Photovoltaics - Economics

Economics

Photovoltaic power worldwide GWp
2005	5.4
2006	7.0
2007	9.4
2008	15.7
2009	22.9
2010	39.7
2011	67.4

The output of a photovoltaic array is a product of the area, the efficiency, and the insolation. The capacity factor, or duty cycle, of photovoltaics is relatively low, typically from 0.10 to 0.30, as insolation ranges, by latitude and prevailing weather, and is location specific from about 2.5 to 7.5 sun hours/day. Panels are rated under standard conditions by their output power. The DC output is a product of the rated output times the number of panels times the insolation times the number of days. The sunlight received by the array is affected by a combination of tilt, tracking and shading. Tracking increases the yield but also the cost, both installation and maintenance. A dual axis tracker can increase the effective insolation by roughly 35–40%, while temperature effects can reduce efficiency by 10%. The AC output is roughly 25% lower due to various losses including the efficiency of the inverter. For example, for a 4 kW array in Paris, where the average insolation is 3.34 sun hours/day, the annual (AC) output would be approximately 3.34x4x365x0.75=3657 kWh, and the monthly output, from the following chart, would range from 67 kWh in December to 498 kWh in July. The weather strongly affects the output. Monthly and annual energy production varies substantially from year to year (by +/-40% monthly and +/-20% annually). Published insolation values are normally 10 year averages, and long term output tends to be accurate within 10 to 12%. There are many live data sites that can be monitored, and compared.

Source: Apricus

Financial incentives for photovoltaics, such as feed-in tariffs, have often been offered to electricity consumers to install and operate solar-electric generating systems. Government has sometimes also offered incentives in order to encourage the PV industry to achieve the economies of scale needed to compete where the cost of PV-generated electricity is above the cost from the existing grid. Such policies are implemented to promote national or territorial energy independence, high tech job creation and reduction of carbon dioxide emissions which cause global warming. Due to economies of scale solar panels get less costly as people use and buy more — as manufacturers increase production to meet demand, the cost and price is expected to drop in the years to come.

Solar cell efficiencies vary from 6% for amorphous silicon-based solar cells to 44.0% with multiple-junction concentrated photovoltaics. Solar cell energy conversion efficiencies for commercially available photovoltaics are around 14-22%.

As of 2011, the price of PV modules per MW has fallen by 60% since the summer of 2008, according to Bloomberg New Energy Finance estimates, putting solar power for the first time on a competitive footing with the retail price of electricity in a number of sunny countries; an alternative and consistent price decline figure of 75% from 2007 to 2012 has also been published, though it is unclear whether these figures are specific to the United States or generally global. The levelised cost of electricity (LCOE) from PV is competitive with conventional electricity sources in an expanding list of geographic regions, particularly when the time of generation is included, as electricity is worth more during the day than at night. There has been fierce competition in the supply chain, and further improvements in the levelised cost of energy for solar lie ahead, posing a growing threat to the dominance of fossil fuel generation sources in the next few years. As time progresses, renewable energy technologies generally get cheaper, while fossil fuels generally get more expensive:

The less solar power costs, the more favorably it compares to conventional power, and the more attractive it becomes to utilities and energy users around the globe. Utility-scale solar power can now be delivered in California at prices well below $100/MWh ($0.10/kWh) less than most other peak generators, even those running on low-cost natural gas. Lower solar module costs also stimulate demand from consumer markets where the cost of solar compares very favorably to retail electric rates.

As of 2011, the cost of PV has fallen well below that of nuclear power and is set to fall further. The average retail price of solar cells as monitored by the Solarbuzz group fell from $3.50/watt to $2.43/watt over the course of 2011.

For large-scale installations, prices below $1.00/watt were achieved. A module price of 0.60 Euro/watt (0.78 $/watt) was published for a large scale 5-year deal in April 2012. In some locations, PV has reached grid parity, which is usually defined as PV production costs at or below retail electricity prices (though often still above the power station prices for coal or gas-fired generation without their distribution and other costs). Photovoltaic power is also generated during a time of day that is close to peak demand (precedes it) in electricity systems with high use of air conditioning. More generally, it is now evident that, given a carbon price of $50/ton, which would raise the price of coal-fired power by 5c/kWh, solar PV will be cost-competitive in most locations. The declining price of PV has been reflected in rapidly growing installations, totaling about 23 GW in 2011. Although some consolidation is likely in 2012, due to support cuts in the large markets of Germany and Italy, strong growth seems likely to continue for the rest of the decade. Already, by one estimate, total investment in renewables for 2011 exceeded investment in carbon-based electricity generation.

In the case of self consumption payback time is calculated based on how much electricity is not brought from the grid.

For example in Germany with electricity prices of 0.25 euro/KWh and Insolation of 900 KWh/KW one KWp will save 225 euro per year and with installation cost of 1700 euro/KWp means that the system will pay back in less than 7 years.