Solar Energy Perspectives - IEA

Chapter 3: Solar electricity
peak times is always costlier than base load electricity generation. In sunny and warm
countries, the sunniest hours of the day usually correspond to the peak or mid-peak demand,
but supply may or may not be priced high enough to reflect the full costs.
Electricity generation costs (USD per MWh)
400
Establishment of PV industrial
mass production
350
PV residential
300
250
200
150
100
PV utility 2 000 kWh/kW
BLUE Map retail
electricity costs
1 500 kWh/kW
BLUE Map wholesale electricity costs
50
st
1 competitiveness level
0
2010 2015 2020
Figure 3.12 PV competitiveness levels
1 000 kWh/kW
2 000 kWh/kW
Large-scale integration of PV power in the grid
nd
2 competitiveness level
rd
3 competitiveness level
2025 2030
Note: The large orange band indicates PV generation costs of residential/commercial systems, which depend on the level of irradiance
and performance ratios. These levels are represented by the electrical output of residential PV systems, so that 1 000 kWh/kW is
obtained under an irradiance of 1 333 kWh/m 2 /y on the modules. 2 000 kWh/kW for utility-scale corresponds to 2 353 kWh/m 2 /y
of irradiance. The large blue band indicates IEA forecast of retail electricity costs. The first level of competitiveness was for off-grid
systems. PV is now approaching the second level of competitiveness, when PV generation costs are equal to retail electricity prices.
The dark red band shows the IEA forecast of wholesale electricity costs, the dark blue band the costs of utility-scale PV generation.
The third level of competitiveness will be reached when these two bands cross. Dates are indicative only, as the PV cost decreases
are scenario-dependent.
Source: IEA, 2010c.
Key point
Residential and commercial PV will compete with retail electricity prices before 2020.
When PV and STE/CSP are becoming competitive
with bulk power
If residential customers are not always given timely price signals, industrial customers tend
to receive them, and utilities certainly know the differences between marginal costs for base
load, intermediate load and peak load electricity generation. This is why some utility-scale
(or “industrial”) PV systems could find their way into bulk power markets sooner than
expected by most analysts. This is likely to be the case especially where electricity generation
is based on costly fuels (oil and diesel fuel) provided the solar resource is available during
demand peaks. This is not likely to be the case in this decade for coal-based generation,
which is most often base load, nor for gas-fired generation as the costs of natural gas have
been decreasing as the result of the exploitation of shale gas in the United States.
Few industrialised countries make great use of oil in electricity generation – Italy and Japan
(even before the Fukushima accident) being the most notable ones. Oil-rich Middle East
countries, however, do burn oil to generate electricity, and other developing countries use
numerous diesel generators and large amounts of diesel fuels to respond to rapidly growing
demand peaks. A significant capacity (150 GW) of oil-based generators are located in very
sunny regions of the world (Figure 3.13), but it is not clear whether peak demand consistently
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© OECD/IEA, 2011