Although solar power’s return on investment has been debated endlessly, it now looks like the renewable energy source has finally become as cheap as buying off the grid – at least in some European countries. Renewable energy consulting firm Eclareon just released a report confirming that the price of solar power in Germany, Italy and Spain has finally reached what is referred to as “grid parity.” While grid parity has quite a few variables, it means that, over the course of the equipment’s lifetime, the total cost of installing solar panels is now on par with the costs associated with buying from the country’s grid system.
Here in the US, this gives us all reason to believe that solar power is moving in the right direction and can soon be an attainable and affordable resource for private homeowners as well as large and small commercial properties. Of course, there are still quite a few hurdles to be overcome. At the moment, the US offers a 30 percent federal tax credit for installing a solar panel system. Unfortunately, that tax break is set to expire at the end of 2016 and will be replaced with a production credit, limiting the upfront incentives for homeowners.
Also complicating the road to grid parity here in the US is the inclusion of “soft costs” such as financing and maintenance fees that occur in the full-cycle solar installation process. These soft costs are considered obstacles to grid parity because they swell the overall manufacturing and installation costs, affecting the competitivity of solar power in comparison to buying from the grid. Grid parity is a measurement of the true market competiveness of solar energy generation regardless of tax benefits and extra costs associated with installation and financing procedures.
Of course, reaching grid parity depends on a number of outside factors such as location, climate and the current housing market. A recent report from Rocky Mountain Institute suggests that US consumers may start switching from grid-purchased energy to solar between 2025 and 2047. However, with the elimination of solar energy tax credits along with the recent news from Eclareon proving that grid parity is an achievable objective, the solar sector could hopefully be inspired to push the industry in the same direction as our European friends.
Via Fast Coexist