Solar energy will fall in price to match the cost of conventional fossil fuel electricity far sooner than previously expected, the UK’s largest solar company has claimed in a new report. Solarcentury said British homeowners will see solar achieve “grid parity” – the point where solar electricity rivals or becomes cheaper than conventional nonrenewable electricity – by 2013. Most predictions suggest that technological innovation will not bring the price down far enough until 2020 or later.

The company suggested falling production costs for solar panels and increasing conventional electricity costs have brought parity closer. Prices for solar and grid electricity in residential homes are expected to crossover at around 17p to 18p per unit of electricity (kWh) in 2013, followed by parity for commercial solar electricity in 2018.

April 2010 could be a major milestone in the UK’s attempts to deliver a low-carbon economy. Assuming all goes well, that is the date when the government will introduce new “feed-in tariffs”, where a price premium is paid to homeowners, schools and businesses for every unit of electricity they generate from small-scale renewable technologies, such as solar photovoltaics (PV), wind and micro hydro power.

All of these technologies have immense potential in the UK. However, there is still a very real danger the government will lose its bottle and go for a tariff that will at best make a very marginal difference to uptake. If that happens, it will be a massive lost opportunity at a time when the government needs all the help it can get in meeting its 2020 renewable energy targets.