A further dramatic drop in the costs of PV will make it competitive with wholesale power prices by 2030 in the EU, a study has claimed.
Analysis by the European Photovoltaic Technology Platform (EUPVTP) of the levelised cost (LCOE) of electricity of PV in the EU has forecast costs falling by 30-50%, bringing it on par with today’s wholesale electricity prices.
“Today, if the real cost of capital was around 5%, a 50MWp PV system in Spain would produce electricity at around €45/MWh. Our analyses indicate that the same type of PV system in the same location may generate power at as low as €25/MWh in 2030,” said Eero Vartiainen, leader of the LCOE working group of the EUPVTP, a body representing the European PV industry at an EU level.
The study predicted that PV module prices will most likely halve from current levels by 2030 and balance of system prices fall by 35%, leading to an overall PV system capital expenditure (capex) reduction of around 45%. Alongside this, PV system operational expenditure (opex) will fall an estimated 30%. Significantly the report said such decreases would not require any significant technological advances to attain.
“Such results can be achieved without any technological breakthrough,” said Gaëtan Masson, co-author of the report. “We simply assume that PV modules and other PV system components will become more efficient and less expensive and that operation and maintenance procedures will be optimised.”
A more significant influence on LCOE than either capex or opex will be the cost of capital, according to the report, which said that an increase of eight percentage points in the so-called ‘weighted average cost of capital’ could double PV LCOE.
Because of this the report said both the PV industry and policy makers needed to ensure they both played their part in ensuring the right conditions for keeping capital costs down.
“What is striking, is that when we modified our assumptions for different PV system cost components, it became evident that the cost of capital will play a much more important role in the competitiveness of this technology than other parameters,” said Christian Breyer, co-author of the report. “Cost of capital will be almost as important as the location of PV systems. This leads to the conclusion that, going forward, it will be of outmost important for the PV industry to further improve the bankability of its technology and for policy makers to create a stable environment for PV investments.”
The EUPVTP’s analysis can be read in full here and will be presented at an EU PVSEC parallel event titled “Competitiveness, Soft Costs and New Business Cases for PV” on 14 September in Hamburg.