December 14, 2022
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Aligning economics and sustainability with smart energy

The saying above has been doing the social media rounds again recently, as COP27, the IEA’s World Energy Report and end-of-year climate news prompts a renewed interest in renewables, cleantech and sustainability. It is now clear that clean electricity products offer not only financial and economic benefits, but also lower risk and a seamless experience for companies, countries and consumers – if combined with the right technology.

According to the World Energy Outlook, the “alignment of economic, climate and security priorities has already started to move the dial towards a better outcome for the world’s people and for the planet.” At gridXdays, report co-author Yasmine Arsalane highlighted that renewables are the solution to the global energy crisis, not the problem. In fact, a more rapid deployment of clean energy sources and technologies would have actually shielded consumers from rising fuel prices and mitigated the post-pandemic rebound in energy-related CO2 emissions in 2021 – at 2.1Gt, the largest ever year-on-year increase. 

We, of course, can’t change the past – but we can learn from it and act now to not only change our future, but ensure humanity has one. At our recent gridXdays, the alignment of sustainable and economic interests, with the help of innovation, was one of the most frequently mentioned topics. Here are some of the key takeaways.

Reaching price parity: sustainable does not mean more expensive

Sven Wiechert, Chief Marketing Officer at ClimatePartner believes, “if we build up sustainable supply chains and invest in new technologies, sustainable solutions do not need to be more expensive. As fossil fuel prices go up and renewables go down, we are already seeing that.”

A study from LeasePlan revealed that when it comes to total cost of ownership, standard mid-size EVs are now cost competitive in 19 out of 22 European countries. A report from Agora Verkehrswende stated, “by linking energy and vehicle taxes to CO2 emissions, and by raising carbon prices, we can shift the cost-benefit calculation even more in BEVs’ favor.” This has already been successfully implemented in Norway for decades.

Asmund Møll Frengstad, Chief Commercial Officer at CURRENT Eco AS says that by avoiding tax for electric cars in Norway, the price comparison between ICE and electric vehicles has been there from the outset. Combining this with enough capacity in the grid means switching to EV lowers your fuel bill by 90%, he says. And it works - 77.5% of cars sold in Norway in October 2022 were battery electric vehicles. 

"Creating a system where it’s economically a benefit to you to be environmentally friendly while still driving a car is the key to success."
Asmund Møll Frengstad, CURRENT

“Even though many Norwegians claim they are buying an EV for the environment, let’s face it, you do it because of your wallet. Creating a system where it’s economically a benefit to you to be environmentally friendly while still driving a car is the key to success,” adds Frengstad.

Heat pumps, EVs and clean energy solutions now make sustainable and financial sense

Similarly, the soaring cost of gas means heat pumps in the UK are now up to £261 a year cheaper to operate than a gas boiler. Their longer product lifetime (20-25 years versus 10-15 years for a gas boiler), combined with significant grants and tax cuts means that the lifetime costs of a heat pump is now about the same for the first time, making them much more attractive for consumers.

As the share of renewables in the power mix continues to rise – renewables are expected to account for 90% of global electricity expansion in the next five years – electricity prices, and the cost of running electrified assets, should fall. In contrast, CO2 prices and continued gas shortages will likely make ICE cars and gas boilers more expensive. This will gradually make electric cars and heat pumps more attractive as their total cost of ownership decreases.

Increasing participation and financial incentives

Many gridXdays speakers highlighted the need to move towards a consumer-centric energy system, where consumers actually benefit from playing an active part in the clean energy transition.

Philipp Cüppers from Vattenfall Hydro Germany says “we will be less in need to help people if they can just participate. If you just get paid more for your PV at home because the prices are high, you probably need less subsidy...So it's all an interconnected system and we need to think more in an interconnected way.”

"We will be less in need to help people if they can just participate."
Philipp Cüppers, Vattenfall

Ecosystems and partnerships are crucial to reduce complexity for end users, highlighted Friedrich Rojahn, Founder of Solandeo. He points out, “the customer doesn’t want to wait for five installation dates or wait for three different parties, customers just want to put down their money, have an amazing experience and become an active participant. This is where the ability of players in the ecosystem to integrate seamlessly is really critical.”

Prosumer offerings must not only be hassle-free, but should also leverage cutting-edge technology to provide end users with financial incentives. “Customers care deeply about the prices they’re spending on energy,” says Gordon Charles Thompson, VP Corporate Development and Partnerships at E.ON One, “but they can’t control it currently. Pricing signals aren’t baked into how it works for retail consumers.” Digital solutions are crucial to ensure that customers are financially rewarded for participating in flexibility.

"Customers care deeply about the prices they’re spending on energy, but they can’t control it currently."
Gordon Charles Thompson, E.ON One

Dynamic pricing, user-friendly apps that increase transparency, energy communities that enable P2P trading, combined with integrated offerings that connect assets like batteries, PV and EVs to the grid are the key to empowering consumers. Only then are they able to view and control their generation and consumption patterns, significantly lower costs and reduce their emissions. 

Technology is the linchpin to connect sustainable and financial interests

Regulatory changes and geopolitical issues are making dependence on fossil fuels riskier than ever. As a result, renewables have never been more lucrative. We are thus reaching a tipping point, where sustainability is the most attractive option, even without accounting for environmental impact. Energy players now not only have the responsibility to switch to clean energy solutions, but also the financial incentive.

Transitioning to clean electricity will protect consumers from price spikes by increasing their independence, while also providing companies with a huge financial opportunity to tap into new and growing markets. However, consumer-centric technology is the key to accelerating this switch – with an average of just 32 days between purchase and pilot project, our XENON platform is a prime example of how both benefits can be quickly realized. Future smart energy systems will be shaped by those that bring clean, holistic and seamless solutions onto the market today.

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