Grid parity

[1] Reaching grid parity is considered to be the point at which an energy source becomes a contender for widespread development without subsidies or government support.

It is widely believed that a wholesale shift in generation to these forms of energy will take place when they reach grid parity.

[3] Wind power reached grid parity in some places in Europe in the mid 2000s, and has continued to reduce in price.

On the other end of the wire, the local distribution company (LDC) charges rates that will cover their power purchases from the variety of producers they use.

A drop in power prices, as has happened in some locations due to the late-2000s recession, can likewise render systems formerly at parity, to be no longer interesting.

This rate of price reduction accelerated between late-2009 and mid-2011 due to oversupply; the wholesale cost of solar modules dropped approximately 70%.

Process improvements and a very large boost in production have brought that figure down 99 percent, to 68¢ per watt in February 2016, according to data from Bloomberg New Energy Finance.

Palo Alto California signed a wholesale purchase agreement in 2016 that secured solar power for 3.7 cents per kilowatt-hour.

Modules are generally warranted for 25 years and suffer only minor degradation during that time, so all that is needed to predict the generation is the local insolation.

According to PVWatts Archived 18 January 2012 at the Wayback Machine a one-kilowatt system in Matsumoto, Nagano will produce 1187 kilowatt-hour (kWh) of electricity a year.

Compared to most sources, like wind turbines or hydro dams, PV can scale successfully to systems as small as one panel or as large as millions.

In this case the LCOE competes against the retail price of grid power, which includes all upstream additions like transmission fees, taxes, etc.

Predictions from the 2006 time-frame expected retail grid parity for solar in the 2016 to 2020 era,[15][16] but due to rapid downward pricing changes, more recent calculations have forced dramatic reductions in time scale, and the suggestion that solar has already reached grid parity in a wide variety of locations.

Shi Zhengrong said that, as of 2012, unsubsidised solar power were already competitive with fossil fuels in India, Hawaii, Italy and Spain.

[20][21][needs update] In fact, recent evidence suggest that photovoltaic grid parity has already been reached in countries of the Mediterranean basin (Cyprus).

Nevertheless, there remained the widespread belief that concentrating solar power (CSP) will be even less expensive than PV, although this is suitable for industrial-scale projects only, and thus has to compete at wholesale pricing.

[26] Nevertheless, a significant amount of the wind power resource in North America remained above grid parity due to the long transmission distances involved.