Solar PV Grid Parity in Ohio?
How close are Ohio solar photovoltaic systems to "grid parity" (competitive with local electric power rates)? Cost examples from Ohio solar units would be helpful to move the industry in Ohio.
Below are excerpts on a recent report on grid parity from the World Resources Insitute May 2010 paper. View Full WRI Paper: Toward a Sunny Future? Global Integration in the Solar PV Industry - http://budurl.com/mercomtsun
Policymakers seem to face a trade-off when designing national trade and investment policies related to clean energy sectors. They have pledged to address climate change and accelerate the large-scale deployment of renewable energy technologies, which would benefit from increased global integration, but they are also tempted to nurture and protect domestic clean technology markets to create green jobs at home and ensure domestic political support for more ambitious climate policies.
Excerpts from the paper:
Government Support as Main Driver of Demand: Until the late 1990s, off-grid solar PV installations accounted for the majority of what was a relatively modest sized global market. This early importance of small-scale off-grid solar PV applications was a result of their ease of use in desolate areas with no or only very expensive alternative power supply options, such as diesel-fueled power generators or extensions of the public electricity grid. As such, off-grid solar PV applications were already fully cost competitive with alternate power supply options, especially on a lifetime cost comparison basis that includes the alternatives’ variable cost of (diesel) fuel.
Government Support as Main Driver of Demand: Until the late 1990s, off-grid solar PV installations accounted for the majority of what was a relatively modest sized global market. This early importance of small-scale off-grid solar PV applications was a result of their ease of use in desolate areas with no or only very expensive alternative power supply options, such as diesel-fueled power generators or extensions of the public electricity grid. As such, off-grid solar PV applications were already fully cost competitive with alternate power supply options, especially on a lifetime cost comparison basis that includes the alternatives’ variable cost of (diesel) fuel.
However, the point at which solar PV power becomes fully competitive with other sources of power—known as “grid parity”—has not yet been reached in any large power markets. Against this backdrop, the dramatic increase in grid-connected solar PV application installations in recent years seems surprising. This is
even more so as the rapid rise was not coincidental with similar declines in the price of solar PV applications over this period.
even more so as the rapid rise was not coincidental with similar declines in the price of solar PV applications over this period.
In addition, countries with relatively low solar radiation, such as Germany, have been able to develop large PV markets. These patterns illustrate that instead of price considerations, the main driver for the development of global demand for grid-connected PV systems was national or regional support policies
in four key markets: Germany, Spain, Japan, and the Unites States.
Cost Structure and Competitiveness of Solar PV Power: Although solar PV has experienced high industry learning rates and associated cost reductions in the past, it remains an expensive way to generate power. The overall cost of power generated from a solar PV system over its lifetime (levelized cost) still lingers between $0.15 to $0.40 per kilowatt hour, two to three times the level for other currently available large-scale grid-connected electricity sources. Industry analysts estimate that it is possible to further bring down the costs for solar systems by improving technology, expanding economies of scale, and streamlining production processes.
This projected reduction of upfront installation costs, which represent the lion’s share of levelized solar PV cost, in combination with rising world market prices for fossil fuels and carbon pricing would make solar PV–generated electricity commercially competitive in many regions of the world within the next 5 to 10
years.
Current Competitiveness of Solar Power: Although grid parity also depends on several external and regional factors, such as grid electricity prices, fossil fuel prices, or the amount of solar radiation, the most important determinant of future competitiveness will be the price of solar electricity itself and thus the total
lifecycle costs of solar PV installations. The total costs over a lifecycle of 20 to 30 years can be divided into fixed capital costs that occur as a one-off investment at the time of installation and variable costs that occur every year. Taken together and spread over the lifetime of a project, these make up the levelized costs.
