The costs of self-generating and storing power could be the same as buying it from an energy provider by 2022 in Europe, 20 years ahead of the US, new findings from Ernst and Young Global Ltd (EY) have revealed.
US markets will take much longer to hit off-grid parity, possibly until 2042 in its southeast region, due to its energy sector being complex and regionalised.
This gap between Europe and Oceania’s energy transformation journeys and the US could leave $67 billion of traditional utilities revenues at risk annually by 2050 due to distributed solar generation in Europe.
Meanwhile electric vehicles could become mainstream by 2025 across all markets as cost and performance reaches parity with traditional combustion engine vehicles. Consumers are also likely to increasingly take the reins on energy generation and supply with the emergence of so-called ‘prosumers’ who generate, produce and consume their own energy.
Benoit Laclau, EY global power and utilities leader, said: “As the countdown to increasingly feasible grid defection by customers accelerates and a new distributed model emerges, US utilities can seize the opportunities that this extra lead time allows them.
“Now is the time to rethink investment strategies, learn lessons from other regions and industries and take a proactive role in the transformation of the sector.”
EY suggested three critical energy ‘tipping points’ as potential disruptors; when self-generation becomes affordable for all, when mass availability and cost and performance parity of electric vehicles arrives, and when delivering power via the grid costs more than self-generating.
Two factors arising from the research could signal that the energy sector is on the cusp of such a shake-up with a greater number of people turning towards renewable energy sources and the evolution of energy technologies transforming consumer behaviour.
The study explores the potential impact of electricity demand, and cost of ten core distributed energy and information technologies across Europe, Oceania and the US.
The gap between the US and Europe and Oceania could be due to low cost generation, the rise of utility-scale renewable generation, sustained low cost of natural gas, low levels of taxation in energy bills and less expensive grid maintenance.
But Laclau stresses that the US is by no means behind, the fact that its electricity is cheaper than Europe’ suggests there will be a change further down the line.
Projected uptake of renewables by 2050 reflects this trend, in Europe and Oceania, when renewables will represent 50 per cent and 49 per cent of power demand. Many European countries have started to adopt energy business models in response to regulations and to adhere to carbon-reduction targets.
He said: “Instead of trying to predict the future of energy innovation, utilities companies should focus on building an agile, collaborative business that is ready to quickly adapt to take advantage of new technology and trends. Our advice for utilities preparing for the imminent tipping points of their sector is to make smart, ‘no regrets’ investments now while planning for a very different future.”
Laclau, added: “Energy companies need to be prepared to innovate, they have been very good at managing assets, they now need to be more dynamic, a bit more commercial and put the customer at the centre.”