Solar panels and battery storage could reduce overall electricity system costs by as much as 40% by the 2030, provided their deployment is coordinated with the expansion of electricity demand, according to research published by Schneider Electric.
The report, System Costs of Electricity: A New Baseline for the 21st Century Economy, produced by the Schneider Electric Research Institute (SERI), analyzed 40,500 scenarios combining different solar, battery and grid cost assumptions.
The findings suggest that lower electricity system costs could generate an additional 0.8% of global gross domestic product by 2030.
Battery deployment and storage duration emerged as key factors influencing overall system costs. Under average global cost assumptions, a mismatch in battery storage durations across different assets could push total system costs up to 35% above current benchmark levels, the study found.
The research also highlighted the importance of coordinating the rollout of solar capacity, battery storage and electrification. Expanding renewable energy generation without a corresponding increase in electricity demand, or vice versa, could temporarily drive up system costs.
The study identified electric vehicles, heat pumps and data centres as potential sources of additional electricity demand that could help improve the utilisation of existing grid infrastructure as renewable capacity expands.
By increasing electricity consumption and making better use of available grid capacity, these technologies could help spread fixed infrastructure costs across a larger volume of electricity sales, reducing costs per megawatt-hour and easing pressure on peak demand.
The report also found that decisions made independently by households, businesses and industrial users to install solar panels and battery storage tend to produce outcomes close to the lowest-cost solution for the electricity system as a whole.
It said policymakers should focus on enabling the adoption of distributed energy resources rather than prescribing how much solar or storage capacity individual consumers should install.
“For the past decade, solar has been experienced as an intermittent energy source. But we’ve been looking at this generation asset in the wrong manner — solar is the fuel, the battery is the power plant,” said Laurent Bataille, executive vice president of Europe Operations at Schneider Electric.
Bataille explained batteries were making solar energy more attractive but stressed that cost reductions depended on coordinating generation, storage and electricity demand.
Accelerating the deployment of solar panels and batteries could help Europe strengthen its energy sovereignty and competitiveness, he added.