vrijdag 21 oktober 2011

The World’s Biggest Grid Parity Market Could Change Drastically Within Ten Years

Picture yourself Italy in 10 years' time. Apart from a new prime minister, other things will have changed drastically. Anyone who makes some conservative forecasts for household energy prices in Italy in 10 years' time will see some interesting outcomes. Take a modest 2.5% inflation on the current electricity price for households and you will arrive at around €0,30 per kWh by 2021. This is of course without taking into account any euro or dollar value increase, abolition of  CO2 taxes, oil and gas price decreases, (renewable) energy tax decreases and – last  but not least – sharply reduced energy consumption due to a wave of environmental consciousness flooding Italy. All of which could possibly happen.

At the same time, imagine a 'crazy' global PV industry growth of 25% per year. Compared to the 50% compound annual growth rate during the last 10 years, this at least can be called a conservative scenario. In line with this, a 5-10% average price reduction per year in PV systems looks feasible. Again based on assumptions that remain to be proved: economies of scale leading to lower production costs for solar modules, technology and cell efficiency that have not reached their limits, the number of markets for PV not coming to a standstill, and – last but not least – the assumption that the currently more than 500 module manufacturers will not collectively decide to compete and lower prices any further. All of which could possibly happen.

Such a 5-10% yearly system price decrease will lead to a cost price per kWh of around €0,12 for solar electricity in 2021 (calculated based on 15-year amortization and 6% interest rate).
To summarize, for 2021 we calculated €0,30 per kWh for grid electricity and around €0,12 for solar electricity. Is it possible for these prices to co-exist alongside each other? How likely is it that people will use the grid if they can use solar energy for less than half the cost?

What about supply security and energy storage? Well, you can assume that the price difference of €0,18 should be sufficient to cover cost for energy storage. Also, much development is taking place in this area. Think about micro energy storage solutions in mobile phones, but also about electric cars, scooters and bikes. All of these are expected to show significant growth trajectories. Will energy storage be more expensive in 2021 than solar electricity production (€0,12/kWh)? If not, the total price for solar electricity plus storage could be less than €0,24/kWh. Still lower than the expected grid electricity price....

Will there be any reason for customers to stay with an expensive, old-fashioned bureaucratic energy company? Or will they opt for new dynamic solar energy utilities supplying green solar electricity, including storage and full 24-hour service at a 15-year guaranteed lower price?

Italy will arrive at grid parity in 2012. It will become the world’s biggest grid parity market and an example for the rest of the world. Within 10 years, the Italian energy landscape could face major changes. Will today's energy moguls remain passive and then be surprised to see new solar energy service providers take over their businesses overnight, like WhatsApp did with SMS...?

Geen opmerkingen:

Een reactie posten