I just came across a whitepaper on SunPower’s website that extensively went over the Levelized Cost of Energy and how the drivers of solar power are working to decrease costs, and a glimpse of where we might end up in four years.
The report (PDF) is available and goes through the all of the steps on how to calculate the LCOE and what factors go into designing a large scale solar power system. There are a few places where I disagree with their numbers but overall the report is fairly accurate (their maintenance figures a little low – not too bad, but for us our maintenance cost per kWh is not close to one cent or half a cent as they might claim in some of their cases).
There are a few highlights to point out in this report. First was a reference to a report on panel degradation (source report PDF). They tested 23-year old solar panels and found that they had only degraded 4%. Further, there was nearly no noticed degradation from years 1 through 20, with nearly all the degradation coming in a few year window between years 20 and 22, with the last year of the survey having leveled off the degradation.
Next is that most plants are financed under forecast power production, and that is usually grossly underestimated. This I have also found to be true – our guaranteed output is far less than our actual output – by more than 10%.
The biggest item in the report is the following quote…
In SunPower’s case, the grams of polysilicon consumed to manufacture a watt at the solar cell level declined from 13 g/W in 2004 to 6.3 g/W in 2008 and is planned to decline to an estimated 5 g/W with SunPower’s Gen 3 technology now under development. By 2011 this approximately 60 percent reduction in the use of silicon, coupled with an approximately 50 percent decline in the price of polysilicon, will independently drive large cost reductions for PV panels.
So while panels might have cost $5-6/Wp back in 2004, the increase in cell efficency, reduction of the quantity of bulk silicon used as well as the reduction of the cost of silicon due to the crappy economy and oversupply due to added manufacturing capacity, the cost of a panel could drop down to $2/Wp, and reducing overall costs from $7-8/Wp to $5/Wp and closer to grid parity.
While this is sort of a PR/promotional piece, the numbers in the report are backed up by my real world experiences. As long as the world doesn’t fall apart anytime soon, solar power is on track.
[Edit 6/16: Updated link to Sunpower LCOE paper after their website redesign]