ORIGINAL REPORTING: When And Where Wind And Solar Will Pull Even In Price

The factors driving wind and solar toward grid parity; A new analysis shows when, where, and why renewables can be cost-competitive

Herman K. Trabish, December 10, 2015 (Utility Dive)

Buoyed by tax incentives, wind and solar energy are growing rapidly in the parts of the U.S. where the resources are strong. Three other factors are also critical for renewable resources to reach grid parity — the point at which they are cost-competitive with other fuels, according to Journey to Grid Parity from Deloitte. Without solar’s 30% federal investment tax credit (ITC) and wind’s $0.023 per kWh federal production tax credit (PTC), some parts of the U.S. are unlikely to see grid parity for renewables within the next 10 to 15 years. But reaching parity will also depend on natural gas prices, wholesale power market rebalancing, and ongoing improvements in renewable technology.

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If a region has a high wholesale power price, wind and solar developers who chose sites where the technologies can be built at competitive costs and produce with competitive capacity factors can reach parity relatively early even without the federal incentives. But finding those good sites and building at lower costs will be easier for onshore wind developers than utility-scale solar developers. This means wind will get to parity sooner than solar. Another broad generalization is that many U.S. regions where wind and solar resources are most potent have lower wholesale electricity prices. That delays grid parity in some of the most promising regions for renewable development. Renewables prices are likely to become competitive in certain places at various points along the natural gas price curve… click here for more

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