With the 30 percent Federal Business Energy Investment Tax Credit (ITC) set to expire at the end of 2016, GTM Research has begun to assess the state of the U.S. solar market in a world with fewer incentives. In determining the potential for solar deployment, we are looking for a scenario where solar becomes cost-effective even without subsidies. We believe the first tipping point in the distributed generation market will be when developers can offer customers a PPA at less than retail prices. And if the PPA has an escalator, it should be less than historical increases in retail rates. One way to measure this point in time is to compare the levelized cost of energy (LCOE), a measure of the total generation cost in dollars per kilowatt-hour, over the lifetime of a PV system, to retail electricity prices. By looking at energy cost, as opposed to capital cost, we are able to assess the competitiveness of solar versus traditional generation.

Two weeks ago GTM Research published a preliminary study of the U.S. commercial market following the step down of the ITC to 10 percent in 2017. Our ever-thoughtful readership raised a number of good questions, so we have revised the model. The conversation also brought up a discussion worth repeating.

via What Happens When the ITC Expires? Part 2 : Greentech Media.