Mapping Solar Grid Parity

Date: 14 Dec 2011 | posted in: Energy, Energy Self Reliant States | 51 Facebooktwitterredditmail

Where does solar grid parity strike first?  How fast does it spread?  Click “animate” on the map below to see which major metropolitan areas can beat grid prices with local solar first, and how quickly unsubsidized solar could take over America’s major metropolitan areas.

Solar grid parity describes the moment when electricity from solar power is less costly than electricity from the existing grid. It’s a tipping point, when democratization of the electricity system not only makes political and economic sense, but becomes more competitive than using utility-delivered electricity.

We used the following assumptions in the construction of this animated map:

  1. The cost of solar in 2011 is $4.00 per Watt installed.
  2. Grid electricity price is the average residential retail rate reported by PVWatts for the core city of the metropolitan area.
  3. The cost of solar decreases by 7% per year.
  4. The grid electricity price increases by 2% per year.

In just 7 years, 1 in 6 Americans living in major metropolitan areas could lower their electricity bill by installing solar –without any incentives.$nbsp; Here comes the sun!

John Farrell
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John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.

John Farrell
Follow John Farrell:
John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.

51 Responses

  1. ScottB
    | Reply

    I like this analysis. The $4/watt 2011 starting point is competitively accurate and the 7% decrease and 2% increase for electricity are balanced assumptions. Over how many years did you spread the upfront cost? I assume most people use the warranty period of 25 years? Why don’t we use the expected lifespan of 30 years, since we know it’s still kicking out 80% at year 25? Also, did you use any maintenance assumption or inverter replacement?

  2. Mike
    | Reply

    I think the dates are near enough in the future that it’s a no brainer to deploy solar. Eventually solar cells will have a much longer lifespan than it would take for them to pay for themselves. The sooner that solar is deployed, the sooner we can get to that turning point where the total cost of ownership becomes cheaper than the equivalent in gas powered electricity.

  3. Estee Chaikin
    | Reply

    Would be good to see how this map may churn out amongst UK counties.

  4. JRP
    | Reply

    Hawaii generates most of its electricity by burning imported oil, giving it the dubious distinction of the country’s highest electricity prices. How high are the Hawaii rates?
    Hawaii Electric Light Co (HELCO) is charging Big Island of Hawaii customers 41.70 cents a kilowatt hour in DEC
    On Kauai Kauai Island Utility Cooperative customers paid 40.6 cents a kilowatt hour.
    On Maui, MECO (Maui Electric Company) charged 35.7 cents a kilowatt hour.
    Oahu, home to many military bases, Hawaiian Electric Company (HECO) charges 35.1 cents a kilowatt hour.
    Because of this, Hawaii is VERY rapidly embracing solar pv on rooftops. In fact, Hawaii likely leads the nation. But, this is creating challenges for a grid unprepared, or so say the utility companies.
    Article worth reading about the issue, especially in Hawaii, published 13 DEC 2011 by Hawaii Free Press, online at this weblink –

  5. AndySNJ
    | Reply

    I find this map fascinating, and I know of several installation projects that were canceled due to the cost, and lack of a return on investment (even with subsidies). But, living 30 miles west of New York City, this chart isn’t all that helpful. NY will reach parity in just 3 years. I was grabbing my phone to set my appointment. But, then as the animations continued, I noticed Philadelphia, Providence and Boston don’t reach parity until 5 years later. How can that be? NYC and Philadelphia are only 90 miles apart.

  6. Web Designer
    | Reply

    I have to wonder how accurate this is….I am really wanting to install my own set up here in Dallas. The panels have been the big gotcha, but I can order 1Kw of panels for under $1500 from China. That puts a self install around 5-6K. Not to mention Foxconn is ramping up a giant factory that should cut panel cost another 25% this year. So it think the parity will be hit a lot sooner.

  7. Anonymous
    | Reply

    Ohio? Really? Good luck with that. I spent the first 35 years of my life there.
    When you’ve lived there and spent October to May without seeing the sun get back to me on how well solar will work there….

  8. Anonymous
    | Reply

    Repost the data when you can do more. please

  9. Chris
    | Reply

    It’s surprising to see several northeastern markets pop up early in the list. I assume the 2% grid increase is a national average. Does it factor in expected impacts of natural gas production from the Marcellus Shale region?

