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The Value of Efficiency

Abstract:

In this paper, we discuss the value of efficiency (VOE)-a metric to assess the maximum allowable cost for innovation in photovoltaic technology. We derive VOE by analyzing the co-dependence of levelized cost of electricity (LCOE) on manufacturing cost and efficiency and use the tool to explore different scenarios and technologies. Exploring historical trends indicates that a stronger market diversification between utility and residential applications could develop. Regional trends indicate that another diversification could also happen across different countries. Finally, we also explore detrimental economic effects of degradation and show that competing for lower LCOEs demands achieving similar degradation rates as established technologies do.