By 2022 in Europe and 2021 in Oceania, the cost of autonomous power generation and storage will be similar to the cost of purchasing energy from a supplier, according to a study released by EY. The results of the research show that US markets will reach off-grid parity over a longer time horizon, for example in 2042 in the South-East, where the energy sector is complex and highly regionalized.

The study also shows that in all markets, by 2025, electric vehicles (VE) will reach parity with conventional, internal combustion vehicles, in terms of costs and performance.

The research looks at the expected adoption rate and its impact on demand and energy costs among 10 major energy producers and distributors in Europe, Oceania and the US. The study is the first to advance the timing of three critical trends for the energy sector:

• self-generation of energy becomes accessible to everyone;
• electric vehicles become a mainstream mobility option;
• supplying energy through networks becomes more expensive for consumers than the one they would produce by themselves

“The maturing of renewable energy production technologies, the steep drop in the cost of energy storage in batteries, and clearer choices for the end consumer have shown for long time already the emergence of a new radical energy system,” says Valeriu Binig, Partner EY Romania. “While trends and moments differ between markets and geographies, the study clearly shows that the countdown to the onset of a new energy future is accelerating more strongly than many expected.”

Faster in Europe and Oceania

The results indicate a difference between the path to energy conversion in Europe and Oceania, compared to the one in US. The emergence of more economical power distribution networks will affect the utilities and the US consumer’s preferences at a slower pace than in other markets. This is due to the low cost of energy generation, as a result of increasing renewable energy generation on a utility scale, to the maintained low gas price, to the low levels of taxation on energy, and to the low maintenance costs of energy grids.

The research highlights two factors that could accelerate the achievement of tipping points: changing consumer preference for renewable energy and accelerated adoption of technologies that allow easy integration into energy distribution networks and reduce the cost of solar and wind power generation, as well as battery storage.

Estimates of increasing adoption of renewable energies by 2050 reflect this trend. In Europe and Oceania, renewable energies will account for 50%, and respectively for 49% of energy demand. In the US – where renewable energy policies are evolving and differing from one region to another – the absorption rate varies from 18% in the Northeast, to 49% on the West Coast.

Instead, the third tipping point – when the cost of energy supply exceeds the cost of self-generated and stored energy – is expected to become reality in the North-East of the US by 2039, ahead of Europe and Oceania (for both being projected by 2040). This will point to a steep fall in the costs of renewable energy production and storage, the evolution of consumer behavior in various markets and the emergence of “prosumers” – consumers who generate and supply their own energy.

Romania needs to clarify the status of active consumers

“Romania expects a clarification of the system to integrate the production capacities from renewable sources of potential ‘prosumers’. Against the background of dissatisfaction from large-capacity investors who see their investments not recovering as proposed in primary legislation, amid dissatisfaction from the distribution operators, who should invest in smart meters and in all the logistics of contracting and purchasing electricity, on the background of the fiscal framework that does not allow a natural person to invoice an economic agent, a discussion paper proposes the purchase of electricity produced at a “personal” capacity of less than 300 kW at the price at which the distributors purchase energy to cover network losses, without the obligation to undertake penalties for the imbalances generated. The line of separation to the state aid status is very thin. We are witnessing the efforts of utilities companies in Romania to become agile and to implement smart solutions to offer customers a wide range of services besides the commodity called electricity, sometimes gas. Patience is still needed until this transformation effort brings clear profits. However, this is the only option in the European and global context”, says Valeriu Binig.

Many European countries have already begun to change their energy business models in response to legislative and regulatory pressures, to ever increasing absorption of renewable resources and to ambitious carbon footprint reduction targets. The results of the EY study indicate that the $ 67 billion annual revenue of traditional utility companies will run the risk of falling by 2050 due to the distribution of solar energy generated in the region.