For First Solar, the Milestone of Grid Parity Achieved?

First Solar's new 12.6 megawatt thin-film solar power plant in the Nevada desert has made it to grid parity, an analyst has claimed. If that's true, it means the company can churn out photovoltaics as cheap as coal, or in this case even cheaper.

In a research note to Greentech Media, Mark Bachman, a senior analyst with Pacific Crest and a specialist in clean energy, said that Arizona-based First Solar can produce electricity at its Nevada system for 75 cents per kilowatt-hour. That's without any subsidies. Compare that with 90 cents per kilowatt-hour for conventional power.

He said:

"In our view, the industry leaders will be those companies that can deliver electricity at or below grid parity pricing without the aid of subsidies while also delivering superior return to shareholders...Currently, only First Solar can claim these achievements..."

Anticipating naysayers, Greentech Media wrote: "Bachman's cost calculations, of course, are impacted by a number of factors and others will likely come to different conclusions. Part of the calculation relies on what others are achieving in other locations with different kinds of panels. "

True. Grid parity depends on the location of the grid to which you seek to be at parity with, the technology used and panel type. It also depends on how you define "grid parity," as EcoGeek notes. 

According to conventional wisdom, grid parity in the solar world will be achieved when module prices get to the coveted $1-a-watt mark. Indeed, the focus to date has been squarely on the cost per installed watt. But Bachman looked instead at the price per kilowatt-hour, or the cost of generating electricity. His rationale was that "the solar industry cares too much about the cost of producing and installing panels, and not enough about the how much a system costs in terms of its power generation, in kilowatt-hours." And so:

"By focusing on the cost/kWh calculation, we can compare competing business models on a defined metric that is independent of technologies."

And compare he did. In his analysis, Bachman concluded that the 14.2-megawatt system at the Nellis Air Force base in Nevada run by SunPower, a First Solar rival, has an installed price of 16.4 cents per kilowatt hour. That appears to give First Solar a giant cost advantage, at least in that market.

But the question remains: Did the company really hit grid parity, the holy grail of cost-effective clean energy? 

That debate shall rage on. In terms of the conventional buck-a-watt metric, the answer is no. Bachman said that First Solar installed panels at the Nevada plant at a cost of $3.17 per watt.

At the same time, the company recently announced that it produced panels at $1.08 a watt for the third quarter -- a nine percent drop from the $1.18 reported in the second quarter. Critics have noted, however, that the number is an average of all of its factories, including those in Malaysia, where costs are closer to 75 cents a watt.

So yes or no on grid parity, the real point is this: The solar industry is making tremendous progress toward making affordable clean energy. Grid parity is fast approaching, and in some markets, according to some metrics, it may already be here. That's cause for optimism. And with that, a final word from Greentech Media Senior Analyst Shyam Mehta:

The idea that module prices need to come down to $1/W for solar to be competitive is misplaced at best, and to a great degree, just plain wrong – it dangerously erases the important fact that even at current prices, PV is at or near parity with the grid in a number of markets. The revolution, kids, isn't coming. The revolution is now.

Yup.

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