Swanson’s Law is the observation that the price of solar photovoltaic modules tends to drop 20% for every doubling of cumulative shipped volume. Concurrently with this, prior research suggests that public policies aimed at stimulating market growth accounted for roughly 60% of the overall cost declines, with government-funded R&D accounting for the remaining 40%. There’s a virtuous cycle of government deployment policies pushing volume, while the R&D pushes technology.
Additional research suggests that it was mostly the industry scaling in the early-2010s that led to the greatest price drops, however, in the second half of the decade we’ve seen module efficiency begin to increase significantly. With the average module efficiency starting under 15% in the early part of the decade, we’re now seeing modules touch 20% efficiency – a full 33% increase. And we’re expecting big efficiency jumps in the near future as well.
With all of this, LONGi – the leading global manufacturer by volume of mono-crystalline solar modules – has done the math to show off how these efficiency increases in solar modules leads toward broader system-wide pricing gains.
In the above analysis, LONGi compares the balance of system costs between a 1 MWdc project composed of 270W poly-crystalline solar modules and 295W mono-crystalline modules. As seen in the graphic, the amounts of hardware being used are lesser – a few hundred fewer modules, 20 meters less of DC cable, almost a thousand meters less of PV cable, and one fewer combiner box. LONGi also supplied a high level equation to quantify in a different manner:
If the balance of system costs of poly-crystalline module affected by the module efficiency is considered at 25¢/W, the corresponding BOS costs of the 295W module can be roughly calculated based on the efficiency ratio: 0.25*270/295=23¢/W – a savings of 2¢/W, or about 8.5% on balance of system.
Next, LONGi looked at mono-crystalline solar cells of different efficiency and sizes from 2012 in order to show how a 30% increase in efficiency (similar to what’s happened over the last five years) drove greater than 6¢/Wdc out of system costs.
Then LONGi puts out something new for us to consider from their company 166 mm solar cells within a standard 72 cell module frame – which is an equivalent 78 solar cell module. In the below table we see an 11.8% efficiency gain, and 7% gain in balance of system costs – just under a penny per watt by simply squeezing some more cells in.
With LONGi, Oxford PV, REC Solar and many others pushing efficiency gains – and new technologies like bifacial modules and their backside gains – we should expect to see land costs per megawatt, hardware costs, labor costs and more keep coming down and continue Swanson’s Law further into the future.
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