Solar Power Is Now as Inexpensive as Grid Electricity in China

Solar Power Is Now as Inexpensive as Grid Electricity in China

Solar power now costs the same as, or less than, electricity from the grid in many of China’s cities, a new study finds. This research may encourage broader adoption of industrial and commercial solar power there.

China is now the world's largest producer of electricity. Most of this electricity comes from coal, which was used to generate more than 72 percent of China's electricity in 2015. Still, China is aggressively pursuing renewable energy, with the U.S. Energy Information Administration projecting China's solar capacity to grow by more than 7 percent per year from 2015 to 2040, and its wind capacity to grow at nearly 5 percent annually during that period.

Previous research suggested that solar energy could reach grid parity—that is, become as or less expensive than coal and more conventional sources of electricity—in most developed countries between 2013 and 2020. In contrast, prior work suggested it might take China decades before solar energy achieved grid parity.

Advances in solar technology have helped bring solar within reach of grid parity sooner than expected in China. Whereas the cost of solar photovoltaic electricity there was up to 15.1 Chinese yuan per kilowatt-hour in 2000, it was only up to 0.79 Chinese yuan per kilowatt-hour in 2018. In addition, in 2018, the Chinese government dramatically cut subsidies to the solar photovoltaic industry to drive it to compete with coal without government aid.

To see where Chinese solar energy stands now, scientists in Sweden and China analyzed the net costs and profits associated with building and operating industrial and commercial solar energy projects in 344 prefecture-level cities in China. They found that in all 344 cities, solar photovoltaic systems were capable of generating and selling electricity at lower prices than the grid without subsidies, and in 22 percent of those cities, they could also produce electricity at lower prices than coal.

“[Experts in] the field had known that solar had reached grid parity in many places in China, but the extent seen in this study is higher than what I would have thought,” says solar analyst Rishab Shrestha, with energy research and consultancy firm Wood Mackenzie in Denmark.

Future research could explore how commercial and industrial solar power customers in China might benefit as grid energy storage costs come down, Shrestha adds.

The scientists detailed their findings in the 12 August edition of the journal Nature Energy.

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