We’ve discussed the unconventional wisdom that economies of scale are limited for wind and solar (and likely other renewable energy technologies). Another piece of evidence comes from a December 2009 report by the Electric Power Research Institute (EPRI): Solar Photovoltaics: Status, Costs, and Trends.
This chart, taken from page 14, illustrates the percent of the total installed cost represented by various components of a solar installation.
As you can see, the non-module costs (e.g. overhead) are a higher proportion of total costs for a residential system than for small and large commercial systems. However, the components of a small commercial PV system have a very similar cost profile to large commerical systems, an indication that most of the economies of scale in non-module costs have been achieved when a project increases in size from residential scale to small commercial scale.
Of course, the above chart simply looks at the relative cost of project components and not total installed cost. But the following chart indicates that this hypothesis is correct: small commercial systems capture most total cost economies of scale, through lower module and non-module costs. This chart pulls data from the California Solar Statistics website (and featured in our earlier post, Renewable Energy Economies of Scale are Bullshit):
What’s ironic is that I came across the EPRI report in a story titled “Large Solar PV to Dominate U.S. Market.” If that’s true, the evidence suggests it won’t have much to do with economies of scale…