Solar photovoltaic costs

The main market for solar photovoltaic technology in 2003 was grid-connected residential and domestic installations. These accounted for 365 MW of total annual production of 744 MW, or roughly 50%.13

The cost of a grid-connected solar photovoltaic system based on silicon can be divided roughly into thirds. One-third is for the actual silicon to make the cell (the module), a further one-third for the manufacture of the solar cell and panel or module, and one-third for installation and ancillary equipment.14

In the USA in 2003, the cost of an installed rooftop system of this type was $6500-$8000/kW (see Table 13.3). This compares with $7000-$9000/kW in 2001 and $12000/kW in 1993. Even so, this makes solar photovoltaic technology one of the most expensive available today for generating electricity.

Table 13.3 Solar photovoltaic costs

Photovoltaic module ($/kW)

Installed AC system ($/kW)



















Source. Renewable Energy World.16

Source. Renewable Energy World.16

The cost of the solar cell accounts for a major part of the overall cost. Table 13.3 shows, this is between one-third and one-half of the total cost. Newer technologies may offer hope of reduced costs. Amorphous silicon and cadmium telluride modules were selling for $2000/kW and $3000/kW in 2003. The manufacture of silicon designed specially for solar cell applications may also reduce costs of silicon further.

Apart from the introduction of new technologies, the main hope for a reduction in the cost of solar cells comes from economies of scale. This effect is already bringing prices down slowly and global capacity rises. Government sponsored schemes to encourage the use of grid-connected photovoltaic arrays in commercial and domestic situations in countries like Japan, Germany and the USA are helping to increase demand.

The cost of electricity from solar photovoltaic power plants remains high. At an installed cost of $5000/kW, electricity probably costs around $0.25/kWh. This can be competitive with the peak power costs in somewhere like California but is way above the cost of base-load power, $0.025-0.050/kWh, in markets with well-developed infrastructures. Nevertheless the cost has reduced to a point where widespread installation is feasible.

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