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Maxims applied: The Grid Parity Strategy: why it failed to work for solar PV

Posted on: 11-Jun-2010 Page Views: 2298
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Summary Some years ago it became fashionable to believe the solar photovoltaic market would take off, once the price per watt peak of solar hit grid parity. It’s time we called this belief into question… The most important de facto proof of grid parity’s irrelevance is that … Clearly other demand factors are at play here and they are much more powerful than the grid parity argument. So what’s wrong with the grid parity strategy? First off, grid parity is a B2B approach to strategy, not a B2C strategy…
Posted By
Dan Hutcheson (Fellow)
Post Date 2010-06-16 10:46:55
Comment Also, I plead guilty to picking a controversial title. My objective was to
get people thinking outside the box of solar marketing concepts from
decades ago that clearly don't match today's reality. The Grid Parity
strategy goes way back to the times with solar PV growth was stagnant. I
also wanted people to rethink the 'solar is a commodity' argument. A
commodity is where were there is no differentiation and only the lowest
price sells. Commodity prices have very narrow price ranges.
Posted By
Dan Hutcheson (Fellow)
Post Date 2010-06-16 10:40:10
Comment Emmanuel, Great question. All I can say after 4 decades of watching
Moore's Law is that the ability of Engineers and Scientists to break down
or find ways around the barriers to technological progress and their own
'Laws' is amazing. I am seeing a similar effect in solar. CpW reductions
have accelerated to unimaginable rates just 2 years ago.
Posted By
Dan Hutcheson (Fellow)
Post Date 2010-06-16 10:35:51
Comment Thanks Mark, it's great to hear from someone in the field.
Posted By
Dan Hutcheson (Fellow)
Post Date 2010-06-16 10:34:14
Comment Don't get hung up on Grid Parity everyone. My point was that GP is not a
strategic inflection point. That steadily decreasing CpW and B2C marketing
methods are proving far more important. In other words you don't have to
wait until GP for high growth. Besides, if it's growing at double digits
BGP will GP make it grow triple digits AGP?
Posted By
Dan Hutcheson (Fellow)
Post Date 2010-06-16 10:29:29
Comment Adam, don't forget that most of the Grid connected power is coming from
residential. For power companies, GP is definitely an issue. They invest
prior to GP only when it makes economic sense, but that is a B2B market.
Posted By
Dan Hutcheson (Fellow)
Post Date 2010-06-16 10:27:12
Comment Tony, I did not mix the two, though I may have been liberal with
terminology, everything was converted properly. I think you made my point
that grid parity is not key, since you agree that people will buy before it
reaches it. The GP argument is that sales won't take off until it reaches
it. Clearly this is in error.
Posted By
Mark Veach (Member)
Post Date 2010-06-13 07:03:55
Comment I dont believe grid parity applies to small or medium scale solar. The
deciding factor for most alternate energy clients is not money but desire.
Most of our clients want solar, and they are glad the price has decreased
in the last few years, but over all the cost is a secondary desision.
Solardesignandconstruction.net
Posted By
Emmanuel Rausa (Member)
Post Date 2010-06-13 00:21:20
Comment Dan, the arguments you make for early adopters (business or consumer) not
being driven by thoughtful economic reasons are valid. I considered
purchasing PV for my house but the gap between what I think is morally
right to do and what I can economically do is still sadly too large! In the
long term though is economically impossible to argue against the economics
of a commodity business and the grid parity argument. I think the question
really is: will we get there... or close to it?
Posted By
Tony Tersol (Member)
Post Date 2010-06-11 19:07:30
Comment Qualitatively: If grid parity had been achieved and the market wasn't
increasing, your point would be proved. The situation and your arguments
have little relation to your hypothesis. Quantitatively: you mix power
(kilowatts or kW) with energy (kilowatt-hours or kWh). Grid power is $0.10
per kwh. Some people are willing to get solar even though it hasn't yet
reached grid-parity. When it does, many more will.
Posted By
Adam Feinstein (Member)
Post Date 2010-06-11 07:34:16
Comment This would be true if B2C where any significant part of the market, but
grid connected applications represent >90% of the demand. It is here where
it is a commodity and why First Solar has been so strong.
About weQuest:
weQuest's are written by G Dan Hutcheson, his career spans more than thirty years, in which he became a well-known as a visionary for helping companies make businesses out of technology. This includes hundreds of successful programs involving product development, positioning, and launch in Semiconductor, Technology, Medicine, Energy, Business, High Tech, Enviorntment, Electronics, healthcare and Business devisions.
Short URL: http://energy.wesrch.com/weqTR1Z9XQ
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