Increase in PV System Prices: Is This Possible?

In the previous article we discussed reasons for installing a PV system sooner rather than later. In this article we discuss factors which may lead to increase in system prices for Ontario homeowners:

C$/US$ parity
The cost of photovoltaic systems is tied to an underlying commodity (silicon) which is priced in US dollars. Moreover, most parts of photovoltaic systems (cells, power electronics) will be imported (despite local content rule) from China. Thus, photovoltaic system cost will be significantly dependent on the CAD/USD exchange rate. Take advantage of the current near parity exchange rate. It will not last long. Economists expect a decline in the loonie back to 0.55-0.65 USD range within a couple years.

Silicon price
While system prices decrease steadily, in short-term, prices on silicon may be volatile. The booming photovoltaic industry worldwide is a major consumer of polysilicon. Because European countries have started to offer incentives to install solar energy, demand for solar cells has heavily increased. This demand may continue to increase significantly when incentives are introduced in China (expected in 2010). The amount of polysilicon needed today for both solar cell and semiconductor production is larger than the manufacturing capacity. Therefore limited supply + high demand = high price of silicon; a typical supply and demand situation.

Increase in system price due to local content rule
Until January 1, 2011 FIT rules require 40% local (Ontario) content which can be easily satisfied using numerous scenarios. After January 1, 2011 however, local content rule will be increased to 60%, making it much more difficult to satisfy. Consequently, system prices may increase until enough manufacturing facilities are built in Ontario to satisfy all demand.

Thus, despite a steady tendency of decreasing system prices, there are some factors which may contribute to short run (e.g. local content rule, commodity price) or even long run (e.g. due to change in exchange rate) increase in PV system prices.

To learn more about solar PV systems visit Solar PV Installation.