- April 5, 2018
- Posted by: Admin
- Category: Developers, Innovation
A notable group of supply side companies (“ITRPV”) has provided recent 2028 predictions for the levelized cost of solar energy (“LCOE”) that are 34% below 2017 levels. Many buyers, project developers and owners seek to understand how future costs of solar will change. To assist in that process, Beacon Energy LLC analyzed the mid-March, 2018 findings of ITRPV (International Technology Roadmap for PV) to offer our views on the future costs of commercial and utility scale solar.
The ITRPV (affiliated with VDMA.org) issued in mid-March a road map for improvements in PV solar. This is the compilation of information provided by 55 companies active in the supply-side of the industry. As the 9th edition is a progression of earlier annual versions, the group has calculated that their current predictions may be within 5-10% accuracy based on correlations of estimates over the past couple of years. Subjects such as cell efficiencies, pricing, improvements in technology, segment growth, manufacturing/process technologies and other areas are covered by ITRPV. The report and presentation is available at www.itrpv.net.
Key observations are:
• By 2028, the LCOE for PV solar is predicted to be $0.019-$0.047/kWh, a 34% improvement from 2017. World end user prices in 2017 for large scale PV solar are citing by ITRPV at a LCOE of $0.029/kWh to $0.072/kWh depending on geographic location, project size and other factors.
• Cell efficiencies, vary by technologies (PERC, n-type, p-type, etc.) and various assumptions, but are summarized as showing a 1.5%-4.2% improvement from 2017-2020 and a 5.8%-8.5% improvement from 2017-2025
• Module output is expected to rise with an imputed performance increase of 10.3% from 2018-2022 and a 20.6% improvement from 2018-2028. Module performance is affected by the growth of half and quarter cells, power losses in modules, the mix of cell technology used, as well as other cell level efficiency improvements. This can have a profound impact on balance of system (“BOS”) costs and has a multiplier effect.
• A learning curve related decline with a slope of 22.8% has been calculated for the 2017-1976 period. This implies that costs decline at this rate with each doubling of production. ITRPV applies this logic to the price of modules.
• Using ITRPV information and their references to IEA, a low scenario estimated annual production shows the doubling of production by 2021, again in 2025 and again in 2030. Higher forecasts move this up 1yr to 2020, 2 yrs to 2023 and by 3 years to 2027.
• As a result of the above ITRPV assumptions and findings, the 2017 module price of $0.34/Wp on a learning curve related decline basis, decreases to $0.26/Wp in 2021 and $0.20/Wp in 2024 under the low growth scenarios. From 2024-1017, this is a 41% improvement in the price of modules based solely on the learning curve price declines expected as Beacon Energy LLC has calculated the above prices on the bases of the ITRPV information.
The ITRPV information is without regard to added cost of trade tariffs and the benefits of the US investment tax credits (“ITC”). Beacon Energy LLC has calculated the impact of these factors for a more comprehensive view of the short-term situation. First, the US has enacted a recent trade tariff of 30% the first year (Feb 2018) stepping down 5% per year for the next three years (however, 2.5 GW of cells annually may be treated differently along with thin film technology, US manufactured modules and other factors, all subject to WTO approval). Second, the 30% 2019 US Investment Tax Credit incentives decrease uniformly per year to 10% for new construction started in 2022. The table below shows the estimated costs of the trade tariffs on typical modules and the benefits from the ITC, using ITRPV module price information only.
Year Trade Tariff Cost Module ITC Benefit
2019 $0.08/kw $0.093/kw
2020 $0.06/kw $0.073/kw
2021 $0.04/kw $0.056/kw
2022 $0.00/kw $0.023/kw
Based on the above calculations, the trade tariff costs appear to be offset by the module ITC benefit. There is also ITC on other solar installation costs, since modules today are about 30-50% of the total hard system costs (without certain development expenses).
Overall, the road map provided by the ITRPV 9th edition is a useful source of information on expected module output performance as well as possible cost declines. Since many factors go into any specific installation, the road map serves as a rough guide to future costs and efficiencies. Market factors of over supply and competition may prove to move everyone’s expectations. And transactable cost estimates require the care of experienced professionals armed with specific locational information as well as best in class industry expertise.