Once all its costs are accounted for, the price of commercial solar power has pulled even with retail electricity rates in Italy and Germany, according to a new report.
The analysis is the third installment in a regular report by the consulting firm Eclareon, done on behalf of an international group of sustainable energy interests. This installment was also the first to look at solar power in the commercial sector rather than the residential sector. It looked at a standard 30 kilowatt solar photovoltaic system for your average commercial building, and the built a methodology to assess its “leveled cost of energy” (LCOE) in seven different countries: Brazil, Chile, France, Germany, Italy, Mexico and Spain.
The LCOE of any source of power — solar, natural gas, coal, wind, etc — accounts for everything that goes into determining that electricity’s cost: installation, maintenance, investment, the electricity itself, depreciation, and so forth. The goal is to give a more complete picture of each power source’s economic position vis-a-vis its rivals.
According to Eclareon’s analysis, solar’s LCOE in Italy and Germany is now at “grid parity,” meaning it’s even with retail electricity prices in general in those countries. Spain’s already gotten there as well, and Mexico and France are coming up.
Solar’s LCOE actually dropped significantly from 2012 to 213 in every country but Germany — between 20 and 25 percent. Even Germany saw a drop of just over 10 percent. But these drops don’t always translate into grid parity (the Y axis in the graph), since the prices of other sources are always moving as well.
The analysis also looked at the level of regulatory support solar enjoys in each country. (The X axis.) This does not mean subsidies. Right now, regulatory law in both European countries and the states isn’t set up to handle a world in which electricity consumers also generate and sell their own electricity. Sometimes there are added fees for people who generate their own solar power, sometimes they aren’t legally allowed to sell their excess power back to the grid, and sometimes laws can rocket back and forth from solar-friendly to solar-unfriendly in short order. As a result, meaningful market competition between solar power and other forms of electricity is really hard to come by, even when their respective prices have pulled alongside one another.
None of the countries have an ideal circumstance. But some — those in the top right-hand quadrant — get closer to a world in which electricity is generated not just by a small number of really big suppliers, but by lots and lots of little suppliers as well, and everyone can buy and sell electricity to everyone else as they see fit.