Over the past decades, the levelized costs of grid-connected solar electricity dropped from over $2.00 per kilowatt hour in the 1970s to $0.15 to $0.40 per kilowatt hour in 2008, depending on the application and the geographic conditions. Even under a scenario where carbon pricing would increase the price of fossil fuels, the levelized cost of solar PV energy would still be among of the highest of all currently available energy technologies. Broadly speaking, the price for solar energy would have to further decline by 30 to 50 percent to around $0.10 per kilowatt hour in order to reach grid parity and be competitive with other
forms of grid-connected energy generation
The Road to Grid Parity: Constituting 75 percent of total expenses, it is clear that upfront capital costs are the major determinant of the price of solar PV power. The industry’s steep learning curve over the past two decades led to significant reductions in average project costs per installed megawatt, which in turn led to falling prices for solar PV generated electricity.
The nominal price decrease then slowed down somewhat during the rapid market expansion in the 2000s. The relative increase in US module prices after 2003 can largely be attributed to limited supply, as there were bottlenecks in polysilicon production and most modules were shipped to Europe at that time. Average costs for commercial systems declined from approximately $10.00 per installed megawatt in 1998 to $4.50 in 2009.
Looking forward, most industry experts estimate that solar PV can reach grid parity between 2012 and 2020 in most markets, if the existing potential to bring down total lifecycle costs further is fully exploited. In order to reach retail grid parity in many markets, analysts estimate that the cost for solar systems must fall from $4.50 to below $2.50 per installed watt. At that level, the cost of solar electricity will be comparable to the current level of the retail rate of electricity produced in combined cycle natural gas plants, which provide marginal generation capacity in many parts of the world.
While measures to level the playing field vis-à-vis fossil fuels, such as a price on carbon and an elimination of fossil-fuel subsidies, would still be needed, direct support mechanism such as feed-in-tariffs could be phased out at this point, Compared to the experiences over the past decade, falling module costs will likely contribute more to the overall drop in prices for solar PV installations than in the past.
in four key markets: Germany, Spain, Japan, and the Unites States.
Cost Structure and Competitiveness of Solar PV Power: Although solar PV has experienced high industry learning rates and associated cost reductions in the past, it remains an expensive way to generate power. The overall cost of power generated from a solar PV system over its lifetime (levelized cost) still lingers between $0.15 to $0.40 per kilowatt hour, two to three times the level for other currently available large-scale grid-connected electricity sources. Industry analysts estimate that it is possible to further bring down the costs for solar systems by improving technology, expanding economies of scale, and streamlining production processes.
This projected reduction of upfront installation costs, which represent the lion’s share of levelized solar PV cost, in combination with rising world market prices for fossil fuels and carbon pricing would make solar PV–generated electricity commercially competitive in many regions of the world within the next 5 to 10
years.
Current Competitiveness of Solar Power: Although grid parity also depends on several external and regional factors, such as grid electricity prices, fossil fuel prices, or the amount of solar radiation, the most important determinant of future competitiveness will be the price of solar electricity itself and thus the total
lifecycle costs of solar PV installations. The total costs over a lifecycle of 20 to 30 years can be divided into fixed capital costs that occur as a one-off investment at the time of installation and variable costs that occur every year. Taken together and spread over the lifetime of a project, these make up the levelized costs.
Over the past decades, the levelized costs of grid-connected solar electricity dropped from over $2.00 per kilowatt hour in the 1970s to $0.15 to $0.40 per kilowatt hour in 2008, depending on the application and the geographic conditions. Even under a scenario where carbon pricing would increase the price of fossil fuels, the levelized cost of solar PV energy would still be among of the highest of all currently available energy technologies. Broadly speaking, the price for solar energy would have to further decline by 30 to 50 percent to around $0.10 per kilowatt hour in order to reach grid parity and be competitive with other
forms of grid-connected energy generation
The Road to Grid Parity: Constituting 75 percent of total expenses, it is clear that upfront capital costs are the major determinant of the price of solar PV power. The industry’s steep learning curve over the past two decades led to significant reductions in average project costs per installed megawatt, which in turn led to falling prices for solar PV generated electricity.
