Large-scale power generation in Europe is becoming a “dinosaur” – too big, too inflexible and not relevant for back-up power in the long run, according to a briefing note from financial analyst UBS. It predicts that developed electricity markets will be turned upside down within 10-20 years, and cheap batteries will revolutionise household energy.
Solar technology and batteries are set to be disruptive technologies for the electricity system, with electric vehicle innovation driving down battery costs, which are forecast to roughly halve by 2020. By 2025 the production and storage of power at a local and domestic level will be widely available and cost competitive, says the UBS briefing note.
UBS finds that the combination of solar technology, battery storage and an electric vehicle is already economically viable, but it is set to become a financially attractive option for family homes in Europe within less than a decade, having a payback of 7-11 years. It notes that the cost of solar panels has dropped by more than 80% over the past seven years, and prices look set to continue falling. But the key to transformation in household energy ultimately lies in developing battery technology to allow energy to be consumed on site, rather than sold at fixed, subsidised rates.
The briefing note also says that the future of decentralised energy generation, the smart grid, mobile consumers and renewables could pave the way for the development of ‘virtual power plants’, with equipment and software matching buyers and sellers of electricity.