Residential solar photovoltaics have achieved grid parity in 20 U.S. states, and 42 states are expected to reach the same threshold by 2020, Greentech Research reported in early February.
As the report explains, "Grid parity is a minimum threshold of economic attractiveness where the levelized cost of energy (LCOE) dips below a customer’s electricity bill savings in year 1 of system life.
“While traditional grid parity analyses rely on average retail electricity rates to calculate customer savings, we used utility- and state-specific rate design, system production, and installation costs to more accurately gauge solar’s attractiveness,” Greentech explains.
“As retail rates evolve from flat or consumption-based tiered structures to time-of-use, rate design will play an even greater role in shaping residential solar economics,” author Cory Honeyman, Senior Analyst, Solar Markets, writes in a downloadable executive summary of the longer report.
“In the near term, fixed monthly charges rank as the greatest policy risk that could undercut residential solar economics.” But “through 2020, incremental cost reductions to rooftop solar, alongside incremental retail rate hikes in most utility service territories, will serve as sufficient tail winds to expand the number of states that reach grid parity.”
Over the longer haul, he says, the viability of residential solar “will depend on its pairing with other distributed energy sources, namely battery storage, which will enable rooftop solar production to better align with peak electricity price periods and optimize self-consumption.”
The Ontario Energy Board has stated that its fixed monthly charge initiative is designed to facilitate customer initiatives like rooftop solar, without impairing the ability for local distribution companies to continue offering service to other customers at comparable rates.