Grid parity
Topic: Infrastructure: Transport, Communications and Energy · NCERT: Beyond NCERT
Meaning
Grid parity is reached when power from a renewable source costs the same as, or less than, power from conventional sources such as coal. At this point, renewables can compete on cost without special price support. The comparison is usually made using the levelised cost of electricity, which is the average cost of each unit over a plant's life.
Example
In India, solar auction tariffs of about ₹2.5 per kWh are below the cost of power from new coal plants, so solar has reached grid parity. However, solar power is available only in daytime. Adding battery storage to supply power round the clock raises its cost.
Don't confuse with
- Feed-in tariff: A feed-in tariff is a guaranteed support price used before renewables were cheap enough to compete. Grid parity is the point where that support is no longer needed on cost grounds.
Related concepts
- Energy infrastructure
- Energy security
- Plant load factor
- Aggregate technical and commercial losses
- Power purchase agreement
- Cross-subsidy
- Open access (electricity)
- Time-of-day tariff
- Feed-in tariff
- Levelised cost of electricity