering). PV is arguably cost-effective today in California if built on new residential construction (instead of being retrofit on an existing roof) and it it's price is compared to the price of green electricity sold at a fixed rate contracted over 30 years and if you engage in peak shaving so that you replace the most expensive portion of your power bill with PV electricity. PV is cost effective in many locales if its price (assuming net metering) is compared to the retail price of peak daytime electricity.

Sure, it may take 14 years before PV is producing electricity at $0.08/kwh. But in the meantime, the industry can sell as much PV as it can build cost competively into ever widening market niches. The size of the niches grows faster than is needed to keep bringing the cost down for the next niche.

bean's rhetorical question is inaccurate for two reasons: (1) we don't care if the average person would buy PV today. PV doesn't have to be cost competitive with nighttime coal fired electricity in order to grow rapidly and make a significant contribution to our energy supply; (2) it is not only the cells whose price is rapidly dropping, it is also the price of installation, inverters, modules, etc.


Note that it is not at all clear that Cypress helps Sunpower obtain a supply of silicon. Cypress doesn't manufacture silicon; they buy it from others. Also, cost reductions do not just come from thinner wafers and better recycling, they also come from higher efficiency cells. You know, kinda exactly like the cells that Sunpower produces.

Nick -- your analysis of the costs look about right. $/watt might be higher. The 30 year life assumption might be considered aggressive. You might not have included costs to replace the inverter every 10 years. On the other hand, you'll want to make sure you compare the PV price to the correct retail price of electricity from the utility. Use time-of-use peak green fixed rate pricing for comparison.

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