Solar reaches grid parity – subsidies dwindling in the rear view mirror

The Desoto Next Generation Solar Energy Center in Arcadia Florida

The Desoto Next Generation Solar Energy Center in Arcadia Florida

Grid parity – it’s what we’re all waiting for. The moment when an alternative energy source generates electricity at a levelised cost that is equal to, or less than, the cost of energy purchased from the grid generated by utility scale fossil-fuel burning plants, eliminating the need for subsidies or other forms of external support.

Many commentators have long held that solar generation would be the first to reach grid parity in certain jurisdictions since unlike, for instance, offshore wind, the levelised cost of solar PV generation is pretty much summed up in the capital costs of the module with little or no additional cost resulting from ongoing maintenance. The plunging prices of solar modules also has a big role to play.

That day appears to be here in a number of major markets. A recent report by Deutsche Bank estimated that once the levelised cost of solar electricity reached between 10 and 20 cents/kWh, module prices would need to stabilise between 60 and 70 cents/watt in order for grid parity to be achieved for solar PV in major markets. This module price target has now been achieved, with many manufacturers reporting average module prices ticking up since the beginning of 2013 but still squarely below 70 cents/watt.

Deutsche estimated that following the over 80% drop in solar module prices since 2008, these levelised costs have now been achieved in over 10 markets in the world. Just think about that – in over 10 markets in the world, it’s cheaper, or at least no more expensive, to generate power from the sun using solar PV than it is to use legacy sources of generation. With a 25 year lifespan with minimal maintenance, no additional costs of fuel and consistent predictable generation, this is a sea change for the affordability and promising future of solar PV electricity generation.



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