The Economics of Photovoltaic Power Generation

A European Photovoltaic Industry Association surveypower could provide 5-8% of the total energy demand
covering the 1990-1994 time period showed thatby 2020, but only with continued support for research
approximately three-fourths of PV applicationsand development .Figure .1 shows the practical
involved remote locations. Remote applications includeimplementation of photovoltaic system
satellites, remote telecommunications sites, remoteFig.1. A view of PV system
homes and villages, water pumping, camping, and 
boating . Remote applications can becomeMajor Manufacturers
economically feasible because of the expense of 
constructing distribution lines and power lossesThe five companies listed below are major producers
sustained in transmission of conventional power. PVof photovoltaic modules. All have been involved in
facilities may be located at the point of powerproducts for aerospace as well as land-based
consumption and do not require the purchase orsystems including thin-film technology. Some have
delivery of fuel. If a remote site requires a dependableachieved this status by recent buyouts of established
power source or has large loads, a hybrid system mayPV manufacturers.
be a better option. This may consist of photovoltaic 
cells and a diesel generator charging a bank ofSiemens Solar
batteries. In such a hybrid system, the PV cells reduce 
the amount of fuel consumed. The batteries reduceSiemens Solar is the largest manufacturer of
the runtime required of the generator. Charging thephotovoltaic cells. The parent company, Siemens, is a
batteries during generator runtime permits thediversified producer of electrical equipment, involved in
generator to operate in a more efficient load range.all types of electrical power generation, with an
 established worldwide marketing and distribution
Peak Load Reliefsystem.
  
In warm-climate areas, peak load demands occur onApplications of Photovoltaic Power
sunny days due to heavy use of air conditioners. This 
coincides with the productive period for photovoltaicDistinct advantages to PV power, such as zero
power. By locating photovoltaic collectors at the end ofpollution and absence of the need to transport fuel to
a distribution line, a power utility may be able to deferthe generating site, make it attractive in many
the construction of additional conventional generatingapplications. As efficiency improvements and
capacity as well as defer an upgrade of the distributionmanufacturing cost reductions inch PV power toward
line.economic parity with conventional power, these
 applications become more numerous. This economic
Photovoltaic System Componentstrend is reflected in the recent expansions of
 manufacturing capacity and the acquisitions of PV
We often see the cost of photovoltaic modulesmanufacturers by larger corporations. The use of
reported in dollars per watt. At the retail level, the costphotovoltaic as the sole source of electrical power
of photovoltaic modules is currently about $5/watt. Butrequires the use of batteries or other storage. The
photovoltaic modules account for only 25% to 50% ofcost of electrical storage prevents PV generation
the cost of a PV system. To achieve substantial costfrom replacing conventional power generation. PV
reduction, the expense of system components willsystems with electrical storage are only feasible for
need to be addressed. Also, poor componentlow-power, remote applications. For remote
efficiencies can compromise the total systemapplications requiring more power, a hybrid system
efficiency. PV systems can have efficiencies as lowmay be practical. This may consist of photovoltaic cells
as 50% due to losses in inverters, batteries, andand a diesel generator charging a bank of batteries. In
system voltage drops.such a hybrid system, the PV cells reduce the amount
 of fuel to be transported to the site. The batteries also
Green Powerreduce the runtime required of the generator, and
 charging the batteries during generator runtime permits
Economic feasibility is not always the determiningthe generator to be operated in a more efficient load
factor in selecting a power generation system. Withrange .
interest in green (ecologically friendly) power growing, 
both consumers and providers of electrical power areConclusion
turning to the use of photovoltaics in spite of its higher 
cost.Photovoltaic efficiency and manufacturing costs have
 not reached the point that photovoltaic power
Industry Forecastsgeneration can replace conventional coal-, gas-, and
 nuclear-powered generating facilities. For peak load
A 1996 study published by the International Energyuse (no battery storage), the cost of photovoltaic
Agency (IEA), concluded that demand for alternativepower is around two to four times as much as
energy would grow strongly, yet renewable sourcesconventional power. (Cost comparisons between
would only account for about 1% of total energyphotovoltaic power and conventionally generated
produced in 2010. This does not include hydropower,power are difficult due to wide variations in utility
which would constitute about 3% of the energy supply.power cost, sunlight availability, and numerous other
The World Energy Council estimates that renewablevariables.