PHOTON International The Photovoltaic Magazine

Report shows PV cost cuts slower than planned rebate reductions in California

As California prepares to enter its newly gaveled long-term funding program – the California Solar Initiative (see article, p. 44) – a fresh report from Ernest Orlando Lawrence Berkeley National Laboratory (LBNL) examines the effect of the state's two previously existing PV programs on cost.


Cost analysis: California end-consumer prices may be on the rise.

The report, funded by the US Department of Energy's Office of Energy Efficiency and Renewable Energy and entitled Letting the Sun Shine on Solar Costs, looks at PV cost reductions under the California Energy Commission's Emerging Renewable Program (ERP), which has offered rebates to systems under 30 kW in capacity since 1998, and the 2001 launched California Public Utilities Commission's Self-Generation Program (SGIP) for systems between 30 kW and 1 MW in size.

The report does not actually say the rebate programs have yielded any cost reductions at all, but does trace significant installation and balance of system cost decreases over the duration of the programs, and recommends such non-module price reductions as a primary goal of local PV incentives. According to the report, module costs themselves are largely »outside the control of an individual PV program« since they are part of the worldwide market. However, conversely, it would be nearly impossible to argue that Germany's feed-in tariff program alone has not directly exacerbated the silicon feedstock shortage and contributed to at least short-term module price increases globally.

Significant for the new funding regime under the California Solar Initiative (CSI) is that the report finds that pre-rebate installed costs have declined more rapidly in ERP than SGIP – 7.3-percent average reduction per year compared to 4.1 percent. The difference may have less to do with the efficiency of programs than opportunity for non-module cost reductions on smaller projects, suggests the report. But more significantly, it shows that the historical annual price declines in California are less than the 10 percent annual rebate reductions planned for the CSI program, in which both programs are consolidated at the CPUC, with the exception of new home construction. This would seem to indicate a continuation of the trend where rebate reductions exceed drops in system cost, increasing prices for the end-customer. The report also alludes to, but does not thoroughly examine, one of the perils of the capacity-based rebate model: that a portion of the subsidy can be shaved off before impacting end-user costs. For example, it notes that system purchasers may have received only 30 ¢ to 70 ¢ per W of the $1.5 per W rebate increase offered by the CEC in 2001, with the balance »captured« by installers and retailers.

To download a copy of the report, go to: http://eetd.lbl.gov/EA/EMP/reports/59282-es.pdf