Suntech CEO, Zhengrong Shi, a prime mover in helping to turn China into a global force in photovoltaic technology, has been a major influence in bringing China’s solar PV cost structure down and making China a powerhouse in photovoltaic technology–and became a billionaire in the process. Shi’s ambition is to make solar power as cheap as conventional electricity.
by Chris de Morsella, Green Economy Post
I just read a good article in the MIT Review regarding the rise of Suntech as a force in the global PV market. It speaks about Suntech and the story of its dynamic and cross cultural CEO, Zhengrong Shi, who has been a prime mover in helping to turn China into a global force in photovoltaic technology–and became a billionaire in the process. His next ambition is to reach grid parity the point at which solar power is as cheap as conventional grid electricity.
The graph below tracks the raw cost per watt for solar PV over a period of seven years and one cannot help but be struck at how the cost per watt is falling. It is still above grid parity, when the added the financing, module assembly manufacturing, supply chain, final onsite installation costs as well as the extra things like inverters and battery systems that are required for grid connectivity (and for standalone off grid systems too), but it is dropping fast.
The graph clearly shows how much faster China’s cost structure is coming down vis a vis the averages in the US, Europe and Japan. Notice how fast Chinese per watt production costs are going down. Notably this graph also illustrates the impressive leadership role that US based First Solar has earned.
Suntech has also been staying on a doubling cycle of just one year – i.e. doubling its production each year (except 2009, but returning to the 100% growth rate in 2010) It is both driving down costs and is ramping up production and producing high quality modules that last a long time. This rate of doubling is of fundamental importance. The rate that Suntech has been tracking of one doubling each year means that in just ten years production will have grown by a factor of 1000 times. Compare this to just 32 times if the rate of doubling occurs every two years. That is a truly wild growth rate and Suntech has been able to maintain it over numerous cycles by now. Will it be able to maintain this growth going forward? Only time will tell.
In order to try to form an opinion it is illustrative to look at the world’s other major silicon based industry… the computer chip industry… and how it has held to Moore’s law – and is still holding to it long after legions of prognosticators predicted the limits would be reached. Solar PV has many aspects in common with the chip industry besides – for the most part at least – being silicon based. Solar cells are knowledge products to a high degree. Knowledge, know how, engineering and basic science are the key drivers behind the product. Digging coal instead is not a knowledge industry per se.. sure there is knowhow and technology in it, but in the end it is about moving dirt to get to the coal then digging, transporting and burning coal. Sure its scale has increased – huge swaths of land are now being chewed up in table top mining operations, but it has certainly not doubled every two years or even every ten years. The reason that chips and things like solar cells do is because they are not primarily raw material gross tonnage (or millions of barrels) resource extraction type industries; they are instead industries with cost structures primarily determined by the knowledge content needed in order to think up, create, design, refine and manufacture the high knowledge content product.
Those who discount solar PV, in my opinion, often gloss over, or fail to appreciate this fundamental difference between solar energy and other energy systems. This is especially true when it comes to fossil fuel based energy systems that are operating in a regime of rising re-occurring costs. Tthe cost of the fossil fuel and its capital costs are not dropping at all. In fact, it costs a lot more to break ground on a new Gigawatt scale fossil (or nuclear) thermo electric energy electric generating plant than it did say twenty five years ago in constant dollars. The cost of solar has meanwhile gone down by several orders of magnitude and it looks like it will likely continue to do so – at least for some time.
What is not likely to go down nearly as fast, of course, is any labor intensive installation costs, which will more or less remain constant or only gradually decrease. These along with other costs , such as marketing, supply chain and financing will begin to dominate the overall cost structure as the raw costs of the cells themselves continues to fall. So overall the price of installed turnkey systems will not fall nearly as rapidly and will tend to level out at some level – though I think there is still quite a lot of room to bring these other costs down as well. For example by incorporating solar PV into other architectural materials.
