September 5, 2013
Solar Panel Wars: Study Shows How US Could Compete With China
Lee Rannals for redOrbit.com - Your Universe Online
Scientists, publishing a paper in the journal Energy and Environmental Science, say they have found a way for the US to be a cost-competitor to China in the field of solar panel manufacturing.China is currently the world's dominant manufacturer of solar panels because of its low labor costs and strong government support. However, researchers at MIT and the US Department of Energy's National Renewable Energy Laboratory (NREL) have produced a detailed analysis of all costs associated with photovoltaic (PV) manufacturing that could make the US a viable competitor.
The researchers estimated costs for nearly all the materials, labor, equipment and overhead involved in the PV manufacturing process. The analysis is "very rigorous, it's down in the weeds," said Tonio Buonassisi, an associate professor of mechanical engineering at MIT and a co-author of the new report.
"It doesn’t rely solely on self-reported figures from manufacturers’ quarterly reports. We really took great care to make sure our numbers were representative of actual factory costs," Buonassisi said in a statement.
The study found that labor costs have relatively little impact on prices because solar panel manufacturing is highly automated. The lower cost of labor in China provides an advantage of seven cents per watt, but this amount is countered by other country-specific factors like higher inflation.
Buonassisi said the bottom line is that today's regional price differences in making PV modules are not inherent and not driven by country-specific advantages. He said that technological innovations could level the playing field.
The team included estimates in the analysis not only of the costs of producing silicon wafers, making those into PV cells, and mounting the cells in panels, but also estimates of indirect costs such as research and discount rates for the manufacturer.
Douglas Powell, a doctoral student in mechanical engineering at MIT and a co-author of the report, said China ramped up its manufacturing capacity, expanding "really fast, and caught a lot of people by surprise."
The biggest factor contributing to China's ability to make solar panels is that the country's factories are four times larger than those in the US. These factories are able to negotiate better contracts with suppliers, and their manufacturing equipment can be used more efficiently.
Buonassisi said the study makes it clear that China's current price advantage in solar panel production can be replicated in other countries, assuming that the conditions are met. He also said the key to making solar panels competitive is to bring the cost of installed panels to a level, competitive field with the current cost of electricity from the grid.
“This common goal, which can benefit all nations, is an opportunity for international cooperation that harnesses our complementary strengths,” Buonassisi says. “We could be hitting grid-competitive costs … within the next few years."
Al Goodrich, a senior analyst at the NREL and lead author of the study, said the greatest advantages may go to multinational companies that can harness regional advantages.
“We envision a globally optimized supply chain that will enable companies to manufacture close to their customers, likely resulting in regional industry clusters,” he said in a statement.