The Big Myth About Grid Parity

Grid ParityWe hear from many sources, not the least of which is the DOE, that grid parity is right around the corner.

 What is grid parity and why is it important?  Grid parity is the point at which generating electricity from alternative sources, such as solar and wind, produces power at a cost that is equal or less than the price of purchasing power from the grid.  Reaching grid parity is considered to be an important point in the development of new sources of power — the point at which it becomes a contender for widespread development without subsidy support.

But is it really around the corner?  The facts don’t really support this.  For example, the Commerce Department recently placed a tariff on Chinese solar panels because they were being dumped on the US market by government subsidies. This can only raise the cost of solar produced electric.   Somebody will always have to design, sell, install and warrant these systems and those costs will be hard if not impossible to reduce.

So maybe creating grid parity is not the best goal.  Here is what Paula Mints of Navigant Consulting has to say on the subject.

“You’d think that quarter after quarter of losses for PV industry manufacturers along with a steady march of failures would be enough to shake the industry loose from its addiction to the goal of grid parity. Instead, and despite evidence that the current pricing for PV modules is actually damaging the industry’s ability to compete, the enthusiastic chorus about grid parity continues to grow louder. Disagree at your own risk, but agree or disagree, promises have been made for consistently lower system prices, and the cost of breaking these promises could be steep. “

“Throughout its 40 year history, the PV industry has operated in a climate of stop/start/stop incentives along with a perception that it is more expensive than other energy generating technologies (specifically, conventional energy, though also wind and nuclear).  In the early years, the public perception was that PV was essentially a science experiment best suited to sandal wearing hippies, instead of a business started by engineers and scientists and propelled forward by small companies taking significant risks, often on a shoestring budget.  The perception of solar as the most expensive energy source continues, despite a tacit realization that conventional energy – globally – enjoys significant direct and indirect subsidies.  In many countries the electricity that the public buys from the utility is delivered at a price point that is below the cost of production.  Simply put, to try and achieve grid parity with electricity that is delivered to the customer below the cost of production is absurd as well as ironic.”

While grid parity may not be right around the corner, homeowners and businesses can still benefit from solar energy.  It’s affordable, saves you money and it’s good for America!

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