CLIMATE SPECTATOR: The right way to value solar

As more and more Australians install small-scale rooftop solar PV systems, it's time to address confusion about the value of feed-in tariffs and the concept of 'grid parity'.

Climate Spectator

Australian households have installed over 1,000 megawatts of small-scale solar PV, and there will be more installed as module prices continue their fall. Now is the time to resolve confusion about the value of solar power, "grid parity" and the role of support mechanisms for solar PV. How do we decide what solar PV is worth? What does this mean for feed-in tariffs and the concept of grid parity?

The question of the value of power from residential PV systems is hard to answer. It differs at various points in the supply chain, and depends on whether the power is used on site or exported. The solar power households consume substitutes for electricity from the grid, valued at the variable (per kWh) charge that comprises the bulk of retail electricity prices (often at least 20c/kWh). Therefore, households ‘earn’ close to retail prices for the solar power they use. The notion of grid parity – when the cost of power from a distributed source, like solar PV, equals the cost of grid-connected electricity – is relevant here.

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