Grid Parity…it’s here…so where is the celebration?

December 8, 2010 § 9 Comments

In the solar industry it’s always a promise for the future.  Not today, but someday in the future.

Someday, the cost of PV solar electricity will be so low that PV will be competitive with utility rates . . . we will have ‘grid parity’ and at that point in time, we can all go solar!

Well, PV solar electricity is competitive today, and beyond grid parity in most markets.  But, do not hold your breath for an announcement or celebration.  After all, whose interest is served by the promise of someday instead of the reality of today?  Of course the answer is the vested and deeply entrenched business interests and their proxies in state capitals and Washington.

Recently, the Houston Chronicle, while reporting on the completion of a solar farm in San Antonio, cited Bloomberg New Energy Finance to state that ‘electricity generated by solar-photovoltaic technology today costs five times as much to produce as coal-fired energy’

Really?  This is totally absurd.  It’s a false message.  It is ambiguous and misleading. What is being compared?  It discourages PV consumers and serves the status quo of utilities, coal, and nuclear power interests.  It’s the same refrain and drumbeat from the vested interests . . . someday, maybe someday, solar will be competitive . . . not today, but maybe someday.

Here is the market choice for a consumer:

  1. Purchase electricity over a long-term period from your utility at whatever rate the utility charges,  OR
  2. Utilize solar PV to produce a portion of your electricity (on the load side of your meter) over a long period at a fixed up front cost.
Average Retail Price of Electricity compared to PV

Average Retail Price of Electricity compared to Solar System in Dallas

The EIA reports that the average residential cost for electricity in the U.S. for August, 2010 was 12.02ȼ kWh; in Texas, the cost was 11.95ȼ kWh.  Most likely this price will increase over the next forty years!    On the other hand, a grid-tied residential PV system in Dallas, Texas with no local incentives and installed at $5.00 per Watt produces 40 years of electricity at 10.97ȼ kWh.

Is there a REP (retail electricity provider) in Texas’ deregulated markets willing to offer a prepaid 40 year contract at 10.97ȼ kWh?  PV wins, and it wins by most other metrics as well.

So, what is the issue?  Why do we have to wait a decade to install solar?  You don’t.  Plus, PV is scalable; a small system for home or business is affordable and works just fine to hedge your energy costs and resources.

The large-scale adoption grid-tied PV is a disruptive proposition.  There are a lot of industries that like matters just the way they are ‘thank you’, and when they have the chance to frame the message, it always will be someday, maybe someday PV will be economic.

Someday is here.

Chet Boortz
PhD, Political Economy

[Note: I will follow with a series of commentaries on the economics of PV one metric at a time.  Thanks.]

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