In this April 2012 article in RenewableEnergyWorld.com, Navigant Director Paula Mints discusses some of the significant changes in the way the PV industry currently sells and deploys its technology.
Before 2005, multi-megawatt installations (termed utility scale) were not standard nor was this particular category expected to take any real market share. This particular category of installation was driven by the feed-in-tariff (FIT) incentive model and perpetuated by power purchase agreement, or PPA (tender) business models. Both FITS and PPAs assume that over time the cost/price of conventional energy will continue to rise while the cost of solar electricity will continue falling. The fallacy of these assumptions (that is, increasing conventional energy costs along with decreasing costs of solar) is made clear by the current decrease in the cost of natural gas to the hub, observations of all commodities over time along with observations of losses and negative margins among PV manufacturers over the past year or two. The current low prices of PV installations are only possible as long as prices for PV technology remain artificially low. Another example in this regard is the collapse of the housing market: just as the solar industry relied on incentives and low technology prices for growth in the mid to late 2000s, the housing industry relied on inflated values and loose mortgage policies and is now suffering the consequences of that mistake. The reality is that the promises of grid parity and ever-lower system prices are clasping solar into a vise of unprofitability.
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