Grid Parity Are we there yet?

Grid parity as it pertains to solar is the point where it is as cheap or cheaper to produce your own power from solar than it is to buy it from the grid. This is what we have been working toward for many years, the day when we can generate our own power affordably. The day we can tell the utilities to take a hike, we will take it from here.

Recognizing when we have achieved grid parity is not easy. Grid parity is dependent on many thing. The most important factors are cost of solar equipment, the interest rate and the cost of grid power.

The faster the utilities raise rates the faster we get to grid parity and for better or worse the rates in Ontario continue to escalate at a frightening rate. The average annual increase of electricity is over 10% annually. They do a good job hiding this behind time-of-use metering and smart meters but the fact is that the rates have escalated year over year by about 10.5%.

With the average cost of a secured loan at 2.5% the cost of capital is very low today. The cost to borrow the money to have your own solar system installed is less than the value in energy it will generate. You can be cash flow positive from day one; this is grid parity.

The best part is that all of this is outside of any government incentive programs. The microFIT program is still here and still makes sense for most people but we no longer need it to be at grid parity. The microFIT system has served us well but most of us in the industry will be glad to see it go.

Welcome to grid parity, Ontario!

Additional background information about grid parity can be found here..

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