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.

Read more...

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles