ABSTRACT
The major costs for solar PV systems are the upfront capital cost and the cost of financing. Operating and maintenance costs are low. Modules account for 30–60% of total system costs. The 'levelised cost of energy' (LCOE)is used by suppliers of PV electricity to set a unit kWh price for their consumers. The point at which this supplied price matches that of the local price for grid-supplied electricity is called 'grid parity'. The cost of financing is measured by the 'discount rate'. This economists' term is determined by the annual interest rate charged on upfront costs divided by the capital including that interest, averaged over the payback period of the loan. Solar PV will most quickly become competitive in places where there is higher solar insolation, electricity rates are high or where utilities have inordinate monthly charges. Capital costs for medium- to large-scale projects are primarily in construction, with pre-development costs averaging 6% and grid connection costs 2%.
