Distributed Generation P1 Practice Test 2025 - Free Distributed Generation Practice Questions and Study Guide

Grid parity refers to the point at which the cost of generating electricity from renewable sources, such as solar or wind, becomes equal to the cost of generating electricity from traditional sources, like fossil fuels or nuclear power. This is significant because it indicates that renewables can compete on a cost basis, leading to greater adoption and investment in clean energy technologies. Achieving grid parity is a crucial milestone in making renewable energy more viable and accessible, ultimately contributing to a widespread transition towards sustainable energy systems.

The other options do not accurately capture the essence of grid parity. For instance, the idea of demand exceeding supply pertains to market dynamics rather than cost comparison. Similarly, energy production being fully subsidized suggests dependence on government support, while fluctuating energy prices based on demand describes market behaviors that influence pricing, rather than a fixed comparison between generation costs. Understanding grid parity is essential for assessing the economic viability of renewable energy.