A Review of Solar Photovoltaic Levelized Cost of Electricity

As the solar photovoltaic (PV) matures, the economic feasibility of PV projects are increasingly being evaluated using the levelized cost of electricity (LCOE) generation in order to be compared to other electricity generation technologies. Unfortunately, there is lack of clarity of reporting assumptions, justifications and degree of completeness in LCOE calculations, which produces widely varying and contradictory results. This paper reviews the methodology of properly calculating the LCOE for solar PV, correcting the misconceptions made in the assumptions found throughout the literature. Then a template is provided for better reporting of LCOE results for PV needed to influence policy mandates or make invest decisions. A numerical example is provided with variable ranges to test sensitivity, allowing for conclusions to be drawn on the most important variables. Grid parity is considered when the LCOE of solar PV is comparable with grid electrical prices of conventional technologies and is the industry target for cost-effectiveness. Given the state of the art in the technology and favorable financing terms it is clear that PV has already obtained grid parity in specific locations and as installed costs continue to decline, grid electricity prices continue to escalate, and industry experience increases, PV will become an increasingly economically advantageous source of electricity over expanding geographical regions.

[1]  Joshua M. Pearce,et al.  Accelerating Applied Sustainability of Utilizing Return on Investment for Energy Conservation Measures , 2009 .

[2]  Antonio Luque,et al.  Achievements and Challenges of Solar Electricity from Photovoltaics , 2011 .

[3]  Christian Breyer,et al.  Grid-Parity Analysis for EU and US Regions and Market Segments - Dynamics of Grid-Parity and Dependence on Solar Irradiance, Local Electricity Prices and PV Progress Ratio , 2009 .

[4]  R. M. Swanson,et al.  Photovoltaics Power Up , 2009, Science.

[5]  Suleyman Hakan Sevilgen,et al.  Effect of economic parameters on power generation expansion planning , 2005 .

[6]  M. Munasinghe.  Electricity Pricing: Theory and Case Studies , 1982 .

[7]  Joshua M. Pearce,et al.  Reducing Greenhouse Gas Emissions by Inducing Energy Conservation and Distributed Generation from Elimination of Electric Utility Customer Charges , 2007 .

[8]  Bill Marion,et al.  Performance and Economic Analysis of Distributed Power Electronics in Photovoltaic Systems , 2011 .

[9]  Benjamin K. Sovacool,et al.  Going Completely Renewable: Is It Possible (Let Alone Desirable)? , 2009 .

[10]  N. Stern.  The Economics of Climate Change: Implications of Climate Change for Development , 2007 .

[11]  Joshua M. Pearce.  Increasing PV velocity by reinvesting the nuclear energy insurance subsidy in large-scale photovoltaic production , 2009, 2009 34th IEEE Photovoltaic Specialists Conference (PVSC).

[12]  Joshua M. Pearce,et al.  of solar photovoltaic levelized cost of electricity , 2011 .

[13]  Christian N. Jardine,et al.  INFLUENCE OF SPECTRAL EFFECTS ON THE PERFORMANCE OF MULTIJUNCTION AMORPHOUS SILICON CELLS , 2002 .

[14]  D. Staebler,et al.  Reversible conductivity changes in discharge‐produced amorphous Si , 1977 .

[15]  Kyrke Gaudreau,et al.  An Analysis of the Ontario Power Authority’s Consideration of Environmental Sustainability in Electricity System Planning , 2008 .

[16]  Stan Kaplan,et al.  Power Plants: Characteristics and Costs , 2008 .

[17]  V. Fthenakis,et al.  A solar grand plan. , 2008, Scientific American.

[18]  K.W. Jansen,et al.  The Advantages of Amorphous Silicon Photovoltaic Modules in Grid-Tied Systems , 2006, 2006 IEEE 4th World Conference on Photovoltaic Energy Conference.

[19]  M. Robinson.  The microfinance revolution: sustainable finance for the poor. , 2001 .

