The Prospects for Cost Competitive Solar PV Power

New solar Photovoltaic (PV) installations have grown globally at a rapid pace in recent years. We provide a comprehensive assessment of the cost competitiveness of this electric power source. Based on data available for the second half of 2011, we conclude that utility-scale PV installations are not yet cost competitive with fossil fuel power plants. In contrast, commercial-scale installations have already attained cost parity in the sense that the generating cost of power from solar PV is comparable to the retail electricity prices that commercial users pay, at least in certain parts of the U.S. This conclusion is shown to depend crucially on both the current federal tax subsidies for solar power and an ideal geographic location for the solar installation. Projecting recent industry trends into the future, we estimate that utility-scale solar PV facilities are on track to become cost competitive by the end of this decade. Furthermore, commercial-scale installations could reach “grid parity” in about ten years, if the current federal tax incentives for solar power were to expire at that point.