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Chapter 3

100

50

1976 [65 USD/W]

Produced Silicon PV Modules (Global)

/W]

2005

Average Price [USD

10

5

2010 [1.4 USD/W]

1

0,5

1

10

100

1,000

10,000 100,000 Cumulative Global Capacity [MW]

Figure 3.17 | Solar price experience or learning curve for silicon PV modules. Data dis- played follow the supply and demand fluctuations. Data source: Maycock (1976-2003); Bloomberg (2010).

decreased significantly over the past couple of decades and is projected to continue decreasing rapidly as PV technology and markets mature. However, the system price decrease11 varies significantly from region to region and depends strongly on the implemented support schemes and maturity of markets (Wiser et al., 2009). Figure 3.18 shows the system price developments in Europe, Japan, and the USA.

The capacity-weighted average investment costs of PV systems installed in the USA declined from USD2005 9.7/W in 1998 to USD2005 6.8/W in 2008. This decline was attributed primarily to a drop in non-module (BOS) costs. Figure 3.18 also shows that PV system prices continued to decrease considerably since the second half of 2008. This decrease is considered to be due to huge increases in production capacity and pro- duction overcapacities and, as a result, increased competition between PV companies (LBBW, 2009; Barbose et al., 2010; Mints, 2011). More generally, Figure 3.18 shows that the gap between PV system prices or investment cost between and within different world regions narrowed until 2005. In the period from 2006 to 2008, however, the cost spread widened at least temporarily. The first-quarter 2010 average PV sys- tem price in Germany dropped to € 2,864/kWp (USD2005 3,315/kWp) for systems below 100 kWp (Bundesverband Solarwirtschaft e.V., 2010). In 2009, thin-film projects at utility scale were realized at costs as low as USD2005 2.72/Wp (Bloomberg, 2010).

O&M costs of PV electricity generation systems are low and are found to be in a range between 0.5 and 1.5% annually of the initial investment costs (Breyer et al., 2009; IEA, 2010c).

11

System prices determine the investment cost for independent project developers. Since, prices can contain profit mark-ups, the investment cost may be higher for independent project developers than for vertically integrated companies that are engaged in the production of PV systems or components thereof.

Direct Solar Energy

The main parameter that influences the capacity factor of a PV system is the actual annual solar irradiation at a given location given in kWh/ m2/yr. Capacity factors for PV installations are found to be between 11 and 24% (Sharma, 2011), which is in line with earlier findings of the IEA Implementing Agreement PVPS (IEA, 2007), which found that most of the residential PV systems had capacity factors in the range of 11 to 19%. Utility-scale systems currently under construction or in the planning phase are projected to have 20 to 30% capacity factors (Sharma, 2011).

Based on recent data representative of the global range of investment cost around 2008 as discussed above, assumptions provided in Annex III of this report, and the methods specified in Annex II, the following two plots show the sensitivity of the LCOE of various types of PV systems with respect to investment cost (Figure 3.19a) and discount rates (Figure 3.19b) as a function of the capacity factor.

Note that 1-axis tracking for utility-scale PV systems range from 15-20% increase in investment cost over fixed utility-scale PV systems. Modeling studies for c-Si indicate 16% increase for 1-axis tracking over fixed utility-scale PV systems (Goodrich et al., 2011). In 2008 and 2009, com- mercial rooftop PV systems of 20 to 500 kW were reported to be roughly 5% lower in investment cost than residential rooftop PV systems of 4 to 10 kW (NREL, 2011).

These figures highlight that the LCOE of individual projects depends strongly on the particular combination of investment costs, discount rates and capacity factors as well as on the type of project (residential, commercial, utility-scale).

Several studies have published LCOEs for PV electricity generation based on different assumptions and methodologies. Based on investment cost for thin-film projects of USD2005 2.72/Wp in 2009 and further assump- tions, Bloomberg (2010) finds LCOEs in the range of 14.5 and 36.3 US cent2005/kWh. Breyer et al. (2009) find LCOEs in the range of 19.2 to 22.6

US cent2005

/kWh in regions of high solar irradiance (>1,800 kWh/m2/yr)

in Europe and the USA in 2009. All of these ranges can be considered to be reasonably achievable according to the LCOE ranges shown in Figure 3.19 and included in Annex III.

Assuming the PV market will continue to grow at more than 35% per year, the cost is expected to drop more than 50% to about 7.3 US

cent2005

/kWh by 2020 (Breyer et al., 2009). Table 3.5 shows the 2010

IEA PV roadmap projections, which are somewhat less ambitious, but still show significant reductions (IEA, 2010c). The underlying deploy- ment scenario assumes 3,155 GW of cumulative installed PV capacity by 2050.

The goal of the US DOE Solar Program’s Technology Plan is to make PV-generated electricity cost-competitive with market prices in the USA by 2015.Their ambitious energy cost targets for various market sectors are 8 to 10 US cents2005/kWh for residential, 6 to 8 US cents2005/kWh for commercial

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