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Reconsidering solar grid parity


  • Yang, Chi-Jen


Grid parity-reducing the cost of solar energy to be competitive with conventional grid-supplied electricity-has long been hailed as the tipping point for solar dominance in the energy mix. Such expectations are likely to be overly optimistic. A realistic examination of grid parity suggests that the cost-effectiveness of distributed photovoltaic (PV) systems may be further away than many are hoping for. Furthermore, cost-effectiveness may not guarantee commercial competitiveness. Solar hot water technology is currently far more cost-effective than photovoltaic technology and has already reached grid parity in many places. Nevertheless, the market penetration of solar water heaters remains limited for reasons including unfamiliarity with the technologies and high upfront costs. These same barriers will likely hinder the adoption of distributed solar photovoltaic systems as well. The rapid growth in PV deployment in recent years is largely policy-driven and such rapid growth would not be sustainable unless governments continue to expand financial incentives and policy mandates, as well as address regulatory and market barriers.

Suggested Citation

  • Yang, Chi-Jen, 2010. "Reconsidering solar grid parity," Energy Policy, Elsevier, vol. 38(7), pages 3270-3273, July.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:7:p:3270-3273

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    Cited by:

    1. Palmer, J. & Sorda, G. & Madlener, R., 2015. "Modeling the diffusion of residential photovoltaic systems in Italy: An agent-based simulation," Technological Forecasting and Social Change, Elsevier, vol. 99(C), pages 106-131.
    2. Munoz, L.A. Hurtado & Huijben, J.C.C.M. & Verhees, B. & Verbong, G.P.J., 2014. "The power of grid parity: A discursive approach," Technological Forecasting and Social Change, Elsevier, vol. 87(C), pages 179-190.
    3. Vimpari, Jussi & Junnila, Seppo, 2017. "Evaluating decentralized energy investments: Spatial value of on-site PV electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 1217-1222.
    4. repec:eee:enepol:v:106:y:2017:i:c:p:445-456 is not listed on IDEAS
    5. repec:eee:energy:v:130:y:2017:i:c:p:55-75 is not listed on IDEAS
    6. repec:eee:rensus:v:109:y:2019:i:c:p:213-229 is not listed on IDEAS
    7. Abeer Pervaiz & Christian Lechner, 2019. "Understanding the emergence of an industry through the lens of Social Movements and Entrepreneurial Communities," BEMPS - Bozen Economics & Management Paper Series BEMPS58, Faculty of Economics and Management at the Free University of Bozen.
    8. Anton Finenko & Kamal Soundararajan, 2016. "Flexible solar photovoltaic deployments for Singapore: an economic assessment," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 39(3/4), pages 157-180.
    9. Biondi, Tommaso & Moretto, Michele, 2015. "Solar Grid Parity dynamics in Italy: A real option approach," Energy, Elsevier, vol. 80(C), pages 293-302.
    10. Orioli, Aldo & Di Gangi, Alessandra, 2015. "The recent change in the Italian policies for photovoltaics: Effects on the payback period and levelized cost of electricity of grid-connected photovoltaic systems installed in urban contexts," Energy, Elsevier, vol. 93(P2), pages 1989-2005.
    11. Mundada, Aishwarya S. & Shah, Kunal K. & Pearce, J.M., 2016. "Levelized cost of electricity for solar photovoltaic, battery and cogen hybrid systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 692-703.
    12. Hernández-Moro, J. & Martínez-Duart, J.M., 2013. "Analytical model for solar PV and CSP electricity costs: Present LCOE values and their future evolution," Renewable and Sustainable Energy Reviews, Elsevier, vol. 20(C), pages 119-132.
    13. repec:eee:renene:v:125:y:2018:i:c:p:783-795 is not listed on IDEAS
    14. Obi, Manasseh & Bass, Robert, 2016. "Trends and challenges of grid-connected photovoltaic systems – A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1082-1094.
    15. Karaveli, Abdullah Bugrahan & Soytas, Ugur & Akinoglu, Bulent G., 2015. "Comparison of large scale solar PV (photovoltaic) and nuclear power plant investments in an emerging market," Energy, Elsevier, vol. 84(C), pages 656-665.
    16. Bazilian, Morgan & Onyeji, Ijeoma & Liebreich, Michael & MacGill, Ian & Chase, Jennifer & Shah, Jigar & Gielen, Dolf & Arent, Doug & Landfear, Doug & Zhengrong, Shi, 2013. "Re-considering the economics of photovoltaic power," Renewable Energy, Elsevier, vol. 53(C), pages 329-338.
    17. Krupa, Joel, 2012. "Identifying barriers to aboriginal renewable energy deployment in Canada," Energy Policy, Elsevier, vol. 42(C), pages 710-714.
    18. Branker, K. & Pathak, M.J.M. & Pearce, J.M., 2011. "A review of solar photovoltaic levelized cost of electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4470-4482.
    19. Gustavo Cáceres & Shahriyar Nasirov & Huili Zhang & Gerardo Araya-Letelier, 2014. "Residential Solar PV Planning in Santiago, Chile: Incorporating the PM10 Parameter," Sustainability, MDPI, Open Access Journal, vol. 7(1), pages 1-19, December.
    20. Ciabattoni, Lucio & Grisostomi, Massimo & Ippoliti, Gianluca & Longhi, Sauro, 2014. "Fuzzy logic home energy consumption modeling for residential photovoltaic plant sizing in the new Italian scenario," Energy, Elsevier, vol. 74(C), pages 359-367.
    21. Mircea SAVEANU & Ion IGNAT, 2014. "Solar Power Plants In The Eu. An Environmentally-Friendly Engine For The European Economies," EURINT, Centre for European Studies, Alexandru Ioan Cuza University, vol. 1, pages 209-218.
    22. Kar, Sanjay Kumar & Sharma, Atul & Roy, Biswajit, 2016. "Solar energy market developments in India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 121-133.
    23. repec:gam:jsusta:v:10:y:2018:i:11:p:4045-:d:180611 is not listed on IDEAS
    24. repec:eee:renene:v:116:y:2018:i:pa:p:384-401 is not listed on IDEAS
    25. Jägemann, Cosima & Hagspiel, Simeon & Lindenberger, Dietmar, 2013. "The Economic Inefficiency of Grid Parity: The Case of German Photovoltaics," EWI Working Papers 2013-19, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).


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