A recent report by Ernst & Young shows yet again how dramatically solar PV moduleprices are dropping. The report, which focuses on the UK solar market,illustrates the continued downward price pressure on panels due to asteady ramp-up in global manufacturing capacity. By 2013, the averageselling price of a solar module will be down around $1 a watt, from$1.50 today.
The Guardian writes: “this suggests that falling PV panel prices and rising fossil fuel prices could together make large-scale solar installations cost-competitive without government support within a decade.”
However, it’s important to remember that these are simply moduleprices — the actual cost of solar electricity is determined by the cost of other equipment, construction and installation, and permitting. Lowmodule prices do not in themselves bring grid parity.
But what exactly does grid parity mean? A must-read Greentech Media piece by Shayle Kann points out that the term actually means different things in different markets:
In my opinion, there will be two achievements (bothoccurring over an extended period of time across various locations)that will make solar mainstream. For wholesale generation, it will bethe point at which large volumes of solar become attractive toutilities even accounting for dispatchability. This could achieved either through the competitiveness of solar plus energy storage, or by making solar so cheap that supplementing solar generation with natural gas or another peaking resource beats the peaking resource alone.
For retail generation, the difference will be made when consumerscan see significant cost savings from a PV installation that areassured. In essence, the droves of new solar customers will be drivenby cost savings, not cost parity.
The bottom line is that the solar industry is thriving even in ourcomplicated, semi-parity world. Over time, prices will continue to fall and incentives will become increasingly unnecessary. In the meantime, let’s see grid parity for what it is: an attractive idea that willjust be one among many factors enabling the solar revolution.
— Tyce Herrman and Stephen Lacey