Module Cost Structure Update: Path to Profitability

In 2011, the U.S. Department of Energy (DOE) released a vision study that estimated that by reducing system prices to $1/W and module prices to $0.50/W by 2020, solar could generate 14% of the U.S.’s electricity by 2030 and 27% by 2050 without government subsidies. With severe oversupply and recently crashing polysilicon prices, module prices have dropped precipitously – as low as $0.70/W from top-tier Chinese players. However, the cost of goods sold (COGS) for modules has largely not reached this level, resulting in massive net losses for a majority of module manufacturers. With pressure from competitors, customers, and policy-makers to drop prices even further, manufacturers need to drive costs down to survive and thrive during the coming years of growth in the demand market. In a detailed cost and sensitivity analysis, we analyze the impacts of drivers like low-cost manufacturing locations, high efficiency, increased capacity utilization, and higher production yields on module COGS, as well as identify the incumbent technologies poised to take advantage of these downward cost drivers.