  10. Anonymous
    | Reply

    The animation is fun, but wouldn’t the same information be conveyed more easily by a static map with different colored bands keyed by year—like weather temperature maps are keyed by color?

  11. Anonymous
    | Reply

    If solar is going to be cheaper than the existing grid in San Diego in 2013, it must be pretty close in price right now, right? So it must be the case that some pretty significant number – 35%? 40%? – are already off the grid. Any idea what that number really is in December 2011?

  12. Anonymous
    | Reply

    Um what about Hawaii, Guam, Puerto Rico?

    There are a lot of people in Hawaii and Alaska off the grid to some extent already.

  13. Charlie
    | Reply

    A few comments:
    1. Why did you not include local incentives and tax benefits? Oil, gas, and coal produced electricity all receive financial incentives which are, in turn passed on to the consumer in the form of lower kWh prices. It is the same mechanism in a different level of the value chain. So the real cost (LCOE) is much lower than you use in your calculation. 30% lower (Federal ITC) at least.

    2. 2% utility rate increase is less than 1/2 of the national historical average (5%) for the past 20 years. “2% inflation” doesn’t pencil either, as utilities have increased at higher than inflation rates, AND the coal fired power plants of the 1950-70 time period will need to be replaced, so kWh prices are likely to increase by at least 7% in the coming decade (conservatively). AND I made no mention of the cost of carbon, which will come. No joke.

    3. Balance of system prices have fallen 50% in the past 5 years, not 7%. Granted, they won’t go much lower as module prices are not such of percentage of costs and labor, inverters, and SG&A are likely to create more negative pressure on the trend. But 10%-12.5% is real in the next 10 years.

    4. Grid parity exists currently in south western markets where utility rates average more than $.10/kWh and the capitalized cost of solar is around $.08/kWh or less after incentives.

    Inaccurate assumptions equals inaccurate conclusion. Shave 8 years from your timeline.

  14. Anonymous
    | Reply

    I agree as the volume of sales increase, the price will drop. New technology tends to have exponential price drops with increasing sales
    Look at the price of VCRs

  15. Simon Arthur
    | Reply

    How does New York get to be the second city to reach break-even, in 2015? There’s not great sunlight there, and the cost of electricity is fairly high.

  16. Alex
    | Reply

    If it wasnt so expensive. I’d have to mortgage my house to do it. 🙂

  17. Anonymous
    | Reply

    What about Hawaii?

  18. Cody Hill
    | Reply

    Very nice job on the animated map. The next step for this analysis is to consider yearly solar insolation in each of these cities (available from the National Renewable Energy Lab here), from which you can easily calculate expected Watt-hours per year, and therefore payback time on a solar investment.


  19. Brett
    | Reply

    Interesting graphic, and I understand that you were probably trying to keep things simple, but aren’t there large regional price differences in solar power generation? Is it really realistic that NYC would reach solar power parity in 2015?

  20. Anonymous
    | Reply

    Solar decreasing only 7% per year is very conservative.

    A more likely scenario would be double that.

  21. John Farrell
    | Reply

    Grid parity has two parts, the cost of solar (likely pretty similar over 90 miles) and the cost of electricity (very different). NYC has very high cost power, so grid parity comes a lot sooner there.

  22. John Farrell
    | Reply

    This is based on annual solar insolation, which takes into account cloud cover. Check out PVWatts for more info.

  23. John Farrell
    | Reply


    Thoughtful comments.
    1) Incentives are transient. The most valuable is the federal incentive which is unlikely to be renewed past 2016, and this analysis extends to 2027.

    2) I’d love to see a citation on that 5% figure. 2% seems a nice, conservative long-run approach.

    3) 50% in five years looks a lot like 7% per year.

  24. John Farrell
    | Reply

    It’s the high price of electricity that makes it work. Grid parity happens when cost of solar = cost of grid electricity. If one is high, the other can be, too.

  25. John Farrell
    | Reply

    Yes, it is. With expensive electricity, solar can be much more expensive and still economical for residents of NYC.

