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Solar Technology Cost Analysis

NREL’s solar technology cost analysis examines the technology costs and supply chain issues for solar photovoltaic (PV) technologies. This work informs research and development by identifying drivers of cost and competitiveness for solar technologies.

An illustration shows the entire silicon solar cell value chain, beginning with a bulk polysilicon and progressing through silicon ingots, wafers, individual solar cells, and entire PV modules.

When modeling the costs of solar technologies, NREL analysts consider a full range of factors. For example, NREL’s bottom-up cost modeling of silicon modules considers costs from all of the steps in the silicon value chain, shown here.

Solar Manufacturing Cost Analysis

NREL analyzes manufacturing costs associated with PV technologies, including crystalline silicon, cadmium telluride, copper indium gallium diselenide, perovskite, and III-V solar cells.

These analyses are often based upon bottom-up cost models for multiple components along the supply chain, offering a detailed look at cost drivers. The key outputs of these analyses are:

  • Minimum sustainable prices (MSP)
  • Step-by-step and total manufacturing costs for a given process, to identify cost drivers
  • Roadmaps identifying potential pathways for cost reduction.

Minimum Sustainable Price

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NREL regularly employs MSP calculations in manufacturing cost analyses. MSP represents the minimum price that would need to be charged for a PV technology at any given time to cover all production and overhead costs and pay investors back at their demanded rate of return.

MSP is neither a market price nor intended to indicate the minimum price achievable for a given technology. Rather, MSP calculations enable “apples-to-apples” comparisons between different technologies and can reveal how market prices compare to the cost to produce a technology.

Bottom-Up Manufacturing Cost Modeling

Many NREL manufacturing cost analyses use a bottom-up modeling approach. The costs of materials, equipment, facilities, energy, and labor associated with each step in the production process are individually modeled. Input data for this analysis method are collected through primary interviews with PV manufacturers and material and equipment suppliers.

This approach enables NREL to estimate step-by-step costs and identify cost drivers for a given material and production process.

Historical and Future Cost Modeling

Since 2010, NREL has been conducting bottom-up manufacturing cost analysis for certain technologies—with new technologies added periodically—to provide insights into the factors that drive PV cost reductions over time.

NREL also creates roadmaps that illustrate how innovations, increased production volume, and other factors could drive future cost reductions.

Solar Supply Chain and Industry Analysis

NREL conducts analysis of solar industry supply chains and provides quarterly updates on important developments in the industry.

These analyses draw from data collected through a combination of third-party market reports, primary interviews, and publicly available data sources.

Solar Industry Updates

NREL’s quarterly solar industry updates provide information on trends within the solar industry. These quarterly updates cover an array of PV module and system technologies as well as energy storage and concentrating solar power.

The quarterly solar industry updates often cover:

  • Global and U.S. supply and demand
  • Module and system selling prices
  • Finance
  • Investment trends and business models
  • Updates on related government programs and policies.

Solar Supply Chain Analyses

NREL conducts detailed supply chain analysis for specific PV module technologies. These analyses include production locations, supply chain risk and costs, and material availability. 

Solar Installed System Cost Analysis

NREL analyzes the total costs associated with installing PV systems for residential rooftop, commercial rooftop, and utility-scale ground-mount systems. This work has grown to include cost models for solar-plus-storage systems. 

NREL’s PV cost benchmarking work uses a bottom-up approach. First, analysts create a set of steps required for system installation. Next, they calculate the hardware, equipment, direct labor, and indirect labor costs associated with each step for a given location and system design. Finally, they add in costs associated with permitting, inspection, interconnection, and other overhead.

These bottom-up models capture the impacts of economies of scale, efficiency, location, system design, and company structure on total costs. NREL uses these insights to develop roadmaps for future cost reductions and to provide context for cost variability observed in the market.

Solar Levelized Cost of Energy Analysis

NREL conducts levelized cost of energy (LCOE) analysis for photovoltaic (PV) technologies to benchmark PV costs over time and help PV researchers understand the impacts of their work.

This analysis can include LCOE benchmarking and tracking progress against U.S. Department of Energy SunShot Targets, exploring pathways to reduced LCOE, and understanding LCOE drivers to guide research, development, and investment decisions.

Levelized Cost of Energy Calculator

This simple levelized cost of energy calculator is intended to help PV researchers with limited knowledge of costs and markets quickly estimate how their ideas might influence LCOE. It also helps them examine different trade-offs between cost and performance.

This tool compliments other resources, such as the NREL System Advisor Model, that can be used for more detailed project-specific analyses.

Publications

Q1/Q2 2019 Solar Industry Update, NREL Presentation (2019)

Q4 2018/Q1 2019 Solar Industry Update, NREL Presentation (2019)

Q2/Q3 2018 Solar Industry Update, NREL Presentation (2018)

Q1/Q2 2018 Solar Industry Update, NREL Presentation (2018)

Q4 2017/Q1 2018 Solar Industry Update, NREL Presentation (2018)

Q3/Q4 2017 Solar Industry Update, NREL Presentation (2018)

Q1/Q2 2017 Solar Industry Update, NREL Presentation (2017)

Q2/Q3 2017 Solar Industry Update, NREL Presentation (2017)

Q4 2016/Q1 2017 Solar Industry Update, NREL Presentation (2017)

Q3/Q4 2016 Solar Industry Update, NREL Presentation (2016)

Q2/Q3 2016 Solar Industry Update, NREL Presentation (2016)

Estimating the Effects of Module Area on Thin-Film Photovoltaic System Costs, 2017 IEEE 44th Photovoltaic Specialists Conference (2018)

Printed interconnections for photovoltaic modules, Solar Energy Materials and Solar Cells (2017)

Evaluating the Economic Viability of CdTe/CIS and CIGS/CIS Tandem Photovoltaic Modules, Progress in Photovoltaics (2017)

Low-Cost CdTe/Silicon Tandem Solar Cells, IEEE Journal of Photovoltaics (2017)

Analysis of Glass-Glass CIGS Manufacturing Costs, Solar Energy Materials and Solar Cells (2016)

Contact

Robert Margolis

Robert.Margolis@nrel.gov | 202-488-2222