Firm Power Parity

Firm Power Parity: A Framework for Understanding the Disruptive Threat of Solar & Storage

Abstract: This paper proposes a new conceptual framework for understanding competition in electricity markets. Noting that one of the primary drivers for consumers to switch from grid-supplied electricity to self-generated electricity is cost savings, we have constructed a model that forecasts when grid defection may become widespread. Based on detailed modelling of technology cost curves, we estimate the year in which three types of consumers switch to on-site power generation that offers similar reliability and lower cost as grid-supplied electricity. We name these customer switching points “firm power parity.”