AE 868
Commercial Solar Electric Systems

PV Market Segments

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After we established that the predominant solar energy technology is mainly Photovoltaic (PV) technology, it is important to understand how PV installations are classified. PV can be classified into three main segments:

  • Residential
  • Non-residential (including Commercial and Community solar)
  • Utility scale

Each of these sectors has its targeted market, but it helps to understand the market share of each sector. If we track annual PV installation capacity for different solar PV sectors from 2010 to 2020, we can see, in Figure 1.5, that the PV utility scale sector has the biggest share in the PV market since 2011 and is second when it comes to the residential PV sector. We can see that the non-residential sector has leveled for several years, while both residential and utility scale installation demands are soaring.

Current projections show that PV utility scale projects will have the biggest share in the PV market. See text above for more detailed information.
Figure 1.5: US PV Installations by Segment, 2010-2017

Moving to the PV installations by state, you can see that some northeast states are big on Residential and Commercial (non-utility) PV while California, North Carolina, Texas, and Nevada, for example, have mainly Utility scale PV installations. The question remains: why? Is utility scale solar better than residential?

If we compare turnkey-installed PV cost per watt for different market sectors, we can see that utility scale PV installations have the lowest cost. Due to economy of scale, non-residential installations are second lowest. It can also be seen that residential installations have the highest soft costs when compared to the rest of the sectors shown in Figure 1.6. This explains why utility scale PV is more attractive to utilities and investors; we can see that the installed cost for utility scale PV is much lower than both residential and non-residential systems.

Utility scale PV is more attractive to utilities and investors. See text above for more detailed information.
Figure 1.6: Installed PV cost per segment

Reflection

We can also observe from Figure 1.6 that PV module price is almost the same for all sectors, and that is an important point on which to elaborate since the module is the most important piece in the PV system. As we can see from Figure 1.6, we are talking about module cost, but since all modules are made of cells, the question remains: is there a difference in cost between cells and modules? And which one of them do you look for as a solar designer? Refer to the Required Reading GTM Report 2020 - Table 2.5 U.S. prices.

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ANSWER: It can be seen that module prices are different from cell prices; as designers, you care about the final product, which is the PV module, since it is the product on which you will base your system. We can see from table 2.5 that module prices are falling in 2016 due to the demand in production with new technology in encapsulation and improving manufacturing efficiency and processes. However, the market in 2017 led to a fluctuation in prices. 

Current projections show that PV utility scale projects will have the biggest share in the PV market. See text above for more detailed information.
2.5 U.S. Polysilicon, Wafer, Cell, and Module Prices, Q4 2016-Q4 2017
Click for a text description of U.S. Polysilicon, Wafer, Cell, and Module Prices, Q4 2016-Q4 2017.
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
Polysilicon ($/kg) $14.98 $16.93 $14.39 $16.69 $18.03
Wafer ($/W) $0.15 $0.15 $0.14 $0.15 $0.15
Cell ($/W) $0.21 $0.21 $0.21 $0.23 $0.22
Module ($/W) $0.39 $0.38 $0.40 $0.45 $0.48

Reflection

Zooming deeper into Figure 1.6, we can break down the cost and compare the additional costs associated with PV residential vs utility scale. Discuss these costs and why residential is more expensive compared to other segments.

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ANSWER: Residential is more expensive compared to other segments because supply chain and margin is higher in residentials due to the small system size, and permitting and other soft costs play a huge role in the total cost.