Solar PV reaches grid parity in the commercial sector of three European markets

While Germany has hit grid parity for PV, the economics of self-consumption in the nation are endangered by proposed policy changes. Image: Yingli
While Germany has hit grid parity for PV, the economics of self-consumption in the nation are endangered by proposed policy changes. Image: Yingli

A new report by Eclareon (Madrid) finds that the levelized cost of electricity (LCOE) for solar photovoltaics (PV) has become competitive with retail electricity prices under conditions of self-consumption in the commercial market segment in Germany, Italy and Spain.

The Grid Parity Monitor (GPM) analyzed the competitiveness of PV with retail electricity prices in seven nations, which also included Brazil, Chile, France and Mexico. In all seven nations, in the last quarter of 2013 the LCOE for PV fell.


Grid parity no guarantee of success

An important conclusion of the report is that grid parity alone is no guarantee of market creation, and that PV self-consumption will only grow if grid parity is combined with government support.

“In countries such as Italy and Germany, both at grid parity and with proper regulation, PV systems for self-consumption represent a viable, cost-effective, and sustainable power generation alternative,” said Eclareon Partner David Pérez

“With subsidy-free generation from PV becoming a profitable alternative in many countries, the debate about the potential impact on revenues for electricity Distribution System Operators (DSOs) and tax collectors is gaining relevance.”

Such an analysis is highly timely, as German Minister of Energy and Economy Sigmar Gabriel (SPD) is pushing to apply a portion of the feed-in tariff surcharge to self-consumption PV systems, which would negatively impact economics for these systems.


Grid parity elusive in Latin America

In Latin American nations high installation prices prevented PV from being competitive with retail electricity, and the majority of these nations have been experiencing retail price decreases.

However, the report finds that net metering policies have been effective to encourage self-consumption in Brazil and Mexico. It also finds that an inadequate regulatory environment can hinder the self-consumption market, citing the case of Spain.


France has still not hit grid parity

The study found that France was the only European nation that had not hit grid parity, and noted the role of low electricity prices in the nation. It should also be noted that Germany, Italy and Spain have reached the highest levels of demand met with solar PV of any mid-sized to large nations on earth, the result of very high levels of deployment which drove down prices.

Cumulative installation levels are much lower on a per-capita basis in France, as the nation has never made the commitment to a broad and effective feed-in tariff policy that Germany, Italy and Spain did.

The report also finds that overall results for the commercial sector are not as positive as those recorded in a similar report on the residential sector, as lower LCOE does not fully compensate for lower retail electricity rates for commercial customers.


2014-03-26 | Courtesy: Eclareon; Image: Yingli | © Heindl Server GmbH

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