Grid Parity and Other Solar Thoughts

Grid parity is when new solar and wind farms cost less than new natural gas power plants, even without subsidies. And we might already be there.

More Flipboarding! This time, I stumbled across this article. It’s worth a read, and it prompted me to offer some other thoughts on where things stand with solar. Three thoughts, in particular.

First, the article didn’t mention the term “grid parity” explicitly, but it should have. If you aren’t familiar with the term, let me explain a bit.

The grid is the electricity distribution system operated by regulated utilities that provides power to our homes and businesses. Overwhelmingly in the United States, the electrons pulsing through our various grid systems are generated by nuclear, coal, and natural gas power plants. Each of these forms of electricity generation have a cost that can be normalized per megawatt hour produced. In general, natural gas is much cheaper than nuclear and coal, which is a direct result of the recent fracking boom.

Grid parity is the term used when an alternative energy source, such as solar or wind power, can be deployed at unsubsidized utility scale with a per megawatt hour cost less than or equal to conventional grid electricity sources.

Okay, that was an obnoxiously wordy sentence, so I’ll simplify. Grid parity is when new solar and wind farms cost less than new natural gas power plants, even without subsidies. And as the article I linked noted, we might already be there:

“Unsubsidized utility-scale solar power costs $50 to $70 per megawatt-hour (or 5 to 7 cents a kilowatt hour), compared with $52 to $78 for the most efficient type of gas plant, according to a 2015 study by investment bank Lazard.”

Which leads me to my second thought. This is a fascinating time for solar with tons of uncertainty. The Lazard study referenced is extremely encouraging, but other estimates disagree. Check out a Wikipedia page here for lots of information on the cost of electricity per source.

It turns out that it’s still really hard to tell how cost-competitive solar power is. That’s because the sun doesn’t shine as brightly everywhere, power plants vary in cost dramatically, technology continues to change rapidly, local policies and regulations impact costs, and about a thousand other variables cloud the water.

Here’s what is clear though. Even if solar grid parity hasn’t officially arrived in the United States, the trend line is headed that way. It will happen eventually, and probably sooner rather than later if I had to bet.

Which leads me to my final thought. The big issue in utility scale solar is shifting from the cost of solar power itself to the problem of storing solar power. So long as the earth spins on its axis, we’ll need some sort of battery to deliver each day’s extra solar power at night. And, unfortunately, the technology isn’t quite there yet.

Still, I’m optimistic. Many great minds are working on this challenge, often with strong sources of funding. I believe it is the next big domino to fall in our transition to a clean economy. One breakthrough in energy storage, just one single breakthrough, may be all that we need to end our reliance on fossil fuel electricity generation. I, for one, will be watching this sector closely.