Solar panels are cheaper than diesel for levelized cost and reach cost advantage after 5 years

Forbes – a supply glut caused by overbuilding and reduced subsidies has dramatically slashed the price of c-Si cells. Bloomberg New Energy Finance (BNEF) forecasts that demand will not catch up with supply until 2014, even in their most optimistic scenario. In May, the spot price for a Chinese c-Si module was only $0.85 per watt, quite close to the $0.75 per watt manufacturing cost claimed by First Solar. Since Cd-Te cells are less efficient than c-Si cells (currently 14.4% of First Solar cells, compared to the high teens to low 20% range for typical c-Si cells), First Solar’s modules need to be larger to produce the same power rating, which leads to higher costs at the module and solar installation level. This leaves very little room for profit, from a company that once seemed to be an endless money-printing machine.

New Scientist – Solar power is now cheaper than diesel “anywhere as sunny as Spain”. That means vast areas of Latin America, Africa and Asia could start adopting solar power.

The one thing stopping households buying a solar panel is the initial cost, says Amit Kumar, director of energy-environment technology development at The Energy and Resources Institute in New Delhi, India. Buying a solar panel is more expensive than buying a diesel generator, but according to Chase’s calculations solar becomes cheaper than diesel after seven years [based on end of 2011 pricing. Lower prices in 2012 could make it 5 years to reach a cost advantage] . The panels last 25 years.

Even in India, solar electricity remains twice as expensive as electricity from coal, but that may soon change. While the price drop in 2011 was exceptional, analysts agree that solar will keep getting cheaper. Suntech’s in-house analysts predict that, by 2015, solar electricity will be as cheap as grid electricity in half of all countries.

At the end of 2011, dropping solar panel prices were making solar cheaper than diesel power in India.

Winners of India’s national solar-capacity auction in December agreed to supply power for an average rate of 8.78 rupees (17 cents) a kilowatt-hour by early 2013.

In comparison, electricity from burning state-subsidized diesel costs generators about 17 rupees, according to Charanjit Singh, an energy analyst at HSBC Holdings Plc. The cheapest power comes from burning coal, which is about 4 rupees a kilowatt-hour, though users must be connected to the grid.

According to BNEF, the levelized cost of electricity (the cost distributed over a project’s lifetime) for conventional silicon PV declined by nearly 50% from an average of $0.32/kWh in early 2009 to $0.17/kWh in early 2012; thin-film PV dropped from $0.23/kWh to $0.16/kWh over the same period. As of the first quarter of 2012, BNEF pegs the levelized cost range at $0.11/kWh to $0.25/kWh. Residential customers in the United States pay an average retail price for electricity of $0.115 cents/kWh.

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