Solar Is Nearly Competitive With Traditional Energy in Some Markets

In recent months, falling costs and time-of-use electricity pricing have started to make solar photovoltaics competitive. Proximity to grid parity varies by location, and is closest for commercial rooftop installations in California according to a new report from Lux Research.

Grid parity isn’t a single-point in time, and parity for utility-scale generation could still be a decade or more away. However, near-term viability in select applications will drive the industry to more cost reductions and future universal grid parity, Lux Research’s report, The Slow Dawn of Grid Parity says.

According to the report solar will converge with grid electricity rates in some situations, such as commercial roof decks in California at costs approaching US $0.45/kWh. But grid parity comparable with utility generation costs around $0.08/kWh remains a decade away for solar in most markets.

Subsidies are still the primary demand driver for new installations. Even where solar is far from grid parity, ongoing subsidies allow investors, businesses, and homeowners to earn positive internal rates of return (IRRs) from solar installations. These IRRs will boost demand, fueling further increases in scale and enabling the industry to continue cutting costs and innovating. This should drop future solar levelized cost of energy and further accelerate grid parity.

For more information about the report, click here.


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