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Solar PV costs to fall another 25 per cent in three years

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The big fall in solar PV costs over the last five years is helping redefine the future of energy generation across the world, with grid parity in the retail market achieved in dozens of countries, and even beating wholesale prices in markets such as Chile and the Middle East.

And it seems that the cost falls will continue. Canadian Solar, one of the big three global solar PV manufacturers, this week delivered a detailed update of its outlook, including some interesting forecasts on the future of solar PV costs.

In short, Canadian Solar says the cost of solar PV modules will likely fall 25 per cent in the next three years, from US47c/watt at the end of 2014, to US36c/watt at the end of 2017.

canadian solar reduction

This is mainly going to be achieved by improvements in cell efficiency and the output of solar PV modules. Canadian says it has been able to increase cell efficiency at 0.5 per cent per year over the past five years, and it expects this to continue, or even accelerate.

It is now targeting cell efficiency of 22 per cent and module power outputs of 310W. Commercial efficiency will rise to around 20 per cent from 16-17 per cent today.

This comes as it plans to almost double solar module production to 5.5GW per annum by fiscal 2017. (That conforms then to the past experience that solar PV costs fall by 20 per cent for every doubling in capacity).

It’s not just the cost of modules that will drive a significant reduction in costs at the consumer end. UBS this week noted the huge number of “Yield-Co” being created by leading manufacturers such as Sunpower, First Solar, Trina, Jinko and Canadian Solar.

These YieldCos are essentially vehicles that can attract billions of dollars in investment, lowering financing costs.

Unlike Yingli, which pushed “upstream” into the poly-silicon market and is now having debt problems, the downstream push is seen as a key to retain profitability.

“We see this increased competition having the potential to drive development margins and PPAs down as the push to ‘own’ the project; we see a similar trend emerging among utilities, marketers, and IPPs alike seeking growth in the sector. We suspect those with scale and real depth in offtaker relationships will survive and thrive.

Direct sales to consumers are also likely to increase and boost profitability. Canadian Solar intends to treble its amount of direct sales to around $1 billion per annum by 2017. That will add 5-10 per cent to their margins, as they cut out the middle man, particularly in retail and micro grid sectors.

“This will involve selling modules and BoS products via online platforms, and we believe will force many resellers out of business, and eventually drive equipment costs down with suppliers eating some of the additional margin,” UBS analysts wrote in a recent note.

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  • Jacob

    The grid has been ignoring the facts above for years.

    The cost of solar panels has been decreasing for decades.

    And the output per square foot of solar panels is improving too.

  • nakedChimp

    Direct sales to consumers are also likely to increase and boost
    profitability. Canadian Solar intends to treble its amount of direct
    sales to around $1 billion per annum by 2017. That will add 5-10 per
    cent to their margins, as they cut out the middle man, particularly in
    retail and micro grid sectors.

    Can the battery/cell manufacturers please take note?
    I mean I tried to get some cells from CALB 2 years back, but transferring the money upfront and waiting for my cells was not feasible.. and they didn’t want to use escrow.. :-(

    • Miles Harding

      The best bet are the EV conversion shops, there are several that import either CALB or Thundersky. They usually retail them at a reasonable price, I would be expecting to pay $550-$600 per kwh.
      Not quite Tesla prices, but available off the shelf today.

      I also gave lead acid a second look because of recent improvements to importing arrangements. One of the best buys is the ‘Trojan’ golf cart battery, which can now be direct delivered to metro addresses. eg T105RE (225AH/6V/thicker plates) retails for about $275 each, or about $200 per kwh. They are a wet cell type, so need watering maintenance every 2 months or so. Also, lead acid does not like to be cycled deeply, so a lot more battery is needed, say 4 or 5 times the daily cycle depth. This is a benefit on those runs of cloudy days, as the battery has a lot of reserve capacity that can be used a few times per year, also no BMS is needed. Another issue is the efficiency self-discharge rate of lead acid, so some additional solar panel is needed to accommodate the battery. I would expect them to last about 10 years, the same as CALB or Thundersky.

      • Bob_Wallace

        Shop harder for the T-105 REs. I got 12 for $US 2,000. That would be about $AU 2,560 or $AU $213 each.

        • nakedChimp

          2 years ago we got (FNQ, Cairns) 12 of them 225Ah,6V T-105 REs.. best offer was $250 (w/o GST, 10%) per unit afaik. Down south one might get them for $225 w/o GST I guess if the quantity is right.

          This time I needed something different (shorter recharging time, higher currents) and went with LFP – CALB cells.
          Will see how it goes when the stuff is here in ~4-5 weeks..
          The solution with LFP was overall cheaper than the LAB version with above cells… 10.4kWh, 16 cells, recharge with 230Vac 6kW within 1.5hours (SOC 30%-100%), discharge 7kWh (0.3kW continuous). With LAB it would have cost 1.5 times as much and would had been heavier.

        • Miles Harding

          That was the first reasonable price I saw when researching my response, so better deals are likely.
          Even at $250 each, the T105REs make a strong case for themselves, so it may come down to package size and the convenience of maintenance free operation in consumer-land.