TrendForce Says Installed Cost of Utility-Scale PV System in the U.S. Down 17% YoY in 3Q15; Falling PV Costs Will Spur Demand

The latest analysis from EnergyTrend, a division of TrendForce, finds that prices of photovoltaic (PV) systems are in a steady decline. In the U.S., for example, the average installed cost of utility-scale PV systems was at US$1.38/W in the third quarter of 2015 compared with US$1.66/W in the same quarter of 2014, representing a 17% year-on-year drop. As PV-generated electricity reaches grid parity in more places worldwide, the market is also entering an expansionary phase with a growing number of utility-scale projects taking place. Based on EnergyTrend’s recent survey on the emerging markets, the respective installed capacities of India, Chile and the Philippines between the start of 2015 and now are respectively estimated at 827MW, 750MW and 134MW. These countries enjoyed substantial installation growth during the past year. EnergyTrend thus expects upward revisions of these figures later on as more data for 2015 are released and tallied.

EnergyTrend analyst Patrick Lin pointed out that the levelized cost of electricity (LCOE) of each regional market is determined by daylight hours, labor costs, subsidies and prices of PV modules after taxes. For example, some utility-scale systems in India have a LCOE of around US$0.08/kWh because the country enjoys long daylight hours, low labor costs and low module prices. EnergyTrend believes the average installed cost of utility-scale systems worldwide could fall by another 15% year on year by the end of 2017, and the drop in the installed cost could also lower the LCOE of PV energy in some regional markets to US$0.07/kWh and under. In this scenario, the LCOE of utility-scale PV systems in general would be close to that of coal-fired power plants and below that of natural gas power plants. In sum, PV demand continues to grow, and the share of renewable energies in power generation worldwide is expected to expand in the future.

Looking to 2016, Lin added that policies in major markets including the U.S., China and India will cause a gradual decline in module prices. The fall of module prices will also coincide with the price decline of inverters and other related consumables. The average installed cost of PV system therefore will drop to around US$1.15/W, and the 2016 market in general will see a resurgence in demand. Moreover, conversion efficiency rates of PV cells continue to improve. In the second half of 2016, mainstream multi-Si products are expected to achieve a power output of 265W, while their mono-Si counterparts will be reaching 275~280W. Consequently, the ongoing rise in efficiency will progressively push down the LCOE of PV energy. For the 2016~2017 period, EnergyTrend anticipates demand growth to return in regions with abundant sunlight, such as India, Southeast Asia and Central and South American countries.