Due to the large variety of the applications of PV allows for a range of different technologies to be present in the market, from low-cost, lower efficiency technologies to high-efficiency technologies at higher cost. Note that the lower cost (per watt) to manufacture some of the module technologies, namely thin films, is partially offset by the higher area-related system costs (costs for mounting and the required land) due to their lower conversion efficiency. Figure (4-3) gives an overview of the cost and performance of different PV technologies. High investment costs, or total system costs, represent the most important barrier to PV deployment today, although they are decreasing rapidly as a result of technology improvements and economies of volume and scale. Total system costs are composed of the sum of module costs plus the expenses for the “balance-of-system”, including mounting structures, inverters, cabling and power management devices. While the costs of different technology module types vary on a per watt basis, these differences are less significant at the system level, which also takes into account the efficiency and land-use needs of the technology. Total system costs are sensitive to economies of scale and can vary substantially depending on the type of application. Typical turn-key prices in 2008 in leading market countries ranged from USD 4000 /kW for utility scale, multi-megawatt applications, to USD 6 000 /kW for small-scale applications in the residential sector, [36].
With expanding polysilicon supplies, average PV prices are projected to drop to $2000/
Kw in 2010. For thin-film PV alone, production costs are expected to reach $1000/Kw in 2010, at which point solar PV will become competitive with coal-fired electricity.
Figure 4-3: current performance and price of different PV module technologies, source, PV road map
4.7.1 Levelized Energy Production Cost
The levelized electricity generation costs (LEGC) of PV systems depend mainly on two factors: the amount of irradiation of sunlight during the year (and associated capacity factor), and the interest/discount rate. The operation and maintenance costs of the PV systems relatively small, there are no moving parts, estimated at around 1% of capital investment per year. Assuming an interest rate of 10%, the PV electricity generation
residential use, PV systems ranged from USD 360-720 /MWh, depending on the relevant incident solar energy. While these residential costs are very high, it should be noted that residential PV systems provide electricity at the distribution grid level.
Therefore they compete with electricity grid retail prices, which, in a number of OECD countries, can also be very high, [34].
4.7.2 Cost Reduction Goals
The essential target of PV economic is to reduce turnkey system prices and electricity generation costs; it is expected to reduce by more than two-thirds by 2030. Turn-key system prices are expected to drop by 70% from current USD 4000 to USD 6000 per kW down to USD 1200 to USD 1800 per kW by 2030, with a major price reduction (over 50%) already achieved by 2020. Large scale utility system prices are expected to drop to USD 1800 per kW by 2020 and USD 800 per kW by 2050, and in the best case will lead to long-term levelised generation costs lower than USD 50/MWh, [36].
4.7.3 Cost of Turnkey PV in Germany drops, (the German experience)
The German experience with PV technology system considered the leading and the most successful all over the world, through encouraging spreading this technology.
Germany installed a record 3.8 GW of solar PV in 2009; in contrast, the US installed about 500 MW in 2009. The previous record, 2.6 GW, was set by Spain in 2008.
Germany was also the fastest growing major PV market in the world from 2006 to 2007 industry observers speculate that Germany could install more than 4.5 GW in 2010. In fact Germany installed 7.25 GW in 2010. The German PV industry generates over 10,000 jobs in production, distribution and installation. By the end of 2006, nearly 88%
of all solar PV installations in the EU were in grid-tied applications in Germany, [37].
According to Germany's PhotovoltaikZentrum, which interests for surveys of the PV projects installation prices in Germany, in 2010 the price of installed PV dropped by 20.58% to 2,740 euros per installed kilowatt? The survey is based on responses given
by 2,758 array owners from all over Germany who installed arrays smaller than 100 kilowatts in 2010.
This decrease in the price considered the greatest since the first survey in 2006, when an installed kilowatt of photovoltaic cost around 5000 euros. In 2007, prices had only dropped slightly down to around 4,800 euros, but prices began plummeting in 2008, when an installed kilowatt cost around 4,300 euros, a decrease of just over 10 percent.
In 2009, prices then dropped by 19.77% to around 3,450 euros. In total, the price of installed photovoltaic has dropped by around 45 % in Germany since 2006. It is important to keep in mind that the prices for crystalline panels on the spot market in Germany have fallen to around 1.8 euros per watt for modules from Europe and Japan and to around 1.60 euros for modules from China. It is therefore roughly possible to estimate what the local added value is even if the panels themselves are imported from China. If we assume that the difference between 2.70 (installed price) and 1.60 euros per watt (module price) is locally made installation equipment and local services charged by installers, then the local added value is potentially already at 42 % in Germany even if the panels are imported from China. Furthermore, Germany proves that feed-in tariffs with a regular schedule of decreasing rates can bring down prices drastically. While the official figures are not yet in from Germany's Network Agency, the German Solar Industry Association estimates that some 7-8 giga watts were newly installed in Germany in 2010. Spread across an estimated 230,000 solar arrays, the average array size comes in at roughly 32.6 kilowatts, which shows that Germany remains a market largely driven by homeowners. Thanks to this unparalleled growth, a strong wholesale market and a large pool of skilled installers have been created in Germany.
2010. After stagnating at around 7.50 US dollars per watt in 2008 in 2009, the price of an installed array smaller than 100 kilowatts in California had fallen in the first six months of 2010 to 6.1 dollars, compared to 5.7 dollars per watt (or 5,700 dollars per kilowatt) in New Jersey -- but prices can be expected to be much greater in other states, where PV markets are far less mature. Those who argue that feed-in tariffs keep the cost of photovoltaic high should explain why arrays in the US cost at least 60 percent more than they do in Germany, [38].
4.7.4 The Expected Investment Cost of PV in Egypt
With reference to the feasibility study which prepared by EM power program for 100 MWp Solar PV Plant – Kom Ombo, Jan 2010
The investment costs used in the analysis represent first quarter 2010 market prices and are based on benchmark cost of EPC contracts for private investors, which have been obtained through evaluation of numerous EPC contracts in southern Europe. A minor discount on the services and components with higher national share of supply has been considered. The costs reflect the current market price of contracts from international EPC contractors with experience in large scale PV plant erection. The cost indicated above covers the complete PV power plant including land preparation, control and security, access and grid connection.
System Kom Ombo 100 MWp
grid connected system
Investment cost [Mio EUR] 246.4
Specific investment cost [EUR/kW] 2,460
Table 4-7: investment cost of 100 MW PV power plants, source PFC of PV in Kom Ombo
4.7.5 Tariff Requirements
According to the financial analysis which was carried out to determine the project’s required tariff given the target indicators for investor’s financial benefits, using the same cost assumptions and time schedules as in the economic analysis. The expected economic levelized unit costs amounted to 1,242 TEGP/MWh which is within the typical range for photovoltaic installations in tropical climates. On the other hand, the economic rate of the project is negative. Among the funding options, Development Bank Financing generates the lowest project feed-in tariff requirement of 1.60 EGP/kWh (0.20 EUR/kWh) and payback period of 7 years, [39].
4.7.6 PV Power Plant SAM Model
Using PV model with total installed 20 MW in Cairo airport weather to verify the results coming from the feasibility study or make comparison, After making the simulation using the SAM modeling we found the technical results in the annual energy production is nearly similar, but the change in economic results due to the different installed capacity
In the feasibility study the total installed capacity is about 100 MW and the the SAM model is 20 MW, it means that, the increase in the installed capacity will decrease the investment cost and so the LCOE
Table 4-8: results of SAM simulation for 20 MW PV
4.8 General Economic evaluation and Impacts