News and analysis about energy in California with an eye toward renewables.

Rooftop Solar Could Be Cheaper Than Your Electric Bill in 5 Years

It's called "grid parity" -- the point at which solar panel installation costs fall far enough that it's no longer cheaper just to buy your electricity from your local utility. Some places with especially expensive power have already reached grid parity, and a few other places -- Southern California, for instance -- hover on the brink. Now, a new report from a leading energy analyst says that grid parity will be a fact of life around the world by 2018.

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The report by Navigant Research, entitled "Distributed Solar Energy Generation Market Drivers and Barriers, Technology Trends, and Global Market Forecasts," costs more than $3,000 per copy, so we haven't seen the full thing. But ReWire's gotten ahold of the report's Executive Summary, and even that small glimpse into the body of the report is intriguing.

Worldwide, distributed solar -- the kind you put up on rooftops and carports and other small-scale installations, and which Navigant defines as less than 1 megawatt in capacity -- accounted for 69 percent of all photovoltaic solar installed in 2012. That was down a couple of percentage points from 2011; Navigant blames the slackening on uncertainty in subsidy policy in Germany and Italy. Increased installations in the U.S., China, and Japan made up somewhat for the central European malaise. Navigant doesn't see that slack deepening: between this year and 2018, says the report, the research firm projects 220 gigawatts of distributed solar being installed worldwide. That's more than twice the U.S.'s nuclear generating capacity as of 2011, and about 60 percent of American coal-fired generating capacity in the same year. In other words, a formidable amount of generating capacity, all of it in small batches on roofs, over parking lots, and covering other parts of the built environment.

What will drive this rapid deployment of rooftop solar, even as advocates struggle to maintain subsidies in the face of utility company opposition? A plunge in the price of PV modules. Costs ran around $4 per watt of capacity in 2006; by last year, they'd reached $1 in some places. Says Navigant:

Navigant Research's forecast is based on the assumption that PV module prices and installation costs will continue to decline, reaching a global average in the range of $1.76 per W to $2.47 per Watt installed anywhere in the world by 2018. At this price, solar PV will largely be at grid parity, without subsidies, in all but the least expensive retail electricity markets.

In case you're wondering, California doesn't quite qualify as one of those "least expensive retail electricity markets." According to new figures from the Energy Information Administration (EIA), residential electrical customers in California paid an average of 16.4 cents per kilowatt-hour for their power, compared to about 10 and 11 cents in Arizona and Nevada, respectively, and well under ten cents per kilowatt-hour in Oregon and Washington. By some definitions, California has already reached grid parity; residential ratepayers here will likely start finding out that generating their own power is actually cheaper than paying their electric bills years before their friends in neighboring states do.

But what about the Chinese solar glut that many credit with the dramatic fall in PV costs? Won't trade restrictions on China close down that source of cheaper panels? Navigant thinks not:

Even if the EU follows in the footsteps of the United States and adds import tariffs on Chinese solar cells and modules, this will have minimal impact on the installation rate for two main reasons: First, Chinese manufacturers are already ramping up production in Taiwan and other countries to skirt the taxes; and second, solar PV modules and balance of system (BOS) costs will continue their rapid price declines, further diluting the impact of any tariffs. Ultimately, it is a great time for consumers and end users to purchase or lease distributed solar PV systems as prices continue to fall in the middle of fierce competition and continued consolidation.

Sounds good to us.

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About the Author

Chris Clarke is a natural history writer and environmental journalist currently at work on a book about the Joshua tree. He lives in Joshua Tree.
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It is great to see that solar is hitting grid parity in certain places, and while there are many obstacles, it is important that we keep working towards this goal in all of the U.S. Here at EnergySage we have made it our mission to not only educate consumers and raise awareness, but also to lower the soft costs of solar significantly. Our online marketplace allows consumers to get multiple quotes from installers for free! It's simple and fast - try it out.