Please cite this article in press as: Wang X, et al. The value of module efficiency in lowering the levelized cost of energy of photovoltaic systems. Renew Sustain Energy Rev (2011), doi:10.1016/j.rser.2011.07.125 ARTICLE IN PRESS G Model RSER-1531; No. of Pages 7 Renewable and Sustainable Energy Reviews xxx (2011) xxx–xxx Contents lists available at SciVerse ScienceDirect Renewable and Sustainable Energy Reviews j ourna l h o mepage: www.elsevier.com/locate/rser The value of module efficiency in lowering the levelized cost of energy of photovoltaic systems Xiaoting Wang a,∗ , Lado Kurdgelashvili b , John Byrne b , Allen Barnett a a Department of Electrical and Computer Engineering, University of Delaware, Newark, DE, United States b Center for Energy and Environmental Policy, University of Delaware, Newark, DE, United States a r t i c l e i n f o Article history: Received 18 April 2011 Accepted 5 July 2011 Available online xxx Keywords: LCOE Photovoltaic Value of module efficiency a b s t r a c t One standard that is used to compare different energy generation technologies or systems is the levelized cost of energy (LCOE). The relatively high LCOE of photovoltaics (PV) is an obstacle to adopting it as a major electricity source for terrestrial applications. In a conventional PV system, the cost of the module contributes approximately half of the expense and the other costs are together summarized as balance of system (BOS). A large portion of the BOS is not related to the peak power of the system, but can be either proportional to or independent of the total installation area. Across different PV systems with the same installation area, this part of BOS ($/W) is directly dependent on the module efficiency. Therefore, the LCOE is affected by the module efficiency even if the module price ($/W) remains the same. In this paper, we compare the LCOE across PV systems with equal installation areas but with modules of different efficiencies installed with fixed tilt, 1-axis tracking or 2-axis tracking. We conclude that: (1) at a given module price in $/W, more efficient PV modules lead to lower LCOE systems; (2) when meeting an LCOE goal, the PV module efficiency has a lower limit that cannot be offset by module price; and (3) both 1-axis and 2-axis tracking installations provide lower LCOEs than fixed tilt installations. © 2011 Elsevier Ltd. All rights reserved. Contents 1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 00 2. Levelized cost of energy (LCOE): a measure to characterize PV systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 00 3. Reference system for LCOE analysis: 1 MW commercial system at Phoenix, AZ. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 00 4. The influence of module efficiency on LCOE for flat plate PV systems with fixed tilt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 00 5. LCOE comparison between flat plate PV systems with fixed tilt and with tracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 00 6. Conclusions and future work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 00 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 00 1. Introduction The photovoltaic (PV) industry is the fastest growing power industry in the world. In the last decade PV production grew by more than 35% per year [1,2]. Technological improvements, increased economies of scale, and strong policy support have contributed to this experience. Nevertheless, compared with tradi- tional energy sources used to generate electricity, like fossil fuels, without policy support PV energy production is limited in its wider application because of its relative high cost. Cost reduction for PV can be achieved through combination of market, tax and regula- ∗ Corresponding author. E-mail address: xiaotingudel@gmail.com (X. Wang). tory incentives (e.g., tax credits, rebates, solar energy mandates) and research and development (R&D) support [2]. R&D funding is crucial for increasing energy efficiency of PV modules. As is shown in this paper, increased module efficiency can reduce lev- elized (i.e., lifetime) energy production costs of PV systems. This work compares the energy cost of PV systems that adopt different module efficiencies and different configurations. It also identifies approaches to achieve lower energy production costs for this tech- nology. One measure to compare different PV technologies is levelized cost of energy (LCOE), a concept that was introduced at the begin- ning. The LCOE is calculated using the solar advisor model (SAM) [3]. To compare the LCOE of systems with different module efficien- cies and different configurations, we specify a reference system that 1364-0321/$ – see front matter © 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.rser.2011.07.125