What is Grid Parity?

What is Grid Parity?

A grid, that is, an electrical grid is an interconnected network that is designed to provide or deliver electricity from the generators to the consumers of electricity. It consists of generating plant, the transmission lines, the substation, transformers, the distribution lines and the consumer. Parity, according to Wikipedia is a state of being equal.

What then is grid parity?

Grid parity occurs when an alternative source of energy (renewables) generates power at a levelised cost of electricity (energy) that is equal to or less than the power from the national electric grid.

Levelised Cost of Electricity (Energy) is simply the cost at which electricity must be sold out in order to achieve break-even over the lifetime of the project.

Grid parity very simply describes the point at which a developing technology (e.g. Solar) produces electricity for the same cost as traditional technologies (e.g. oil/gas/coal).

Grid parity is also a term used to describe when the cost of using a renewable source of energy is equal to or less than the cost incurred on your electric bill (cost per kWh).

As of 2015, a number of countries had reached grid parity for PV, including parts of the US, Japan, China, Germany, the UK, and France. See the image below:

A graph showing countries that have achieved grid parity. It shows the LCOE as well.
Source: Caracas Chronicles

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