The energy industry is at the start of a period of unprecedented change, one that will fundamentally change the market place (presenting new challenges as well as new opportunities). Three tipping points will mark the emergence of a new energy system.
Tipping point one is when self-generation reaches cost parity with grid-delivered electricity. To determine this date, we calculated the projected demand for electricity, future generation mix and cost of delivering electricity via a central grid between 2015 and 2050, and then compared it to the predicted cost of self-generating electricity using solar PV and battery storage.
To help determine when these costs would reach parity, we worked with a leading global analyst house to model the expected adoption and interactive impacts on electricity demands and costs of 10 core distributed energy and information technologies: solar PV; battery storage; electric vehicles; microgrids; home and building energy management systems; P2P electricity exchange; smart meters; artificial intelligence; grid-edge technology; and cloud.
The study also identified two further tipping points for the energy industry:
- Tipping point 2: when the price of battery electric vehicles reaches cost and performance parity with traditional cars with internal combustion engines
- Tipping point 3: when the mere cost of delivering electricity (i.e., the unit-cost of electricity transmission and distribution) exceeds the cost of self-generated electricity
Because drivers vary across markets, the tipping points will hit different regions at different times. So far, we’ve developed models for Oceania, Europe and the US, with more to come. The American energy sector is complex and highly regionalized, making it difficult to get one clear picture of what is driving change. To provide clarity we’ve determined the tipping points for five US markets – ERCOT, Westcoast, Midwest, Northeast and Southeast, with a focus case study on California. We’ll update our models and clock every six months as technology and regulations change.