Their cost reduction projections are in line with the historical 20% learning rate and imply some growth in the amount of subsidies needed. The overall cost of subsidy is a race between the yearly growth in projected installed capacity and the rate of reduction in costs. As such the report assumes policies that continue to provide subsidies as needed to maintain the growth they are projecting. Were the IEA’s projections of cumulative growth and cost reductions to be maintained, prices would eventually fall to where PV electricity was competitive in the late 2020s. When this occurs it would be realistic to expect that growth would increase, but the projections do not assume higher growth after prices fall to competitive levels. At high levels of PV market penetration, other constraints like storage and backup start to loom large.
PV optimists think the IEA is too conservative in its projections, largely because they foresee a more rapid drop in prices, based on projecting the recent rapid PV price drop forward, rather than the slower historical 20% learning rate curve. The IEA’s PV price projections seem based on a more realistic assessment of the state of the business and the more likely to be correct.
Unfortunately, PV optimists and the IEA are both likely too optimistic. The IEA because it projects political willingness to provide more subsidies and PV optimists because they foresee unrealistic price drops. StratoSolar could provide the price drop the PV optimists desire and enable the growth that the IEA projects. Unfortunately we will have to wait for both sets of optimists to be proven wrong before alternatives like StratoSolar get any serious attention.