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Summary:

By 2017, solar modules could cost below 50 cents to produce, says Lux. They are as low as 70 cents per watt now. The cost will drop partly because of manufacturing efficiencies, but also because of the efficiencies of the modules themselves.

Photo by Katie Fehrenbacher/Gigaom

Solar panels are as cheap as they’ve ever been, and according to Lux Research the costs of producing solar modules, which make up solar panels, will also continue to fall. It needs to for some of the solar manufacturers to survive.

By 2017, solar modules could cost below 50 cents to produce, says Lux. They are as low as 70 cents per watt now. The lowest costs will be for solar modules made from thin film solar panels of cadmium telluride, particularly the kind made by First Solar. Modules made of copper indium gallium (di)selenide, or CIGS — a lot of startups developing CIGS have struggled to reach commercialization — could reach 64 cents per watt to produce by 2017.

The cost will drop partly because of manufacturing efficiencies, but also because of the efficiencies of the modules themselves. Startups and big companies alike are looking to make their cells more efficient as a way to sell lower overall costs of the system, and survive the difficult price environment of the last fours year.

Due to an overcapacity boom, and subsidized solar manufacturing, many solar makers are operating at a loss, being forced to sell solar cells and  modules for rock bottom prices. There will no doubt be even more consolidation and the companies transition through the overcapacity.

  1. How does this compete with coal, natural gas and nuclear? I’m having trouble finding cost per watt for these power sources since most articles use the metric of kw/h.

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    1. The short answer is: Solar is already as cheap or cheaper than other sources of electricity on a cost per kw/hour basis >in some areas<. The big variable is how expensive the local power is and how much the sun shines. So, for example, in Hawaii… solar is cheaper than almost anything else.

      In many areas, it's cost competitive today. In other areas, it's not yet there. As GreenPlease says, there are a lot of other costs besides panels, much of them are not parts at all, but permits and so, for example, it costs 2x as much per watt to install residential solar in the U.S. as it does in Germany — using the same equipment!

      When the panels are 50 cents/watt, there's a near certainty that solar will compete on a kw/hour basis in the bulk of the world.

      Now, that said, solar only makes power a portion of the day, so it can still only solve a part of the power equation for the time being.

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  2. @Jason: that’s a trickier question than you’d imagine.

    First, the article above refers to the cell price. At $0.50/watt for cells, you might be looking at $1.10-1.25 including the balance of system (inverter, wiring, racking, installation). To get the cost per kwh, one calculates the number of hours of sun exposure over the system’s life multiplied by the capacity factor (insolation above/below the standard 1,000w/h/m^2). Divide the resulting number by 1,000 to get total kw/h produced for the system’s life. Divide the cost by this amount.

    For example, at $1.25/watt installed, assuming 1,000w/h/m^2, 6hrs/day of sun (I’m adujusting for the distribution of sunlight throughout the day… weak at dawn, strong at noon, weak at dusk…. and approximating), and a 20 year life:

    $1.25/[(1x365x20x6)/1,000]= $0.028 or 2.8 cents per kwh.

    That’s not entirely accurate as you have to include the costs of financing. Say you pay 5% over 20 years for you financing. Off the top of my head, that $1.25 turns into ~$3.20 so your cost would be ~$0.068 or 6.8 cents per kilowatt hour.

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    1. ah ok thanks a lot man!!

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  3. Solar technology is following an exponential curve. And just like with other exponential technologies (communications bandwidth, cpu speeds, data storage, DNA sequencing, etc) there will be a sudden enabling of all sorts of applications that seem outlandishly impractical or expensive today.

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  4. Soft costs now dominate the cost of installing solar. This is a shame because they are “easy” to avoid and boil down to bureaucracy and inertia, not physics. Those need to come down for solar to make further progress. For example see:
    http://phys.org/news/2012-12-nrel-teams-solar-pricing-trends.html

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  5. WOW – that’s really going out on a limb saying $.50 by 2017.

    I was quoted $.59 on January 11th, 2013 – I” likely see $.50 by year end.

    I’d expect to see $.25 in 2017, especially if 1366 Technologies unleashes by then.

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  6. The FOB price for chinese solar panels is already below 0.50 cents.
    I received several quotes between US$0.48 and 0.50.
    The price for 5kW inverters is US$550.

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  7. I do not think the price of solar panel costs less than $1.00. But such solar panels to absorb the light is too poor. The future technology is PV developed in UK.

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