North Carolina PV systems achieve grid parity09. March 2012 | Applications & Installations, Global PV markets, Industry & Suppliers, Markets & Trends | By: Becky Stuart
According to a new study, many photovoltaic systems bigger than 10 kilowatts (kW) achieved grid parity with commercial retail electricity prices in 2011. This has resulted in a spike in projects and, thus, jobs. Both declining costs and the state’s favorable policies are said to be driving growth.
The North Carolina Sustainable Energy Association (NCSEA) undertook the study, "Levelized Cost of Solar Photovoltaics in North Carolina", which revealed that by last October, the U.S. state ranked number eight in the country for cumulative photovoltaic capacity, with 1,142 residential and commercial systems worth over 128 megawatts (MW) installed.
The 32-page report also revealed that over the past 10 years, conventional electricity costs have increased by three percent, while between 2008 and 2010, the national trend for the cost of photovoltaic modules decreased by 37 percent; and non-module costs by 18 percent from 2009 to 2010. As such, the average cost per watt (/W) of installing photovoltaics in North Carolina has dropped from US$8.50/W in 2006, to $5.44/W in 2011. "In all, that is a 36 percent drop in price, making solar power more accessible in our state," says NCSEA in a statement released.
It adds that by 2020, the installed cost of photovoltaic systems less than 10 kW are expected to be $3.84/W, while those bigger than 500 kW will be $1.90/W.
Therefore, for many electric utilities in the state, says the association, systems over 10 kW in size, which have admittedly received both federal and state tax credits, were at grid parity with commercial retail electricity prices in 2011.
Meanwhile, NCSEA says that those systems 10 kW or smaller will reach grid parity or become cost competitive with residential retail electricity prices for the majority of North Carolina electric utilities in 2020. For those between 10 and 500 kW, it will be achieved in 2018, and for systems bigger than 500 kW, 2015. As before, to achieve this, they must also be backed by federal and state tax credits.
The association goes on to say that systems which are not supported by these credits, can expect to be at grid parity or cost competitive with retail electricity prices in 2020.
The report expands: "The LCOE [levelized cost of electricity] of solar PV systems greater than 500 kW taking federal and state tax credits was $0.09/kWh in 2011. This figure was at or below the retail commercial electricity prices for 74 of the 104 electric utilities, or 71 percent of utilities in North Carolina. These cooperative and municipal electric utilities at grid parity serve over 107,000 commercial customers in North Carolina. However, grid parity was not present with commercial electricity prices provided by investor-owned utilities, which serve 71 percent of the commercial customers in North Carolina."
Myriad of factors
Falling costs have been driven by a myriad of factors, write the report’s authors, which include technological improvements and tighter supply chain management, and North Carolina’s solar energy policies.
In 2007, the state adopted the North Carolina Renewable Energy and Energy Efficiency Portfolio Standard (REPS) – said to be a "major driver" – which requires North Carolina’s investor-owned utilities to generate at least 12.5 percent of their annual retail electric sales from renewable energy and energy efficiency resources by 2021. Of this, at least 0.2 percent of retail electric sales must come from solar energy. Cooperative and municipal electric utilities must also meet a 10 percent requirement by 2018, which includes at least 0.2 percent of retail sales from solar energy.
Furthermore, NC GreenPower, an independent nonprofit that supports small renewable energy systems by collecting voluntary contributions from electric customers in North Carolina, has been established.
Compliance with the North Carolina REPS and management of NC GreenPower are both dependent on renewable energy certificates (RECs). RECs – tradable commodities – are equal to one MWh of renewable electricity.
"Additional North Carolina policy drivers include a 35 percent state investment tax credit through 2015 and a property tax exemption of 80 percent for commercial and 100 percent for residential PV systems. Solar PV installations in North Carolina also benefit from federal energy policies, particularly a 30 percent federal investment tax credit. Commercial projects are also eligible for accelerated depreciation through the Modified Accelerated Cost Recovery System," continues the report.
These falling costs have served to boost solar activity in North Carolina, with more projects being deployed and additional jobs created, which has been said to both stimulate the economy and make solar energy more affordable for the public.
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