Grid Parity

Grid parity is a term used to when the cost of producing electricity from renewable sources matches, or becomes competitive, with the cost of purchasing electricity from the electricity grid (power predominantly derived from fossil fuels). Reaching grid parity means that renewable energy sources become economically viable without the need for any government support or subsidies and it is widely believed will prompt a wholesale shift in electricity generation.

Market conditions have in the past made it cheaper to develop new power sources based on fossil fuels, a far from perfect solution considering global climate change and the high and variable costs of fuel. However those market conditions are thankfully becoming a thing of the past.

A 2014 report conducted by Bloomberg New Energy Finance (BENF) concluded that renewable energy sources are just as competitive as fossil fuel based electricity sources in 55 emerging nations around the world, as well as in 10 states in India and 15 provinces of China. While 10 U.S. States are currently at grid parity, Deutsche Bank is forecasting that all 50 will be there by the end of next year. Australia, Germany, Portugal and Spain all reached grid parity in 2013.

As grid parity becomes more common throughout the world, renewable energy sources increase their potential to transform our world and to help to reduce the effects of global climate change.