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Solar Panels Reaching For Grid Parity

When speaking about solar panels the term grid parity is used. This term relates to the cost of power from photovoltaic (PV) panels being low enough to compete with the cost of electricity from the grid. As most PV power is subsidized by the government, the real cost often makes green energy a far more costly choice.

Depending on what source you believe, either grid parity is excitingly close to reality or is frighteningly far in the future. The best we can do is to look at a few pieces of information and track them into the future.

To date, government subsidies in Europe have been a great success. Today, Europe is responsible for four out of five watts of new photovoltaic power additions the world over. However, with stagnant economies and high debt across countries, these programs face cuts or total elimination.

With less money available for individuals and companies to invest in the technology, the demand for the product decreases. Less demand will halt the dropping prices of materials. With many of the schemes, the tariff amounts were very generous and didn't take into account how quickly the material costs have fallen.

Another reason that material and production costs have fallen so quickly is due to low labor cost countries entering into the field. With Asia, more specifically China growing the industry, European and U. S. Companies have had to move their manufacturing to China to compete. China will be the major demand and supply for the PV industry into the foreseeable future.

The current cost for a watt of energy has been based on local demand and supply. However, if China takes over the majority of manufacturing, the current numbers will have to be rethought. As China and to a lesser extent the U. S., increase the demand and reduce the manufacturing costs of solar panels, grid parity may still occur.