Countries in sunny regions, such as Chile, are expected to see strong demand for PV in the next two years. Image: SunEdison.

A projected 15% decrease in the installed cost of PV over the next two years will continue to drive demand worldwide, according to new analysis.

Taiwan-based EnergyTrend has reported significant ongoing decreases in PV system costs in the past year, a trend that is set to continue and to spur growing demand for solar.

One highlight in the past year identified by EnergyTrend is the US. Here the average installed cost of utility-scale PV systems in the third quarter of 2015 was down 17% year on year to US$1.38/W.

With increased deployment and new technological advances, EnergyTrend predicts installed costs could drop to around US$1.15/W in 2016 and by 15% by the end of 2017.

Such a decrease would drive down the key levelised cost of electricity (LCOE) metric to under US$0.07/kWh in some areas, although this would depend on specific local conditions such as labour costs, daylight hours and available subsidies.

Nonetheless, EnergyTrend concludes that the overall picture for PV is of increasing competitiveness with fossil fuels, particularly coal, and a consequent increase in demand.

Installation targets of major markets and LCOE for utility-scale systems. Source: EnergyTrend, Jan 2016

Market/country Installation target Share of renewable generation Current LCOE (min), $/kWh Current LCOE (max), S/kWh China 150GW by 2020 20% (non-fossil fuel by 2030 0.08 0.14 Japan 64GW by 2030 22-24% by 2030 0.1 0.14 US - 20% by 2030 0.07 0.12 Germany 66GW by 2030 50% by 2030 0.11 0.17 UK 22GW by 2020 15% by 2020 0.12 0.2 India 100GW by 2022 40% (non-fossil fuel) by 2030 0.08 0.11 Taiwan (current govverment) 8.7GW by 2030 13.3% by 2030 0.09 0.14 Taiwan (opposition party) 13GW by 2025 20% by 2025 0.09 0.14

EnergyTrend analyst Patrick Lin said that policies in major markets including the US, China and India would cause a gradual decline in module prices in 2016, in parallel with price declines for other components, such as inverters and other related consumables.

On modules, EnergyTrend highlights the incremental improvements in conversion efficiency rates of PV cells as a key driver and also the increasing power of modules, with mainstream multi-Si products expected to achieve a power output of 265W in the second half of 2016 and their mono-Si counterparts reaching 275-280W.

In 2016-17, EnergyTrend said it expected strong growth in regions with abundant sunlight, such as India, Southeast Asia and Central and South American countries.