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Hans De Keulenaer
Fernando Nuno
Is Grid Parity for Solar Photovoltaics Imminent?
WebmeetingMarch 7, 2008
www.leonardo-energy.org
Experience curves for energy technologies
Energy technologies reduce 15-20% in cost for each when cumulative sales double
The cost to make a technology market competitive is the learning investment– Carried by government subsidies and early user’s ‘willingness to
pay’
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Small systems are relatively more expensiveGrid connection less expensive than off-grid
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Annualisation Factors for various interest rates and lifetime
0%
5%
10%
15%
20%
25%
30%
35%
0 5 10 15 20 25 30 35 40 45
Lifetime (years)
An
nu
alis
atio
nfa
cto
r
4%5%6%7%8%9%10%11%12%13%14%1
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Annual yield per 1 kWp
Output
Location Global horizontal irradiation
Roof-topkWh/kWp
FaçadekWh/kWp
Perth 1,941 kWh/m2/yr 1,587 932
Brussels 946 kWh/m2/yr 788 539
Washington 1,487 kWh/m2/yr 1,249 814
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Does solar electricity need to compete with wholesale or retail electricity prices?
Is solar electricity a comparable commodity to bulk electricity?
Is it justified to waiver the taxes and surcharges for solar electricity?
Does solar electricity make more or less use of the grid?
Does PV electricity lower peak demand from the grid?
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Grid parity
PV’s cost per kWh– The numerator
• Capital cost
– Learning curve– Size of system– Grid connection– Market variation
• Interest rate & lifetime• Component replacement
(inverter)
– The denominator• Annual output• Long-term performance
Grid cost per kWh– Electricity cost
• Level of competition• Generation system• T&D system• Cost of carbon fuel• Other taxes & incentives
– Pricing of externalities• Carbon• Network use
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Example
Target electricity price: 20 c/kWh– 1000 kWh/kWp– 5%; 25 years
(annualisation factor 7%)
PV cost target = 0.20 * 1,000 / 0.07 = 2,857 euro/kWp
With a 20% learning factor: – factor 2 cost reduction requires 0.8^3 or a factor 8
increase in cumulative installed base– factor 4 means a 64-fold increase
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Market considerations : cost evolutionS
ourc
e :
Sol
ar G
ener
atio
n IV
– 2
007,
Eur
opea
n P
hoto
volta
ic I
ndus
try
Ass
ocia
tion
– G
reen
peac
e
Generation costs have reduced by a factor 2 during the past 10 years
Before 2020 PV generation cost will match peak power generation cost, and this without any subsidy
Currently PV is widely supported by national subsidies (most of EU countries…)
European Technology Platform has
ambitious objectives for 2030 :
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Market considerations : volume evolutionS
ourc
e :
Sol
ar G
ener
atio
n IV
– 2
007,
Eur
opea
n P
hoto
volta
ic I
ndus
try
Ass
ocia
tion
– G
reen
peac
e
Cumulative capacity increased by 35% during the last years
What about the future? European Photovoltaic Industry Association makes several
scenarios, which lead to a PV contribution to electricity consumption between 1% and 9% by 2030
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PV, and its solar alternatives
Typical feedin tariffs
PV @ 300 €/MWh
CPV
CSP @ 200 €/MWh
Wind @ 80 €/MWh
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Conclusions
‘Grid parity’ presently the exception but not exceptional– Number of installations at grid parity should increase
steadily– EPIA expects parity with peak electricity by 2015 in
Southern Europe
Grid parity may not be a genuine issue Without a step improvement, cost reductions
through learning investment may not suffice
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