Is grid parity an indicator for PV market expansion in the Netherlands

Abstract

Grid parity occurred in the residential sector in the Netherlands in the period 2011-2012, because the levelized cost of electricity (LCoE) for a typical residential PV system (0.6-5 kWp) was well below 0.2 euro/kWh, for interest rates between 3 and 8%, while the retail electricity price was 0.23 euro/kWh, propelling a significant increase in installed PV capacity in the residential sector. It is revealing to discuss the constellation of factors that have led to grid parity in the Netherlands, and whether they will lead to continued market expansion. These factors include those relevant to the industry (i.e. the cost learning curve and the overcapacity) as well as those specific to the Netherlands (various policy incentives, net-metering, as well as large-scale purchasing actions). 'Grid parity' may not reflect the growth perspectives for the industry because it gives no information on the adequacy of the PV system prices to impel market expansion, or on the complexity and controls on grid electricity pricing, which depend only to a small degree on generation costs. Low PV system prices were accompanied by an increase in installations but 'unhealthy' prices will not necessarily mean continued market expansion. The continuation of the cost learning curve to drive down PV prices depends to a certain degree on R&D budgets, which are under severe pressure in the current environment. Grid parity in the residential sector has been accompanied by a surge of installations, however this trend