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Manufacturing cost reductions are available to the solar industry - and the industry needs to embrace them in order to regain profitability in the face of reduced subsidies, according to Lux Research.
The solar industry is contending with overcapacity, with supply outstripping demand by two to one, Lux said.
The new report said module prices fell swiftly in the last four years to a low of $0.70/W, but the cost of goods sold (COGS) for modules has not reached this level, and that has resulted in big losses for most module manufacturers.
"With pressure from competitors, customers, and policy-makers to drop prices even further, manufacturers need to drive costs down to survive and thrive during the coming years of growth in the demand market," said Ed Cahill, Lux Research Associate.
The research firm analyzed drivers such as low-cost manufacturing locations, high efficiency, increased capacity utilization, and higher production yields on module COGS.
Copper indium gallium (di)selenide (CIGS) thin-film module technology was determined to have the best potential for cost reduction.
While all COGS costs will decrease from 2012-2017, CIGS is expected to have the greater rate of decline. The research firm believes the technology can take $0.14/W off the cost to reach $0.64/W.
Cadmium telluride (CdTe) is the low cost leader and the research firm said that, despite challenges facing high-profile producer First Solar, CdTe thin-film modules will still be the least expensive solar option as of 2017. The research firm sees the cost reducing from the current $0.67/W to $0.48/W.
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