The Long Chase for Solar Power Might Finally Be Over
The “Holy Grail” for solar enthusiasts has always been what the industry refers to as “grid parity.”
Here’s why grid parity is so important.
Grid parity refers to the cost of the source used as being equivalent to that of the primary manner in which electricity is generated. And until recently, most of the solar input could not be sustained in market terms, unless it was the recipient of significant government subsidies.
However, as locations were weaned from dependence upon public sector support, some of them showed signs they could become self-sufficient. Above all else, these projects required two things: lots of sunshine and infrastructure networks that were already in place.
Of course, these developments by themselves were hardly enough to change the global energy landscape. Local changes in the energy pattern have a minimal impact on worldwide energy flows and pricing projections.
But the Bernstein report takes a different view, positing that’s not likely to be the case a decade from now. According to the report, solar is already eating away at the margins of oil and gas demand. Bernstein says the adoption of solar in off-grid areas in developing markets will translate into less demand for kerosene and diesel. Even oil demand in the Middle East will feel the effects.
Meanwhile, the increased use of solar power in China, developed Asia, the United States, Europe, and Australia will likely serve to reduce natural gas demand as well.
But Parkinson’s article goes on to reveal something much bigger. The kicker in the report is what he refers to a veritable “bombshell.”
As he writes, “While solar has a fractional share of the market now, within one decade, solar PV (plus battery storage) may have such a share of the market that it becomes a trigger for energy price deflation, with huge consequences for the massive fossil fuel industry that relies on continued growth.”