Hard Limit for Solar PV Price Reduction About $100 a KW

Eduard Heindl blogs about his idea of moving mountains as a storage option (Lageenergiespeicher) and other matters of interest in the field of energy.

In July he analyzed the hard limits for the price reductions for solar PV. As Professor Eicke Weber of Fraunhofer just noted, prices have come by over an order of magnitude in the last twenty-five years. Can solar PV do so again until 2037? Where is the limit for these price reductions?

Heindl starts out noting that most of the raw material for solar panels will be glass and metal for the frames, at about $28 each. He slaps on another $50 for transport and installation and sees the hard limit around $100.

That, in his opinion, will result in cost of 0.6 cents per kWh. It will be fun to watch gas and coal plants try competing with that.

Heindl doesn’t explain how he gets to that number. Let’s play a bit around with the NREL levelized cost of electricity calculator.

I plug in $100 as capital cost, fifty years as period, and 0.5% as discount rate, setting everything else to 0. That results in 0.2 cents per kWh. Sounds good to me.

Of course anything less than around 3 cents should be enough to beat any other method of generation, so it doesn’t matter much if 0.6 or 0.2 cents is the hard limit.

What matters is to get those prices down even further. What matters is that the hard limits are still far away. It has been clear before that solar will be the cheapest method of generation in about a decade at the latest. But what matters is to get there fast enough to keep more of the fossil fuel in the ground.

The first reduction in cost by an order of magnitude was of course the most difficult, and the most effective in making solar competitive. And it was mostly achieved courtesy of the German feed-in tariff.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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