"Grid Parity" – What Does It Mean and When Will It Happen?

At the Renewable Energy Finance Forum you’ll hear largely about the wins, where developers have taken the most mature clean energy technologies, addressed the many financial risk factors, and presented a can’t-lose package to a bank or other funding entity. That means that you’ll hear about solar (photovoltaics) and wind FAR more often than still-nascent technologies like geothermal, hydro, concentrating solar power, etc.

That’s understandable, since if people don’t make money bringing clean energy along, it’s not going to happen. And no one wants to take unnecessary risks, especially in this climate.

The point of “grid parity,” i.e., the point that an incremental megawatt of solar is the exact same cost as an incremental megawatt of gas or coal, is projected to occur somewhere between early 2014 and late 2018. This is based on the fact that although natural gas prices are low and are expected to remain so, the cost of PV is falling steadily.

When this happens, of course, one should expect an explosion of solar development. Even the utilities in the South (great progressive social thinkers that they are) who have routinely said, “Suh, if clean energy means mah costs go up one penny pah kilowatt-hour, we’re not intahrested,” will be buying and selling clean without a problem.