Grid Parity Revisited


Not too long ago, many conversations about the solar market revolved around grid parity and our ongoing pursuit of it.

Then, the Solyndra scandal stole solar headlines and attention, putting much of the grid-parity quest discussion on the sidelines (even though the topic, by its nature, is actually intertwined with any solar story – including the Solyndra one).

At the Solar Power International (SPI) convention last month in Dallas, we all learned that SolarWorld and its Coalition for American Solar Manufacturing partners had filed an anti-dumping complaint and a countervailing-duty petition against China. This story quickly became the hot topic at the conference.

But in the meantime, where did we leave off in that grid-parity quest? What is happening with key market incentives? What does all this mean for the industry? Insights – and more questions – came in the form of some compelling and often candid observations from executives who spoke at an SPI session on Oct. 19.

The program, titled ‘Impact of Reduced Incentives and Grid Parity on Market Dynamics,’ highlighted the evolving role of solar incentives, as well as challenges faced by many utilities in integrated solar energy resources to meet mandates and keep their cost structures properly aligned.

Craig Stevens, president of market research firm Solarbuzz, pointed to declining feed-in-tariff (FIT) rates in many European countries as the trigger of enormous market changes.

‘Now we're going through the process of going beyond the FIT,’ agreed Murray Cameron, chief operating officer at Germany-based integrator Phoenix Solar. This development should be welcomed, he added, as it demonstrates industry growth and proper FIT evolution.

‘The beauty of the FIT is that it can self-destruct,’ Cameron pointed out.

This global change has nonetheless resulted in challenges. In particular, as more installation demand shifts away from Europe – to the U.S. and emerging markets – incentive structures and the price signals they generate must undergo a sometimes painful evolution, the panelists explained.

In California – the U.S.' largest solar market – finding the right mix of incentives to keep pace with declining solar costs has proven to be tricky, said David Rubin, a director at utility Pacific Gas & Electric.

‘We have a lot of policy goals in California – some would argue too much policy,’ he noted. ‘We tend to do a lot of things at the same time without seeing how they might best integrate.’

Finally, as for when we might reach that magical grid-parity threshold, the answer from the panelists, not surprisingly, was ‘it depends.’Â Â

This Sun Dial column was originally published in the November 2011 issue of Solar Industry.

Editor's note: To submit your own contribution to Viewpoints, email Jessica Lillian at

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