The solar industry is reeling from overcapacity and
supply outstrips demand by two to one, according to Lux Research.
Solar industry needs to drive costs lower in order to
overcome diminished subsidies and regain profitability. As a result, the
research agency predicts that solar modules production costs will fall as low
as $0.48/W in 2017.
Module prices have fallen precipitously over the past
four years to a low of $0.70/W but the cost of goods sold (COGS) for modules
has not reached this level, resulting in massive losses for most module
manufacturers.
“With pressure from competitors, customers, and
policy-makers to drop prices even further, manufacturers need to drive costs
down to survive and thrive during the coming years of growth in the demand
market,” said Ed Cahill, Lux Research Associate and the lead author of the
report titled, “Module Cost Structure Update: Path to Profitability.”
CIGS has the greatest potential to cut cost. COGS
will fall across the board between 2012 and 2017, but the rate of decline will
be the steepest for copper indium gallium (di)selenide (CIGS) thin-film
modules, which can shave $0.14/W off the cost to $0.64/W.
Cadmium telluride (CdTe) remains the low cost
leader. Despite the travails of its main champion, First Solar, CdTe
thin-film modules will remain the cheapest solar option in 2017, at $0.48/W,
down from the current $0.67/W.
Efficiencies are the key driver. Manufacturing
location has the greatest potential influence on COGS but overcapacity makes
opening new facilities in low-cost countries unlikely. Consequently, increasing
module efficiencies will make the most difference, up to $0.09/W for mc-Si and
$0.21/W for CIGS.