INDUSTRY I SUBSIDY
of the grid parity range in the figure. Onshore wind is expected to achieve wholesale grid parity in a very limited number of countries before 2030. In case of relatively lower onshore wind capex, Ireland will achieve grid parity in 2020 followed by Great Britain in 2021 primarily due to high achievable onshore wind load factors in these countries. A 10% higher onshore wind capex would delay the grid parity by two to four years as represented by the upper value of the grid parity range in the figure. In Turkey, grid parity is gained for solar PV (2018) and onshore wind (2019) ahead of any other European country due to higher wholesale electricity prices in the country.
Note that uncertainties involving cost (capex and opex) of renewable technologies and fuel (coal, oil and gas) as well as carbon prices can accelerate or delay the time when grid parity is expected to be reached.
Implications of reaching grid parity Reaching grid parity for a given renewable technology means that it can now compete with other conventional technologies, mainly coal and gas-fired power stations, without subsidies. This could lead to accelerated deployment of such a technology provided there are no investment, supply chain, policy or regulatory constraints.
Based on our analysis, we have found that on achieving grid parity an additional 220GW of solar PV mostly in Southern Europe and 40GW onshore wind across Europe can be built in
the absence of above mentioned
constraints.So what prevents even higher deployment of renewables? One of the main factors is that of revenue cannibalisation: as the share of renewables rapidly grows in a system, it puts a downward pressure on wholesale electricity prices. In particular, large amounts of solar PV can depress prices during the midday peak so that they fall below night-time prices. In the most extreme scenarios, the wholesale price drops to zero during the day – the strongest possible signal that no further solar is required on the system.
While the above factors lead to lowering the wholesale electricity prices, large penetration of wind and solar can also result in curtailment of surplus wind and solar energy when the sum of intermittent generation and other must-run generation in the system at a given time exceeds concurrent demand. Consequently the achievable load factors of wind and solar will reduce associated with loss of revenues. Such situations are more likely to occur in systems with very limited energy storage facilities.
At high penetration of renewables due to the combined effect of falling wholesale electricity prices and reduced (achievable) load factor of wind and solar, a threshold level of these technologies will be reached beyond which further addition of wind and solar capacity will not allow adequate revenues to self-sustain.
Conclusions
A system where wind and solar become competitive with wholesale market prices will mark a massive shift in the evolution of these technologies. We would expect to see large-scale deployment (unhindered by changes in regulation or government
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