The first market for PV electric power panels was for space satellites. While the single crystal cells used in these panels made these panels very expensive, this was unimportant for that market. That market emphasized reliability, not cost. As these panels came down to earth for off-grid remote applications, again the emphasis was on reliability and low maintenance, not cost.
Off-grid residential then led to the grid connected residential roof top market. The residential roof top market has sustained the growth of PV for the last decade. However, these select customers are not really motivated by pure economics. Solar PV for this application has the reputation of being too expensive for mass applications. There are several intrinsic economic problems for this application. On a fundamental level, the single crystal material is inherently very expensive. This problem is compounded by the fact that these residential systems are generally small with unique rooftop layout designs leading to high sales and installation costs. In addition to these problems, residential users need electricity in the evenings, not when the sun is shining.
The residential application does have one important advantage over electric utility central power stations. The utilities have to transmit and distribute electricity on power lines long distances. They generate electricity at wholesale prices and sell it to the users at the other end of the line at retail prices. Solar PV panels on homes generate higher value electricity displacing electricity at retail prices.
Solar electricity can become cost competitive for commercial customers. Commercial customers can buy and use larger PV systems. They presently pay retail prices for electricity and they need electricity during the day when the sun is shining. Power Light Corp has recognized this market and has been quite successful.
The Solar Advisor Model (SAM) has recently become available and is a very nice tool for analyzing solar PV system costs. SAM provides three current baseline cases for typical residential, commercial, and utility PV systems. This model agrees with the assessment that commercial systems have the most viable economics near term. The SAM cases show the Levelized Cost of Electricity (LCOE) for typical residential, commercial, and utility PV systems today to be approximately 32 cents, 16 cents, and 21 cents per kWh respectively.
Our company believes that there is an excellent opportunity to reduce the LCOE for commercial PV systems in three ways as follows:
- Using low profile solar trackers on commercial building flat rooftops will increase the number of kWh per kW installed reducing LCOE immediately.
- Lower cost panels can be produced now by using less of the expensive single-crystal silicon cell material in simple 3-sun mirror modules operating at low solar concentration ratios. This approach also addresses the silicon feedstock supply shortage problem.
- Panel efficiencies can also be dramatically improved over a longer term by using more efficient cells operating at high solar concentration ratios.