Solar photovoltaic systems: the economics of a renewable energy resource

This paper analyses some emerging aspects of the economics of grid-connected photovoltaic systems. While the 1997 cost of photovoltaic systems is estimated as 5.5 US$/Wp, a 1997 cost estimate for photovoltaic grid-connected electricity is (deflated terms) 0.25 or (nominal terms) 0.29 US$/kWh, for US sunbelt conditions, prevailing US capital market conditions, and an economic lifetime of 20 years. This compares to about 0.10 US$/kWh for conventional electricity production. Other estimates for are, respectively, in deflated and nominal terms and in US$/kWh, 0.30 and 0.35 (average US conditions), 0.29 and 0.33 (average Western European conditions), 0.23 and 0.27 (sunbelt European conditions), and 0.33 and 0.34 (average Japanese conditions). Assuming a longer system lifetime (30 years) lowers these costs by 15–20%. Dividing costs by 2, a reasonable future possibility, would bring them close to competitiveness. Further cost decreases, although possible, are still uncertain. The structure and future evolution of the world photovoltaic industry are also discussed.