Grid parity around the world


Newly installed renewable power capacity increasingly costs less than the cheapest power generation options based on fossil fuels, according to the International Renewable Energy Agency (IRENA) – confirming how decisively the tables have turned.⁴⁹

A report released by Bloomberg NEF in 2019 highlighted that solar and onshore wind energy facilities have now reached parity with average wholesale prices in the US (California), China and across Europe.⁵⁰

Grid parity around the world

In Europe, back in 2017, research conducted by BayWa r.e. and the Becquerel Institute in Brussels predicted the spread of grid parity PV projects. Starting in southernmost Europe in 2017 and 2018, progressing through central Europe during 2019 and 2020, reaching Northern Europe from 2021 and regions as ‘dark’ as Finland by 2029.⁵¹

To date, those predictions are proving largely accurate. In 2018, BayWa r.e. realised the 175 MW Don Rodrigo project in Seville, Spain – the first subsidy-free utility-scale PV plant in Europe – and then followed this in 2019 with Germany’s first subsidy free project.⁵²

Fig. 6 – Cheapest source of new bulk electricity generation on a LCOE basis, 2H 2019

This map shows the technology with the lowest benchmark LCOE in each market, excluding subsidies or tax credits. CCGT: Combined-cycle gas turbine.

Source: BloombergNEF.

In 2020, grid parity reached Poland with construction beginning on the Witnica solar park, which will be the largest solar power plant in Poland and will be built without any subsidies.⁵³

In China, under the nation’s new solar policy, the country has revealed details of almost 15 GW of ‘grid parity’ projects already underway, with delivery expected to come online between 2020-23. However, the Chinese projects are not entirely free of subsidy as land use fees have been reduced or waived in many instances.⁵⁴

Covid-19 resulted in a major slowdown to China’s solar industry in the first quarter of 2020. A research paper published in Environmental Geochemistry and Health, titled ‘The influence of COVID-19 on grid parity in China’s photovoltaic industry’⁵⁵ points to empirical results suggesting that the pandemic’s impact on the PV industry will trigger a short-term jump in production costs, with an immediate lag of one quarter and a periodic lag of four quarters. However, as production was back to normal in Q3, but domestic projects were not, prices dropped lower than ever before. This fall will not be continued as installation in China resumes.

Overall, even allowing for this temporary loss of momentum, researchers expected that the LCOE for Chinese PV would return to normal levels by the end of 2020 and could even reach grid parity by then.⁵⁶


Marching towards global grid parity