Currently, he said, three PV technologies are competing for market share. The crystalline path has traditionally led in market share, although thin film technology seemed more promising technology for the last two or three years. Over the last six to nine months, however, crystalline technology has regained its lead in terms of cost competitiveness and is “probably going to be back up to 80 to 90 percent of global demand.” The third area is multi-junction technology, which is more efficient but more expensive, and also needs a structure that tracks the sun’s position, further increasing cost.

Therefore, Dr. Neuhoff said, he would focus on crystalline technology. The cost of producing PV electricity depends first on insolation. Some eastern provinces and southern provinces receive up to 1100 kilowatt-hours of sun averaged over the year and can produce electricity for about 30 euro cents per kilowatt hour. A major factor in cost, however, is the cost of capital, which needs to be near 4 percent or less. For large-scale application, he said, overall costs need to be reduced by a factor of two before solar can effectively compete with current electricity prices in Germany. Obviously, however, once the PV penetration is very high, storage facilities must be built to stabilize electricity supply, which brings additional cost increases.

In China, which has more sunshine, especially in the southern provinces, solar technology looks more attractive. To some extent, deployment costs are also high, but the break-even point against which the technology is competing is lower, especially because the costs of carbon are not built into electricity pricing.

Dr. Neuhoff turned to the 15-year trend in the price of roof-top systems in Germany. After 2000 came a gradual reduction until about 2006 to 2007. The reduction has accelerated since then, as a result of three drivers. One was the opening of the German market to international competition. “As long as we had a German-only market on both demand and supply sides, there wasn’t much pressure on companies to innovate or improve competitiveness. You could actually observe all the actors in the value chain reaching their margins.” Second were several certain production scarcities, such as a sudden drop in the silicon supply, which brought a high price for a time. Finally, several innovations contributed to recent cost reductions.

For this symposium, he said, he would look at five kinds of innovations that could bring such cost reductions. One of the biggest kinds of innovation was that of the U.S. company, First Solar, which introduced a new commercial thin film cell of cadmium telluride in 2003. Building the cell required about 15 years of public support through universities and national laboratories. The company made all its decisions internally and maintained ownership of their technology longer than do most companies. It remains one of the biggest producers globally, with much of its production capacity in China. What drove much of the company’s growth, including private investment, was the expectation of a future market, and indeed, the market in Germany, and then briefly Spain and Italy, were major causes of growing global demand. All three were driven by



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