Canadian Solar sees grid parity for big solar in 5 years

Global solar manufacturing giant Canadian Solar expects that solar power will be competitive with fossil fuels in many countries with five years.

In an interview with RenewEconomy, chief commercial officer Yan Zhuang said utility-scale solar costs were currently around 15c/kWh. But within five years this would fall to around 10c/kWh. By this time, fossil fuels will be around the same price.

However, Zhuang said the arrival of cost competitive energy storage would be a key for solar’s future growth, because the output needed to be delivered.

“Storage is just so important now – whether we are moving to self consumption (at the residential and commercial level) and at utility-scale. It will become a game changer because we need to shift the load. But we are not quite there yet.”

Once storage became a viable commercial option, Zhuang said that residential solar would then truly be at “grid parity”. He said residential rooftop was not at grid parity yet because “there was no sun in the evening”.

But he said solar was already at grid parity for commercial users with daytime loads, and for off-grid locations where diesel or other expensive fuels were the only option.

Canadian Solar is the fourth biggest solar manufacturer in the world. This interview was conducted before its 2nd quarter results were released last week, during Zhuang’s recent trip to Australia which included Clean Energy Week.

Zhuang said the global solar manufacturing industry had reached a critical juncture, with a shakeout caused by many firms running short of cash because of accumulated losses.

This was occurring up and down the supply chain. In turn, companies were now focusing on increasing margins and were no longer selling below cost.

“The industry is behaving much more rationally now,” he said. “I don’t see an obvious trend of module prices coming down until the industry comes back to profitability.”

Zhuang said his company was enjoying strong margins in the US market, and in the Japanese market, where it claims a large share after installing 160MW in the second quarter.

He described the Australian market as “stable”, but saw growth in areas such as Mexico, Peru, Brazil, Ecuador and Pakistan, which he said had recently ended diesel subsidies and was facing chronic energy shortages.

“The self-consumption market in Pakistan will be very strong. The payback for the residential and commercial PV market is now around 3-4 years.”