The global market for concentrated photovoltaic (CPV) systems is on the verge of explosive growth, with worldwide installations set to skyrocket 750% between 2013 and 2020, according to a report published on Tuesday by market research group IHS.
In the new report, Concentrated PV (CPV) Report 2013, IHS predicts CPV installations will rise to 1,362 MW in 2020, up from 160 MW in 2013. Indeed, installations are expected to expand at double-digit percentages every year through 2020.
CPV technology employs lenses or mirrors to focus sunlight onto solar cells. While this allows for more efficient PV energy generation, the use of additional optics for focusing sunlight has also driven up the cost of CPV compared to conventional PV installations, limiting the acceptance of concentrated solar solutions.
The situation is changing rapidly, however, as advancements in CPV technology are reducing costs.
"What is happening in todays CPV market is very similar to that of the overall PV space in 2007, beset by high costs and an uncertain outlook," said Karl Melkonyan, photovoltaic analyst at IHS. "However, the CPV market in 2013 is on the verge of a breakthrough in growth. Costs for CPV have dropped dramatically during 2013 and are expected to continue to fall in the coming years. Furthermore, when viewed from the perspective of lifetime cost, CPV becomes more competitive with conventional PV in large ground-mount systems in some regions."
No trouble with the curve
Prices for CPV are retreating as manufacturing processes progress down the learning curve.
Average installed pricing for high-concentration PV (HCPV) systems are estimated to have decreased to $2.62 per watt in 2013, down 25.8% from $3.54 per watt in 2012. Rising volumes and improved system efficiencies are driving the decline, according to the report, which adds that prices will slide further at an annual compound rate of 15% from 2012 to 2017, falling to $1.59 by the end of 2017.
Taking lifetime costs into account
In the conventional PV market, cost analysis predominantly focuses on the module price-per-watt and the total installed cost-per-watt, IHS points out. When comparing the installed cost-per-watt of conventional PV to CPV, the cost of conventional PV is significantly lower.
"This is mainly due to the higher panel cost of CPV, given that CPV suppliers have yet to achieve the economies of scale, as well as a better balance of system and installation cost, because of the required tracker system," IHS says.
"To be sure, conventional PV has a lower upfront cost and appears to be a more attractive option based on upfront system costs. However, this does not take into account the overall cost of the system over its lifetime, nor does it consider the energy yield of the system."
Instead, the report adds, it is important to compare the levelized cost of electricity (LCOE). The LCOE estimates the cost of generating electricity at the point of connection, dividing the total lifetime system costs by the total energy produced over the systems lifetime.
"Such a calculation is also necessary in order to compare the competitiveness of PV and CPV with that of conventional power generation."
Using the LCOE, IHS predicts that system costs for HCPV will remain low enough to compete with conventional PV for large commercial, ground-mount systems in target regions. These are the areas with hot, dry climates and high daily irradiation at more than 6 kilowatt-hours per square meter of direct normal irradiation.