The nominal price decrease then slowed down somewhat during the rapid market expansion in the 2000s. The relative increase in US module prices after 2003 can largely be attributed to limited supply, as there were bottlenecks in polysilicon production and most modules were shipped to Europe at that time. Average costs for commercial systems declined from approximately $10.00 per installed megawatt in 1998 to $4.50 in 2009.
Looking forward, most industry experts estimate that solar PV can reach grid parity between 2012 and 2020 in most markets, if the existing potential to bring down total lifecycle costs further is fully exploited. In order to reach retail grid parity in many markets, analysts estimate that the cost for solar systems must fall from $4.50 to below $2.50 per installed watt. At that level, the cost of solar electricity will be comparable to the current level of the retail rate of electricity produced in combined cycle natural gas plants, which provide marginal generation capacity in many parts of the world.
While measures to level the playing field vis-à-vis fossil fuels, such as a price on carbon and an elimination of fossil-fuel subsidies, would still be needed, direct support mechanism such as feed-in-tariffs could be phased out at this point, Compared to the experiences over the past decade, falling module costs will likely contribute more to the overall drop in prices for solar PV installations than in the past.
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Replies to This Discussion
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Permalink Reply by Amie Scarpitti on
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I didn't read the entire paper, but it's interesting that in the excerpts you provided there wasn't any mention of RPS's or the value that RECs bring in allowing people/businesses to finance solar energy projects. Ohio's solar benchmark's seem to be making quite an impact on the affordability for businesses and homes to install solar PV, and I feel that without these added incentives, the cost of PV is much farther away from reaching grid parity.
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Permalink Reply by William A. Spratley on
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Toledo is Ohio's Solar City as this morning's June 15 USA Today feature article documents. See video and article: Toledo Reinvents Itself at Solar-Power Innovator.
Bringing solar module costs down using thin-film PV emanating from world-class University of Toledo research and lowering balance of systems costs by training a skilled workforce at Owens Community College factor into Ohio's solar reaching grid parity.
Congratulations to Toledo from Green Energy Ohio for making solar Ohio-made! GEO is proud to have helped Toledo's efforts on the education side over the past decade. -
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Check out this grid-parity discussion below - Bill Spratley
U.S. states can reach grid parity by 2014, energy experts say
By Andrew Nusca | Jul 1, 2010 |
NEW YORK — Several U.S. states, even in the Northeast, can reach grid parity between 2014 and 2018, one energy expert said on Tuesday. Grid parity is the point at which alternative means of generating electricity are equal to or cheaper than grid power. “Grid parity is not that far away,” said Navigant managing director Lisa Frantzis. “It’s only about two rate cases away. It’s not 20 years out. It’s right around the corner, and a lot of these utilities are becoming more and more aware of that.” In a panel discussion at the seventh annual Renewable Energy Finance Forum–Wall Street at New York City’s Waldorf Astoria Hotel, cleantech experts discussed how renewable energy is viewed globally, how it impacts the greater energy mix and the driving forces behind it. Among the panelists was Frantzis, who said despite the hype, renewables are still a small part of the global market — roughly 12 percent worldwide — and just 6.2 percent of the total mix in the U.S. Reductions in production costs are driving some of the increase in market share for renewable energy, Frantzis said.“With the federal and state incentives in place, [renewables] are very competitive with existing technologies today,” she said… http://www.smartplanet.com/business/blog/smart-takes/us-states-can-... -
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Here's a new study that declares that solar may already be at "grid-parity" with nuclear power using examples in North Carolina. - Bill
Solar power costs less than nuclear, study finds
The analysis by researchers at Duke University is even more compelling when you consider that their data were based on exposures in North Carolina, which has less sunshine than many other states. Also, the researchers confined their comparison to electricity made with photovoltaic cells – which are dropping steadily in price but are still likely to remain a costlier generating method than some newer, utility-scale technologies. -
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