Solar grid parity – why Australia leads the world

This graph from another report from US investment bank Alliance Bernstein caught our eye. It is a map of the world looking at how solar – on an unsubsidised basis – compares with retail electricity prices in 30 large energy markets.

The green shows the grid parity markets as at the end of 2013. (Apologies about the quality, try clicking on the graph to enlarge). The first number relates to the population and the second  is the comparison – where applicable – of the cost of rooftop solar versus retail prices, wholesale prices versus utility scale solar, and solar versus diesel in areas of low electrification.

Australia is a standout, with Bernstein estimating savings of around 46 per cent for solar versus retail prices, thanks to its high electricity costs and its abundant sunshine.

No other developed country comes close on the savings that rooftop solar PV offers households users in Australia. (The US is not depicted at grid parity, although Bernstein notes that states like California, Hawaii and other south-western states clearly clearly are at grid parity, but others in the north and east are not. Interestingly, Europe is considered not at grid parity, which is a claim that may be contested in Germany, considering that payments for solar PV are now well below the retail price).

Bernstein notes that solar is now cheaper than natural gas as a means of generating electricity on the east coast of China. Given that new coal-fired generators are banned in large parts, and are not part of the energy solution anyway, and nuclear and hydro are subject to complex approval processes and long-dated construction programs, the remaining options are gas and solar. “And solar is cheap, and so in a nutshell, that’s why we feel good about solar and in many parts of Asia.”

In the Middle East, Bernstein notes, oil is used to generate electricity and does so at a cost of around 16c/kWh. That’s about twice the cost of solar, which ranges from 5c-8c/kWh in the desert. In India, the comparison is made with operating a diesel generator, given that nearly 400 million do not have access to electricity. “Solar on that footing looks pretty good,” Bernstein says.

It notes a recent visit to Rajasthan in north-west India where unsubsidised solar was being installed in villages with no roads and houses with no power supply. “The alternative to solar in this market is using kerosene lamps and walking to the next village every other day to charge your cell phone,” the Bernstein analysts write.

“So, if you can get together the $50, you can buy a solar panel, together with the battery, cell phone charger and light bulb. Then you go from the 19th to the 21st Century. It’s an easy sell into this market.” And it helps explain why new PM Narendra Modi has vowed to address that energy poverty by using solar in every home by 2019.

“Broadly, where we get to with solar globally is there are plenty of end markets where solar is just cheap, clean, convenient, reliable electricity,” Bernstein concludes.