California could hit solar grid parity by 2015

but is dwarfed 17 to 1 by German Capacity

By John Johnson on Jan 31, 2012

As fossil fuels continue to rise, the cost of implementing solar technology is dropping. That’s good news for the state of California, which aims to provide 33 % of its energy from renewable sources by 2020. Could California become the ‘Saudi Arabia’ of solar energy?

In fact, some believe that California’s solar production will reach grid parity -- the point where solar is equal or less in price compared to retail grid supplied electricity – by 2015.

“We’re not that far away,” says Bernadette Del Chiaro, Director of the Clean Energy and Global Warming Program at the Environment California Research & Policy Center (ECRPC).

“It’s important to note that our projection assumes we have certain policies in place to reach grid parity like net metering, and that the utilities don’t have their way and make it difficult for people to go solar in California,” she says.

2016: a milestone year for solar, California

Del Chiaro says that California is well on its way to meeting a goal of producing 3,000 megawatts of new, solar-generated electricity by the end of 2016.

California would be the first state in the US to achieve grid parity. Currently, solar is just a small percent of the state’s energy mix, but is growing rapidly. Grid parity considers a number of factors, the most important being energy prices. In California, natural gas prices drive the benchmark to determine parity.

Reaching grid parity provides a number of benefits for future adoption, the most crucial one being that from a pricing perspective, hurdles that have preventing people from installing solar will disappear because investing in a solar panel will become competitive with what consumers would otherwise pay for retail electricity.

Grid parity

That would allow California – and eventually other states in the US as well as parts of Europe – to begin to wean themselves off many of the cash incentive policies designed to help solar compete with retail electricity.

“When you reach grid parity it means you now have a technology that is as cheap, if not cheaper than getting electricity from your utility,” says Del Chiaro. “It doesn’t mean that solar suddenly no longer needs public policy to help it keep growing. But it does mean that we can start to phase out many of these rebate programs.”

California’s three public utilities are aggressively pursuing solar. San Diego Gas & Electric, for example, recently announced plans for two pilot programs that would allow its customers who don’t have access to solar to buy solar energy off the grid.

Under the programme, customers who do not own a home, cannot afford a solar investment, or do not have the ability to put photovoltaic panels on their roof could buy all or some of their energy from solar projects located in SDG&E’s service territory, or negotiate directly with a local solar provider. 

“Research shows that fewer than 30 per cent of our customers currently can take advantage of rooftop solar either because of structural, shading or ownership issues,” says James P. Avery, senior vice president of power supply for SDG&E.

Expanding markets

“Our proposal would expand solar access to all of our customers and also open up a new potential market for solar developers.”

California’s innovative Million Solar Roofs Initiative, which is 50 percent through its government-mandated timeline, is on pace to meet its goal of installing 3 gigawatts of solar power by 2016. The state just hit the 1 gigawatt milestone of rooftop solar power, something that only five other countries in the world have reached.

The Million Solar Roofs Initiative that was signed into law in 2007 initially called for one million rooftops to carry solar panels by the end of 2016. That projection was based on the average system that produced 3 KW of energy at the time. Today’s systems are nearly triple that size, as the commercial sector adopts bigger systems.

“We won’t get to a million individual installations in California because we didn’t have any idea how big the large-scale, commercial non-residential market was going to be,” says Del Chiaro. “The megawatts going in are trending toward larger systems.”

Rooftop capacity

California still has tremendous untapped solar energy potential. The National Renewable Energy Laboratory estimates that the state could host more than 80,000 MW of rooftop solar capacity – which could generate more than a third as much electricity as California uses in a year.

Other countries are demonstrating that it is possible to rapidly expand the solar market and achieve ambitious goals. Germany, for example, has already reached 17,000 MWdc of solar capacity – nearly 17 times California’s current total – through consistent and strong public policy support.

“California can become the Saudi Arabia of the sun if it continues to get behind big, successful solar programs,” said Michelle Kinman, Clean Energy Advocate with ECRPC.