Solar cell companies in China recently submitted a scheme to the Ministry of Science and Technology to cut the cost of solar power generation to $0.146 per kilowatt-hour (kWh) in 2012. This is three years earlier then had been thought possible only last year and is largely due to the current steep drop in polysilicon prices and further planned advances in production.
The companies that submitted the scheme include Suntech Power Holdings Company Limited (NYSE:STP), LDK Solar Company Limited (NYSE:LDK), Trina Solar Limited (NYSE:TSL), Solarfun Power Holdings Company Limited (NASDAQ:SOLF) and Nanjing First-Second Power Equipment Company Limited (Nanjing).
The scheme was reportedly drafted based on a former scientific research program prepared by the Jiangsu Photovoltaic Industry Association, which initially received approval from the first board meeting held in Nanjing, the capital city of eastern China’s Jiangsu province, on December 18, 2008.
Preparation for the scheme was carried out by enterprises covering the entire photovoltaic industrial chain, including solar-cell producers such as Suntech and wafer producers such as LDK Solar.
The Chinese government has approved only three solar-energy demonstration power stations so far, namely the 1-megawatt (MW) Chongming Island Project in Shanghai, the 255-kilowatt project in Ordos in Inner Mongolia and the 10-MW on-grid solar power project in Dunhuang. Both the demonstration projects on Chongming Island and in Ordos require an allowance of $0.584 per kWh from the government.
The situation abruptly changed starting in 2007, when industrial players predicted that the cost of solar power could be reduced to $0.438 per kWh by 2010 and to $0.146 per kWh by 2020. In 2008, the timetable of $0.146 per kWh, was moved up to 2015, and the new proposal moves this date up to 2012.
At a price point of $0.146 kWh, it will be possible for electricity produced by photovoltaic solar panels to be competitive with conventional energy. Regardless of factoring in the environmental and supply side costs of fossil fuels.
The price of polysilicon had fallen from a peak of $400 per kilogram in July 2008 to less than $100 per kilogram by the end of the year. Presently, the cost of polysilicon is about $30-$40 per kilogram, and the cost will be further reduced following the advance in technology. Therefore, silicon material, which accounts for 70% of the cost of photovoltaic products, will not be an obstacle in achieving the proposed price target.
Image is of a masked and developed silicon wafer by TalAtlas on flickr under the Creative Commons license
That would quite certainly a major improvement. Since the rate of amortization is still a major hampering factor when selling solar applications, even more reduced production costs will be of great benefit. My only hope is, that US and European solar companies will draw level with the Chinese developers…
There could be no better investment in America than to invest in America becoming energy independent! We need to utilize everything in out power to reduce our dependence on foreign oil including using our own natural resources. Create cheap clean energy, new badly needed green jobs, and reduce our dependence on foreign oil. The high cost of fuel this past year seriously damaged our economy and society. The cost of fuel effects every facet of consumer goods from production to shipping costs. After a brief reprieve gas is inching back up. OPEC will continue to cut production until they achieve their desired 80-100. per barrel. If all gasoline cars, trucks, and SUV’s instead had plug-in electric drive trains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota. There is a really good new book out by Jeff Wilson called The Manhattan Project of 2009 Energy Independence Now.
China is the sleeping giant of alternative energy. Simply, they have the resources (people, materials, land) AND the know-how to make it happen. At Solargex we have always dealt with China, so are aware of the price movements (if you overlook currency fluctuations). As Sherry points out, OPEC will control oil prices; for the smaller pacific countries such as Tonga, Vanuatu, Fiji, Papaua New Guinea the need to maintain energy independence by sourcing alternatives (solar, wind, wave) is critical. Roll on 2012!
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OPEC will cut production to achieve their desired 200-320. per barrel. If all gasoline cars, trucks, SUV’s and place have plug-in electric drive trains, the amount of electricity needed to replace gasoline is approximately equal to the estimated wind energy potential of the state of North Dakota.
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