The installed capacity of photovoltaic modules has grown at a rate of 40 percent per year over the last decade. As the industry has grown, PV module prices declined along a well-established learning curve, which has seen cost reductions of 22 percent for each doubling of cumulative capacity over the last few decades. An excursion from this historical rate occurred due to supply bottlenecks and market dynamics from 2003 to the end of 2008. The learning curve has since returned towards the historic trend and the global installation capacity increased to 10 GWp/year in 2010.
Both the IEA and the European Photovoltaic Industry Association (EPIA) expect further cost reduction with increased production capacities, improved supply chains and economies of scale. China has experienced a 20-fold increase in production capacity in four years, increased expansion of global production capacities for key components (including modules and inverters) and is continuing to exert downwards pressure on prices. A surge in silicon production capacity, a key commodity, has continued to increase, alleviating supply constraints. Technological cost reduction opportunities include improvements in efficiency for the different cell types. Based on these drivers, the IEA and EPIA have made cost projections using learning rates of 18 percent, slightly lower than the historical average of 22 percent.
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