MIT Technology Review identifies early-stage technologies that, if employed together, could reduce the cost of making solar panels to 52 cents per watt. At 52 cents per watt, assuming similar cost reductions for installation and equipment such as inverters, solar power would cost six cents per kilowatt-hour in sunny areas of the U.S.—less than the average cost of electricity in the U.S. today. Solar power in sunny areas now costs roughly 15 cents per kilowatt-hour.
This is the same kind of thinking that caused the Solyndra loan default. Solyndra was funded based on developing new technologies which were ultimately hoped to achieve lower solar power prices. However, lower prices were achieved from Chinese companies by continuous improvement of traditional solar module technology and aggressive cost reduction in terms of business scaling.
Solar PV Investor – The average price of Chinese Tier-2 crystalline PV modules fell to $0.96 per watt in January 2012, according to the latest PV module pricing report from IMS Research. Annualized price declines (ignoring seasonality) slowed to 22% in January, having exceeded 50% in December, as incentive levels were reduced in a number of major PV markets at the end of 2011.
Prices as low as $0.80/W (~€0.60/W) were recorded for Chinese Tier-2 module suppliers in January, typically for large orders from German distributors.
Technology for Lower cost Solar
MIT Techonology Review talked about new solar technology for lower costs.
The best way to reduce the cost per watt is to make solar cells more efficient—as a result, more power can be produced with a given amount of material and factory equipment. Increasing efficiency also decreases installation costs, since fewer solar panels are needed. But efficiency improvements aren’t enough to reach 52 cents a watt. Manufacturers will also need to make solar cells from thinner silicon wafers, make wafers in a way that wastes less silicon, and speed up manufacturing. If a high-efficiency solar cell design slows down manufacturing or requires thick wafers, it likely won’t lead to the necessary cost reductions.
One major way to reduce costs involves technologies that offer an alternative to the wasteful process now used to make silicon wafers. Currently, half of the high-quality silicon needed to make wafers ends up as waste. One startup, 1366 Technologies, makes thin wafers directly from a pool of molten silicon. It plans to replace conventional crystallization furnaces, sawing stations, and ingot-handling equipment with a single machine that requires fewer workers to operate. Others startups are replacing sawing with processes that free thin wafers of silicon from a larger piece of silicon using chemical etching, or by peeling them off.
Much of the technology described in the report hasn’t been demonstrated at full production scale. The techniques for making wafers without sawing, in particular, face a number of issues, such as producing high enough quality silicon, making wafers in the right shape and size, or producing them reliably and at a high rate.
To make solar power more competitive, installers will also need to reduce costs. Installation and the cost of inverters, wiring, land, and financing account for half—and sometimes as much as 80 percent—of the cost of solar installations. Much of this needed cost reduction could be achieved by improving efficiency, which would reduce the number of panels needed in a project.
The Chinese costs are already at full production scale and the projected costs are at full production scale.
China Vertical Integration, expanded capacity for PV Cost Reduction
The big Chinese PV solar companies SunTech, Trina, Yingli are all vertically integrated and aggressively grinding costs out of their processes Suntech is planning to reduce module production cost from $1.40/W in 2010-3Q to $1.30/W in 2011-1Q through expanding ingot/wafer capacity along with cell and module production capacity, and even to $0.85/W by minimizing manufacturing costs in ingot/wafer production by 2013. Other Tier-2 Chinese solar power module makers are about 20% below the cost of Suntech. They will likely be at 70 cents per watt.
Foxconn is looking to enter the solar power module market and will be using 500,000 robots and insane volume scaling.
52 cents per watt with new technology that has not been achieved yet and still needs to be scaled will not intercept the price reduction path that China is on with solar power.
Solarbuzz Retail Pricing and estimated cost per KWH