Solar PV Technology Cost Dynamics and Challenges for US New Entrants

Abstract

Renewable energy generation is being used more than ever due to the increasing awareness of climate change. Solar energy has emerged as the fastest-growing energy technology alongside other renewable energy sources, such as wind energy. Although the United States developed photovoltaic solar cell technology and led the first wave of efficiency and cost improvements. In the following years, US companies could not dominate the market and lost their pioneering position. In this work, we reviewed some of the factors why some American companies found it difficult to survive in the solar PV market. It is necessary to review some of the factors that led to the demise of some of the American Solar PV companies, with the hope of identifying the significant issues that impacted these companies so that new entrant into the market will review their position and prepare adequately to counter these forces. This report uses minimum price concepts to assess the evolution of solar photovoltaic manufacturing costs and economic factors in recent years. This analysis shows three different periods of cost improvement corresponding to periods of oil price highs and lows. A model was developed to explain why some US companies find it challenging to compete and enter the market in the second period and used some of these companies as case studies. The model shows that rapidly declining costs are making technology and production equipment obsolete. US companies took long lead times to prove their technology, raise funding, obtain the necessary permits and set up production facilities.