Economically sustainable scaling of photovoltaics to meet climate targets

Abstract

aTo meet climate targets, power generation capacity from photovoltaics (PV) in 2030 will have to be much greater than is predicted from either steady state growth using today's manufacturing capacity or industry roadmaps. Analysis of whether current technology can scale, in an economically sustainable way, to sufficient levels to meet these targets has not yet been undertaken, nor have tools to perform this analysis been presented. Here, we use bottom-up cost modeling to predict cumulative capacity as a function of technological and economic variables. We find that today's technology falls short in two ways: profits are too small relative to upfront factory costs to grow manufacturing capacity rapidly enough to meet climate targets, and costs are too high to generate enough demand to meet climate targets. We show that decreasing the capital intensity (capex) of PV manufacturing to increase manufacturing capacity and effectively reducing cost (e.g., through higher efficiency) to increase demand are the most effective and least risky ways to address these barriers to scale. We also assess the effects of variations in demand due to hard-to-predict factors, like public policy, on the necessary reductions in cost. Finally, we review examples of redundant technology pathways for crystalline silicon PV to achieve the necessary innovations in capex, performance, and price. Broader contextTo reduce CO 2 emissions enough over the next fifteen years and avoid the worst effects of climate change will require dramatic increases in the deployment of renewable energy, photovoltaics (PV) in particular. Climate action plans call for 2-10 terawatts (TW) of PV by 2030. Current manufacturing capacity could supply enough for 1 TW of cumulative installations at the end of this period, implying that growth in manufacturing capacity is necessary. Industry roadmaps project up to 2.6 TW but largely fail to assess whether these targets are economically feasible with today's PV module technology. Addressing the question of what technological innovations, if any, would enable rapid manufacturing scale-up requires a conceptual advance in modeling methodology. We address this challenge by coupling three industry-validated models: a bottom-up cost model, an economically sustainable growth-rate calculator, and a constraining demand curve. This approach enables us to determine the sensitivity of PV industry growth to specific technological and economic variables, considering both their effect on the ratio of up-front factory costs to revenue and demand as a function of PV module price. Shifting the demand curve enables us to consider the effects of different policy decisions, like a carbon tax or deployment subsidies.

Revisiting thin silicon for photovoltaics: a technoeconomic perspective

“…To shine some light on the practical implications of these capex and cost values for the growth of PV deployment, we used the demand-constrained growth model that was described previously in Ref. [7]. With the potential capex and cost reduction in an example of the 50-μm-wafer advanced HE-Tech module shown in Table I, we want to know the potential boost in PV growth in comparison to our current PERC technology with 160-µm-thick wafers.…”

“…In this work, we varied operating margins and D/E ratio in a relatively wide range to evaluate possible scenarios to achieve more than 7 TW cumulative PV installation in 2030. For operating margin, a value of 15% was used as a baseline in previous cost analyses [4], [7]. The values of 10% and 20% represent lower and higher margin scenarios.…”

“…The very low margin of 5% marks a case where growth is nearly impossible. In previous studies [7], [9], a D/E ratio of 1 was assumed as a low-risk reference. Due to high capital intensity of the PV industry, we also consider D/E ratios of 2 and 5 as intermediate and aggressive leverage of debt scenarios.…”

“…Four different operating margins were used: 5% , 10%, 15% and 20% of the module selling price, and three different debt-to-equity (D/E) ratios for new capacities: 1:1, 2:1 and 5:1. The light blue shaded area indicates the 7-10 TW peak PV capacity that was determined in [7] as a climate target for 2030, following suggestions from [7] based on IPCC climate targets [4].…”

“…These achievements are noteworthy but are insufficient to enable the PV industry to meet climate targets defined by the Intergovernmental Panel for Climate Change (IPCC) through PV deployment [5], [6]. Needleman et al [7] estimated that a cumulative PV installed capacity of 7 -10 TW by 2030 would be required to have a reasonable chance of sufficiently reducing electricity-related carbon emissions and keeping the global temperature rise below 1.5 -2°C. However, the current PERC baseline is not able to achieve this level of installation by 2030 (see Figure S5 in ESI).…”