Solar materials prices are down, financing is more accessible and technology has extended solar system life. The result: The price of solar energy-generated electricity, calculated by a legitimate levelized cost of energy (LCOE) method, is now competitive in many regions with the price of electricity generated by conventional sources.
To be clear, this review of solar photovoltaic LCOE is not one of those “if coal and nuclear paid for the real harm they do” analyses. It is a hard look at the actual numbers.
The study’s biggest surprise, said co-author Joshua Pearce, Materials Science and Mechanical Engineering Professor at Queen’s University and Michigan Technical University, was how much outdated information and misinformation there is about the price of residential and small/medium system solar energy. “We have reached a tipping point,” he said. “Solar has gone past grid parity.”
Parity, according to the study, is “the lifetime generation cost of the electricity from PV being comparable with the electricity prices for conventional sources on the grid.” The metric of LCOE is used “when comparing electricity generation technologies or considering grid parity for emerging technologies.”
Based on the study’s LCOE calculations, “It is still a common misconception that solar PV technology has a short life and is therefore extremely expensive.” However, he continued, “Depending on the location, the cost of solar PV has already dropped below that of conventional sources.”
For the study, Pearce and co-authors K. Branker and M.J.M. Pathak, also Materials Science and Mechanical Engineering specialists at Queen’s University, reviewed “every residential and small/medium PV solar system LCOE [calculation] that has been done,” Pearce said, identifying five key factors: “The choice of discount rate, average system price, financing method, average system lifetime and degradation of energy generation over the lifetime.”