US solar parity: It’s coming faster than we thought

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In 2015, America’s 6 largest metropolitan areas are already at solar parity, representing 30m+ people. By 2021, the same could apply to 150 million people.

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ILSR

Back in 2012, ILSR released a pair of reports on the solar Rooftop Revolution, noting that one-third of Americans would live in a metropolitan area where the cost of solar energy from their roof would be less than the cost of power from the utility by 2021. When combined with our analysis of non-residential property, we estimated that 287 gigawatts of solar would be at price parity with grid electricity across the country by 2021.

It turns out we were wrong, and that the rapidly falling cost of solar is making solar more economical in more big cities than many people expected.

For example, in our original analysis looking for parity between solar and grid electricity prices on residential property in 2015, residents were expected to save money by going solar in only 2 of the largest 42 U.S. metro areas, New York and San Diego.* According to a recently released report by the North Carolina Clean Energy Technology Center, however, grid parity was coming much quicker. A review shows that their study included all applicable federal, state, and local incentives (instead of our no-subsidy analysis), but it gave us a reason to revisit our 2012 analysis.

As it turns out, solar parity – without incentives – has been accelerating.

population-at-solar-parity-in-top-40-metros-2015-ILSR-1024x768

In 2015, six of the largest metropolitan areas are already at solar parity, representing over 30 million Americans. That’s one-third more people living with solar at parity with utility electricity prices than in our original analysis, when we calculated that 2015 would bring parity to just two metro areas, totaling 22 million people. The following table lists the metropolitan areas where electricity from solar installed at $3.50 per Watt – with no incentives – matches the average electricity rate, and a comparison to our original 2012 analysis.

Cities at Solar Parity in 2015

Metro AreaOriginal AnalysisRevisited Analysis
New York20152016
Boston2020now
San Francisco2017now
San Diego2013now
San Jose2017now
Los Angeles2017now
Riverside, CA2017now

In 2017, the five-year point in our original, the population at parity is likely to be 71 million instead of 51 million. By 2021, 109 million Americans will be at parity, instead of our original prediction of 95 million.

Cities at Solar Parity in 2021

Metro AreaOriginal AnalysisRevisited Analysis
New York20152016
Boston2020now
San Francisco2017now
San Diego2013now
San Jose2017now
Los Angeles2017now
Riverside, CA2017now
Chicago20232018
Dallas20192019
Philadelphia20202018
Houston20212020
Miami20212020
Detroit20232020
Phoenix20182017
Tampa20202021
Baltimore20232021
Denver20202021
Pittsburgh20242020
Sacramento, CA20182019
Las Vegas20192018
Providence, RI20202021
Jacksonville, FL20222021

As you may notice in the above chart, some cities have reach parity sooner, and some later. The following map illustrates the changes by city for all 40 metropolitan areas.  What’s not captured in the table above or the map is that the acceleration of grid parity seems to be concentrated in the largest metropolitan areas, pushing up the population at parity despite nearly as many cities losing ground toward parity as gained between our new and original analysis.

comparison-of-city-parity-year-2012-v-2015-ilsr-1024x768

Next week, we’ll add a bit more, by examining the net present value of a solar investment in each city. This accounts for the fact that an investment in solar can make sense even if the cost of solar electricity is currently higher than retail prices because, in the long run, solar prices are fixed, but electricity prices tend to rise. Early results suggest that nearly 150 million Americans––33% more than a simple parity analysis reveals––will live in a city where a solar investment––without subsidies––pays back over 25 years by 2021. More to come…

Data and Assumptions

*We picked these 42 because half the U.S. population lived in those 42 metropolitan areas in 2012.

  • The installed cost of solar for this analysis is $3.50 per Watt in 2015, estimated to decrease 7% per year
  • The price of electricity is expected to increase by 2% per year
  • Electricity prices for each metro area were taken from the Bureau of Labor Statistics or Energy Information Administration
  • Solar insolation data comes from the National Renewable Energy Laboratory’s PVWatts system

This article originally posted at ilsr.org.

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2 Comments
  1. Jonathan Koomey 4 years ago

    This analysis is useful, but it assumes that the rates that utilities charge customers for solar PV won’t change, and as we’ve seen, utilities are working to change those rates to make solar PV less attractive. You should incorporate that possibility into the calculations to see how much effect it could have.

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