Grid Parity: What is it and Why does it matter?

When you start researching about going solar, there can be a lot of terms that don’t make sense. Don’t worry, this is why we are here. We are here to help you understand all of the phrases involved with going solar, so you can make a fully informed decision about making the switch. Today the phrase that we are going to be looking at is Grid Parity.

What is Grid Parity?

Grid parity is when the cost of an alternative source of energy (solar and wind) cost the same or less than obtaining energy through the grid (coal and natural gas, etc). Analysts determine when a state or country has reached grid parity by comparing their levelized cost of electricity (LCOE). This measurement looks at the lifetime cost and amount of energy generated from a certain form of energy, for example solar. This means when finding the LCOE, you would look at everything from the first watt your solar panels produced when you turned them on, to the very last watt. You may be wondering, when will solar reach grid parity or have we already reached it? The important thing to understand regarding grid parity is that it’s not a single event that happens, but a process that is ongoing as utility prices change and as the cost to go solar continues to drop. That said, according to GTM, there are already 20 states in the U.S. that have reached grid parity and the rest are on their way to reaching it. This means that in 20 states on average it either costs the same or less to go solar than to use the grid. That is incredible news for the solar industry! Here is an animation video about wind and solar spreading across the globe.[embed]https://www.youtube.com/watch?v=vq7VEyykIoU[/embed]We love seeing our customers save money and as solar technology continues to develop and the costs continue to go down, the more people will be able to save by switching over to solar.

Why does Grid Parity matter?

One of the false beliefs that people have regarding grid parity is that as soon as we reach grid parity, that everyone will immediately start buying solar. While the popularity of solar will definitely rise as we reach grid parity, this is a bit of an exaggeration. Remember, grid parity is more of a process than a onetime event.

Rather, as our states and country reach grid parity, solar will becomes more financially competitive with the conventional energy sources. Then solar will become available to more people than before. There will definitely be more and more people making the switch. However, it will likely be a process over a space of time, versus an immediate change. As solar becomes more financially competitive, it is likely that there will be more solar developments and financial opportunities. At Shine Solar, we meet so many people who find that solar is a better option for their energy needs. Every day, we hear about our customers who are saving on their utility bills. They have already reached grid parity in their home. As Arkansas and Missouri reach grid parity as a state, solar will simply become available to more people. Contact us today to learn about your household achieving grid parity.