One of the greatest advantages of solar is that is can be installed anywhere, at any size, quickly and easily. It is a wonderful distributed power solution. However, it needs to compete with the end-customers’ alternatives. This is where socket parity comes in.
Solar has the great advantage that it can come in any size: in a huge power plant or in your old Casio calculator. It can be built on rooftops and directly near to where it is consumed. That is great, because if the power is generated and consumed in one place, you don’t need to trouble the power grid with it.
You have a home and you have power bills. The home might have a nice rooftop. If you build a solar PV plant there and consume the power directly, you can compare the cost of solar power directly with your cost of grid power – and if it is cheaper, as is the case in many countries and many parts of India, then solar has reached socket parity. “Socket” being the power socket in your house.
The cost at which a utility buys power (grid parity) and the cost at which a utility sells you the power (socket parity) are, of course different. You might pay Rs. 10 per kWh for a unit of electricity that cost the utility only Rs. 5 to procure. Why the difference? Firstly, the utilities need to transmit the power to you. For that, they need to build and operate a power grid – and that costs money. (In addition, in India, it is a very leaky grid, where on average 30% of the power is lost.) Secondly, power pricing is usually not an economic, but a political decision. Some people get power cheaper than others and some other have to pay for that. In India, farmers get very cheap power (if they get it) and industries and tax payers are footing the bill.
To compare costs of power or tariffs with the cost of solar, we need to break down the solar costs on a per unit basis. That means, we take the cost of the system, perhaps the cost of financing the system and the cost of maintaining the system (very small). You add these costs up and divide them by the number of units the system will produce over its lifetime (say 20 years) to get the kWh costs.
Here are some indicators on were we currently stand on socket parity in India for different tariff groups in different states. The graphics come from an analysis by BRIDGE TO INDIA.
Socket parity in India in the residential sector is expected to be reached by 2022 – and also projected to be the key driver for installations.
If you are an industrial or commercial power consumer, then you are way beyond the point of parity in some states. Below are the graphs to show you. The comparison between regular prices and solar prices shows that, solar is more viable than electricity from the grid in many states.
– Commercial (0-50 KW) as of Dec 2014:
– Industrial (50-100 KW) as of Dec 2014:
Don’t forget that parity and lower costs are not the only benefits of going solar. In addition, you can lock-in your solar power tariffs for a 20 years or more, when grid power will probably cost you more and more. You become more energy independent, use less fuel, might be able to apply tax benefits and, last but not least: help to improve air quality and save our climate!