A techno-economic breakdown of each step in the Photovoltaic (PV) value chain is established. The chosen methodology to link the different steps in the value chain is to follow a flow of Silicon through the value chain, as illustrated in the figure below.
At each step in the value chain there are identified net costs, as shown in the figure. The accumulated costs at a given step in the chain are given as the net cost at the step plus accumulated costs for all preceding steps. In addition to the net costs at the different steps also other variables such as yields, materials losses, and efficiencies must be included in the analysis. Natural key performance indicators at a given step are the net costs incurred at the step along with the other cost related variables as shown in the figure, and the accumulated key performance indicator for the entire chain is the solar module cost per Watt peak (€/Wp).
Key performance indicators for total cost reductions are solar module net costs per Watt peak (€/Wp) and levelized cost of electricity, LCOE (€/kWh). The rationale for applying both €/Wp and LCOE is as follows: The solar module cost (€/Wp) is technology dependent and subject to the global marketplace (some variations will occur, by toll barriers etc.), while the balance of system costs (BOS) adding up to the final LCOE are specific to location and segment (Residential / Commercial / Utility). In addition, the final LCOE also vary with local insolation, and local political and economic conditions. Also O&M costs vary between segments and regions.
In conclusion, the €/Wp metric will tell whether a specific PV technology is competitive at a global level. The LCOE metric on the other hand will tell whether the technology under investigation may be a viable energy source at a distinct location, subject to local insolation, as well as given political & economic conditions, including maturity of market.