Renewables

Photovoltaic costs to plummet in 2009

11 December 2008 — The cost of photovoltaic electricity is due to plummet in 2009, according to analysts at New Energy Finance. Its quarterly Silicon and Wafer Price Index shows average silicon contract prices falling by over 30 percent in 2009, compared with 2008.

With thin-film PV module manufacturing costs approaching the $1 per watt mark, crystalline silicon-based PV will come under severe competition for larger projects, resulting in margins shrinking throughout the silicon value chain, the company states.

The analysis shows an average perceived spot market price of solar-grade silicon during October and November of $332/kg. The weighted average price for polysilicon for delivery in 2009 under contracts signed in 2007 and 2008 was $113/kg, a reduction of 31 percent from 2008.

Although the decrease in silicon prices will be good news for silicon-based cell and module-makers, another threat is now looming larger. According to the new report, “Through Thick and Thin,” New Energy Finance forecasts that production of thin-film photovoltaic modules will more than quadruple to 1.9 GW in 2009.

Thin-film PV is less efficient at converting solar energy to electricity, with efficiencies of as much as 11 percent rather than the up to 18 percent displayed by commercial crystalline silicon technology. However, with manufacturing costs approaching $1/watt, it is an attractive option for larger space-constrained applications.

For a ground-mounted plant in a region with good insolation, this could translate into an unsubsidised generation cost of $0.17/kWh for crystalline silicon – competitive with daytime peak electricity prices in many parts of the world. Meanwhile, thin-film manufacturers can achieve unsubsidised costs of $0.13/kWh for the same large project by 2010.

According to New Energy Finance, the credit crunch will impact the ability of some solar project developers to find debt finance. This will slow the build-out of solar projects, intensifying downward pressure on prices and potentially shifting the market from value-based to cost-based pricing.

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