[20]  R. Ruther,et al.  Performance test of amorphous silicon modules in different climates - year four: Progress in understanding exposure history stabilization effects , 2008, 2008 33rd IEEE Photovoltaic Specialists Conference.

[21]  Ricardo Rüther,et al.  Spectral effects on amorphous silicon solar module fill factors , 2002 .

[22]  E. Dunlop,et al.  20 years of life and more: where is the end of life of a PV module? , 2005, Conference Record of the Thirty-first IEEE Photovoltaic Specialists Conference, 2005..

[23]  Joshua M. Pearce,et al.  The Effect of Spectral Albedo on Amorphous Silicon and Crystalline Silicon Solar Photovoltaic Device Performance , 2013 .

[24]  W. Short,et al.  A manual for the economic evaluation of energy efficiency and renewable energy technologies , 1995 .

[25]  M. J. Kearney,et al.  Experimental study of variations of the solar spectrum of relevance to thin film solar cells , 2003 .

[26]  Stephen J Genuis,et al.  The environmental burden of disease in Canada: respiratory disease, cardiovascular disease, cancer, and congenital affliction. , 2008, Environmental research.

[27]  Margaret R. Taylor.  Beyond technology-push and demand-pull: Lessons from California's solar policy , 2008 .

[28]  Chi-Jen Yang,et al.  Reconsidering solar grid parity , 2010 .

[29]  Joshua M. Pearce,et al.  Financial Return for Government Support Financial Return for Government Support of Large-Scale Thin-Film Solar Photovoltaic Manufacturing in Canada , 2010 .

[30]  Joshua M. Pearce.  Industrial symbiosis of very large-scale photovoltaic manufacturing , 2008 .

[31]  Tara C. Kandpal,et al.  Effect of financial and fiscal incentives on the effective capital cost of solar energy technologies to the user , 2005 .

[32]  Joshua M. Pearce.  Photovoltaics - A Path to Sustainable Futures , 2002 .

[33]  Joshua M. Pearce,et al.  Intrinsic and light induced gap states in a-Si:H materials and solar cells—effects of microstructure , 2004 .

[34]  T. Beck,et al.  Reaching Out: Access to and Use of Banking Services Across Countries , 2005 .

[35]  Galen Barbose.  Tracking the Sun III; The Installed Cost of Photovoltaics in the United States from 1998-2009 , 2011 .

[36]  Lutz Weischer,et al.  Toward a Sunny Future? Global Integration in the Solar Pv Industry , 2010 .

[37]  S. Ong,et al.  Breakeven Cost for Residential Photovoltaics in the United States: Key Drivers and Sensitivities (Report Summary) (Presentation) , 2009 .

[38]  Parm Pal Singh,et al.  Realistic generation cost of solar photovoltaic electricity , 2010 .

[39]  J. Mason,et al.  The technical, geographical, and economic feasibility for solar energy to supply the energy needs of the US , 2009 .

[40]  Antonio Luque,et al.  Handbook of photovoltaic science and engineering , 2011 .

[41]  J. Merten,et al.  Clear separation of seasonal effects on the performance of amorphous silicon solar modules by outdoor I/ V-measurements 1 This work has been financed by the project JOU2-CT92-5103 of the EU. 1 , 1998 .

[42]  L. Moore,et al.  Five years of operating experience at a large, utility‐scale photovoltaic generating plant , 2008 .

[43]  D. Chianese,et al.  Analysis of weathered c-Si PV modules , 2003, 3rd World Conference onPhotovoltaic Energy Conversion, 2003. Proceedings of.

[44]  P ? ? ? ? ? ? ? % ? ? ? ? , 1991 .

[45]  Joshua M. Pearce,et al.  Light-Induced Defect States in Hydrogenated Amorphous Silicon Centered Around 1.0 and 1.2 eV from the Conduction Band Edge , 2003 .

[46]  Donald W. Jones,et al.  The Economic Future of Nuclear Power , 2004 .

