PV Economics

By Edmund Kelly

The rapid drop in PV panel prices in 2011 has led some optimists to predict continuing rapid price declines, particularly in the US. The triggering event in panel price decline was the drop in the cost of poly-silicon from over $100/kg to under $20/kg. This drop in price came as a result of investment in poly-silicon capacity which broke a cartel that had been keeping prices artificially high. This article by Matthias Grossmann describes the history in detail and focuses on the conditions necessary for renewed investment in poly-silicon production.  He concludes that poly-silicon prices higher than the current $20/kg will be necessary to get investors on board. As supply is coming into balance with demand, that increased price is already happening, so investment in poly silicon production is likely to resume.

All this means is that rapid PV panel price declines from current levels are not likely and current price levels will prevail for some time. Current overall  capital costs for large utility arrays varies from about $1.50/W to $2.00/W depending on a variety of project specific details, like local labor rates, land and regulatory costs. Interestingly,  if low cost financing is available and you have the high capacity factor of a desert, this capital cost level can produce electricity competitive with fossil fuels without subsidy, as is illustrated by this project in Dubai. However 100% project financing at 4% for 27 years is not yet the norm. For StratoSolar financing we assume a working cost of capital of 8.5% over 20 years which results in about $0.06/kWh for electricity. At 4% financing we would be under $0.03/kWh. That is so low a cost for electricity that it would be immediately disruptive in all markets and would drive very rapid growth in installed capacity. This would drive down costs which would further drive down the cost of electricity.

If we can prove the viability of high altitude, buoyant, tethered, platforms, the foundations laid by PV growth and the continuing improvement in PV technology will enable spectacular rapid growth for StratoSolar systems worldwide.