Balance of Power, Columns, Energy, Environment, Health, Jobs, Lifestyle

The implications of solar power reaching grid parity

As many of you know, I am the CEO of Lumicity, a renewable energy development company, focusing on solar, wind and biomass energy. I am a director of a wave energy company, Aquamarine Power. I previously worked with Shell, where I was exposed to the oil and gas sectors and set up a solar panel manufacturing company, and prior to that was with Citigroup where I was exposed to coal, integrated coal gasification and natural gas powered projects. As such I have had a pretty good overview of conventional and renewable energy markets.

What is happening with solar power at the moment is quite astounding.

There are now a number of large scale solar projects that are being developed in Spain and Italy that I am aware of aim to be built without a penny of government support. This is a milestone in history and will have far reaching implications. Subsidy free renewables has been the holy grail for the renewables sector since its inception. While we can argue that conventional fuels get 10 to 37 times more government support than alternative energy, at the end of the day the general public is not aware of that inconvenient truth.

These solar projects are a beachhead as strategically important to the world as Omaha Beach was to the D-Day landings and the outcome of the Second World War. They allow solar developers, manufacturers and financiers to develop projects without fear of sudden changes in government support mechanisms that will make their projects financially unviable. They allow companies to purchase power from solar projects without fear of inflation and energy price rises. They allow governments to rethink their policies towards oil producing nations. They allow citizens access to cheap, clean energy.

Spain and Italy have very high solar irradiation levels and relatively high electricity prices. They are not normal markets and not all projects will work without support, even there. Other markets will still take years before solar power can reach grid parity. But they represent the future that has already arrived today.

That is cause for celebration.



2 thoughts on “The implications of solar power reaching grid parity

  1. Hi Tristan,
    this is a great milestone indeed! And prices are still falling.

    In Germany we are not quite at grid parity at wholesale level. But first large projects are appearing that work on the basis of own consumption, i.e. compared with commercial retail prices. An example:
    90% of the solar electricity is to be used on site, only the occasional peak will be fed into the grid. About 45% of the energy consumption of the supermarkets can be supplied directly by the PV installation on the roof.

    Another coming shift is, I believe, the provision of heat using PV instead of solar thermal collectors. With a heat pump with a Coefficient of Performance of 3 it can be cheaper today to use PV than solar thermal to generate warm water and space heating. And the heat generated is cheaper than the fuel cost of heating oil. This also allows PV electricity to be stored in a buffer tank in the form of hot water.

    So PV2.0 (PV without Feed-in Tariff) is on its way. PV3.0 (PV to heat) will follow soon.

    Interesting times!

    best regards

    P.S.: in 1Q12 I have installed a 55 kWp PV installation at 1400 Euro/kWp, and could do it even cheaper today given similar ideal circumstances.

    Posted by Jochen Marwede | July 5, 2012, 3:37 pm

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