Solar is approaching parity in several key markets
Data from renewables consultancy, Eclareon, shows that solar is becoming price competitive in many countries, but the target is a moving one
Editor’s note: This is a guest post written by Zachary Shahan, editor of CleanTechnica and Planetsave. The views expressed in this post do not necessarily reflect or represent the views of ABB or its employees.
Eclareon has put out a number of reports on solar “grid parity” and “generation parity” this year. In the most recent one, Eclareon examined utility-scale “generation parity” potential in five countries – Chile, Italy, Mexico, Morocco and Turkey – as well as the US state of Texas.
Investors in solar power projects are environmentally aware, but they still want to see a good return on their investment. That means they need be able to sell electricity that is produced from their solar power plants at a certain rate in order to receive their targeted return. The authors of the new Eclareon report considered solar to be at “generation parity” when the rate required by investors matched the average price of wholesale electricity in a given market. After analysing certain markets, they found that utility-scale solar power plants (50 MWp and up) are already at generation parity in Chile. Utility-scale solar in Morocco is close to generation parity, and it was recently close to generation parity in a couple of the other markets — Italy and Mexico — but then got pushed further away as electricity prices fell faster than the cost of solar in those countries. Here’s the key graph from the report:
Similarly, but for a different segment of the solar market, in March, Eclareon put out a report on commercial-scale solar grid parity. Grid parity is when a company saves money over time from installing solar panels compared to simply paying retail electricity prices from the grid. With retail electricity prices higher than wholesale electricity prices, this often happens sooner than utility-scale generation parity, but another important matter to note is that commercial-sized solar installations are also quite a bit more costly per kilowatt-hour than utility-scale solar installations. Regulatory factors also come into play. The Eclareon report found that Italy, Germany, Spain, and Mexico were already at commercial solar grid parity, while France was getting close. Interestingly, Chile doesn’t make the cut in this case. Here’s the key graph from this report, which highlights both grid parity and regulatory support for solar:
On the smallest scale, Eclareon put out a report on residential grid parity in May 2013. In most places, the situation for solar has gotten even better since then, but that report found that Spain, Australia, Italy, Mexico, Germany, Chile, California, and France (for the most part) were already at grid parity on the household level. The UK and Brazil, meanwhile, were getting close to grid parity. Those were all of the locations studied. Here’s the key graph on that report:
Overall, we’re just at the beginning of solar generation and grid parity. Solar costs keep coming down, and solar growth keeps defying forecasts. Also, in many locations, electricity prices are going up. Thanks to good solar resources, supportive policies, and relatively high electricity prices, the leading countries above (as well as other countries not studied in these reports) are seeing solar become the best choice for new electricity capacity.