Solar PV rapidly becoming the cheapest option to generate electricity

By Kees Van Der Leun
For a long time, the holy grail of solar photovoltaics (PV) has been "grid parity," the point at which it would be as cheap to generate one's own solar electricity as it is to buy electricity from the grid. And that is indeed an important market milestone, being achieved now in many places around the world. But recently it has become clear that PV is set to go beyond grid parity and become the cheapest way to generate electricity.

Whenever I say this I encounter incredulity, even vehement opposition, from friends and foes of renewable energy alike. Apparently, knowledge of the rapid developments of the last few years has not been widely disseminated. But it's happening, right under our noses! It is essential to understand this so that we can leverage it to rapidly switch to a global energy system fully based on renewable energy.

Solar cells.A hundred solar cells, good for 380 watts of solar PV power.Photo: Ariane van DijkWorking on solar PV energy at Ecofys since 1986, I have seen steady progression: efficiency goes up, cost goes down. But it was only on a 2004 visit to Q-Cells' solar cell factory in Thalheim, Germany, that it dawned on me that PV could become very cheap indeed. They gave me a stack of 100 silicon solar cells, each capable of producing 3.8 watts of power in full sunshine. I still have it in the office; it's only an inch high!

That's when I realized how little silicon was needed to supply the annual electricity consumption of an average European family (4,000 kWh). Under European solar radiation, it would take 1,400 cells, totaling less than 30 pounds of silicon.

Of course, you need to cover the cells with some glass and add a frame, a support structure, some cables, and an inverter. But the fact that 30 pounds of silicon, an amount that costs $700 to produce, is enough to generate a lifetime of household electricity baffled me. Over 25 years, the family would pay at least $25,000 for the same 100,000 kilowatt-hours (kWh) of electricity from fossil fuels -- and its generation cost alone would total over $6,000!

At a very large scale, the cost of manufacturing anything drops to just above the cost of its base materials. As scale goes up, per-unit costs come down. This is known as a "learning curve" -- the price per unit of capacity comes down by x percent for every doubling of cumulatively installed capacity. For solar PV modules, the learning rate has been exceptionally high, averaging 22 percent for the past two decades. The cost of the "balance of system," i.e., all other components needed, follows this trend line closely. So this is what we see happening now in PV:

Chart.