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When will solar be competitive with other energy sources?

Grid-parity is the point at which the cost of electricity generated from solar equals that of electricity generated from prevailing sources.

That point varies for each country, depending, notably but not exclusively, on average electricity rates and how much sun the country gets.

Holding constant the price of solar, the study looked at retail electricity prices and insolation rates as indicators of how close solar stands to being competitive with other sources of electricity in any given country.

Because solar incentives are intended to bridge the gap between the price of solar and prevailing electricity rates, the higher the electricity rates, the lower the incentives need to be in order to make solar power competitive.

Countries with the highest electricity rates and highest insolation rates (closest to the upper right hand corner) stand to gain the most from incentivizing solar.

Cheap fossil fuels discourage market development

It should come as no surprise to find that countries closest to the left edge of the graphs (with the cheapest electricity rates) such as India, Russia, China, Australia and the US are also notorious for heavily subsidizing fossil fuels.

Once emissions trading regimes or carbon taxes raise the cost of greenhouse polluting energy in those countries, all of this will change, and the marketplace for solar market development will benefit.

Countries that subsidise their electricity not only encourage higher electricity consumption, but also artificially keep solar energy from reaching grid parity.