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Labour cost as impetus in PV prod'n no longer holds water

Posted: 09 Sep 2013 ?? ?Print Version ?Bookmark and Share

Keywords:solar panels? PV manufacturing? labour cost?

Douglas Powell, a doctoral student in mechanical engineering at MIT and a co-author of the report, stated that in 2012, "the analysis suggests that the minimum sustainable price of modules was above current prices"!meaning that many manufacturers were not providing investors with adequate returns.

One reason for that disparity: China rapidly ramped up its manufacturing capacity, and the market was still catching up in 2012 to the oversupply. "They expanded really fast, and caught a lot of people by surprise," Powell indicated. Meanwhile Germany, which had been buying half of all PV modules produced worldwide, suddenly decreased its subsidies, drastically cutting demand.

Still, the biggest factor contributing to China's ability to make solar panels for about 23 per cent less than U.S. companies, Buonassisi said, turned out to be economies of scale. Typical Chinese PV factories are four times larger than those in the U.S., the study found. That leads to economies in several ways: Those factories can negotiate better contracts with suppliers. Also, their manufacturing equipment can be used more efficiently, since machines can be scheduled to run more of the time by allowing flexibility in matching up the production rates of machines at different stages in the process.

Overall, Buonassisi stated, the study makes clear that China's current price advantage in solar-panel production "can be replicated elsewhere, if the right conditions are met."

He said the key to making solar panels competitive!whether in the U.S., China or elsewhere!is to bring the cost of installed panels to a level competitive with the current cost of electricity from the grid, without subsidies or tax benefits. Once that goal is achieved!which the researchers estimate will likely occur by the end of the decade!then much larger PV factories will become economically viable worldwide. "This common goal, which can benefit all nations, is an opportunity for international cooperation that harnesses our complementary strengths," Buonassisi continued.

Improvements under way in every step of the PV manufacturing process!from thinner silicon wafers to greater cell efficiency to better ways of mounting the cells in a panel!could end up making them highly competitive with other sources of power, Buonassisi said.

"Today's technology is not quite there yet. We could be hitting grid-competitive costs ... within the next few years," which could lead to a surge in installations.

In the long run, said Al Goodrich, a senior analyst at the NREL and lead author of the study, the greatest advantages may go to multinational companies that can harness regional advantages. "We envision a globally optimised supply chain that will enable companies to manufacture close to their customers, likely resulting in regional industry clusters."

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