SOLAR TO REACH GRID PARITY BY 2013 IN UK

Cost of solar energy will match fossil fuels by 2013, claims Solarcentury; Falling production costs for solar panels and increasing nonrenewables electricity costs have brought parity closer
Adam Vaughan, 12 May 2009 (UK Guardian)

SUMMARY
2020 – A vision for UK PV; An up to date accurate analysis on the investment case for solar photovoltaics (PV) in the UK, from the UK Photovoltaic Manufacturers Association, says the UK has more than enough solar PV potential to meet the nation's entire electricity need but suggests that a reasonable goal would be for solar PV to provide 140 terawatt-hours (TWhs) of Britain’s 400 terawatt-hour annual power demand. The cost would at present be £4 per peak watt (Wp) installed but will, with economies of scale and the gradual shift to thin film, drop to below £2 per peak watt installed by 2020.

This means, according to the report, that solar PV’s levelized cost per watt hour, at £80-£230 per megawatt-hour (MWH) by 2020, will very soon be cost competitive with other sources of electricity generation.

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The analysis concludes that UK solar PV will achieve grid parity around 2013 for residential customers and around 2018 for commercial installations.

Large installations in California and Spain have already reportedly achieved grid parity.

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COMMENTARY
These are surprising, controversial and self-serving conclusions for the Association to report.

Most other analyses see solar PV reaching grid parity, meaning a parity or equality in the price of solar PV-generated electricity and the price of electricity generated by coal, natural gas, nuclear and other sources, sometime between 2015 and 2020.

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One of the less evident keys to the Association’s prediction is the anticipation of a drastically falling price for silicon, a material that is a large part of the fiber of solar panels. New Energy Finance recently predicted a 31.5% price drop in the price of silicon in 2009.

Another important factor is that the UK government will introduce a feed-in tariff (FiT) in 2010. The UK FiT is expected to drive demand and contribute to the creation of economies of scale just as other FiTs have done in Germany, Spain, Italy and other European nations.

When parity will be achieved is a controversial question. (click thru to the 2008 Global Green Global Solar Report Card)

Although the current economic downturn has contributed to a sudden fall-off in all energy prices from what they were in the summer of 2008, most analysts believe fossil fuel-generated energy prices will soon climb again. Those rising prices will be driven by (1) domestic consumer demand, (2) competition for energy supplies due to the voracious demand coming from the BRIC countries (Brazil, Russia, India and China) and other emerging economies, and (3) the peaking of affordable oil sources.

Even those who see a 2013 grid parity as unrealistic agree that those 3 forces are gathering and solar’s moment could come as early as 2016 or 2018 as easily as 2020.

The UK is lookiing to improve its grade. (click thru to the 2008 Global Green Global Solar Report Card)

QUOTES
- From the report: “Generally there is a good and ever improving investment case for solar PV, particularly at the residential level; PV is an investment grade technology due to its long life, reliability and predictability, and is seen as a valuable and low risk asset class for investors of many different types.”
- Derry Newman, CEO, Solarcentury UK: "When you reach grid parity, you have a watershed moment where the perceptions of investors and consumers shift. People have been programmed to believe solar is expensive and takes a hundred years to pay back, but when parity arrives people realise it takes 8-10 years to payback, and they can then be making money out of it."

click thru to the 2008 Global Green Global Solar Report Card

- Jeremy Leggett, executive chairman, Solarcentury UK: "The feed-in tariff that the government has said it will bring in from April 2010 is vital. A burst of premium-pricing for solar energy, of the kind now on offer in 18 European countries, will stimulate a very fast-growing market."
- Ray Noble, solar PV specialist, Renewable Energy Association: "The predicted grid parity by 2013 could be possible if all of the predictions, both in terms of grid electricity prices increasing and reductions in the cost of solar PV, come through. However that's a big if – any slight changes in the pricing can add further years to this date."
- Chris Goodall, Green party parliamentary candidate/author, Ten Technologies to Save the Planet: "This projection of residential grid parity depends crucially on continually increasing prices of conventional electricity, but I just don't see any evidence that residential electricity will cost 17-18p a kWh in 2013. The 'underlying' retail price of electricity at the moment is no more than 11p per kWh…"