The cost of electricity from solar PV panels has reached parity with grid electricity in Germany, Italy, and Spain, according to consulting firm Eclareon. There are some who think that this will be the signal for a massive surge in demand and huge market growth. It is at this point that we should take a closer look at the definition of grid parity.
“The moment at which the present value of the long term net earnings (considering revenues, savings, cost and depreciation) of a PV system is equal to the long-term cost of receiving traditionally produced and supplied power over the grid.”
The key phrase for me in this definition is ‘long term’ and that the process still requires customers to invest relatively high capital amounts against a long term return. This proposition has been a particularly hard sell to date, since we singularly fail to react to long term propositions in the use of disposable incomes.
The issue becomes interesting when considering how government might then begin to look at renewables as the most appropriate investment. For example, it has been reported that the planned subsidies for the new nuclear power station at Hinkley Point in Somerset could reach £17 bn.
This is why investing in a renewable future not only makes great environmental sense but it makes great economic sense too.