Grid Parity Unleashes Another Solar Surge Globally

The long-awaited grid parity had arrived in the last couple of years in multiple places such as India where both solar and wind prices are now below that of fossil fuel power prices. This is not multiplying to other places and situations as the prices of solar technology continue to trend lower and lower each year while the costs of fossil fuel continue to increase.

This trend is leading to subsidy-free solar projects being built at a rapid pace. Europe which was the initial home and driver of solar energy in the early parts of the decade is again returning to prominence as the key market with large projects being built at prices which are lower than the wholesale electricity prices being seen in the European markets. Spain is leading the surge with annual solar installations expected to be 4 GW this year which is a massive growth from the around 300 MW installed in 2018. Spain had seen a huge solar boom in 2010-2012 driven by high feed-in tariffs leading to a massive surge. This was similar to what was seen in Germany, Italy and Czech ultimately leading to the massive solar crash in 2012, which drove solar panel prices lower making China and USA as huge new markets.

Also, read Solar plus Storage Becomes Hot In Australia

Now, Europe is seeing fast growth in solar energy, as not only solar but solar plus storage is also becoming cheaper than the grid prices. While Germany is leading the solar plus storage installations in homes, thanks to high retail electricity tariffs and incentives for self-consumption, other places such as Italy and Spain are also seeing rapid growth as their high solar radiation makes solar plus storage even more viable than Germany.

Just like solar energy, the solar plus storage technology is not going to see “grid parity” at one particular date or region but will be spread out over many years, depending upon the geography, tariffs, etc. Solar plus storage could reach the economic tipping point where it is cheaper than buying power from the grid. It is expected that this will happen in Italy and Germany in 2020 and 2021 followed by France and the UK in 2024.

Fossil fuel power plants face severe disruption once gain from renewable energy sources since distributed energy systems could lead to huge demand destruction from central power plants, as consumers begin to generate power themselves instead of buying it from the grid. What is even more alarming is that the sharp cost decreases in solar energy and storage technology will continue in the future, increasing the gap between fossil fuel and renewable energy costs.