ANALYSISMANUFACTURING COST


olar installations need to be cost effective throughout the entire system to ensure they are competitive in delivering energy at the market price. The goal of the solar industry is cost parity – being able to provide energy at the same price or lower than the cheapest suitable alternative source of energy for a particular need.


S


This milestone was achieved many years ago for satellites due to the excessive cost/kg for space launch. The landmark cost parity against off-grid diesel generation has already been reached with solar now the cost effective option, increasing its credibility alongside traditional energy sources.


All eyes are now looking towards the next major goal: cost parity with grid power, and it is not that far off either. Energy prices continue to rise steeply with increasing fuel costs, UK energy supplier Scottish Gas announced a 19% increase in residential gas prices in June with other companies expected to follow, while developments steadily make PV generation a cheaper option.


Feed-in tariff reductions and scheduled degressions, not just in the UK but across Europe indicate that the solar industry is already delivering economies of scale, efficiency improvements and other cost-reduction measures.


Cost parity is becoming a reality, and the solar industry is bracing itself for the boom that this coming of age will bring. It is clear that as “if” becomes “when”, those involved early are in for the greatest returns. But it is unlikely there will be a distinct ‘Parity Day’, when solar suddenly becomes the cost effective option to meet the world’s growing energy needs because there are so many different factors varying across the globe.


This article describes the pressure for cost reduction, and how analytical modelling can be used to achieve cost reductions. Four important improvements are explained, based on some work that 42 Technology carried out for Circadian Solar’s on their concentrating photovoltaic (CPV) solar technology: accepting a wide spacing of solar arrays to maximize collected energy; using surplus modules to allow for reduced output due to failures in harsh environments; using low cost, thermally conducting aluminium components to dissipate the heat and maintain performance over life; and ensuring optical alignment with innovative technology.


Achieving grid parity


The attainment of grid parity will be strongly linked with location as it is so sensitive to local climate, latitude and local grid power price. The boom in solar that will follow grid parity is likely to appear first in tropical sunny regions before spreading into progressively more northern and cloudier regions as the costs drop relative to traditional energy sources. For example, PV parity with grid prices has already been reported in Hawaii where the climate is sunny and imported fuel expensive.


Attainment of parity is also affected by the economic environment. As with all ‘no fuel’ power generation, there is a relatively high initial capital requirement, followed by relatively low running costs compared with fuel burning options, which is where the payback comes. Economic viability has to be assessed by comparing the life costs against the total energy generated, with the resulting cost per kilowatt-hour (kWh) figure being compared with a more traditional “grid” price.


It is however very important to include adjustments for the time value of money because the benefits are in the future, whereas the costs are accrued up front. To attract investment the installation needs to offer a return that is competitive with the rest of the market, and here one thing is clear, the lower the cost per kWh, the more investors will think the investment opportunity is bankable.


39


Figure 1:


Highly efficient solar systems – shown here – are critical in securing grid parity from solar power but advanced mathematical modelling is also helping to clarify all the system


interdependencies associated with the design and operation of large-scale farms


www.solar-pv-management.com Issue VI 2011


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48