The aim of the European solar energy incentive programs has always been to bring solar technology to the point where photovoltaic (PV)-generated electricity becomes competitive with the retail rate of grid power, a situation known as "grid parity". In most of Europe, grid parity is expected to be reached by 2017, but is already nearly a reality in certain southern European countries with high levels of sunshine and high electricity prices. The recent cuts to incentives in many European markets are both a cause and an effect of this near-parity, and as such are not necessarily bad news. Achieving competitive cost structures for solar power plants is expected to eliminate the market distortion resulting from subsidies, which until now were the driving force of the European PV market.
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