Ask the average person what they think of solar power, and you're likely to hear about how expensive solar power is and that it's a pipe dream to think it will ever reach grid parity. But if you ask them to back up that claim, they probably won't have many facts to support that position.
Few people know that the price of polysilicon of the type produced by LDK Solar
But another driver of the falling cost of solar power for consumers and pushing its path toward grid parity is falling feed-in tariff rates in countries around the world. Below, I have compared ground-mounted and rooftop solar feed-in tariff rates to retail electricity prices for a number of countries and two key U.S. states. As you can see, solar isn't as expensive as it may seem to those who don't follow the industry.
Country or State
|Germany||0.21 euro||0.22 euro||0.27 euro|
|Italy||0.17-0.26 euro||0.20-0.30 euro||0.20 euro|
|Spain||0.18 euro||0.23-0.32 euro||0.20 euro|
|France||0.27-0.35 euro||0.51-0.58 euro||0.14 euro|
Source: Greentech Media; Energy Information Agency; Europe's Energy Portal.
Also consider that the retail price is an average and doesn't consider peak rates, which are implemented in some areas. Solar electrical power production corresponds very closely to the time that peak rates are paid by utilities for natural gas plants or other peak sources, so the retail price above may be a low comparison.
Most countries lower their feed-in tariffs periodically, but the most telling state of solar may come from California later this year, when the state does a reverse auction for solar projects. That will provide a more market-based pricing structure. Expect SunPower and First Solar
Foolish bottom line
Half the challenge in following solar stocks is staying educated on the fast-moving costs and feed-in tariff rates in the industry. As you can see above, solar power isn't as expensive as many people think and is less expensive than retail power in some locations.
Use that as a talking point next time someone questions you about solar.
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Fool contributor Travis Hoium owns shares of First Solar and SunPower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.
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