PV AND GRID PARITY

Grid Parity – the Ongoing Challenge for PV Adoption

Wolfgang Schlichting, August 2012 (SolarBuzz)

“Grid parity - the almost ‘mystical’ point in time when levelized cost of generating electric power from PV energy is equal to the price of purchasing power from the grid…[and] PV power becomes, in principle, a viable technology for widespread development without subsidy support…is expected to trigger an accelerated shift in PV adoption.

“With [parity getting closer and] the PV industry currently focused on cost reduction…[It is important to note that] Grid parity…will happen in different geographies at different times…[that] Grid parity is a moving target – competing energy sources will adjust to the challenge from PV…[and that] Grid Parity will not be the threshold after which PV quickly becomes the dominating energy source – established infrastructure and utility business models will take time to change…”

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“…[W]e are already at – or have passed through – grid parity at several locations in the world…[including Hawaii, tropical island nations in the Caribbean and South Pacific, and parts of Spain]…In 2013, we expect parts of Italy, Brazil, Chile and Australia to also reach the threshold. Thereafter, the Philippines, California, Japan and others will follow…[from] 2014 to 2016…

“Many coal, gas and nuclear plants are already fully-amortized and produce low-cost, highly-competitive electric power…PV has been most successful in competing within the ‘peak-power’ segment…When PV becomes a mainstream energy source, it then competes with less expensive sources rather than ‘peak-only’ power plants…[N]atural gas…prices declining to historic lows…represents serious competition to PV…[and] the grid infrastructure is not [yet] optimized for distributed [variable] generation…”

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