Why Efficiency Is Becoming Increasingly Important in Solar Energy

Solar energy has gotten really, really cheap in the last decade and it's causing some unusual changes in the industry. A commodity solar module costs about $0.35 per watt today, or around $100 for a module with dimensions of 1 meter by 2 meters. Given the cost of the aluminum frame, glass covering solar cells, and electronics in the solar module, there aren't a lot of places to cut costs left, which ironically makes costs less important for solar manufacturers.

What's becoming increasingly important is the efficiency of the cells that are in a solar module. Commodity cells made of multi-crystalline silicon can make modules that are about 15% or 16% efficient, but cap out around there. Mono-crystalline silicon modules can bump up efficiencies to around 18% for a commodity product or higher for mono-PERC (passivated emitter rear contact) construction or over 23% for modules made with SunPower's (NASDAQ: SPWR) back contact construction.

After years of expanding multi-crystalline capacity, JinkoSolar (NYSE: JKS), Canadian Solar (NASDAQ: CSIQ), Hanwha Q Cells (NASDAQ: HQCL), and JA Solar (NASDAQ: JASO) are rushing to upgrade to PERC production because it doesn't add a lot of costs and increases efficiency a couple of percentage points. To keep up, even First Solar (NASDAQ: FSLR) is upgrading from a solar module that is 16.9% efficient today to one that is over 18% efficient.

Source: Fool.com