Price Trends and Grid Parity
Prices for solar power has fallen dramatically in 2009, and are expected to fall further in coming years due to technology and manufacturing process improvements. Solar power is set to achieve grid parity very soon.
Cell Efficiency Improvements
Due to technological advances, the average cell efficiency for crystalline- based silicon modules has increased by 1% every two years. In 2009, the most efficient poly-crystalline cell shipped by Gintech has an efficiency of 16.5%.
The theoretical maximum for efficiency of a silicon cell is 33%.
Given the fairly low efficiency of a solar cell, a change in module efficiency from 16% to 17% equates to an increase in the energy yield of a cell by 6% or the whole system by a respectable 4.5%.And above all, it results in a lower price per kWp.
.To compare modules, prices are typically converted into a $/W amount.
From the second quarter of 2008 to May 2009, prices for silicon pv products have dropped dramatically. The average price for polysilicon has dropped over 60% from $2/W to below $0.6/W. The prices for polysilicon- based products, namely wafers, cells and modules have dropped in a similar fashion.
The sharp drop has been caused by a drop in demand following the credit freeze in 2008/09, lower feed-in tariffs and overcapacity. Although demand will return, it is unlikely that polysilicon prices will return to 2008- levels.
(Average prices taken from Deutsche Bank analyst report)
The cost of the energy generated by a PV module does not just depend on the size of the system (rated power), but also on location where it is installed. The same system will in most instances yield different amounts of annual energy for the same capital investment.
For instance, in Berlin, the energy yield for a system is about 900KWh/kWp, whereas Dubai gets 1,800kWh/kWp. Hence, there is no individual point where solar electricity could reach "grid parity", i.e. the cost of electricity that is pumped into the grid, mostly by coal- fired power plants.
Also, electricity markets know two price points - peak and off-peak, where peak is significantly more expensive than the base-load.
It is anticipated that solar electricity will eventually reach both peak and off-peak grid parity in most locations of the earth by 2040 given current trends.