Simon Batchelor from Gamos writes below on the potential implications of the rapidly-decreasing price of solar photovoltaic panels, and electricity costs per unit from solar energy. With prices rapidly approaching parity for global average retail electricity, the potential for solar energy to move from an expensive, plant-based energy solution, or a small, household-scale system, to a more integrated and commonplace technology for varied energy services, is increasing greatly. Simon presents two sections below, focusing on the improvements in photovoltaic cell efficiency, and if the decreasing cost trend is to continue and its implications.
Will Solar Photovoltaics Increase their Efficiency Soon?
In the past few years solar cells have undergone rapid changes in efficiency and cost. Currently the research being conducted by competing companies is improving the efficiencies and reducing the production cost. The industry itself is growing quickly and due to large scale manufacture prices are decreasing.
One of the ways to reduce the cost of solar cell production is to improve the efficiency of the cells as this enables them to convert more energy from the sun. New efficiency records are constantly being set by the leading companies in solar cell research; these are from the most up to date articles available. The latest breakthrough in solar panel efficiency was in December 2014, a press release from the Fraunhofer Institute in Germany announced that 46% efficiency had been reached with a concentrator (multijunction) photovoltaic system. MiaSolé (January 2014) produces flexible solar panels with an efficiency of 17%, these could have a range of uses that other, more efficient panels could not fulfil. Sharp has been trying to develop cells which can make use of the electrons released on impact with the panel surface, as of June 2014 this project was still getting started but predictions of 60% efficiency have been made if this project is successful. Researchers at Stanford University have been using a layer of perovskite on top of standard silicon as both materials absorb different sections of the solar spectrum, potentially increasing efficiency by 25%. The Economist (Feb 2014) reported that John Roberts of the University of Illinois has also been working on layers within solar cells which could improve the efficiency to a potential 50% by absorbing different parts of the solar spectrum. In August 2014 First Solar improved the efficiency of the CdTe Thin Film cell to 21.4%, 3% higher than their record in February 2013, while this cell has lower efficiency than multijunction ones it has the lowest production cost.
Will Solar Photovoltaics Continue to Decrease their Cost?
A study by MIT in 2013 showed that China is currently the world leader at producing low cost solar panels; in 2011 63% of solar panels production took place there. However this study provided hope for the American market that the lead the Chinese manufactures had was based on large scale production rather than a bigger workforce, American manufactures may be able to catch up. Due to over production in China it has been estimated 88 companies have had to close factories particularly in North America and Europe; companies in China have had to merge (Forbes, 2012). Q cells, a leading German research and manufacture company, which went bankrupt and was taken over by Korean company Hanwha (Economist, 2014). Hanwha announced in December 2014 that it was going to merge three companies (Hanwha Q CELLS, Hanwha SolarOne and Hanwha Solar Holdings) to become the global leader of solar cell production with a manufacture capacity of 3.28 GW. Companies in the US and Europe are unhappy with the over-manufacturing approach China has taken, anti-dumping duties are being applied on Chinese imports of solar panels to the US and EU (Economist, 2014). This has angered consumers as it pushes the cost of solar panels beyond an affordable price range. SunPower, the second largest US solar company, is doing well however and in April 2014 beat market predictions.
As with any product the value of solar energy varies due to the demand and production rate; there have been several fluctuations in both of these but currently they are increasing. Early in 2014 the Wall St Journal showed there was evidence for investors displaying renewed interest in the solar industry indicating a possible resurgence after the decline in 2008. This decline was due to over-manufacture in China and subsidy removal in Germany (previously purchasing half of the PV panels produced) resulting in an unsustainable stock price for solar (Wall St Journal, 2014).
Members of the Fraunhofer Institute in 2013 said that at the time the production of solar cells was greater than the demand for them but in the future the demand would outstrip manufacture capacity. Their aim was to start a large scale factory in Europe which could produce high volumes of solar cells in order to make a profit even when the prices dip below 50c/W. In the same article it was predicted that in 2050 the cost of solar energy may be 2 or 3c/kWh and could be the cheapest source of electricity; to provide 10% of the global energy demand there would need to be a capacity of 10,000GW. The International Energy Agency found that early in 2014 the total solar production globally was over 150 GW. There are predicted increases of solar production in many countries in the coming years due to the 2014 UN Climate Summit in New York. India is expected to reach 100 GW in 2022 and the US solar production is expected in double in 2015/ 2016 taking it to 40 GW.
The cost of solar cells will decrease but the decline may be slow as there is a surplus of solar panels and already low prices (Breakthrough, 2013). Between 2008 and 2013 there was an annual growth rate for solar power of 63.2%. Calculations in this article suggest that with a growth of 50% per year (accounting for an increase in global energy use of 3.4%) by 2020 there will be 2,400 GW of solar energy which will make up 8.1% of global energy. The International Energy Agency has predicted that by 2020 16% of global energy production will be solar and supplied by around 6250 GW.
Price projections of solar energy are necessary to forecast the industry growth however in such a dynamic sector these projections are difficult to make. Renew Economy (2013) found that there are differences in the predictions being made about the price of solar power; Citigroup has predicted prices of 25c/W in 2020. The US Department for Energy predicted a cost of $60/MWh by 2020 (at $1/W) whereas the Australian counterpart (The Bureau of Resource and Energy Economics) expected costs of around $140/MWh in the same year. If the targets from the UN Climate Summit in 2014 are met it would have an impact on the solar economy which may not yet have been included in available predictions. There are many price projections and some of them have in the past proved to have been too low. There were predictions that solar PV production might reach 42c/W in 2015 however the most efficient panels available according to ENF (09/01/2015) are Nice Sun PV at a cost of 45c/W. On 7th Jan 2015. the lowest price available per cell was $0.319. The lowest cost panels available are Sun Electronics at 34 c/Watt (09/01/2015).