Grid parity monitor

PV is an attractive alternative for consumers in Chile

Graphic: Solarpraxis AG/Harald Schütt

CREARA has released a new issue of its Grid Parity Monitor (GPM) Series, exclusively focused on Chile, a promising market with a regulation that fosters the PV market and high irradiation levels in the north of the country (Copiapó was used as reference).

The latest GPM release, sponsored by Jinko and Solar Del Valle, analyses the cost-competitiveness of photovoltaic technology for the residential segment (PV systems of 3 kW), the commercial segment (PV systems of 30 kW) and the utility scale segment (PV systems of 50 MW) in Chile.

The GPM evaluates PV competitiveness according to the following criteria:

  • Grid Parity (residential and commercial segments) is defined as the moment when PV LCOE becomes competitive with retail electricity prices, assuming that 100% of the electricity is self-consumed instantaneously.
  • Generation parity (utility scale sector) is defined as the moment when profitability requirements of PV investors are completely fulfilled with wholesale electricity prices.

The analysis of PV competitiveness in Chile shows that the potential for market development varies significantly between segments:

  • In the residential sector, PV Grid Parity has already been reached albeit to different extents in different locations of Chile.  In Santiago, Grid Parity is only partial while in the north, full Grid Parity has been reached.
  • In the commercial sector, PV technology is still far from being competitive against grid electricity, mainly due to the low variable electricity prices for this segment (the tariff structure places a significant weight on the fixed component of the electricity price).
  • In the utility scale segment, relatively high wholesale electricity prices and irradiation levels have brought generation parity forward, creating an attractive investment opportunity particularly in the north of the country.

Provided that a good match of generation and consumption curves is not always possible, 100% of instant self-consumption is not likely to happen in residential and commercial systems. Therefore, net metering/net billing or equivalent mechanisms that compensate the prosumer for the excess PV electricity exported to the grid will be crucial to achieve economic feasibility for this kind of installations. In Chile, the recent net billing regulation is, on a first evaluation, a proper incentive for the PV self-consumption market.

For PV utility scale plants, the GPM offers a realistic, albeit theoretical, overview of PV competitiveness. Thus, a case-by-case analysis of the particular business case is required to properly asses the investment opportunity. In this line, the fact that generation parity has not been reached in a given location does not imply that utility scale PV plants will not be built, as there are other reasons that may trigger such an investment, such as a convenient PPA scheme.

Given the volatility of electricity prices and the decreasing trend of PV prices, PV competitiveness is a phenomenon that should be monitored overtime. This is the main focus of the GPM studies: the periodical assessment of PV competitiveness.

The GPM is a series of studies about PV competitiveness against conventional electricity prices in several sectors and countries. The GPM is an independent analysis, which is updated regularly, uses a rigorous and transparent methodology and is available free of charge at: http://www.leonardo-energy.org/photovoltaic-grid-parity-monitor
Contact: gpm( at )creara.es

In January 2014, Creara and Eclareon (Spain) merged their business to form Creara Energy Experts (from now on CREARA) and consolidate their leadership in sustainable energy services.

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