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Study: grid parity closer than usually estimated

A new study claims that previous calculations have overestimated the cost of solar, and that PV has already reached grid parity.

Large SolarWorld residential solar system installation. Photo Credit: SolarWorld

A group of researchers at Queen’s University in Ontario, Canada, have shown that PV systems can make electricity at the same price as consumers pay for conventional energy from utilities. And the declining price of solar panels is not the only reason.

The study, “A Review of Solar Photovoltaic Levelized Cost of Electricity,” reviewed past PV cost estimates and found that calculations varied significantly.

The relative price of energy generation technologies is compared using the levelized cost of electricity (LCOE). When considering grid parity – which some people argue is far away – an accurate LCOE calculation is crucial.

But, the report states, there is a “lack of clarity of reporting assumptions, justifications showing understanding of the assumptions and degree of completeness, which produces widely varying results.”

Specifically, the study found that the most important factors in the calculation were system costs, financing, the lifetime of the solar panels and the loan term. For example, if calculations assume a PV system’s lifetime is shorter than it really is, then the LCOE value will be higher than the relative true cost.

Further, “the price of solar equipment has been dropping, so you’d think that the older papers would have higher cost estimates,” says Joshua Pearce, an associate professor of electrical engineering and materials science at Michigan Technological University who co-authored the study. “That’s not necessarily the case.”

Thus reporting inaccurate LCOE values can seriously misguide policy initiatives and further the misconception that PV is extremely expensive in the long term.

The study says that in reality “PV has already obtained grid parity in specific locations and as installed costs continue to decline, grid electricity prices continue to escalate, and industry experience increases, PV will become an increasingly economically advantageous source of electricity over expanding geographical regions.”

The study was coauthored by Kadra Branker and Michael Pathak of Queen’s University and was published in the December 2011 edition of Renewable and Sustainable Energy Reviews. Read the full study here.


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