The capital intensity of photovoltaics manufacturing: barrier to scale and opportunity for innovation

The MIT Faculty has made this article openly available. Please share how this access benefits you. Your story matters. a Using a bottom-up cost model, we assess the impact of initial factory capital expenditure (capex) on photovoltaic (PV) module minimum sustainable price (MSP) and industry-wide trends. We find capex to have two important impacts on PV manufacturing. First, capex strongly influences the per-unit MSP of a c-Si module: we calculate that the capex-related elements sum to 22% of MSP for an integrated wafer, cell, and module manufacturer. This fraction provides a significant opportunity to reduce MSP toward the U.S. DOE SunShot module price target through capex innovation. Second, a combination of high capex and low margins leads to a poor financial rate of return, which limits the growth rate of PV module manufacturing capacity. We quantify the capex of Czochralski-based crystalline silicon (c-Si) PV manufacturing, summing to 0.68 $/W aCap ($ per annual production capacity in watts, $year/W) from wafer to module and 1.01 $/W aCap from polysilicon to module. At a sustainable operating margin determined by the MSP methodology for our bottom-up scenario, we calculate the sustainable growth rate of PV manufacturing capacity to be B19% annually – below the historical trend of B50% annually. We conclude with a discussion of innovation opportunities to reduce the capex of PV manufacturing through both incremental and disruptive process innovation with c-Si, platform innovations, and financial approaches. For solar photovoltaic (PV) technologies, ''cost per watt'' and ''minimum sustainable price'' (MSP, in units of $/W) are ubiquitous techno-economic evaluation metrics. Herein, an MIT-NREL collaboration team highlights the importance of an additional techno-economic metric: ''capex,'' an abbreviation of ''capital expenditure,'' or the upfront factory cost. The team quantifies end-to-end capex for single-crystalline silicon (c-Si) technology, from polycrystalline feedstock manufacturing to module assembly. The combination of high capex and low margins in the c-Si PV industry is found to contribute to many industry trends that cannot be explained by $/W alone, notably: (i) high capex and low margins limit the maximum sustainable growth rate for manufacturing capacity to o20%, limiting how fast the industry can scale up without external support. (ii) Large capital investments for new manufacturing facilities present a barrier to innovation and promotes ''technology lock.'' (iii) High capex increases the margins required to satisfy investors (minimum sustainable price), reducing manufacturers' profitability. Regarding solutions, the authors quantify the benefits of capex reduction to MSP …