This is our calculation of the equivalent cost per kilowatt hour of PV produced electricity as a function of module cost and efficiency (The Electric Power Research Institute makes available to its members a much more complete treatment of this calculation). Module efficiency determines the number of PV modules that must be used for a given amount of power, and also affects the cost of many of the other parts of a PV system (such as wiring, supports, and installation labor), as does the cost of capital if the system is financed.

In most parts of the United States, electricity costs are in the $0.05 to $0.12 per kilowatt hour range. It is easy to see why the market for grid connected PV has developed so quickly in Europe and Japan, where the cost of electricity is often 2 to 3 times as much as in the US, and in California where electric costs are higher than many areas and where state government incentives are offered to reduce the overall system cost. It is also readily seen that HelioVolt's manufacturing methods that reduce the cost of making PV modules will allow rapid market expansion without such incentives.

In the remote power segment of the power generation market, the cost of grid supplied electricity is not the comparison that decision makers use. The usual comparison is to the cost of electricity generated by a diesel generator (or two if equal reliability is needed) and all the maintenance, fuel costs, and fuel delivery costs. The usual costs of running remote generators is much higher per kilowatt hour than a grid connection, were it available.