The learning potential of photovoltaics: implications for energy policy

This article examines the prospects for cost reductions of flat panel photovoltaic (PV) electricity. Current PV production cost ranges are presented, in terms of cost per peak W and cost per kWh, for single crystalline and multi-crystalline silicon, as well as for thin-film technologies. Possible decreases of these costs are assessed, as expected based on learning curves. The cumulative production needed to reach ‘breakeven’ (at which PV is competitive with conventional alternatives) is estimated for a range of values of the learning curve parameter. The cost of this cumulative production is calculated, and the question is posed whether and how the ‘cost cap’ can be bridged, the latter being the difference between what this cumulative production will cost and what it would cost if it could be produced at a currently competitive level. We also estimate how much PV could gain if external costs (due to environmental and health damage) of energy were internalised, for example by an energy tax. The conclusions are: (1) mainly due its high costs, PV electricity is unlikely to play a major role in global energy supply and carbon emissions abatement before 2020, (2) extrapolating past learning curves, one can expect its costs to decrease significantly, so that a considerable PV electricity share world-wide could materialise after 2020, (3) niche-market applications, e.g. using stand-alone systems in remote areas, are crucial for continuing “the ride along the learning curve”, (4) damage costs of conventional (fossil) power sources are considerable, and they could provide an important part of the rationale behind major policy efforts to encourage increased use of PV. The costs involved with such policies would be elevated, but a considerable share of these costs could be justified by the fact that conventional power damage costs constitute a significant fraction of the cost gap, although probably not enough to close it.