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Rocky Mountain Institute

As Panels Get Better and Cheaper, PVs are Poised for Their Day in the Sun

These days, solar power is getting nearly as much attention as wind received in recent years.

In the first week of December, the EU Energy Institute was quoted extensively in British and other European media regarding that organization's belief that solar panel costs will drop dramatically and be cost-competitive with fossil-fuel-based energy for half of Europe's homes by 2020 -- notably, cost-competitive without a subsidy.

This new cost competitiveness is a simple reflection of the lifetime expectancy of photovoltaics (PV).

For years, it was assumed that a typical PV lasted 20 years, and financing programs and payback calculations for PV-generated electricity were based on the two-decade lifespan. But recent tests conducted by the Energy Institute -- where PVs are put through a speeded-up aging process via exposure to extremes of heat, cold, and humidity -- have shown that the panels can last much longer.

The tests indicated that over 90 percent of the panels on the market 10 years ago still performed well after 30 years, despite a small drop in performance. And, as Heinz Ossenbrink of the EU Energy Institute noted, 40-year panels are on the way.

So is PV making a big move, so to speak, and will it only be in Europe?

{related_content}"There is a strong chance that PV energy will be cost-competitive [unsubsidized] with residential retail electricity rates in Western Europe and possibly parts of the U.S. by, or before, 2020," said Rocky Mountain Institute (RMI) researcher Sam Newman. "Recent trends indicate PV energy costs are likely to dip below retail rates in certain U.S. states and southern European markets by 2015 or earlier."

Clearly this technology is on the move. In 2008, China became the world leader in PV production. The Energy Institute estimates (pdf) China might boast as much as 32 percent of worldwide production capacity by 2012.

Module lifespan aside, RMI's researchers think that solar costs will be driven down substantially through changes in the way panels are manufactured, installed and regulated, and how the power from them is used.
Many PV manufacturers consume large quantities of lubricants, chemicals, wire, ink and energy at considerable cost. As the industry matures, competitive companies will continue to optimize processes, driving module prices below $1/watt sooner than is commonly realized. Gains in conversion efficiency (how efficiently modules convert sunlight to power) will offer further opportunities to improve productivity of PV modules. 

The installation process also offers room for improvement. Describing it as a comparatively fragmented and immature industry, RMI's researchers noted that the current piecemeal process of installation (with labor costs of up to $2 per watt) could be streamlined in a variety of ways, including more standardization.

In addition, RMI noted that policies that create a predictable demand for PV technologies would help bolster the industry, fostering further growth and economies of scale.

In both Europe and North America, the discussion about solar power is very quickly going from "Is this possible?" to "What's coming next?"
Now, the EU Energy Institute is urging the finance sector to make loans for PV technology because "they [financiers] can predict the value of the solar panel much more safely than they can predict the value of the house in a volatile market," as Dr Ossenbrink told the BBC.

And last week, British supermarket chain Sainsbury's announced it would sell PV panels along with other micro-generation technology in three of its stores, with an eye to rolling the program out across the country.

"This is happening very quickly," Newman said. "Major gains in PV reliability and reductions in manufacturing and installation costs are all contributing to lower costs."

Cameron M. Burns is the senior editor at Rocky Mountain Institute, where he sets editorial standards and oversees the production of various RMI publications.

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