Eclareon examines PV competitiveness in seven countries

Renewable energy consulting firm Eclareon’s latest issue of the Grid Parity Monitor examined the commercial solar segment in seven countries, including Brazil, Chile, France, Germany, Italy, Mexico and Spain, analyzing PV competitiveness with electricity prices for commercial consumers and assessing local regulation for self-consumption.

Eclareon found that the main driver of PV grid parity was the decrease in PV system prices, one of the main parameters that determine the levelized cost of enertgy (LCOE).

However, retail electricity prices for the commercial sector showed a decreasing trend in most of Latin American countries and Spain, while in the rest of the European countries and Mexico, electricity prices have been increasing.

Some countries with a competitive LCOE and relatively high electricity rates are already at grid parity for the commercial segment. Yet grid parity by itself is no guarantee of market creation, the report found.

"PV self-consumption will only be fostered if grid parity is combined with governmental support," Erclareon said in its report summary.

The Grid Parity Monitor also found that:

  • In Brazil, high installation prices and a high discount rate prevent PV from being competitive against grid electricity, but the regulatory support (an attractive net metering system) is a good example of an effective incentive for market creation.
  • Chile remains far from grid parity, mainly due to high installation prices, a high discount rate, and low electricity prices.
  • In France, high irradiation levels (in the South) and relatively low installation prices do not compensate for low electricity rates in the commercial sector.
  • In Germany and Italy, low PV installation prices, a low discount rate, and high retail electricity prices compensate for low irradiation levels to reach grid parity.
  • In Mexico, for certain commercial electricity consumers (“Tarifa 2”), partial grid parity has been reached. For other consumers, low electricity tariffs still represent a barrier.
  • In Spain, grid parity has been reached, owing to high irradiation and competitive system prices, but poor regulatory support is a barrier for market creation.

Eclareon noted that the grid parity situation of some of the countries had worsened with respect to that of the residential segment. "In essence, this is because lower system costs in the commercial segment and the benefit of the tax shield do not compensate for the much lower retail electricity rates available for commercial consumers."

In addition, as a result of the rising penetration of distributed generation, new trends are posing challenges to grid parity. Some countries, for example, have imposed (or are discussing the introduction of) specific fees per kilowatt of installed PV or per kilowatt hour of self-consumption to cover the fixed costs of distribution system operators. Some countries have also imposed a tax on electricity generation to compensate for the reduction in tax revenues earned by the government.

pv magazine offers a closer look at the Eclareon’s Grid Parity Monitor.

The full report is available here.