Beyond Subsidized Solar Power: The Path to Grid Parity
Editor’s Note: The is a guest contribution by Angiolo Laviziano, President and CEO of REC Solar Inc. This is the third post in a series from the CEO’s of major solar companies. The first post was by the SolarCity CEO, Lyndon Rive, and the second was by groSolar CEO Jeff Wolfe. You can follow the complete series here.
Two phrases that are often repeated in the solar industry are “Grid Parity” and “Cost Roadmap”. Grid parity is generally considered to be a key goal of the solar industry. Grid parity will be achieved in the U.S. when customers are motivated to buy solar because the investment has a sufficient return WITHOUT any subsidies from the federal or state government. At present, most people consider PV to be a financially acceptable investment only if federal, state and rebate incentives are applied.
Currently, the rebates and tax credits offered by the government improve the financial return of a solar project together with other factors, such as the solar electric system cost (lower is better for the return), sun exposure on site (higher is better) and the cost of electricity that the solar system is substituting (higher is better).
The cost of electricity is of particular importance: solar substitutes for electricity demand on the customer’s side of the meter, where it competes with the retail price of electricity. This is in contrast to wind power, which is generated on the utility side of the meter, and therefore competes with the much lower wholesale rate of electricity.
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