[47]  N. Darghouth,et al.  Tracking the Sun II: The Installed Cost of Photovoltaics in the U.S. from 1998-2008 , 2010 .

[48]  Y. Hirata,et al.  Output variation of photovoltaic modules with environmental factors—I. The effect of spectral solar radiation on photovoltaic module output , 1995 .

[49]  George Simons.  Developing Cost-Effective Solar Resources with Electricity System Benefits IN SUPPORT OF THE 2005 INTEGRATED ENERGY POLICY REPORT , 2005 .

[50]  R. Gottschalg,et al.  Impact of spectral effects on the electrical parameters of multijunction amorphous silicon cells , 2003, 3rd World Conference onPhotovoltaic Energy Conversion, 2003. Proceedings of.

[51]  G. Barbose,et al.  Tracking the Sun: The Installed Cost of Photovoltaics in the U.S. from 1998-2007 , 2009 .

[52]  Benny Buller,et al.  Thin Film PV: The Pathway to Grid Parity , 2009 .

[53]  Anthony Gross,et al.  Renewable Energy for BHP Billiton: Framework and Application to BHP Billiton's Global Assets , 2008 .

[54]  E. Dunlop,et al.  The results of performance measurements of field‐aged crystalline silicon photovoltaic modules , 2009 .

[55]  Thomas R. Betts,et al.  On the importance of considering the incident spectrum when measuring the outdoor performance of amorphous silicon photovoltaic devices , 2004 .

[56]  Ricardo Rüther,et al.  Seasonal Variations in Amorphous Silicon Solar Module Outputs and Thin Film Characteristics , 1995 .

[57]  Christian N. Jardine.  PV-COMPARE: RELATIVE PERFORMANCE OF PHTOVOLTAIC TECHNOLOGIES IN NORTHERN AND SOUTHERN EUROPE , 2002 .

[58]  P. Mialhe,et al.  Effect of atmospheric parameters on the silicon solar cells performance , 2008 .

[59]  A. Stanback.  Achieving Low-Cost Solar PV : Industry Workshop Recommendations for Near-Term Balance of System Cost Reductions , 2011 .

[60]  S. Pelland,et al.  THE DEVELOPMENT OF PHOTOVOLTAIC RESOURCE MAPS FOR CANADA , 2006 .

[61]  Glenn N. Doty,et al.  Deployment Prospects for Proposed Sustainable Energy Alternatives in 2020 , 2010 .

[62]  Thomas R. Betts,et al.  A critical appraisal of the factors affecting energy production from amorphous silicon photovoltaic arrays in a maritime climate , 2004 .

[63]  A. W. Czanderna,et al.  Accelerated Life Testing and Service Lifetime Prediction for PV Technologies in the Twenty-First Century , 1999 .

[64]  G. G. Stokes.  "J." , 1890, The New Yale Book of Quotations.

[65]  Joshua M. Pearce,et al.  Diverting indirect subsidies from the nuclear industry to the photovoltaic industry: Energy and financial returns , 2011 .

[66]  Susana Ferreira,et al.  Shedding Light on the Light Bulb Puzzle: The Role of Attitudes and Perceptions in the Adoption of Energy Efficient Light Bulbs , 2009 .

[67]  John Byrne,et al.  Energy-microfinance intervention for below poverty line households in India , 2009 .

[68]  Nitin R. Joglekar.  A Countdown towards Solar Power at Grid Parity : Policy Analysis Based on the Evolution of Price-Performance , 2009 .

[69]  Fengqi You,et al.  Assumptions and the levelized cost of energy for photovoltaics , 2011 .

[70]  A. Banerjee,et al.  The Economic Lives of the Poor , 2006, The journal of economic perspectives : a journal of the American Economic Association.

[71]  Ralph E.H. Sims,et al.  Carbon emission and mitigation cost comparisons between fossil fuel, nuclear and renewable energy resources for electricity generation , 2003 .

[72]  C.Douglas Lummis.  Political theory: why it seems universal, but isn't really , 2002 .