Solar Tech is experiencing a dramatic shift in the cost of almost all elements of the value chain, from the underlying technology to the supporting infrastructure. The industry has thus emerged from its earlier pioneering days and has become a serious player in energy supply. As such, the industry is embracing innovative business processes involving the application of big data analytics, which in turn is enabled by digitalization of the industry. In addition, solar tech is being synergistically benefited by the electrification of the automobile which is driving down the costs of electrical energy storage, setting the stage for a dramatic shift in the way energy is generated, managed, and consumed.
"Solar and wind, coupled with falling battery costs, will fundamentally reshape the electricity system, providing roughly 50 percent of total electricity globally by 2050"
The heart of the photovoltaic solar system is the PV module, which in turn consists of a connection of individual solar cells, set in a frame covered by glass. The National Renewable Energy Laboratory (NREL) measures and maintains the record of a wide variety of experimental solar cells, tracking their improvement in efficiency over time. The variety of innovations includes not only those involved in single crystal silicon cells, which are the predominant type of cell used today, but also those based on thin films of a variety of semiconductor materials. Currently the 2018 "best research cell efficiencies" recorded by NREL range from 16.6 percent to 26.1 percent.
In addition to the impact of technology innovation, there is a tremendous cost benefit from economies of scale and the learning gained from experience in manufacturing. Thus, as in the case of Moore’s law for semiconductor chips, there is a similar law for solar module production wherein it is observed that the cost of solar modules drops 20 percent for every doubling of cumulative shipped volume. Crystalline silicon photovoltaic module prices have fallen from $77 per watt in 1977 to less than $0.36 per watt, as world-wide installations have increased almost exponentially to 512 GW by the end of 2018.
The module cost is, however, only one component of the total PV system, and therefore the business process needs to be able to accurately account for all the major elements of the solar PV value chain: module, inverter, the so-called balance of system (BOS) that includes both mechanical and electrical components, and so-called “soft costs” which include install labor and “other” costs that includes things like permitting, interconnection, land acquisition, EPC, sales tax, overhead and net profit.
The solar photovoltaic (PV) market is comprised of three segments based upon the magnitude of the system power: residential (≤10 kW), commercial (10 kW-2MW) and utility (> 2MW). NREL's most recent cost benchmark for an average 6.2kW residential system is $2.70 per Watt DC, while those for a 200kW commercial system and a 100MW utility-scale one axis tracking system are $1.83 and $1.13 per Watt DC, respectively. Importantly, the module cost is a fraction of the total PV system install cost, with the BOS and soft costs representing upwards of 40-60 percent of the total cost, depending on the market.
The industry is addressing ways to utilize data analysis tools in order to lower the costs across the value chain, particularly those associated with the "soft costs". One such effort, undertaken by PowerScout, addresses the cost of customer acquisition by providing an e-platform that uses cloud computing and machine learning algorithms for matching customers to potential installers. kwh Analytics, on the other hand, is addressing the soft costs associated with solar portfolio-level compliance tracking, as well as providing production and financial analysis. Still others like IBM are using data analysis and artificial intelligence (AI) tools to improve the PV system operation, taking into account variability in weather, while companies like Solar Analytics monitor energy production and consumption, enabling automated smart energy usage. Meanwhile, “community level” PV installations and other forms of decentralization are driving the use of blockchain technology for recording the millions of anticipated energy transactions.
The PV industry is tracked by a variety of organizations, including Bloomberg NEF, which makes global outlooks annually. In their most recent (2018) outlook, they paint a very healthy picture for renewable energy. They foresee that solar and wind, coupled with falling battery costs, will fundamentally reshape the electricity system, providing roughly 50 percent of total electricity globally by 2050. They expect continued reduction in PV module prices. They also project dramatic cost reductions for battery packs from an almost 30 fold increase in electric vehicle sales, which will translate into cheaper stationary energy storage. With storage, solar and wind become “dispatchable” forms of energy that can be integrated into a decentralized smart grid, managed almost autonomously and securely by sensors and AI software, giving the right pricing and policy signals. Continued development and application of data analytics will ensure continued reduction in costs, improvements in operation, and an accelerated global transition to clean energy.