Grist, March 14, 2012
Get a load of this: Nearly 100 million Americans could install over 60,000 megawatts of solar at less than grid prices – without subsidies – by 2021. That’s from a new report by John Farrell at the Institute for Local Self-Reliance called “Rooftop Revolution: Changing Everything with Cost-Effective Local Solar.” It’s about the spread of “solar grid parity” over the next 10 years, where grid parity is defined as “when the cost of solar electricity — without subsidies — is equal to or lower than the residential retail electricity rate.” People often talk about grid parity as if it’s some magic moment, but in fact it will happen in different places at different times, depending on local conditions and electricity prices. And it’s a moving target: It depends on how fast the cost of solar falls and how fast electricity rates rise.
Farrell says that the “installed cost of solar has fallen 10% per year since 2006 and grid electricity prices have averaged a 2% annual increase in the last decade.” In his projections, he uses 7 percent annual decline for solar costs and 2 percent for electricity increases, which seems conservative but reasonable. Obviously either of those rates could change, but almost everything I’ve read and heard predicts rising electricity rates; the rate of solar cost decline is somewhat harder to predict. As a technophile, my money is on the cost of solar falling faster than expected.