PHOTON Consulting

The True Cost of Solar Power:

Race to $1/W

Authors

Joonki Song | Ryan Boas | Chris Bolman | Mark Farber | Hilary Flynn | Martin Meyers | Michael Rogol

Introduction

Three segments of the solar value chain — c-Si modules, thin film modules and BOS — are racing toward cost structures of $1/W.  However, macro-economic challenges are driving many solar executives, investors and industry observers to worry about the breakdown of specific companies.

But where are these breaking points?  Where will the sector break-even bar be set? And what will it take to break away from the pack?  The answer to all these questions begins with cost.  This report, The True Cost of Solar Power: Race to $1/W, provides a detailed roadmap of the benchmarks and cost structures that matter most for the solar sector and its companies through 2012.

At the sector level, our most important take-away from three years of cost benchmarking research is that the “true cost “of solar power is remarkably low even now.  Today, the average cost of a c-Si module is well below $2/W, with the fully-loaded cost of a system below $4/W.  This equates to a levelized electricity cost, without incentives, of less than $0.20/kWh in sunnier environments.  Best practice is already far below this level, and the emergence in the next three years of cost structures of $1/W at the module plus $1/W at the BOS levels will enable the levelized cost of solar electricity below $0.10/kWh.

At the corporate level, our most important finding is that a select group of companies – including First Solar, LDK Solar, Q-Cells, REC, SolarWorld, SunPower, Suntech, Yingli and others – have emerged as low-cost leaders in the race.  This report provides detailed cost analysis for hundreds of solar companies in-depth coverage of more than 20 cost leaders and potential cost leaders.

As the solar sector enters 2009, facing both heightened risk and great opportunity, we hope The True Cost of Solar Power: Race to $1/W will serve as a useful reference for solar decision-makers

Executive summary

Is the solar sector nearing a breakdown? This question is on the minds of many solar executives and investors as macroeconomic market challenges spark worries about the short term outlook for the sector and risks to specific companies. The answer to this question begins with careful analysis of cost. The 2nd edition of The True Cost of Solar Power provides detailed benchmarks of the cost structures that matter most for the sector and its companies through 2012. The central theme of the report is that the solar sector (overall) is racing toward $1/W cost levels in important areas, but that many solar companies (specifically) risk breakdown.

At the sector level, the “true cost” of solar power is remarkably low even now. Today, the average cost is <$2/W for c-Si modules and <$5/W for systems. This includes all costs through the supply chain, excluding only... Click here to read the full executive summary (.pdf)