Grid parity

The term "grid parity" is frequently used to describe the aim of technological and business development in photovoltaics specifically and for energy production in general.

Today's electricity grid and energy suppliers make energy available to every customer, in return for which a price must be paid. This price is made up of various components such as production costs, distribution costs and taxes:

• The production costs are those costs incurred in the production of the energy. However, since several energy production systems are always in competition, this cost component is established in Germany at the Leipzig Electricity Exchange, where the amounts of energy produced are traded and distributed.
• The distribution costs reflect the costs that arise from leading the energy from its production location to the end user.

When a solar power plant produces electricity now, the costs can also be calculated for producing one kilowatt hour of electricity at the plant, based on the cost of the plant, the local solarization and the expected life span of a photovoltaic plant. This number of parameters means that these costs vary greatly and they currently lie at 0.2-0.3 EUR/kWh.

If the costs per kilowatt hour of solar energy are lower than or equal to the costs of one kilowatt hour of electricity from the grid, the term "grid parity" is used.

It is therefore relatively easy to see that grid parity is a highly individual phenomenon, since a very large number of parameters must be considered in comparing the costs. Nevertheless, with the continual reductions in costs of the systems and the extension in the life span of solar power plants, photovoltaics is on the right track to offering a local alternative to power from the grid in more and more cases.