Published December 2010
Industrial scale (>200 KWe) and utility scale (>1 MWe) photovoltaic (PV) systems that absorb light photons and convert them to electricity (electrons) are at the edge of commercial cost competitiveness (grid parity) in geographical regions characterized by high-priced electricity. Two technologies dominate commercial practice: silicon-based systems and thin-film systems. Advances in technology have significantly improved cost competitiveness, but the commercial business still relies upon government subsidies. Like other 'renewable energy' technologies, societal concerns over greenhouse gas-caused climate change provide the justification for the subsidies.
In this study, we examine the process technology, preliminary engineering design, and corresponding economics (capital cost, unit production cost) for commercial scale, grassroots PV installations involving three technologies: 1) silicon-based, 2) thin-film, and 3) concentrated photovoltaic (CPV) offerings of several commercial vendors.
Between 2002 and 2008, demand growth rates for PV systems, on a global annualized basis, averaged over 40% per year. The global recession of 2008–2009 virtually eliminated growth, but (as of 2Q, 2010) growth is resuming at a modest level. Installed global PV capacity in 2010 was only 6,000 MW, representing less than 0.1% of total global electrical generating capacity. The hypothetical opportunities for market share gain are enormous.
Whether significant PV demand growth can resume will depend upon 2 factors: 1) the willingness of governments to continue subsidies, primarily through feed-in tariffs, and 2) the ability of proposed PV systems to compete not only with conventional power generation technologies, but more importantly with other 'renewal generation technologies' that achieve the same societal goals (fewer CO2 emissions) at lower generating costs. Alternative 'green generation' technologies include biomass conversion, wind and wave power, conventional nuclear and hydro power, and solar thermal power.
Looking beyond the next ten years, PV business viability will certainly be affected by improvements in process technology, most often related to sunlight energy capture efficiency. However, the total installed cost of a viable PV system includes many cost components driven more by labor costs than by technology improvements, such as the physical installation infrastructure and electrical tie-in of solar modules. Whether total production cost improvements can be driven to market-competitive levels is not knowable at this time.
