Energy economics
Grid Parity
Definition
Grid parity is the point at which the cost of generating electricity from solar or another alternative source equals or falls below the cost of purchasing electricity from the conventional grid, typically assessed by comparing levelized cost of electricity (LCOE) with retail or wholesale power prices. Grid parity is reached when LCOE is equal to or less than the applicable electricity price.
References
technical definition
drivers and assessment
Overview
What it means
Parity marks the moment clean energy competes on price alone, shifting adoption drivers from environmental preference and subsidy to economics. It is location-specific — arriving at different times depending on solar resource, installation costs, financing, and local tariffs — and has been reached in a growing number of markets since the early 2010s.
How it is used
Analysts map parity to forecast deployment; policymakers use it to phase out subsidies; and utilities treat it as a marker of market disruption.
Why it matters
Grid parity converted solar from policy-dependent niche to the cheapest new electricity in much of the world — the economic engine of the energy transition.