Solar PV May be Viable with Lower Production Costs

“As PV technology improvements reduce cost faster than conventional technologies reduce cost, the world is likely to soon see an environment where PV subsidies are no longer necessary,” said report author Anthony Pavone.

During 2010, new solar photovoltaic (PV) demand worldwide approached 10,000 MW and is expected to grow by double-digit percentages annually for the foreseeable future, if production costs can be driven to market-competitive levels. In response to interest in photovoltaics for industrial and utility scale power, SRI Consulting, now part of IHS Inc., examined the economics for producing solar cells from three dominant commercial process technologies – monocrystalline wafers (Sunpower), CdTe thin-film (First Solar), and concentrating PV (Concentrix) – in a new techno-economic analysis report "Solar Photovoltaic Technology."

In the United States and other regions, utility commission renewable power portfolio requirements dictate that specific amounts of grid power be sourced using technologies that do not produce greenhouse gases. As a result, several utilities are now considering supplementing conventional power (nuclear, coal, and natural gas) with a combination of wind power, biomass power, solar thermal, and solar photovoltaic power.

Demand growth for PV power in the early 2000s averaged 40 percent per year, driven by a combination of technology advancements and generous government subsidies – especially in Spain and Germany – in the form of feed-in-tariffs. The global economic recession of 2008 - 2009 all but eliminated growth, but early 2010 saw demand begin to turn around.

Photovoltaic power is well suited to distributed demand applications where its devices can be mounted on residential homeowner rooftops (< 5 kw capacity), and on small commercial buildings (< 50 kw). Advancements in both manufacturing technology and engineering and design practices are also reducing the cost of "balance of system" components required for the consideration of PV power at utility scale (> 5 MW) at economics approaching conventional peaking power cost (grid parity).

“Advances in technology have significantly improved cost competitiveness, but the commercial world still relies heavily on government subsidies,” said author and IHS Principal Consultant Anthony Pavone. “Like other renewable energy technologies, societal concerns over greenhouse gas-caused climate change provide the justification for these subsidies.”

Although the integrated product chain can be considered as starting with mined silicon metal, and terminating with a combination of PV modules sold to end-use customers, and turnkey power plants sold to utility customers, the heart of the business is in producing PV cells, mounting them in modules (sometimes called panels) rated at 70 – 400 watts, and installing arrays of modules to satisfy customer requirements. A globally competitive producer requires a capacity base of 500 MW/year, and that a utility scale PV plant will have a capacity of 10 – 50 MW.

Two forms of cell architecture, silicon-based wafer and thin-film technologies, dominate the business, with 80 percent and 20 percent market share respectively. The report estimates production economics for the two manufacturing approaches and, using producer-specific information (patents, trade literature, technical publications, and business presentations), provides reasonable design basis assumptions. These results are then used to estimate the economics of a PV utility power plant with a 50 MW capacity.

“As PV technology improvements reduce cost faster than conventional technologies reduce cost, the world is likely to soon see an environment where PV subsidies are no longer necessary,” added Pavone.

For more information on the report, visit

Featured Webinar