Australia’s Street To Extremely Low-Value Solar

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How much can solar cost? If the Australian government has its way, the country will soon be home to some of the world’s lowest-cost solar systems, with an expanded target of $15/MWh.

“Ultra-low-cost solar energy” was recently included as a priority technology in the Australian Government’s recent Low Emission Technology Statement (LETS). To accelerate the realization of this technology, the Australian Renewable Energy Agency (ARENA) has announced $40 million in solar energy R&D funding.

The concept of ultra-low-cost solar energy is not new – the spotlight has been on a number of emerging photovoltaic technologies for a number of years, spurring research and development efforts in academia and industry. In fact, the solar technology we use today has already made significant advances that have resulted in increased efficiencies and continued cost reductions.

However, the path to ultra-low-cost solar power goes beyond module cost and efficiency to also consider the various components of a power plant system required to produce solar energy.

In this article, we take a closer look at ultra-low cost solar energy and the potential role it will play in Australia’s electricity system. We’ll also take a look at some of the innovations already happening behind the scenes and we’ll examine why solar research and development is so important to driving it forward.

What is Ultra Low Cost Solar?

Ultra-low-cost solar energy has been identified as a priority technology in the Australian Government’s latest Low Emission Technology Statement (LETS).

The goal? To reduce the levelized cost of electricity for solar energy to $15 per megawatt hour, about a third of today’s cost. This goal is preceded by the government’s “Solar 30 30 30” goal – i.e. to achieve 30% module efficiency by 2030 at 30 cents per installed watt.

LCOE or Levelized Cost of Energy is a term that describes the cost of energy produced by solar energy over a period of time, typically the guaranteed lifetime of the system. By purchasing solar power, you are essentially creating a hedge against rising utility costs by locking the price per kWh at a known price.

LCOE is calculated using the following basic formula: the total cost of a system (returned to present value: NPV) divided by the total amount of energy it produces.

The government has placed great emphasis on reducing the levelized cost of electricity from solar power, claiming it is key to unlocking the potential of other low-emission technologies, including clean hydrogen, energy storage and low-emission materials.

ARENA CEO Darren Miller said ultra-low-cost solar power will be a “vital component” in the country’s transition to a low-carbon energy system and ultimately the goal of net-zero emissions by 2050.

The website goes on to explain that solar power generation at $15 per MWh would accelerate Australia’s ability to meet the clean hydrogen stretch target of production below $2 per kg and increase our competitiveness in hydrogen export markets. It would also support low-cost production of low-emission steel and aluminum and direct capture of CO₂ from air (an emerging technology).

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What Does Ultra Low Cost Solar Look Like?

To get a feel for what extremely low cost would mean, two key levers need to be considered:

  • module efficiency
  • Balance of Plant (BoP) denotes the various supporting and supporting components of a power plant system that are needed to produce energy

To enable solar power cost reductions that meet their broader goal, the government has stated that we need to improve module efficiency from about 22% to 30% and reduce the balance sheet of plant costs by about 70% by optimizing large-scale scaling deployment.

ARENA’s $40 million solar research and development funding will be split into two streams to help achieve both goals. Stream 1 consists of cells and modules, and Stream 2 focuses on system balance along with operations and maintenance.

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The path to ultra-low-cost solar energy

module efficiency

Australian researchers have played a pioneering role in developing commercially viable solar technologies dating back to the 1960s.

About 30 years ago, a research team at the University of New South Wales (UNSW) developed Passivated Emitter Rear Cell (PERC) technology. This breakthrough technology is the most widespread power generation technology in terms of capacity added globally each year and is now used in 90% of global solar photovoltaic (PV) production.

Technological advances in solar cell technology and efficiency are well documented. By the early 1980s, the world’s best laboratory cells had achieved an efficiency of 17%, meaning that 17% of sunlight was converted to electricity and the rest was lost as heat.

In 1989, PERC technology entered the mix with a record efficiency of 22–23%, which increased to the 24–25% efficiency range in the 1990s after further improvements.

Just a few months ago, SunDrive – a Sydney-based start-up founded by alumni of UNSW – set a new world record for a commercial-size silicon solar cell with an efficiency of 25.54%. The cell is also silver free, replacing the expensive metal with much more plentiful and cheaper copper.

New solar cell technologies have also emerged, including metal halide perovskites that can be combined with silicon cells to create tandem solar cells that use sunlight much more efficiently. In November 2021, a team of German researchers achieved a record efficiency of 29.80% for a perovskite silicon tandem solar cell.

Over the years, not only has the efficiency of solar cells improved, but new, innovative methods of solar PV application have also come to the fore. Solar technologies such as building-integrated photovoltaics (BIPV), “floatovoltaics”, solar skins and solar fabrics have revolutionized the way we think not only about solar energy but about energy production in general.

To meet government criteria, ultra-low-cost cells and modules must not only offer high efficiency, but also be cost-effective, durable, and address sustainability issues when manufactured and deployed on a large scale.

With many technological advances already in the pipeline, achieving a module efficiency of 30% that meets this criterion is not only achievable but probable.

Asset Balance Sheet (BoP)

Previously, we mentioned Balance of Plant (BoP) costs and the government’s goal to reduce costs by a whopping 70%. While solar panel costs in general have undergone a sharp downward trend, BoP costs are not declining at the same rate and should therefore be a key focus if we are to achieve the goal of ultra-low-cost solar.

Balance of Plant (BoP) refers to the various supporting and supporting components of a power plant system required to produce energy, such as inverters, transformers, mounting systems, wiring and cables, etc. It also includes installation, construction and maintenance costs.

ARENA’s Stream 2 allocation is intended to broaden the approach to accelerating innovation that can drive reductions in these costs.

While there are many variables involved, the key to reducing upfront and ongoing BoP costs lies in the strategic application of data, planning and advanced technology. Investments in digitization, automation and AI technologies are a must.

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