Grid parity monitor

PV can be competitive in electricity wholesale markets without incentives

Graphic: Solarpraxis AG/Harald Schütt
  • The fourth issue of the PV Grid Parity Monitor (GPM) focuses its analysis on the utility‐scale segment in six different countries: Chile, Italy, Mexico, Morocco, Turkey, and USA (Texas).
  • PV generation finds a good positioning in Chile and positive perspectives for Morocco, Italy and Mexico.
  • ECLAREON will publish a new version of the utility‐scale issue in 2015 focused on new markets (Central America and MENA) and different financing schemes for PV installations.

September 1 2014 -- The results of the fourth issue of the study PV Grid Parity
Monitor
, carried out by the consulting firm ECLAREON, sponsored by BayWa and ENERTIS, and in cooperation with Copper Alliance, shows that photovoltaic (PV) generation parity (the moment when profitability requirements of PV investors are completely fulfilled with wholesale electricity prices) is an economic reality in Chile and is or has been close recently in Morocco, Italy and Mexico.

While past Grid Parity Monitor (GPM) issues were focused on residential (3kW) and commercial (30 kW) PV installations for self‐consumption, this report deals with large scale PV plants. The plant considered in the analysis has an installed capacity of 50 MWp using a single‐axis tracking system under a project finance scheme. The GPM report analyzes the competitiveness of the PV technology and assesses local regulation in one high irradiation city of 6 different countries: Chile, Italy, Mexico, Morocco, Turkey and USA (Texas).

According to David Pérez, partner of ECLAREON Spain and in charge of the study, "PV investors already consider PV as a credible technology to compete in the wholesale market in certain spots."

It is true that recent news relating to PV utility‐scale generation has caught the eye of the energy industry: PV utility‐scale power purchase agreements (PPAs) have been recurrently signed (especially in Latin and North America) and even a merchant plant of 50 MW was announced in Chile. However, given the volatility in wholesale markets and the fast decline of PV prices (much higher in the utility segment than in residential or commercial segments), David Pérez states that "PV utility‐scale competitiveness is a phenomenon that should be monitored over time."

In order to get full understanding of PV generation parity proximity, an outline of the electricity market is also needed. This GPM report provides a summary of the market situation of each country included in the assessment so that the reader is able to identify which electricity prices must be chosen to evaluate PV generation parity and which are the main difficulties a PV plant will face in the considered market.

As David Pérez states, "The big question remaining for the PV industry, regulators and utilities around the globe, is to what extent will utility‐scale generation (with no feed‐in tariff incentives) become mainstream and more than just a handful of individual cases." Ongoing regulatory reforms in countries such as Mexico, expected long‐term rises in electricity prices and continuous drop in PV prices will be crucial in answering this regard.

About the study

The GPM is one of the most thorough analyses on PV parity to date: it is based on a rigorous and transparent methodology (detailed in the report), it uses real and updated data as inputs, and it has specific and detailed information per country, such as the discount rate, retail electricity prices, and the inflation rate.

The GPM is a series of analyses that show the evolution of PV competitiveness in different consumer segments: residential, commercial, and utility‐scale.

The report is available on http://www.leonardo-energy.org/photovoltaic-grid-parity-monitor.

Author: David Perez, Eclareon

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