Solar Grid Parity in the United States

Ved Chirayath
December 9, 2015

Submitted as coursework for PH240, Stanford University, Fall 2015

Fig. 1: Solar cell efficiency records over time. [1] (Courtesy of the U.S. Department of Energy)

Attaining grid parity for alternative energy resources, such as solar, is seen as one of the fundamental challenges hampering broad adoption of renewable energy in the United States. Over the past decade, there have been significant technological advances in solar power generation efficiency including photovoltaics (PV), concentrating solar power (CSP) and solar heating and cooling (SHC). As of 2015, common crystalline silicon solar cells reached efficiencies of 27.6% while triple-junction concentrator cells reached 44% (Fig. 1). [1] However, decreases in installed cost and improved project performance of solar power plants have contributed most to the marked decrease in solar power cost, spurred by an expiring federal incentive, that have seen solar power sales agreements with utilities averaging just $0.05/kWh, compared to a $0.03-0.06/kWh national wholesale electricity cost, depending on locality. [2]

Based on recent peer-reviewed publications and reports on domestic and global grid parity for solar power, there appear to be three primary factors behind recently observed advances towards parity. [2-4]

  1. Solar power plants have increased in capacity dramatically, with the opening of 550-megawatt facilities in California, for example, and generate electricity more efficiently. [3] Here, efficiency gains are largely due to economies of scale, power conversion and distribution, rather than technological innovations at the cell level. For 2014, solar plants operated at an average capacity factor (AC) of 29.4%, more than a 3% increase over years prior.

  2. Solar plant costs have decreased more than 50% since 2009 with median project costs of $3.1/watt in 2014 as compared to $6.3/watt in 2009. [4] Solar cell manufacturing advances, cost reduction and cell efficiency improvements all contributed to this reduction in installed cost per watt.

  3. Power purchase agreements (PPA) with utilities are finally competitive with traditional energy sources as solar energy is offered for just 5ยข/kWh. [4]

Going forward, solar power is now economically beneficial in a number of regions and industry is financially motivated to enter PPA with new solar power plants.

These data suggest we have reached solar grid parity in the United States and represent an important step towards ensuring a renewable source of energy. However, it has also become clear that assessing the sustainability of such rapid growth in solar power necessitates careful analysis of environmental burdens, sustainability and material constraints. [5] Further, federally-funded incentives and research played a crucial role in achieving solar grid parity, but research and development opportunities are still needed to eventually lead to a sustainable and secure energy future. [6]

© Ved Chirayath. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] M. A. Green et al., "Solar Cell Efficiency Tables (Version 45)," Prog. Photovolt: Res. Appl. 23, 1 (2015).

[2] M. Bolinger, S. Weaver, and J. Zuboy, "Is $50/MWh Solar for Real? Falling Project Prices and Rising Capacity Factors Drive Utility-Scale PV toward Economic Competitiveness," Prog. Photovolt: Res. Appl. 23, 1847 (2015).

[3] T. Goldenstein, "Huge Solar Farm Opens in California: Enough Energy for 160,000 Homes," Los Angeles Times, 9 Feb 15.

[4] M. Bolinger and J. Seel, "Utility-Scale Solar 2014," Lawrence Berkeley National Laboratory, LBNL-1000917, September 2015.

[5] V. Fthenakis, "Considering the Total Cost of Electricity From Sunlight and the Alternatives," Proc. IEEE 103, 283 (2015).

[6] S. Chu and A. Majumdar, "Opportunities and Challenges for a Sustainable Energy Future," Nature 488, 294 (2012).