Grid parity
Encyclopedia
Grid parity is the point at which alternative means of generating electricity is at least as cheap as grid power
Mains electricity
Mains is the general-purpose alternating current electric power supply. In the US, electric power is referred to by several names including household power, household electricity, powerline, domestic power, wall power, line power, AC power, city power, street power, and grid power...

.

For solar energy, it is achieved first in areas with abundant sun and high costs for electricity such as in California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...

, Hawaii
Hawaii
Hawaii is the newest of the 50 U.S. states , and is the only U.S. state made up entirely of islands. It is the northernmost island group in Polynesia, occupying most of an archipelago in the central Pacific Ocean, southwest of the continental United States, southeast of Japan, and northeast of...

, Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...

 and Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

. Many solar power
Solar power
Solar energy, radiant light and heat from the sun, has been harnessed by humans since ancient times using a range of ever-evolving technologies. Solar radiation, along with secondary solar-powered resources such as wind and wave power, hydroelectricity and biomass, account for most of the available...

 advocates predict that grid parity will occur in the near future. In July 2009, a blog surmised that solar would possibly be able to cost-effectively compete with fossil fuels "within a matter of months," due to falling solar module prices. In 2010 the U.S. Energy Information Administration
Energy Information Administration
The U.S. Energy Information Administration is the statistical and analytical agency within the U.S. Department of Energy. EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and...

 predicted that the total levelized cost of photovoltaics would be 21¢(US)/kWh in 2016. Solar photovoltaic power generation will be “grid competitive in parts of Europe as early as 2013, and across key European markets by the end of the decade”, according to a 2011 industry association report.

Grid parity has been reached in Hawaii
Hawaii
Hawaii is the newest of the 50 U.S. states , and is the only U.S. state made up entirely of islands. It is the northernmost island group in Polynesia, occupying most of an archipelago in the central Pacific Ocean, southwest of the continental United States, southeast of Japan, and northeast of...

 and other islands that otherwise use fossil fuel
Fossil fuel
Fossil fuels are fuels formed by natural processes such as anaerobic decomposition of buried dead organisms. The age of the organisms and their resulting fossil fuels is typically millions of years, and sometimes exceeds 650 million years...

 (diesel fuel) to produce electricity. In 2007, President George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....

 set 2015 as the target date for grid parity in the USA.

General Electric
General Electric
General Electric Company , or GE, is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States...

's Chief Engineer 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 in the OECD, as long as grid electricity prices do not decrease through 2010.

In a 2007 Department of Energy report, the fully loaded cost
Cost
In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this...

 (not price
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...

) of solar electricity was $0.25/kWh or less in most of the OECD countries. By late 2011, the fully loaded cost was projected to likely fall below $0.15/kWh for most of the OECD and reach $0.10/kWh in sunnier regions. These cost levels are driving some emerging trends:
  1. vertical integration
    Vertical integration
    In microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or service, and the products combine to...

     of the supply chain
    Supply chain
    A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...

    ;
  2. origination of power purchase agreement
    Power Purchase Agreement
    Power Purchase Agreements are contracts between two parties, one who generates electricity for the purpose of sale and one who is looking to purchase electricity . There are various forms of Power Purchase Agreements; these are differentiated by the source of energy harnessed...

    s (PPAs) by solar power companies;

Concentrating solar power

In 2008 Abengoa Solar announced the award of two R&D projects in the field of Concentrating Solar Power (CSP) by the US Department of Energy that total over $14 million. The goal of the DOE R&D program, working in collaboration with partners such as Abengoa Solar, is to develop CSP technologies that are competitive with conventional energy sources (grid parity) by 2015. Concentrating photovoltaics (CPV) could reach grid parity in 2011.
Other companies predict an earlier date. Oerlikon Solar
Oerlikon Solar
Oerlikon Solar is a manufacturer of thin-film silicon solar modules.Oerlikon Solar has 12 factories in production in seven countries, almost 3 million modules produced and 450 MW of installed capacity worldwide on the fast-growing thin film silicon PV market.Oerlikon Solar has Micromorph patents...

 has said its facilities will achieve grid parity by 2010 in connection with the opening of the company’s new fully automated thin-film pilot line at the Solar Valley
Solar Valley
Solar Valley may refer to:* Solar Valley , industrial area in China* Solar Valley , industrial area in Germany* Trübbach a village in Switzerland...

 in Trübbach
Trubbach
Trübbach is a village in the municipality of Wartau in the Wahlkreis of Werdenberg in the canton of St. Gallen, Switzerland. It's on the western bank of the Rhine River, near the Liechtenstein border, which leads to Balzers. Nearby towns include Sargans and Sevelen...

, Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

.

One company states (in 2011) that concentrating solar power costs 12¢(US)/kwh to produce in Australia, and expects this to drop to 6¢(US)/kwh by 2015 due to improvements in technology and reductions in equipment manufacturing costs.

