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Sunday, January 09, 2005

What happens when solar cells get 20 times cheaper?

If these can really be brought to market at 1/20th the current price, this has significant implications. Let's take a look: currently, an investment in a solar system has approximately a 20 year payoff (depending on where you live), meaning that the cost to install such a system is equal to 20 years of paying your local electric company.

That's not a very favorable payoff for most people. Twenty years is about fifteen years too long to make solar an attractive investment. Sure, a lot of individuals and business want to "go solar" for environmental reasons, but coming up with twenty or thirty thousand dollars in cash to do it is another matter altogether.

Now, if solar cells could be made at 1/20th the current cost, this would dramatically lower the overall cost of a solar system. I'm guessing that solar cells make up around half the cost of a solar system (because you have to pay for the inverter, wiring, batteries and labor, too). So if solar cells were suddenly 1/20th the cost -- say $50 instead of $1000 -- then a solar solution that previously cost $2000 would only cost $1050 now.

To keep things simple, let's just say that these new solar cells would reduce the normal 20 year return to a 10 year return. What's the impact of that?

A 10 year return is still too distant for most individuals, so I wouldn't expect these cheaper solar cells to revolutionize the home solar market. Few people will be willing to front 10 years of electricity bills to go solar.

But what about at the power plant level? Power plants don't need to store the power and could, instead, just pipe it right into the grid. These cheaper solar cells could indeed make "solar farms" an economic reality. I'm not certain about the exact figures here, but if sunlight were cheaper than burning coal, there would be a whole lot of interest in using these solar cells to supplement existing power generation systems.

Of course, solar doesn't work at night, so solar could only act as a daytime supplement, not a 24-hour system. And that means coal-powered plants will still be needed. If someone could invent batteries at 1/20th the cost, that would truly revolutionize home power, commercial power and power plants. But right now, as exciting as solar panels at 1/20th the cost sounds, their potential to revolutionize the solar market remains limited.




  • AMSTERDAM (Reuters) -- A major European chip maker said this week it had discovered new ways to produce solar cells which will generate electricity twenty times cheaper than today's solar panels. STMicroelectronics, Europe's largest semiconductor maker, said that, by the end of next year, it expected to have made the first stable prototypes of the new cells, which could then be put into production. The French-Italian company expects cheaper organic materials such as plastics to bring down the price of producing energy. The new solar cells would even be able to compete with electricity generated by burning fossil fuels such as oil and gas, which costs about $0.40 per watt, said Salvo Coffa, who heads ST's research group that is developing the technology.



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