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Widespread grid parity is here February 11, 2014

Posted by Maury Markowitz in power grid, solar.
Tags: ,

I’ve posted on the concept of “grid parity” in the past.

Basically the concept is that if the interest payments on your panels are less than what you’d pay to the power company for the same amount of power, you’re at  parity.

The industry has long been predicting that we would hit parity at some point. Most of them suggested this would happen around 2020. It came early.

We are clearly at grid parity for most of Canada today. And that means it’s also true anywhere south of us, and most of Europe.

Let’s do the math

Right now you can buy a 250W panel for about $200, or as the industry likes to do it, 80 cents per watt. I’d personally go with SolarEdge on the electronics side, so I’ll add 40 cents for that kit. I’m going to use Kinetic, and since it’s going on the garage I’ll keep it simple and say 25 cents for the racking. So my total equipment costs are $1.45 for the basic gear. For a net metering installations wiring is going to be cheap, and I’m going to do my own installation. I can do that for 50 cents.

So I’m going to do my install for $2.00 a watt.

OK, time to go to the LCoE calculator. In goes a 25 year period, and 2000 for the CAPEX and 13% for the capacity factor and 25 for the Fixed O&M. Zero out the rest. And I get…

12.2 cents/kWh

My last power bill, before tax, was $121.34 for 813 kWh, so…

14.9 cents/kWh

That’s right, straight up, self-installed PV is cheaper than grid power in Toronto.

But that’s actually cheating, because I haven’t worked in inflation. If I put in the standard 3% rate (maybe a little high these days), my average bill for the grid isn’t 14.9 cents, it’s 21.2 cents. And my PV cost with inflation? 12.2. That’s because I’m buying it now, there’s no inflation on the interest payments.

But wait, 3%? We’ve already been told it’s going up 30% in the next three years. Now that’s only on the power side, not the delivery (we hope!), so my bill might be a base rate of 17 cents, not 14.9. Add 3% after that and we’re up to 24.2 cents.

24.2 cents is a lot. You’re still better off with PV if the install costs you $4 a watt. Anything below that, you win.

This isn’t going to get better for the grid side. I really don’t expect to see a headline that says “Power Rates Unexpectedly Fall!” Ask anyone in BC.

It’s everywhere

I started this article not because of the power prices in Ontario, but Nova Scotia. They’re not paying off their old debt or a privatization scheme, so their rates are closer to 13 cents. When I saw that they were already at parity, I started running the numbers here again.

The basic long and short is that anywhere outside the major hydro exporters (Quebec, New Brunswick and Manitoba), you’re probably better off putting up panels than buying power. There’s caveats, of course, especially because small systems are more expensive in relative terms, but in the grand scheme of things these are small potatoes.

Every roof, especially the flat industrial and commercial ones, should have panels on them. Every panel they put up is money in their pocket.

And that’s in Canada. We’re north. If you’re reading this from the US, and lots of you are, I suspect the numbers are even better. Mexico? You should be finding panels as soon as you can. Europe? You even have to ask?


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