Government support schemes and grid parity

Financial incentives for photovoltaics

Financial incentives for photovoltaics are incentives offered to electricity consumers to install and operate solar-electric generating systems. A government may offer incentives in order to encourage the PV industry to achieve the economies of scale needed to compete where the cost of PV-generated electricity is above the cost from the existing grid. Such policies are implemented to promote national or territorial energy independence, high tech job creation and reduction of carbon dioxide emissions which cause global warming.

Feed in tariff (FiT)

A feed-in tariff (FIT, standard offer contract) advanced renewable tariff or renewable energy payments is a policy mechanism designed to accelerate investment in renewable energy technologies. It achieves this by offering long-term contracts to renewable energy producers, typically based on the cost of generation of each technology. Under a feed-in tariff, eligible renewable electricity generators, including homeowners, business owners, farmers and private investors, are paid a cost-based price for the renewable electricity they supply to the grid. This enables diverse technologies (wind, solar, biogas, etc.) to be developed and provides investors a reasonable return.

Grid parity

SPOT grid-parity

DB estimates / A.T Kearney

Grid parity occurs when an alternative energy source can generate power at a levelized cost of electricity (LCoE) that is less than or equal to the price of purchasing power from the electricity grid. Reaching grid parity is considered to be the point at which an energy source becomes a contender for widespread development without subsidies or government support. It is widely believed that a wholesale shift in generation to these forms of energy will take place when they reach grid parity.