Is solar electricity cheap or expensive? There are two parallel stories circulating these days. One version of the story — the older of the two — is that electricity from a photovoltaic (PV) array is more expensive than grid power, and that adding batteries makes PV even more expensive.
The newer tale, oft-repeated on GBA, is that PV is cheap and getting cheaper, and that any utility that tries to limit PV installations is doomed to failure — because homeowners who are disgruntled by a PV-hostile utility will choose to install batteries, cutting the cord to the grid.
Cutting the cord, a move called “grid defection,” is a key element of utility executives’ nightmares. The worry is that increasing instances of grid defection will cause utility revenues to drop, precipitating a “death spiral” for utilities.
So, which version is closer to the truth?
In some states, PV electricity is cheap
Here’s my summary: right now, if available tax credits and rebates are taken into account, PV electricity is cheaper than grid power in many areas of the country with generous PV rebates — but only for grid-connected customers.
If tax credits and rebates are ignored, PV electricity may still be cheaper than grid power for grid-connected customers — but only in areas of the country with high electricity rates or favorable net-metering agreements.
In areas of the country where grid power is cheap, rebates are stingy, or utilities don’t offer net metering, PV electricity probably isn’t yet cost-competitive.
In almost every location in the U.S., the cost of electricity produced by a PV system with enough batteries to permit “grid defection” is significantly higher than the cost of grid power.
Do the math
If you want to know whether PV is a good investment, do the math. You can choose to…