Grid Parity Goal: Practical Information for Beginners

Grid parity is defined as the point at which solar power (renewable energy) is equal or cheaper than utility grid electricity. It is a goal often referred to as the Holy Grail of renewable power, the most coveted prize of renewable energy research.

 How fast the reduction of Solar Power Cost will determine how soon we will attain grid parity. At present, grid electricity cost is lower but solar energy is inching closer and much faster than a decade ago. With Grid Parity, each household becomes a private utility company supplying cheap or free electricity for their use and selling the excess to the grid.

Status of Grid parity:

 Grid parity will not come at the same time for the different areas of the country. The opinions of industry movers are varied. There are those who claim grid parity existing in their states now, some nearing and many projecting within 5 years.

 Here’s what the experts say:

Places like Hawaii, Spain and Japan have achieved or nearing Grid because of abundant sun and high cost of fossil fuel electricity.


Big markets such as California, Texas, Florida, and New York will join Hawaii by 2012 as long as electricity prices keep rising. Since there is state and federal policy supporting solar through the mid-2010s, private consumers already benefit from cost-effective solar in many of these states.

  General Electric predicts grid parity without subsidies in sunny parts of the United States by around 2015. Other companies predict an earlier date: the cost of solar power will be below grid parity for more than half of residential customers and 10% of commercial customers as long as grid electricity prices do not decrease.

What will speed up Grid Parity?

1. The biggest driver of lower cost is better efficiency.  First Solar has indicated that its manufacturing cost has fallen in 2009 to 93 cents per watt, down 5% in three months and down 28% in a year.

2. Industry experts project solar module prices to fall 25% in 2009, 19% in 2010, and more than 10% in both 2011 and 2012.

3. Grid parity is also being sped up through the advances in concentrating photovoltaics. Concentrating photovoltaics can reach grid parity as soon as 2011. 

 4. The cost of CO2 emission has started to be added into the cost of building coal-fired or natural gas fired power plants, and for nuclear, people are starting to put a cost on the issue of dealing with the spent fuel from nuclear reactors. 

  

 Hindrances to Grid Parity:

1. Shortage in supply of silicon materials.The limited supply and increasing cost of silicon raw material increases the cost of manufacturing. If the selling price of solar panels increases, the adoption of solar power will be slow.

.2. Reduction or elimination of government incentives. Renewable energy especially solar power is subsidized heavily by the government in several countries including Spain and Germany. It is this incentives and tax breaks provided that makes it cost efficient to adopt solar power. Any reduction or elimination of incentives can lead to a hindrance in growth of the solar industry.

 3. Conversion efficiency of solar panelsSolar cells on the whole is still not very efficient. They convert about 10-15% of the sunlight that falls on it. Better technology that leads to better conversion can increase the output and thus lower the overall cost of electricity production.

Solar proponents believe that once grid parity is attained, electricity consumers have no reason   not build or buy solar power systems for home use. Advances in conversion efficiency and reduction in cost of solar panels will certainly drive the cost of solar electricity further down. By then Grid Parity will be within our grasp.

We invite you to visit our Informative Solar Article page for more practical tips, simplified application guide and established solar benefits.

 Author’s Box

 Jacinto Demonteverde, Jr., the owner, is a strong advocate of solar power adoption. He writes practical articles to keep established and prospective solar users well informed. Visit him at: http://www.justsolarhome.blogspot.com.You are welcome to republish or reprint this article free of charge provided the content remains unchanged including the Author’s Box. No permission is needed.