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Solar Parity Arrives Early

NEW YORK ( TheStreet) -- When asked when the cost of solar power might equal that of other grid power, I used to say it would happen in 2015 or 2016.

Turns out I'm wrong. The correct answer is now.

The continuing shakeout among Chinese solar panel makers will drop the price of panel power to 48 cents/watt this year, according to GTM Research. It's assumed that grid parity is found at 50 cents/watt.

As I have said many times, you ain't seen nothing yet. The GTM report estimates costs will drop to 42 cents/watt in two years. That's not counting the many breakthroughs being found in other materials, some of which could reach the market by that time.

All this is enabling the production of solar "mega projects" like one SunPower (SPWR) is building for Berkshire-Hathaway's (BRK.A) MidAmerican Energy in Antelope Valley, Calif., which will be delivering 579 Mwatts to the grid.


The Reiner Lemoine Institute in Germany, which has backed a number of solar projects in the past, adds that when wind and solar projects share space, barely 2% of the potential solar power is lost, twice the amount of total electricity is generated, and that this power is complementary -- wind power is primary on winter nights, solar on summer days, as CleanTechnica reports.

This architecture limits the amount of storage required for around-the-clock power, the Institute says, meaning that reliable, low-cost and abundant power is here to stay. It's big news for General Electric (GE), which makes wind turbines. Solar and wind energy can live and work together.

If you want to know why shares in SunPower and First Solar (FSLR) are rising, this is it. When renewable energy can compete on price with other forms of grid energy, it puts a thumb on the scale of energy costs. That thumb grows larger, and more powerful, over time as the amount of cheap renewable energy increases and costs continue to fall.

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