As the solar photovoltaic (PV) matures, the economic feasibility of PV projects are increasingly being evaluated using the levelized cost of electricity (LCOE) generation in order to be compared to other electricity generation technologies. Unfortunately, there is lack of clarity of reporting assumptions, justifications and degree of completeness in LCOE calculations, which produces widely varying and contradictory results. This paper reviews the methodology of properly calculating the LCOE for solar PV, correcting the misconceptions made in the assumptions found throughout the literature. Then a template is provided for better reporting of LCOE results for PV needed to influence policy mandates or make invest decisions. A numerical example is provided with variable ranges to test sensitivity, allowing for conclusions to be drawn on the most important variables. Grid parity is considered when the LCOE of solar PV is comparable with grid electrical prices of conventional technologies and is the industry target for cost-effectiveness. Given the state of the art in the technology and favorable financing terms it is clear that PV has already obtained grid parity in specific locations and as installed costs continue to decline, grid electricity prices continue to escalate, and industry experience increases, PV will become an increasingly economically advantageous source of electricity over expanding geographical regions.

As the Ontario government has recognized that solar photovoltaic (PV) energy conversion is a solution to satisfying society's energy demands while reducing the adverse anthropogenic impacts on the global environment that compromise social welfare, they have begun to generate policy and funding programs to support financial incentives for PV. This paper provides a financial analysis for investment in a 1 GW per year turnkey amorphous silicon PV manufacturing plant. The financial benefits for both the provincial and federal governments were quantified for: i) full construction subsidy, ii) construction subsidy and sale, iii) partially subsidize construction, iv) a publicly owned plant, v) loan guarantee for construction, and vi) an income tax holiday. Revenues for the governments are derived from: taxation (personal, corporate, and sales), sales of panels in Ontario, and saved health, environmental and economic costs associated with offsetting coal-fired electricity. Both governments enjoyed positive cash flows from these investments in less than 12 years and in many of the scenarios both governments earned well over 8% on investments from 100s of millions to $2.4 billion. The results showed that it is in the financial best interest of both the Ontario and Canadian federal governments to implement aggressive fiscal policy to support large-scale PV manufacturing.

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