21 May 2008

Photovoltaic Update

According to photovoltaic industry analyst SolarBuzz, total PV installations in 2007 were 2826 MWpeak, representing a growth rate of 62 % (!!!) over 2006 . By way of comparison, Worldwatch claims that PV installations were 2935 MWpeak in 2007 (hat tip Peak Energy).

Germany continues to be the main driver for the PV industry, although Spain is now coming on very strong with their subsidy program as well. Ontario now has a similarly (over) generous subsidy program in operation so we are starting to see many announcements for PV power plants there as well. Japan is falling behind as their subsidy program was for a fixed capacity (i.e. 100,000 homes).

Thin film is growing much faster than poly- and mono-crystalline Silicon. SolarBuzz claims growth of 123 %, from 180 MW to 400 MW of installed capacity. Since a lot of the newer thin-film capacity is either CdTe or microcrystalline Silicon rather than the simpler amorphous Silicon (which happens to degrade quicker), the 400 MW number is probably actually 'firmer' than the 180 MW deployed in 2006.

The current leader of the direct bandgap thin film solar industry is First Solar of Ohio. The manufacturer of CdTe thin film solar cells has gone from $67 million in sales in the first quarter of 2007 to $197 million in the first quarter of 2008. Net profits increased 830 %, from $5 million to $46.6 million. With profits being about 25 % of sales, they have a much higher profit margin than most industries, including any oil major. That tends to imply they will be able to grow their production capacity very, very fast. They are currently advertising for 105 positions. According to the above report, First Solar is selling their modules for $2.45/Wpeak, and since the cost of sales is 47 % of total sales, that implies a cost of $1.15/Wpeak.

It will be interesting to see how the CIGS manufacturers stack up. As long as the price of solar is supported by overly generous government subsidies we aren't going to see technology sorting out winners and losers in the market, however.

Update: in case you wonder what $1.15/Wpeak means, I calculate that for an environment with a capacity factor of 0.2 (i.e. San Franciso), when amortized over 25 years it works out to under $0.04/kWh. Each peak Watt will average 1.6 kWh/annum (max of 1.75 kWh in first year, dropping by 20 % over 25 years). Assumptions: energy inflation of 2.5 %/annum, general inflation of 2.5 %/annum, interest on financing of 6.0 %/annum. You have to add in all ancillary costs onto that four cent figure (such as frames, inverter, etc.) but the point remains obvious.


Nick G said...

First Solar's quarterly report says that their cost is $1.12/Wp, and that it fell 12% from 1 year ago.

OTOH, I believe their efficiency is a bit below average, so Balance of System costs will be a little higher.

I should think that with continued growth and competition we could expect to see wholesale panels at $1.50/Wp in perhaps the next 3 years, and complete systems, installed, at $3/Wp, which would give us grid parity in Southern California and many other places.

Of course, with high subsidies we may just see very high growth rates, high prices and incredible profits - already we're seeing Chinese solar billionaires.

Robert McLeod said...

Mmm... I don't think the price will drop that fast. The thin film sector isn't growing fast enough in comparison to conventional tech and it's still a small hunk.

First Solar claims they'll reach 1035MW production capacity per year in the 2nd quarter of 2009. World production will be around 6500-7200 MW at that time. Nanosolar is probably running around 400 MW a year now. It's not enough to knock any of the more expensive producers out of the race.

Nick G said...

Could take a while. OTOH, silicon is also coming down in cost very fast - big producers like Sharp are being very aggressive about this, in order to maintain profits and market share.

Ultimately, of course, it depends on the subsidies. As long as Germany is paying around 40 euro cents per KWH, that's how it will be priced in Germany!

At some point, as volumes grow, Germany will have to drop the subsidy levels, and then the rest of the world will begin to reap the benefit of the economies of scale the Germans have paid for.

Krassen Dimitrov said...

3GW with a 20% CF is really nothing.
Worldwide, we need to have at least 1,000 GW of carbon-free baseload (CF>80%) by 2030 if we are going to make a dent in the CO2 concentration...
PV, geothermal and wind will play a role, but the bulk will have to come from solar-thermal, coal-CCS, and nuclear. There is no other way around.

Cyril R said...

but the bulk will have to come from solar-thermal, coal-CCS, and nuclear. There is no other way around.

I used to believe that too, but looking at the developments going on right now, these industries each have serious issues.

Solar thermal, though growing really fast, is from a really small base. Exponential growth is plausible, but that small base puts it in the medium-long term development stage.

CCS is suffering from high cost, generally unproven technology, issues with sequestration (safety, or, rather, perceived safety - nimby issues) and a shortage of specialized knowledge and materials.

A bit similar for nukes. Same lack of specialized knowledge and materials, and industrial manufacturing is moribund. Public attitude is improving but still not very positive overall. The nuclear construction industries were globally comatized (although locally there's large succes) for many years and is understandably still a bit sleepy-headed.

I don't expect much growth from these three technologies in global primary energy needs for at least another 10 years. I'm a big fan of each of them though.

davers said...

Unfortunately there are no companies providing low cost CdTe panels for residential use. For the life of me, I can not figure out why. First Solar says they will not do anything smaller than 4MW. Why doesn't someone buy 4MW of panels from them at $1.15/W and turn around and sell them for residential use?

It boggles the mind. If it's so much cheaper (by nearly 70%) then why are we even messing with silicon at all?

Incidentally, residential, and small to medium commercial is about $7-8/W, and half of that is the panel. The rest is installation labor, the rack and the inverter assembly. In otherwords, it's unlikely that residential solar will ever get any cheaper than $4/watt. So, it will never ever be a major player unless always subsidized.

That said, it's a subsidy that will pay for itself in full back to the economy and then some, unlike most subsidies.

Robert McLeod said...

They probably don't want to deal with the sales and warranty overhead that residential sales would incur. I'm sure its taking all of their focus to continue expanding their manufacturing operations as fast as possible.

They also might not want to let their competition gets their hands on their panels.