Wednesday, May 2, 2007

Anyone got $600 million?

$1 per installed Watt is the holy grail for solar panel producers. At that price, payback time is about five years and solar energy becomes a realistic alternative for average users. Achieving that price requires significant cost savings: April 2007 module prices were nearly $4.90 per watt.

Yet researchers at Hewlett Packard argued, in a study funded by NREL (PDF file), that such dramatic cost savings can be achieved by any company willing to invest in large scale manufacturing, even absent major improvements in the underlying solar panel technology.

Gigawatt scale production facilities could expect to see huge savings both from more efficient manufacturing of intermediate components like glass sheets and aluminum rails, and from better equipment optimization. The equipment optimization piece is where companies like Applied Materials come in. When you sell (or buy) 100 identical systems, non-recurring engineering costs are a much less significant fraction of the total, and yield goes up.

The study estimates the capital cost of such a facility at $600 million or so (2004 dollars). That's a hefty chunk of change, but certainly within the reach of any company that can spend $3 billion for an IC fab.

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