The overall cost of running the electricity system in Europe could be cut by 40% by the 2030s as solar panels and batteries scale up, according to new data from energy technology company Schneider Electric
The findings come after the Schneider Electric Research Institute (SERI) published a report examining how rising solar panel and battery adoption shapes total electricity costs.
The report, System Costs of Electricity: A new Baseline for the 21st Century Economy, modelled 40,500 scenarios across different combinations of solar, battery and grid costs to identify whether the rise of distributed energy resources (DERs) will ultimately raise or lower electricity costs overall.
It found that, when DER deployment is coordinated with electrification, the overall cost of running the electricity system could be cut by as much as 40% by the 2030s as solar panels and batteries scale up.
Schneider says these savings could translate into an additional 0.8% of GDP to the global economy by 2030. Battery deployment was one of the most significant variables affecting total system costs. Under world-average cost conditions, a mismatch of battery durations across asset types can push total system costs to as much as 35% above the current benchmark.
The research also found that the order in which solar, batteries and electrification are rolled out is just as important as how fast they scale. When deployment and demand growth move out of step, in either direction, total system costs can rise temporarily before falling.
‘Europe can reach energy sovereignty’, says Schneider Europe Operations lead
Laurent Bataille, Schneider Electric’s EVP of Europe Operations, adds: “For the past decade, solar has been experienced as an ‘intermittent’ energy source. But we’ve been looking at this generation asset in the wrong manner – solar is the fuel, the battery is the power plant.
“Ultimately, batteries are making solar much more interesting. But the whole system only becomes cheaper if these work in harmony with one another. That also means building the electricity demand to use them, not just focusing on adding supply. By scaling solar and batteries far quicker, Europe can get on a path towards energy sovereignty and competitiveness. The pieces are falling into place – what we need now is acceleration and coordination.”
The report also outlines that individual households, businesses and industries making decisions in their own interest tend to land close to the lowest-cost outcome for the system as a whole, which benefits other consumers on the grid.
Esther Finidori, Schneider Electric’s Chief Sustainability Officer, says, “This research shows that sustainability and affordability can reinforce each other, but coordination is critical. Now the priority must be to turn ambition into action by accelerating electrified demand, enabling more flexible energy use to flatten the load curve and free up capacity, and removing barriers to solar and battery deployment.”
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