# Costs for a photovoltaic system

DIY 3D Solar Panels

Get Instant Access

Whereas average investment costs of grid-connected photovoltaic systems exceeded €10,000/kWh at the beginning of the 1990s, these costs have been falling significantly. The cost reduction for photovoltaic systems has been nearly 50 per cent per decade over the past two decades. End user prices for single photovoltaic modules are now below €5/Wp. Inverters, support structures, cables and installation result in further costs. The specific investment costs decrease with the system size. The end user prices for grid-connected photovoltaic systems in the range of 5 kWp were about €7500/kWp in 2001, whereas prices close to €5000/kWp can be achieved for systems in the megawatt size range. Table 6.2 shows that the photovoltaic modules make up only about half of the total system cost.

The cost of one kilowatt hour of electricity generated by a photovoltaic system is calculated here as an example. The underlying numbers have been also used in the examples later in the chapter. The investment costs for a system with a rated power of 1 kWp are assumed to be A0 = €6500. The operating period of the system is 25 years (n = 25) and the system generates Ea = 800 kWh of electricity per year. This generation level can be expected in regions with an annual solar irradiation of about 1000 kWh/m2, as found in central Europe. In the tenth year of operation, one system component, for instance the inverter, is likely to need replacing. This cost therefore is A10 = €1500.

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

Figure 6.1 Global Photovoltaic Module Production and End User Prices for Small Grid-connected Photovoltaic Systems in Germany

 20,000 17,500 15,000 1 OP 12,500 CD W 10,000 o CD 7500 E

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

Figure 6.1 Global Photovoltaic Module Production and End User Prices for Small Grid-connected Photovoltaic Systems in Germany

Further costs should not accrue in this example. Thus, the levelled electricity cost is calculated as follows:

In regions with very high annual irradiance, for example, near the Sahara desert, the same system can generate up to 2000 kWh/year of electricity. This reduces the levelled electricity cost without return on capital from €0.40/kWhel to €0.16/kWhel. The cost for very large systems is even lower. Today, these costs are usually higher than the conventional electricity price. However, they will remain relatively constant throughout the operating period since no high uncertainty about fuel prices exist.

Future photovoltaic systems will achieve further significant cost reduction as a result of the fast increasing production volume. In 2002, the amount of photovoltaic modules produced annually worldwide was about 560 MW, which is similar to the amount produced by a very small conventional power plant, but the annual increase in photovoltaic module production is consistently more than 20 per cent.

Figure 6.1 shows that costs decrease significantly with rising production volume. Since the mid-1980s, costs have decreased by more than 60 per cent.