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Climate impacts on the cost of solar energy

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  • Flowers, Mallory E.
  • Smith, Matthew K.
  • Parsekian, Ara W.
  • Boyuk, Dmitriy S.
  • McGrath, Jenna K.
  • Yates, Luke

Abstract

Photovoltaic (PV) Levelized Cost of Energy (LCOE) estimates are widely utilized by decision makers to predict the long-term cost and benefits of solar PV installations, but fail to consider local climate, which impacts PV panel lifetime and performance. Specific types of solar PV panels are known to respond to climate factors differently. Mono-, poly-, and amorphous-silicon (Si) PV technologies are known to exhibit varying degradation rates and instantaneous power losses as a function of operating temperature, humidity, thermal cycling, and panel soiling. We formulate an extended LCOE calculation, which considers PV module performance and lifespan as a function of local climate. The LCOE is then calculated for crystalline and amorphous Si PV technologies across several climates. Finally, we assess the impact of various policy incentives on reducing the firm's cost of solar deployment when controlling for climate. This assessment is the first to quantify tradeoffs between technologies, geographies, and policies in a unified manner. Results suggest crystalline Si solar panels as the most promising candidate for commercial-scale PV systems due to their low degradation rates compared to amorphous technologies. Across technologies, we note the strong ability of investment subsidies in removing uncertainty and reducing the LCOE, compared to production incentives.

Suggested Citation

  • Flowers, Mallory E. & Smith, Matthew K. & Parsekian, Ara W. & Boyuk, Dmitriy S. & McGrath, Jenna K. & Yates, Luke, 2016. "Climate impacts on the cost of solar energy," Energy Policy, Elsevier, vol. 94(C), pages 264-273.
    • Handle: RePEc:eee:enepol:v:94:y:2016:i:c:p:264-273
    DOI: 10.1016/j.enpol.2016.04.018
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    References listed on IDEAS

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    7. Ibrahim, Nur Atirah & Wan Alwi, Sharifah Rafidah & Abd Manan, Zainuddin & Mustaffa, Azizul Azri & Kidam, Kamarizan, 2024. "Climate change impact on solar system in Malaysia: Techno-economic analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 189(PA).
    8. Limmanee, Amornrat & Songtrai, Sasiwimon & Udomdachanut, Nuttakarn & Kaewniyompanit, Songpakit & Sato, Yukinobu & Nakaishi, Masaki & Kittisontirak, Songkiate & Sriprapha, Kobsak & Sakamoto, Yukitaka, 2017. "Degradation analysis of photovoltaic modules under tropical climatic conditions and its impacts on LCOE," Renewable Energy, Elsevier, vol. 102(PA), pages 199-204.
    9. Héctor Fernández Rodríguez & Miguel Ángel Pardo, 2023. "A Study of the Relevant Parameters for Converting Water Supply to Small Towns in the Province of Alicante to Systems Powered by Photovoltaic Solar Panels," Sustainability, MDPI, vol. 15(12), pages 1-24, June.
    10. Zhang, Xiaojin & Bauer, Christian & Mutel, Christopher L. & Volkart, Kathrin, 2017. "Life Cycle Assessment of Power-to-Gas: Approaches, system variations and their environmental implications," Applied Energy, Elsevier, vol. 190(C), pages 326-338.
    11. Tervo, Eric & Agbim, Kenechi & DeAngelis, Freddy & Hernandez, Jeffrey & Kim, Hye Kyung & Odukomaiya, Adewale, 2018. "An economic analysis of residential photovoltaic systems with lithium ion battery storage in the United States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 1057-1066.
    12. Abajian, Alexander & Pretnar, Nick, 2023. "Subsidies for Close Substitutes: Evidence from Residential Solar Systems," MPRA Paper 118171, University Library of Munich, Germany.
    13. Rosa, Carmen B. & Wendt, João Francisco M. & Chaves, Daniel M.S. & Thomasi, Virginia & Michels, Leandro & Siluk, Julio Cezar M., 2020. "Mathematical modeling for the measurement of the competitiveness index of Brazil south urban sectors for installation of photovoltaic systems," Energy Policy, Elsevier, vol. 136(C).
    14. Bouaichi, Abdellatif & El Amrani, Aumeur & Ouhadou, Malika & Lfakir, Aberrazak & Messaoudi, Choukri, 2020. "In-situ performance and degradation of three different photovoltaic module technologies installed in arid climate of Morocco," Energy, Elsevier, vol. 190(C).
    15. Silva, Aline M. & Melo, Fernando C. & Reis, Joaquim H. & Freitas, Luiz C.G., 2019. "The study and application of evaluation methods for photovoltaic modules under real operational conditions, in a region of the Brazilian Southeast," Renewable Energy, Elsevier, vol. 138(C), pages 1189-1204.
    16. Shahsavari, Amir & Akbari, Morteza, 2018. "Potential of solar energy in developing countries for reducing energy-related emissions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 275-291.

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    More about this item

    Keywords

    Solar Power; Photovoltaics; Levelized cost; Climate; Renewable energy; Silicon PV;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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