Solar Panel Pricing

Every now and then I get someone asking me what the cost of our panels is in $/kWh.  I always have to reply that we’re still in our pre-commercial phase of product development, and that we’re not able to give price quotes yet.  We have a really good idea of what we think the panels are going to cost, and we have really good data to back that up.  But until we’re able to prove it (to ourselves and our investors) it’s not responsible to start quoting prices without a long string of qualifiers.  (Put another way, is it a real price if I can’t sell you any yet?)

But I want to make a point about pricing solar panels.

First off, if you’re actually planning a specific solar farm, you really can’t make planning decisions unless you’re able to calculate your LCOE (Levelized Cost of Electricity).  That means you’re taking into account all of the variables that affect the cost of developing a solar farm (land, installation, mounting, inverters, grid connection, system efficiencies).

The best tool I’ve found for this is the NREL SAM (Solar Advisor Model) software available for free.  Calculating LCOE is enormously complex and will always be site specific.  Fair warning, using SAM is complex and frustrating, and if you’re really serious about learning how to calculate LCOE, take a course or find some good online materials to guide you.   Then have someone who really knows what they’re doing review your work.  That said, LCOE is expressed in $/kWh and is the most useful expression of cost when considering a specific solar farm.

Personally, I never trust it when solar panel providers quote $/kWh unless they’re willing to give you the model they used.  It’s site specific and there are hundreds of variables that can have a HUGE impact on the final result.  (At a conference, a speaker tried to get away with “Using standard metrics and a reasonable interest rate, we got an LCOE of…”  Pure weasel words.  Where?  What metrics and what interest rate?  Give me your model or don’t waste my time.)

That said, I hate using $/watt too.  $/watt is slightly more useful, partly because it’s one of the variables you need to calculate LCOE, but mainly because you only need to know how much sunlight they’re assuming.  But $/watt gives you the power production at peak power output.

Consider this:

You want to develop an 1 MW system, and in your region you can expect an average of 5.5 hours of good sunlight per day.

  • A fixed system (that doesn’t track the sun) can generate up to 550 kWh/day.
  • A two-axis tracking system will generate up to 792 kWh/day.

This is assuming the same panels, so the $/watt for the panels is the same for both systems, but the results are very different.  At noon, both systems can produce 100 kW in an hour, so $/watt doesn’t really give you the whole answer.  To get a useful number, you need to know exactly what you’re asking when you ask for a price.  When you get an answer, you need to make sure you have enough information for it to be meaningful.

When we do eventually start talking price, I want to make sure that we’re giving enough information so that people won’t have to jump through hoops to figure out what they ACTUALLY cost.

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4 responses to “Solar Panel Pricing

  1. Pingback: Developing a Solar Farm Questions « The Unofficial Morgansolar Weblog

  2. Todd Millions

    Nicholas-
    Your posted amplification ratios may prove or’topping for pv cell integation-the heat shock as the sun peaks over is asking a lot of the pv cells.
    However-given certian factors-incidence angle ect-use of your lenses on thermal applications may be of great advantage-pending price,size ect.
    I’ve being living on pv supplied power for over 10years,and can passively extract an extra 20% from my unisolar in wintre.
    I’m very intiged by the possibilities of the same for thermal use by your lenses.I have the engineering background to use and report results too boot.
    So you may want to contact me.
    Todd Millions SK

  3. Perhaps I misunderstand things. I don’t see the $/Watt figure to be as horrible as you make it sound. Ultimately, when sizing a system, the customer and the business needs a measurement for comparison. It is not convenient for businesses or customers to calculate an integral of the hourly power generation over the course of a year. So estimations become necessary. Using estimations for the peak power output and the number of hours each day that will generate that power, we are able to arrive at a reasonable estimation of power and associate that with a system size and a cost. This is where $/Watt comes in. The solar roof panel cost to a client is best determined by this reasonable estimate of $/Watt.

  4. Pingback: Solar panels: Measuring cost