How does solar power from rooftop panels fare against grid power in terms of cost?
Before getting to know the answer for the question, there are two important terms which one should be aware of – levelized cost of energy and grid parity.
Levelized cost of energy (LCOE) is the ratio of total costs involved in installation and maintenance of rooftop Solar PV panels to lifetime energy generation. Let us do a simple math for a better understanding. The total lifetime costs involved at a specific rate accounting to a common time in future be $1000 and total energy generation till the same time in future be 10,000 kWh. Then, the LCOE of rooftop solar PV is $0.10/kWh.
At a specific point of time, when cost of power (LCOE) produced from your rooftop panels equals or is lesser than the cost of power purchased from utility grid, then your rooftop technology is said to have achieved the grid parity.
With the U.S solar market almost doubling solar installation capacity from 2015 to 2016, residential market has its own share of 19 % as reported in US Solar Market Insight 2016 Year-in-Review. According to National renewable energy laboratory (NREL), rooftop solar has the potential to produce 40 % of total energy production in the U.S and also reported that the cost of rooftop solar has fallen by 70 % over the last 15 years.
Now, answer to the question of rooftop solar cost versus the grid power cost cannot be a generic one as the availability of energy resource from the sun varies state to state. For example, the cost of solar power in Arizona is lesser than that in Massachusetts due to difference in the solar energy availability between the two states.
Even the electricity rates vary across the states due to socio-economic and other regulatory factors with most parts of the Texas paying around $0.1/kWh to parts of Wisconsin paying up to $0.25/kWh. The average electricity rate for all regions across the country can be found from the website of Energy Information Agency (EIA).
As modeled by Dr. Joshua D. Rhodes, a post-doctoral researcher from University of Texas, Austin, the LCOE of residential solar power averages around 20 cents per kWh across the country with average grid power cost being around 13 cents per kWh
Almost 10 states hit the grid parity in 2016 as per reports from the Deutsche Bank. With solar investment tax credit hanging around, fall in price of solar panels and Department of Energy Sunshot initiative aiming for $0.50/W residential PV installation, we can expect rooftop PV to hit grid parity in most of the states at least by 2020 despite reduction in benefits for customers in few of the states’ net metering policies.