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‘Grid Parity’ for Renewables: Why Subsidies? (Part II)

By Mark Febrizio -- March 22, 2016

“By focusing strictly on cost-competitiveness, grid parity fails to consider how dispatchability influences an energy source’s value on the grid. Moreover, renewable energy sources rely heavily on government funding to even reach cost-competitiveness. Continued subsidization of solar and wind to make them cost-competitive or accelerate their adoption is unjustified. “

As Part I of this analysis explained, grid parity for renewable energy is an empty concept because it fails to consider the functionality of renewable resources on the electric grid. Since grid operators must balance supply and demand to sustain grid stability and meet the power needs of Americans, dispatchable resources are extraordinarily valuable for electricity generation.

Resources such as coal, natural gas, nuclear, and hydropower can dispatch power on demand, but solar and wind energy are intermittent, making them undependable for electricity generation.

‘Grid Parity’ for Renewables: An Empty Concept (Part I)

By Mark Febrizio -- March 21, 2016

“Coal, natural gas, nuclear, and hydroelectric power are essential because they are predictable and dispatchable resources; conversely, renewables produce power intermittently and are less valuable as a generation resource…. To reach true grid parity, an energy source should be able to produce affordable electricity as well as dependably meet electricity demand.”

The idea of cost-competitiveness for renewable energy resources—called “grid parity”—is misleading and incomplete without considering reliability. Yet recent reports are pushing grid parity as an imminent reality. For example, a February 2016 study from GTM Research assessed that electricity from residential solar has attained grid parity in 20 states.

How an electricity source functions on the grid is more important than mere cost-competitiveness. To reach true grid parity, an electricity source should provide affordable, reliable power on a dependable basis.…