China is closing in on a true energy transformation tipping point. Powering buildings with solar power will cost by 2013 the same as taking power from the grid in parts of China, according to a featured story at www.solar buzz.com. At that point, large investment will flow to installing solar and solar market penetration will surprise many. In the USA, solar will achieve this competitive pricing position in more electricity utility service territories by 2015.
A world where its two biggest economies--China and America--feature large areas where solar is cost competitive with grid power is fundamentally and positively different. Economically creative destruction will be unleashed, creating winners and losers, but increasing wealth and decreasing pollution.
Reducing solar power costs to achieve parity with grid power pricing--"grid parity"--turns the energy world upside down by making central power stations and the huge transmission infrastructure more costly than generating solar at businesses and homes. Achieving grid parity in China is made more difficult by government actions that subsidize power from the grid. Indeed the government in some cases has refused to allow some coal plants to recover even the full cost of the coal combusted. Solar subsidies for manufacturing have counterbalanced to a degree subsidies of grid power.
While China is a world leader in manufacturing solar panels, it has exported nearly all its solar product and not installed much solar until this year. The sharply falling price of solar means that China is transitioning from manufacturing solar panels and exporting them to installing significant solar generation for domestic power production.
According to Solarbuzz.com, China will install 1800 megawatts of solar power in 2011, roughly equal to US solar installation this year. Another 16,000 megawatts is in the Chinese pipeline.
Yet, once solar hits grid parity in any market, solar installations will jump to massive new levels and dwarf even 16,000 megawatts in the pipeline today. Achieving grid parity in portions of China by 2013 is one more stunning energy development.