As the solar manufacturing industry continues to struggle with overcapacity and oversupply, pressures for lower prices will likely push the cost of solar down to 48 cents per watt by 2017, according to a report from Boston-based Lux Research.
The prices for solar modules have fallen steadily over the last four years to just 70 cents per watt, according to the study. The problem is that the cost of goods sold for panel production has not fallen as quickly, which has resulted in many solar panel manufacturers selling their products at a loss, said Lux Research assistant Ed Cahill, who authored the report “Module Cost Structure Update: The Path to Profitability.”
There are two primary ways manufacturers will be able to reduce their costs per watt and only one that most companies will be able to execute.
The first option is for companies to close up manufacturing facilities in regions of the world that are more expensive and move to cheaper labor markets like China, Cahill said. “Most won’t be able to afford to do that,” Cahill said.
Since solar companies are already operating on tight margins, capital expenditures for new facilities and major corporate moves and restructuring are out of the question for most.
Cahill said that most companies will focus improving solar module efficiency to reduce costs. “CIGS aren’t the cheapest,” Cahill said. “But they have the greatest potential to cut costs.”
The cost of goods sold for CIGS could drop more than 14 cents per watt between 2012 and 2017, landing it at 64 cents per watt.
Cadmium telluride, typically used in thin-film modules, could drop to as low as 48 cents per watt. It’s already the low-cost leader at 67 center per watt.
But Cahill said that doesn’t mean the technology will push out others. “It depends on applications,” he said. “Thin-film will likely be good for utility-scale installations.”
But because it takes up more space to produce the same amount of energy as crystalline solar, crystalline is ecpected to continue to dominate the rooftop solar industry. “Making modules more efficient will be the key driver in reducing costs,” Cahill said.