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Big solar is leaving rooftop systems in dust

businesspaper Updated: Jul 06, 2016, 05:51 IST
Reuters
Reuters

SAN FRANCISCO: Solar power is on pace for the first time this year to contribute more new electricity to the grid than will any other form of energy – a feat driven more by economics than green mandates.

The cost of electricity from large-scale solar installations now is comparable to and sometimes cheaper than natural gas-fired power, even without incentives aimed at promoting environmentally friendly power, according to industry players and outside cost studies.

Today, large systems that sell directly to utilities are expected to account for more than 70% of new solar added to the grid this year, according to industry research firm GTM Research.

Unsubsidised utility-scale solar power costs $50 to $70 per megawatt-hour (or Rs 3.35-4.7 a kilowatt hour), compared with $52 to $78 for the most efficient type of gas plant, according to investment bank Lazard.

Generating power from residential rooftop panels is far more expensive, ranging from $184 to $300 a MWh (Rs 12.4-20.1 a kilowatt hour) before subsidies, the report said.

“If you take a solar panel from someone’s rooftop and put it in a field, the amount you would pay for that power drops precipitously,” said Matt Freedman, an attorney with California ratepayer advocate The Utility Reform Network. “What’s the magic of having it on the rooftop? It’s not clear.”

Rooftop installers such as SolarCity enjoyed rapid growth thanks in part to marketing that peddles the romance and freedom of generating emissions-free power at home. And, for homeowners in states with favourable policies, rooftop panels can be a good investment.

But the math only works in places with so-called “net metering” laws, which require utilities to buy the electricity rooftop panels generate at prices far above what they pay for centralised power. To what extent governments and ratepayers should support rooftop solar is a matter of debate in several state legislatures and utility commissions.

Rooftop solar’s dependenceon incentives is a key reason investors have punished solar stocks in the last year.

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