The capital intensity of photovoltaics manufacturing: barrier to scale and opportunity for innovation

By D. M. Powell, R. Fu, K. Horowitz, P. Basore, M. Woodhouse, Tonio Buonassisi. 2015

142 citations recorded by the source corpus.

Using a bottom-up cost model, we assess the impact of initial factory capital expenditure (capex) on photovoltaic (PV) module minimum sustainable price (MSP) and industry-wide trends. We find capex to have two important impacts on PV manufacturing. First, capex strongly influences the per-unit MSP of a c-Si module: we calculate that the capex-related elements sum to 22% of MSP for an integrated wafer, cell, and module manufacturer. This fraction provides a significant opportunity to reduce MSP toward the U.S. DOE SunShot module price target through capex innovation. Second, a combination of high capex and low margins leads to a poor financial rate of return, which limits the growth rate of PV module manufacturing capacity. We quantify the capex of Czochralski-based crystalline silicon (c-Si) PV manufacturing, summing to 0.68 $/WaCap ($ per annual production capacity in watts, $year/W) from wafer to module and 1.01 $/WaCap from polysilicon to module. At a sustainable operating margin determined by the MSP methodology for our bottom-up scenario, we calculate the sustainable growth rate of PV manufacturing capacity to be ∼19% annually – below the historical trend of ∼50% annually. We conclude with a discussion of innovation opportunities to reduce the capex of PV manufacturing through both incremental and disruptive process innovation with c-Si, platform innovations, and financial approaches.

Subfields: Economics and Econometrics, Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/e0fe62917ca234673f8bfb3e96a0e829c1e7e21e

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Citations in the corpus

A Techno-Economic Analysis and Cost Reduction Roadmap for III-V Solar Cells (2018, background): “This assumes a 14.8% weighted-average cost of capital (WACC), consistent with what has been estimated for other PV manufacturing companies (Powell et al. 2015) (again, no data on cost of capital for III-V solar cell companies are publicly available).”