Solar-cell manufacturing costs: innovation could level the field

It’s widely believed that China is the world’s dominant manufacturer of solar panels because of its low labor costs and strong government support. But a new study by researchers at MIT and the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) shows that other factors are actually more significant — suggesting that the United States could once again become cost-competitive in photovoltaic (PV) manufacturing.

As of 2011, manufacturers in China accounted for 63 percent of all solar-panel production worldwide. But a detailed analysis of all costs associated with PV production shows that the main contributors to that country’s lower PV prices are economies of scale and well-developed supply chains — not cheap labor.

“We developed a bottom-up model,” explains Tonio Buonassisi, an associate professor of mechanical engineering at MIT and a co-author of the new report, just published in the journal Energy and Environmental Science. The researchers estimated costs for virtually all the materials, labor, equipment and overhead involved in the PV manufacturing process. 

“We added up the costs of each individual step,” he says, providing an analysis that’s “very rigorous, it’s down in the weeds. It doesn’t rely solely on self-reported figures from manufacturers’ quarterly reports. We really took great care to make sure our numbers were representative of actual factory costs.”

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