Greentech Media
Greentech Media
Greentech Media is a startup media company based in Massachusetts, United States, that generates research and news on the green technology market....

 predicts that LCOE of CSP and PV power will lower to $0.07 - $0.12/kWh by 2020 in California.

Photovoltaic Power

In the case of Photovoltaic power systems, which can be used both by the power generation companies and the consumers, grid parity has multiple phases, depending on the electricity sources to be compared.
Japan's NEDO
New Energy and Industrial Technology Development Organization
The New Energy and Industrial Technology Development Organization , also known as NEDO, is Japan's largest public management organization promoting research and development as well as deployment of industrial, energy and environmental technologies. In 2003, NEDO was reorganized as an Independent...

 defines the grid parity in three phases:
  • 1st phase grid parity: residential grid-connected PV systems
  • 2nd phase grid parity: industrial/transport/commercial sectors
  • 3rd phase grid parity: general power generation


First Solar
First Solar
First Solar, Inc. is an American manufacturer of thin film photovoltaic modules, or solar panels, and a provider to PV power plants of supporting services that include finance, construction, maintenance and end-of-life panel recycling...

 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. By 2014, it expects to drive down cost per watt to make solar modules to fall to between 52 and 63 cents. The biggest driver of the lower costs is better efficiency. It is working to commercialize new manufacturing techniques that will increase the efficiency of multicrystalline solar cells. It is doing this with three methods: “Honeycomb” texturing the surface of a cell to increase its surface area and capture more sun; grooving the interconnect wires to allow sunlight to bounce around the module and mitigate the problems of bus-bar shading; and also making the metalization lines — which export the energy from the cell — smaller, cheaper and more efficient. By doing all this with manufacturing techniques that can be integrated into existing manufacturing lines, 1366 hopes to manufacture an 18% efficient multicrystalline cell in high volume and produce solar that is competitive with coal by 2013.

Abound Solar
Abound Solar
Abound Solar is a manufacturer of CdTe thin-film photovoltaic modules. At its production facility in Longmont, Colorado, Abound is using a proprietary semiconductor deposition process utilizing CdTe to produce reliable, low-cost solar modules designed for commercial- and utility-scale installations...

 (formerly known as AVA Solar), is commercializing a method for manufacturing low-cost, high-efficiency CdTe solar panels.


China's government has announced support for its photovoltaic companies. Two companies, Yingli Green Energy and SDIC Huajing Power, have submitted a bid to build a 10-MW solar power plant to provide electricity to the national grid at a price of RMB 0.69 per kWh or US $0.10 per kWh. At that price, solar energy will be just about as cheap as coal electricity in China.

In September 2011, in Australia the solar power generated by photovoltaic cells produces electricity for the same price that is charged by the electricity grid, making Australia amongst the first countries to achieve Grid Parity. However this claim is yet to be independently verified and includes network distribution costs.

The European Photovoltaic Industry Association
European Photovoltaic Industry Association
The European Photovoltaic Industry Association is the world’s largest solar photovoltaic industry association, representing around 95 percent of the European photovoltaic industry and 80 percent of the worldwide PV industry...

(EPIA) defines the moment at which the value of PV electricity equals the cost of traditional grid power as dynamic grid parity. EPIA expects that PV power achieves this target in many of the European countries by 2020, with costs declining to about half of those of 2010.

Wind power

Grid parity also applies to wind power where it varies according to wind quality and existing distribution infrastructure. ExxonMobil predicts wind power real cost will approach parity with natural gas and coal without carbon sequestration and be cheaper than natural gas and coal with carbon sequestration by 2025.

See also

  • Cost of electricity by source
    Cost of electricity by source
    The cost of electricity generated by different sources measures the cost of generating electricity including initial capital, return on investment, as well as the costs of continuous operation, fuel, and maintenance...

  • Feed-in tariff
    Feed-in Tariff
    A feed-in tariff is a policy mechanism designed to accelerate investment in renewable energy technologies. It achieves this by offering long-term contracts to renewable energy producers, typically based on the cost of generation of each technology...

  • Microinverter
  • Net metering
    Net metering
    Net metering is an electricity policy for consumers who own renewable energy facilities or V2G electric vehicles. "Net", in this context, is used in the sense of meaning "what remains after deductions" — in this case, the deduction of any energy outflows from metered energy inflows...

  • Ontrario Green Energy Act, 2009
  • Photovoltaics
    Photovoltaics
    Photovoltaics is a method of generating electrical power by converting solar radiation into direct current electricity using semiconductors that exhibit the photovoltaic effect. Photovoltaic power generation employs solar panels composed of a number of solar cells containing a photovoltaic material...

  • Solar America Initiative

External links

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