Solar power--when should it scale?
By Arnold Kling
Some recent stories about solar power.
A new mechanism for focusing light on small areas of photovoltaic material could make solar power in residential and commercial applications cheaper than electricity from the grid in most markets in the next few years. Initial systems, which can be made at half the cost of conventional solar panels, are set to start shipping later this year, says Brad Hines, CTO and founder of Soliant Energy, a startup based in Pasadena, CA, that has developed the new modules.
Nanosolar, a startup in Palo Alto, CA, announced plans to build a production facility with the capacity to make enough solar cells annually to generate 430 megawatts.
…”It’s an extraordinary number,” says Ken Zweibel, who heads up thin-film research at the National Renewable Energy Laboratory in Golden, CO. Most groups building new solar technologies “add maybe 25 or 50 megawatts,” he says. “The biggest numbers are closer to 100. So it’s a huge number, and it’s a huge number in a new technology, so it’s doubly unusual. All the [photovoltaics] in the world is 1,700 megawatts.”
3. Photon Consulting on market penetration:
The entire sector will produce only 4 gigawatts (GW) of cells/modules in 2007, compared to global installed electricity capacity of over 4,000 GW.Similarly, the installed base of solar power systems will be only 0.06% of global electricity consumption this year.
4. Photon Consulting on cost:
Today, the »true cost« of solar power is under 25¢ per kWh in most locations and is likely to reach 10¢ to 15¢ per kWh by 2010. This includes all costs of manufacturing and installing solar power systems from pre-silicon (i.e. TCS) to connected-installations without incentives or tax benefits.
Already, solar is at a cost level that makes it competitive with residential grid prices in the OECD’s highest-priced markets. It is estimated that the cost of solar power is below the price of residential grid electricity for 5 to 10 percent of OECD consumption (200 to 400 TWh). This equates to 150 to 300 GW of solar power, compared to only 2.7 GW of solar cell/module production in 2006.
Over the next three years, it is expected that the typical fully-loaded cost of solar power will decrease at least 30 percent from $3.60 per W in 2006 to $2.50 per W. In consequence, by 2010, the cost of solar will be below the price of grid electricity for at least 50 percent of OECD residential demand, equivalent to around 1,500 GW of solar power. This is much larger than the 15 GW of cell/module production PHOTON Consulting anticipates for 2010.
At what point does an entrepeneur build a massive-scale solar cell manufacturing plant? On the one hand, because the technology keeps getting better, if you invest a lot now you risk having your plant be obsolete soon after it goes on line. On the other hand, if point (4) is accurate, then there will be large unexploited profit opportunities in solar in the next several years, with production of solar panels only a fraction of the potential demand.