Solar Seeks Grid Parity
Panel prices only a part
There are two big ideas leading the way toward a more competitive solar market: lower installed cost for systems, obviously, but also the recognition of new business models that encourage utilities to use more of the resource.
That’s the takeaways from a recent discussion I had with a solar pro. I spoke to Mike Grunow, Trina Solar's marketing director, who represents the Chinese manufacturer of photovoltaic panels and systemms.
State renewable portfolio standards are driving much of the market demand, but that tells only part of the big-picture story.
For large multi-megawatt ground-mount systems over 10 megawatts, prices are now competitive is many markets. In sunny areas, it’s the greater resource. In less hospitable climates, it’s competitive pricing after accounting for tax incentives.
“We’re seeing turnkey systems fall precipitously. Several years ago turnkey systems were $4 to $5 a watt and today we’re seeing them in the $2.25 to $3.50 per watt range,” Grunow said.
“This is leading to power purchase agreement bids from developers in the sub-10 cent (per kilowatt-hour) range in the high radiation areas. That’s project economics that can compete head-to-head with natural gas.”
Another driver on the recent rush toward solar is the rush to cash in on the federal cash grants under the 1603 programs. That led to a boom cycle to meet the December 31 deadline. One downside is that 2012 projects may have been accelerated to qualify for the grants. But those developers may miss out on the project prices that are continuing to trend downward this year.
But one solar market driver that is gaining favor is the large commercial rooftop programs, like the one Southern California Edison initiated three years ago. SCE committed to 250 megawatts of rooftop solar on commercial sites.
“It’s important to utilities to know the difference between grid parity for large systems of 50 megawatts, and there is the other opportunity where solar can compete is large commercial rooftops,” Grunow said.
But a rooftop system also means the expansion of distributed systems that could impact a utility’s revenue stream.
“You’re beginning to see retail grid parity in large portions of New England and the Northeast and further down the Eastern Seaboard when you have significant electricity prices and congestion rates,” he said, as more projects are able to compete by offering prices in the high single digits.
“Smart utilities are getting out in front as they’re deciding they’re going to own the solar on the large rooftops as opposed to giving up that revenue for the next 20 years,” he said.
Grunow didn’t want to discuss the trade dispute that is looming between some American solar manufacturers and the Chinese, preferring to stay upbeat about growth prospects in the United States.
“We’ve invested heavily for the past three or four years in growing this market and we have high hopes for the future demand within the U.S. market,” he said.
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Comments
$2.25 to $3.50/watt PV not equal to grid parity with natural gas
The article quotes Mike Grunow of Trina claiming that commercial systems with $2.25 to $3.50 per watt price tags and 10 cent/KWh power cost yielding grid parity with natural gas generation. Maybe in certain markets with carbon taxes, but I kind of doubt it. ERCOT is not the cheapest market and is dominated by natural gas. It is rare to see $100/MWh pricing, although it occasionally happens for short periods. From October through April the round-the-clock numbers are sub-$30/MWh. From May through September the round-the-clock numbers are typically in the $50 to $60/MWh range with the 5 x 16 numbers in the ranging from $38 in early and late parts of the hot season to $80 for the hottest months. With the present pricing of fuel gas, a modern CCGT with a dispatch factor of 42% (May through September operation) will have an all in power cost of about $42/MWh if one were to limit the life to 20 years.