As Grid Parity Approaches, Solar Goes Mainstream

July 22, 2008
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There is a lot of conversation today about grid parity, that point at which the cost of a renewable energy source gains economic equality to the available non-renewable sources.

Naturally, this has a lot to do with location as costs of both renewable and non-renewable and renewable energies vary wildly from place to place. For example, solar energy has already reached grid parity in Hawaii for obvious reasons, there is an abundance of sun and a lack of locally available coal or natural gas. In other places like Pennsylvania and West Virginia where coal is more plentiful and the sun is not quite so bright, it will take a few more years for costs to reduce sufficiently to reach parity in those regions.

A major factor in reducing the cost per KWp (peak Kilowatt production) lies in the amount of production. More people making more solar panels means cheaper costs. One of the ways that this occurs is when a product becomes sufficiently affordable that is can go mainstream into the retail economy. As consumers begin to go shopping, production increases further, advancements are made to compete and, in the end prices really start to drop.

While economists and experts crunch the numbers to determine these very sophisticated algorithms, I have found there is a very accurate way to tell when an industry has turned the corner and enters the mainstream without graduating from Harvard Business School. I call it the “Home Depot Factor”. It works like this. When Home Depot starts offering and promoting a product in its stores to where an average Joe like me can walk in and buy it without going to a special high priced engineering business, then that product has gone mainstream and we can expect the prices to begin to decline even more dramatically as serious competition gears up.

The good news is that Home Depot is now selling the BP Solar panels and will gladly install them for you. Click here to see their consumer friendly presentation. Of course, just because Home Depot has gotten into the act, doesn’t mean that the competition wasn’t already heating up. SunPower Corporation (Nasdaq: SPWR) is another company on the front lines of the consumer focused solar roofing industry and they’re bringing advances in both aesthetics and efficiencies to both existing homes as well as new construction.

When those ugly solar hot water units for swimming pools and homes were first introduced roof tops so many years ago, I can remember wondering when a person would be able to install a normal looking roof that was actually solar panels that would supply 100% of that home’s electrical needs. Well, I need wonder no longer. That day has arrived and, if you factor in mortgage financing, you can actually go cash flow positive with it, depending of course, on where you live. This means people can now retrofit solar panels to their existing homes and they will most likely save enough each month to make the payments on the home improvement loan.

I had an opportunity to speak with Helen Kendrick who heads up the communications department at SunPower. In addition to the above facts, Ms. Kendrick also pointed out that many forward thinking builders are including their solar tiles as part of new construction and doing so without a significant increase in the price compared to a traditional roofed home.

Obviously, in a tight real estate market in the middle of an oil crisis, this is probably more a capitalistic strategy than an altruistic one the significance of this is not the motive but the simple fact that it can be done. The fact that today, not tomorrow but today, cost competitive homes can be built with aesthetically pleasing solar tiles that will significantly reduce that home’s dependence on non-renewable resources to power it, is indeed crossing a threshold that will change the market entirely.

Helen was also quick to add that recent statistics are indicating that homes with solar arrays installed are moving twice as quickly and at better prices than homes without them. Yep, solar has finally gone mainstream and we all will be better off for it.

With solar technologies going mainstream, wind turbines can’t be far behind and the days when these two technologies will be the preferred, rather than the elite choice for consumers are fast approaching. In no time, people who don’t recycle their garbage, who shave with the water running and who would never consider composting will live in homes that generate 100% of their electrical needs from the sun and don’t infringe on the environment in any way. Hopefully they will be OK with that and won’t feel the need to start smoking again in protest.

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