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    Forcherio G Poster

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    This document summarizes economic factors impacting the modern residential photovoltaic (PV) market. It finds that while PV module efficiencies have increased, residential systems have not reached grid parity due to high costs. The largest costs are solar modules, inverters, and balance of system components. Increasing module efficiency provides only small cost reductions, whereas increasing the capacity factor through techniques like sun tracking can significantly lower costs. Government incentives that reduce up-front costs by 30-50% have been the biggest drivers of PV adoption.

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    Forcherio G Poster

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    This document summarizes economic factors impacting the modern residential photovoltaic (PV) market. It finds that while PV module efficiencies have increased, residential systems have not reached grid parity due to high costs. The largest costs are solar modules, inverters, and balance of system components. Increasing module efficiency provides only small cost reductions, whereas increasing the capacity factor through techniques like sun tracking can significantly lower costs. Government incentives that reduce up-front costs by 30-50% have been the biggest drivers of PV adoption.

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    This document summarizes economic factors impacting the modern residential photovoltaic (PV) market. It finds that while PV module efficiencies have increased, residential systems have not reached grid parity due to high costs. The largest costs are solar modules, inverters, and balance of system components. Increasing module efficiency provides only small cost reductions, whereas increasing the capacity factor through techniques like sun tracking can significantly lower costs. Government incentives that reduce up-front costs by 30-50% have been the biggest drivers of PV adoption.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    19 views1 page

    Forcherio G Poster

    Uploaded by

    zoso0789
    This document summarizes economic factors impacting the modern residential photovoltaic (PV) market. It finds that while PV module efficiencies have increased, residential systems have not reached grid parity due to high costs. The largest costs are solar modules, inverters, and balance of system components. Increasing module efficiency provides only small cost reductions, whereas increasing the capacity factor through techniques like sun tracking can significantly lower costs. Government incentives that reduce up-front costs by 30-50% have been the biggest drivers of PV adoption.

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    of 1

    Economic Factors on the Modern Photovoltaic Market

    School of Electrical & Computer Engineering

    Author: Gregory T. Forcherio

    SURF Research Symposium

    August 3rd, 2011

    [1]

    Introduction Photovoltaic (PV) research is heavily driven by market demand and green-energy hopes of the future. Commercial and utility level thin film PV systems have almost reached grid parity worldwide, but the residential market comprised of crystalline Silicon has been left behind. Because area is constrained in a residential system, higher efficiency Silicon modules are used to achieve desirable electricity levels. Despite higher efficiencies than industrial thin films, current technologies of crystalline Silicon (c-Si and Sanyo cells) residential systems need to be researched further or refined in order to reach grid parity. By surveying the current market and economy of residential PV systems, the capital cost was broken down into system parts and module manufacturing processes.
    [1]

    Typical On-Grid Residential PV System

    COST

    7% 6% 5% 32%

    BREAKDOWN
    1) Solar Modules 2) Inverter 3) Circuit Panel 4) Loads 5) Meter 6) Utility Co.
    Picture from Vaughan Mechanical Blog

    35% of inverters used in the U.S. were made domestically [1] Europe dominates inverter production ends up being most expensive electrical part after frequent failure
    Where the imbalance starts

    Problems and Questions How and where can costs be cut in a residential PV system be cut to reach grid parity? If polycrystalline solar cells can be made 1% more efficient through research, what is the impact on price?

    [6]

    In an era of energy price competition, all sources of energy


    Global Wafer Market Share, 2009
    [1]

    15% efficiency

    are evaluated by their Levelized Cost Of Energy (LCOE).


    Capital Recovery Factor Capital Cost

    cents ~ 38 kWh
    16% efficiency

    However, careful module placement and cheap suntracking technologies could lower prices easier

    O&M Cost Fuel Cost = 0 for solar cells $

    [1]

    Poly Si

    Wafer

    Cell

    Module

    System
    [5]

    LCOE

    $ kW

    1 yr h 8760 yr

    $ kWyr %

    cents ~ 37 kWh

    Btu kWh
    Heating Rate

    MMBtu
    National Renewable Energy Laboratories agrees with this, and has shown module efficiency gains play little role in energy price past ~15% [7]

    But yet owns 40% of the global polysilicon market Of cost: 14% 18% 13% 19%
    Price Markups 36%

    Capacity Factor

    Annual Solar Photovoltaic Installations in Selected Countries, 1998-2009


    4,000

    The three biggest surges in PV market


    [2]

    3,500

    were a result of government incentives!


    Rebates
    [3]

    Module receives 1000 W of power from Sun


    25o C

    W 1000 2 m

    Improving module performance is only a small factor in final cost improvements, but increasing the capacity factor has larger impact
    Results and Conclusions Residential PV system costs are highly dependent on imported module and inverter costs as well as government incentives, which can reduce system costs up to 50%. Though much time and money is put into cell efficiency research, LCOE trends show that this may not be

    Germany
    3,000

    Feed in Tariff

    Megawatts

    2,500

    Feed in Tariff
    2,000 1,500

    pays for certain portion home owners are paid


    Spain

    of system costs usually >20%

    for excess electricity generated into the grid

    Rebate
    1,000 500

    United States Japan Italy

    0 1998 2000 2002 2004 2006 2008 2010

    If you're going to establish a feed-in tariff, you need to figure out how to make it market-responsive. - Julie Blunden
    Vice President of public policy for SunPower Corp.

    1m 1m
    Modeled Capital Cost based off $2.29/W for a modules
    added to $4.81 for remaining costs

    the most efficient way of cutting costs. Further LCOE study shows that increasing the capacity factor has a larger impact on cost. Larger steps towards grid parity could result from more efficient wafer and module fabrication, and cheap sun tracking methods [8]. More immediate steps

    After rebates and incentives

    the up front cost will drop 30% to sometimes 50%


    In the U.S., who has adopted combinations of these ideas

    [4]

    15% efficiency +1% 16% efficiency

    Acknowledgements: I would like to thank Xufeng Wang, my graduate mentor, for his guidance and pointing me in the right direction for my research, Dr. Mark Lundstrom, my professor, for giving me this opportunity, and Dr. Muhammad Alam for his help in improving my analysis. [1] U.S. Solar Energy Trade Assessment 2010, Greentech Media, November 2010. [2] L.R. Brown, World on the Edge: How to Prevent Environmental and Economic Collapse, Earth Policy Institute, 2011, W. W. Norton & Co., New York, U.S. [3] A. Luque, S. Hegedus, Handbook of Photovoltaic Science and Engineering, 2nd Edition, 2011, John Wiley & Sons, U.K. [4] Database of State Incentives for Renewables and Efficiency, 2011, Available: http://www.dsireusa.org/incentives [5] Simple Levelized Cost of Energy (LCOE) Calculator Documentation, NREL, 2011, Available: http://www.nrel.gov/analysis/tech_lcoe_documentation.html [6] Gregory T. Forcherio (2011), "LCOE Calculator," DOI: 10254/nanohub-r11406.3 [7] Thin Film Solar Cells: Manufacturing and Installation Cost Considerations, NREL, 2011 [8] $1/W Photovoltaic Systems, U.S. Department of Energy, 2010.

    $7.10 W $6.96 W

    $0.14 price drop W


    Assuming material cost is the same and larger inverter is not needed

    can be taken by manufacturing domestically to eliminate transportation costs and importation fees. In the future, an investigation of the capacity factor impact a single axis sun tracking system could have for ground installations, and its resulting energy price change.

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