PV Cost Trends in California

Wiser, R., M. Bolinger, P. Cappers and R. Margolis (2006). “Letting the Sun Shine on Solar Costs: An Empirical Investigation of Photovoltaic Cost Trends in California.” Berkeley, CA: Lawrence Berkeley National Laboratory, LBNL-59282, January 2006.
Saved in Z:// drive under NREL 2006 PV Cost Trends in CA.pdf

• Uses data on PV panel installations under two California subsidy programs: CEC (CA Energy Commission), which has provided rebates for small (<30kw)>30kW systems. Size and structure of programs have varied over time. 17,889 data records, 5,033 of which are just approved and the rest installed.
• "In particular, the CEC initiated five gradual reductions beginning in 2003, while the CPUC imposed a single large reduction in late 2004 and a more recent reduction in mid-December 2005. On January 12, 2006, the CPUC ordered a dramatic expansion of these programs with a $3.2 billion, 11-year program of declining incentives." p. i
• Uses Wac (alternating current) rather than Wdc-stc (DC Watts and standard test conditions)
• Finds that costs have declined substantially over time, but less so under CPUC's program. Module costs have declined somewhat (from what looks like about $4.75 in 2004$ in 1998 to about $3.50 in 2005), but biggest cost reductions from installation and balance of systems costs.
• Economies of scale: average costs lower for larger systems, with systems above 300 kWac between $7.75 and $7.90 per watt (2004$).
• Finds that thin film modules reduce costs for CEC projects (by avg of $0.70 per W), but raised them slighty for CPUC projects.
• Says reducing non-module costs should be primary goal of local PV programs. To this end, author recommends business development funding for installers, supporting standardized PV products, installer training and certification.
• Also recommends longer-term programs to facilitate cost reductions.
• 50% cap on rebate induced cost inflation in some cases - says cap should be removed.
• "A sizable literature has developed that explores historical PV cost trends. Much of this literature has used learning or experience curve theory to explore how increases in cumulative PV production have driven costs down over time. Findings from this literature vary, but most studies show that each doubling of cumulative production has historically led to a reduction in module prices of approximately 20% (see, e.g., Kobos et al. in press; McDonald and Schrattenholzer 2001; Neij 1997; IEA 2000; Schaeffer et al. 2004). Others have extrapolated these findings to argue that government deployment support for PV may be warranted to drive the industry down its learning curve and ultimately achieve costs that are comparable to or better than the cost of conventional electricity sources (see, e.g., van der Zwaan and Rabl 2004; Duke and Kammen 1999; Duke 2002).3" p.2
• CEC program funded by ratepayers of CA's invester-owned electric utilities. CPUC program same, but funded by electric and gas ratepayers.
  
• Silicon shortage driving prices of modules up. What's the prognosis on this?
• Regression results for CEC sample on p. 21 (35). Coefficient on "module cost index" is very close to 1 in three different versions, supporting claim that module cost increases and reductions consistently passed along 1-1.