Solar Energy Grid Parity in the UK

by Solar Selections on October 12, 2011

In the solar community grid price parity is considered the Holy Grail and a turning point in the world’s constant search for energy. Grid price parity is the point at which alternative methods of generating energy is as cost-effective as power from the electricity grid. In order to see just how far away we are, Solar Selections have provided the following simple breakdown.

The Cost of Home Electricity

Our energy bills are made up of a deliberately complicated formula, which makes it very difficult for us to find out where the lump sums come from. Recently, the watchdog Which? conducted a simple test asking 36 people (including an accountant, solicitor and an engineer) to determine how their bill was calculated using only the bill provided to them by their retailer and the energy retailers’ websites. Only 1 of the 36 managed to complete what should have been an easy task.

However, it can be revealed that the approximate cost of a kilowatt-hour (kWh or UNIT) in the UK is £0.12. Please consider that this figure will vary depending upon location. You may have heard that this is shortly expected to be raised by approximately 30% and in some cases more.

The Cost and Value of Solar Power Micro-Generation

Today, the typical size of a solar power installation is 4 kilowatt-peak (kWp, the rated capacity) because the highest solar feed-in tariff incentives are available for systems of this size. Through Solar Selections, prices for a fully installed 4kWp system start from £9,000 (inc VAT). In order to put a value on each kWh or UNIT that a typical 4kWp system will produce over a given amount of time Solar Selections have constructed the following formula:

Cost of Solar Power Micro-Generation (without any tariff or grant support)

Price of system: £9,000
Expected yield per annum (in Birmingham, provided by the Energy Saving Trust): 3,474kWh
Panel Performance Warranty: at least 80% of output for 25 years
Expected loss of output per annum: 0.8%
Approximate total yield over 25 years: 78,500 kWh

Cost per kWh over 25 years = £9,000 / 78,500 = £0.115 per kWh

With this approach, it could be argued that the UK has already reached grid parity without the use of any incentives such as the UK’s  Solar Feed-in Tariff.

Current energy prices of £0.12 vs Solar PV prices of £0.115.

These figures represent the price of a small domestic system, but for larger systems the savings stand to be even greater. For a 50kWp system (starting from £100k), prices of £0.102 per kWh can be realised. A 5 megawatt (MW) commercial-scale system could yield prices as low as £0.076 per kWh.

Keep in mind that, with a review of the feed-in tariff scheme underway, they are due to be reduced next year, and no one is sure just how much they will be cut. This means that now is a great time to install a system and take advantage of the solar feed-in tariffs offered by the UK government.

Have more questions about Solar Power? Contact us.

For further impartial information on solar panels and inverters, please feel free to get in touch with Solar Selections (sales@solarselections.co.uk).

In addition, if you are looking for a free and informative Solar Quote Comparison of up to 7 pv installers, simply fill out the “Request a Solar Quote Comparison” form to the right. Once completed you will instantly be emailed a quote comparison and your personal solar broker will be in touch to offer help if required.

Written by Tom Charlesworth

charlesworth@solarselections.co.uk

Phone: 020 7205 2267

© 2011 Solar Selections Pty Ltd

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