  26. Edward Kerr
    | Reply

    When considering the cost of something like electricity (in this case solar vs grid) one has to factor in “exigent” costs that are not clearly reflected in one’s monthly bill. Since about half of the electrical power generated in the US is still achieved by burning coal, I would think that the costs to society due to coal burning should be considered in this formula. When we consider the environmental degradation due to the mining (both deep and strip) of coal and the medical costs due to the pollutants (with Mercury being the worst of about 12 or so) one can see that Solar out shines (pun intended) coal almost from the gate. If solar electricity was 3 times the cost of the grid it would still be the smart choice as far as I’m concerned.

    Thanks again John for your enlightening work.
    Edward Kerr

  27. MM
    | Reply

    I’d love to see this model where the user could adjust the solar cost decline and electricity price increase variables to see the parity sites change…the cost/watt and annual price declines are very modest in this fixed model.

  28. Tom W.
    | Reply

    The cost of solar depends a lot on the raw materials and methods of manufacturing. Additionally, the $4.00/watt cost is an average of national installers. They charge a high amount because most of them are large corporations that have extremely costly overhead. In reality, our company have installed solar PV projects for residential and commercial properties for $2-$3 / watt depending on type of system and location. Our financing plans allow for an immediate positive cash flow.

    Personally, I think there are many myths and hidden information about solar, and that is why my job with Invaleon is to educate customers about what is REALLY offered in the market and how solar is one of the most sustainable power generations out there. Just keep in mind, cost of solar is not the limiting factor, it’s people’s willingness.

    If anyone has specific questions they would like answered, you can reach me directly at:

  29. Rick
    | Reply

    This is a great map and it speaks to the “purchase of a PV system”. However, 80% of the residential market is now comprised of leasing. In almost every market currently served by leasing companies (10 plus states) you can put $0 down and pay less for you electricity from solar than you would from your local utility company. Their are only 2 main reasons why EVERYBODY doesn’t go solar. 1) lack of awareness that they can pay less for solar than they do to their utility company 2) the natural skeptisim that it must be too good to be true. However, once enough people in a given neighborhood go solar and can vouch for it’s real world practical and hassle free savings, the rest of the neighborhood soon follows.

  30. John Farrell
    | Reply

    Solar leases only work with the tax incentives, however, and I wanted to provide a timeline of grid parity without incentives.

    Solar leasing will no doubt play a big role in the future of solar, nonetheless.

  31. Dana Blankenhorn
    | Reply

    You’re not anticipating use of some of the major breakthroughs reported in the media throughout 2011. Like organic fuel cells, which cuts costs. Like the use of mirrors in backplanes to increase efficiency. Like BIPV, which cuts installation costs.

    There’s an entirely new generation of stuff coming onto the market over the next few years that will be completely different from what came before. And there are multiple dimensions of improvement — materials cost, manufacturing efficiency, installation costs, channel costs — beyond mere yield in terms of improving the economics.

    Once you achieve “grid parity” (I call it crossover in my blog) production can accelerate dramatically, as you’re no longer needing any government help to compete.

    Thus, I’m going to make you a little wager. Things are going to move forward much faster than you anticipate. I’m expecting widespread crossover in 2017, more like your 2023 map. Which will change everything, substantially.

  32. Andy Goodell
    | Reply

    Which is a totally fine assumption for arizona and texas, but I think you’ll find even former superfund sites within easy transmission range of NYC go for over $400/acre. Also depending on how fracking goes, our grid costs may be more flat than you think.

    Nice map.

  33. John Farrell
    | Reply

    Most states have enough available and suitable rooftop to get at least 25% of their power from roof-mounted solar PV.

    Good point on the fracking.

  34. Bob Wallace
    | Reply

    That might be a little bit of a problem for the natural gas industry. But, for the sake of the discussion let’s assume the industry will be allowed to go ahead full speed.

    Based on how much NG we used in 2010 we have 21 years of proved and probable reserves. And we’re starting to use NG for transportation (long distant trucking and fleet vehicles), we’re building a lot of electricity generation using NG, and we’re starting to export to other countries,

    Yes, there are people claiming a “100 year” supply but they might be on crack. The futures market thinks the price of NG (without inflation) will double by 2020. We up the use, we eat into supply, and we jack the price. Natural gas may not be the route to keeping our electricity prices low….

  35. […] the electricity grid, a grid parity is created. Grid parity, which has recently been achieved in some towns with on-shore wind-power and solar power, is a tipping point. When a renewable energy source […]

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