Skip to content
Cart (0 item)

Your cart is empty

Grid Parity: Definition & Meaning

Grid Parity Definition

Noun

Grid parity refers to the point at which the cost of producing electricity from a renewable energy source, such as solar or wind, becomes equal to or less than the cost of purchasing power from the traditional electricity grid, often sourced from fossil fuels. Achieving grid parity is a significant milestone for renewable technologies, as it implies that these sources are not only environmentally advantageous but also financially competitive without the need for subsidies or incentives.

Several factors influence grid parity:

Declining Costs: As the technology and manufacturing processes for renewable energy systems, like solar modules or wind turbines, improve and scale up, their costs decrease. This trend has been especially evident in the solar industry over the past few decades.

Rising Fossil Fuel Prices: As the prices for coal, natural gas, and other fossil fuels fluctuate or trend upwards, the relative cost advantage of renewables can increase.

Incentives and Policy: While grid parity ideally denotes competitiveness without subsidies, government incentives, tax credits, and favorable policies can expedite the journey towards this milestone.

External Costs: Recognizing the environmental and health costs (often termed externalities) of fossil fuel consumption, such as air pollution and greenhouse gas emissions, can also influence the effective cost calculations and the perception of grid parity.

Achieving grid parity is often region-specific, as it depends on local electricity prices, availability of resources, infrastructure, and policies. However, as more regions reach this point, the adoption and integration of renewable energy sources into the mainstream power mix are further accelerated.

Usage:

"With solar power reaching grid parity in many parts of the world, homeowners and businesses are finding it financially prudent to invest in solar installations."

Know your solar definitions to learn and understand more about solar power. Develop your solar lingo here.

The Ultimate Solar + Storage Blueprint (Mini Course)

Struggling to understand how solar + storage systems actually work? Looking to build or buy your own solar power system one day but not sure what you need? Just looking to learn more about solar, batteries and electricity?

Join 15,000+ solar enthusiasts breaking free from their energy dependence with this short step-by-step video course that will make you a solar + storage expert. Start your journey to energy independence today.

Learn More Now

Who is ShopSolar.com?

ShopSolar.com is the #1 digital platform that enables consumers & businesses to source and purchase complete solar + storage solutions direct, saving you thousands in time, energy and money! With over 40,000+ happy customers, we’re on a mission to make solar simple, transparent and affordable.

Get a Complimentary Solar Proposal Today!

$150 Value - Free Offer (Limited Time Only!) No Strings Attached. Totally Free. Takes Less than 2 Minutes.

Get Started