Roland Berger Strategy Consultants released last week the ‘Solar PV could be similar to the shale gas disruption for the utility industry’ report stating that solar PV market, which has developed from a niche market segment into a high growth market, will be a game changer for the utility industry.
According to the report, in Europe more and more households and commercial players are expected to make the decision to invest in solar PV and install it on their rooftop. An investment in solar PV will only become more attractive over time, as system costs will continue to decline.
In Germany, Greece and Italy, solar PV capacity will already exceed baseload demand by 2025. It could even exceed 50% of peakload demand, making more export and storage necessary to deal with the market situation.
The report also notes that the increase in 2014 in solar PV capacity of 39 GW is close to the nuclear power capacity of Japan and total global capacity now stands at 177 GW.
Emmanuel Fages, principal in the Paris office of Roland Berger explains that as the prices of solar PV systems have dropped faster than most energy institutes have expected, the adoption of solar PV will consequently be higher than expected. He adds:
“In our view, solar PV could be responsible for 9-12 % of total electricity production in Europe by 2030, largely exceeding expectations of IEA, the World Energy Council and even Greenpeace.”
Roland Berger’s report highlights three key factors that will drive utilities to adapt their business models to solar PV:
- The share of traditional utilities in the European installed solar PV capacity is less than 1% at the end 2014. The remaining 99% is owned by investors, project developers, households and commercial companies and they compete with utilities in electricity generation.
- The share of solar PV electricity production in total European electricity production can reach 12% by 2030, quadrupling the share in 2013. Solar PV will start to have a large impact on the business model of utilities.
- The electricity retail price, including taxes, grid fees and the EEG levy equals 29 cents/kWh in Germany, while the feed-in tariff for residential rooftop installations equals only 12.5 cents/kWh. Raising self-consumption with home automation tools and storage enables consumer to put the difference of 17 cents/kWh in their pockets, threatening the traditional utilities offer.
According to Roland Berger by enabling energy consumers to produce energy, solar PV will change the energy landscape in a multidirectional system, which poses a major threat for the current business model of utilities, but at the same time solar PV creates new business opportunities that fit well with the competences of the utilities.
Eric Confais, partner in the Paris office of Roland Berger, states that utilities should prepare to fully capture these opportunities in the future and maintain their position in the energy landscape:
“The magnitude of the solar PV impact could compare to the shale gas revolution on the energy industry. It will drastically change the energy landscape for utilities. Utilities will have to deal with increased fluctuations of the energy system, loss of generation volumes and lower prices, and even new players may enter the scene.”
To learn more see Roland Berger’s report below.