Could Wind and PV Energies Achieve the Grid Parity in China until 2020?

Hong Li, Yang Yu, Yuantao Xie, Jing Zhang

Grid parity targets of wind and solar power are proposed in China Energy Development Strategy Action Plan 2014--2020. The paper intends to exam this proposal and pinpoints factors that may influence the achievements of these targets. The method of levelized cost of electricity is adopted to compare the price trends of wind, PV and coal power on the utility's transmission and distribution grids. The environmental cost of coal-fired power is estimated and accounted into the price comparison. Results show that the levelized prices of wind and PV power will decrease considerably during the period of Action Plan. Neither wind nor PV power is competitive with coal power from the utility or retail side in 2013. But wind power is approaching the utility cost in 2020 and achieves the grid parity in provinces with the favorable wind resources and unfavorable coal electricity costs. Distributed PV stations can reach the grid parity on the retail level for business or even industrial consumers when utility-scale solar plants still do not. The extent that the environmental cost is accounted extensively influences the time for wind and solar power at grid parity. These findings implicate that the electricity price policies for wind and solar power should be positioned to better promote their cost reductions and better reflect their environmental values.