Report says falling silicon costs and expected increase in fossil fuel prices mean grid parity will come sooner than expected
Electricity from solar panels will cost the same as that produced from fossil fuels from as soon as 2013, some seven years earlier than previous predictions, according to a new report from the UK's largest solar company.
The report from Solarcentury said the point where grid parity is reached for residential homes will be sooner than expected because the cost of silicon - a key component in most solar panels - is expected to fall significantly over the next decade.
"PV in the UK is sometimes seen as a technology which will only ever have niche application, so it is not a core focus for energy policy," says the report. "In fact, there is a wealth of robust, transparent data which strongly implies the opposite view - broad potential application and strong drivers for take-up."
The report predicts that government plans to introduce a feed-in tariff from April 2010, which will guarantee an above-market price for businesses and householders selling solar power back to the grid, will also help drive down long-term costs by boosting demand for panels.
The study also calculates that rising fossil fuel costs will further speed the arrival of grid parity, noting that the global energy watchdog the International Energy Agency earlier this year predicted that an oil supply crunch could come into effect between 2010 and 2012.
Solarcentury said that once grid parity is achieved, consumer adoption of solar panels will become widespread, allowing the company to exploit economies of scale and further drive down production costs.
The company added that once parity is reached, the up-front costs of a panel will be paid back within eight to 10 years.
The report also calculated that the total resource potential for solar PV in the UK is 460TWh for building-mounted solar PV alone.
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