Title
Will grid parity change everything for the solar industry?
Will grid parity change
everything for the solar
industry?
by Jonathan Cassell, iSuppli, El Segundo, California
any in the solar power nations that are leading in solar-energy commitment to invest in a solar system
M
industry and the investment installations, the CAGR will slow to 20 that is expected to operate during a period
community believe the arrival percent. of 30 years.”
of grid parity—the point when Because of this, global PV installations
cost of electricity generated by a rooftop parity apparent are expected to rise in smooth fashion,
Photovoltaic (PV) cell system is equivalent While there are many definitions of grid even when grid parity arrives in certain
to that purchased from an electrical parity, iSuppli characterizes it as the point nations of the world. The major factor
utility—will mark a major inflection point when an investment in a rooftop solar determining the growth of PV installations
for the market that will deliver a huge system delivers a 100 percent return on will be the supply/demand balance, which
increase in growth.
investment in five years. Furthermore,
will dictate pricing.
However, even when true grid parity
debts incurred—i.e. negative cash balance
arrives, it’s unlikely to generate an abrupt
in the investment in the system—must
Solar market to recover from
rise in solar system installations due to the
never exceed 25 percent of the total cost of
Spanish Flu
high upfront costs and the long-term return
the installation.
Global PV installations are expected to
of investing in a rooftop photovoltaic
“iSuppli doesn’t expect the arrival
decline by 32.3 percent in 2009 to reach
system, according to iSuppli Corp. In fact,
of grid parity to result in an abrupt
3,546 megawatts, down from 5,235 in
growth is set to moderate during the years
increase in user demand for photovoltaic
2008. However, the 2009 decline is due to
when grid parity arrives for various regions
systems,” said Dr. Henning Wicht, senior
a single event: a sharp decline in expected
of the world as the industry enters a more
director and principal analyst for iSuppli. PV installations in Spain.
mature phase.
“The market is likely to make a smooth Spain accounted for 50 percent of
Following a dip in growth in 2009,
transition, with demand progressing worldwide PV installations in 2008. An
photovoltaic installations measured in
through the arrival of grid parity in an artificial demand surge had been created
terms of megawatts are expected to rise at a
evolutionary way. This is because users in Spain as the time approached when the
Compound Annual Growth Rate (CAGR)
must still make an investment in advance country’s feed-in-tariff rate was set to drop
of 72.4 percent from 2010 to 2013. During
and the wait for the return over a long and a new cap of 500 Megawatts loomed
the period from 20
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Chart 1: Worldwide Photovoltaic (PV) System Installation Forecast in Megawatts. (Source: iSuppli Corp. May 2009)
26 – Global Solar Technology – May/June 2009
www.globalsolartechnology.com
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