Electricity prices and PV grid parity

776px-2013_Electricity PricesI found an interesting post that looks at the relationship between PV grid parity and electricity prices in the US.  The first thing to say is its complicated.   Whether a domestic PV system is grid parity with what comes up the garden path depends on a number of factors.  These include;

  • Orientation.
  • Solar insolation (how much light the place gets in a year).
  • Tax incentives/Feed in tariff.
  • How the user uses their solar electricity and how much they get paid if it goes to the grid.
  • Increasingly it will depend on energy storage, storing it and using it at night.  This is going to make increasing sense as the price of batteries falls.
  • Electricity prices.

The above post bases its economics on an installed cost of $3.50/W with the price installed falling towards $1.50 at some unspecified point.  The good news is that in crude terms quite a few places in the US are at grid parity now.  There is an overlap between the price per watt you would have bought your power in advance over the lifetime of your PV system (25 years) and the local electricity prices.  In some places the cost of power is more expensive than the PV power for 25 years.  However this relies on either getting a good export rate or using most of it yourself (difficult).  Lowering the costs gradually to $1.50/W installed cost is shown at the bottom of the post given in the link above.  At this price the whole of the US pretty much is at grid parity and for most people it will be far cheaper to buy the electricity upfront as a PV system on their roof.  (Its better than this now since the data is 2013 data).

What struck me though was the enormous range of electricity prices across the US.  Far more than here in the UK.  The map above shows its more than 5 fold.  Some lucky people are paying as little as 3 cents a watt in a limited part of Washington state.  In places such as California/Vermont/New Hampshire/Alaska  more than 25 cents a watt.  California I can understand with long running power supply problems.  Some of the other differences I cannot.  Its not based on competition.  The link above gives another link to the openei.org website where the above map came from.  This has a state by state guide to the number of utilities.  Washington has quite a low number whereas the others mentioned have quite a high number.  This regional variation is far higher than the UK which although the figures are not easy to get is about 20% max.  Any Americans got any ideas why the big difference I would be interested to know.  Meanwhile in some of these states it gives PV a huge opening.

Neil

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