How much will it all cost?
How much will it all cost
and how to prepare for it
In the previous story, we outlined why the world of energy is changing dramatically, what risks and consequences will the planned decarbonisation – attenuation of fossil fuels, on the future energy structure and demand for clean energy from new, mostly more expensive low or emission-free sources.
We will now take a closer look at how much it will all cost us.
01. What are the alternatives for further development?
Based on our calculations, we in the EGTC have developed many variants of energy development. For comparison, we choose three:
- Electric variant anticipates that "clean" electricity will be the decisive energy medium; the variant envisages decarbonization by 95% compared to 1990.
- Gas variant puts the main emphasis on gas; the variant envisages decarbonization by 95% compared to 1990.
- Variant Best Estimate counts on a balanced mix of energy media with significant decarbonization to the level of 80% in 1990.
02. What will be the investment in energy?
Annual investments in energy now amount to approximately 70 billion crowns.
All variants of further development anticipate an extreme increase in investments in renewable energy sources (RES).
RES is not enough to cover the power failure and their integration into the system will require high costs for backups and regulations from a certain level.
Therefore, investment costs in new energy will increase several times.
- The most investment-intensive is the electric variant, where investments around 2050 will exceed 250 billion crowns.
- This is an overall increase in investment of 256% compared to 2019.
- For the Best estimate variant, we assume investments of 91 billion crowns.
03. What will be the cost of producing electricity and heat?
Cheaper fossil fuels will undergo a sharp decline, and in addition they will be significantly more expensive.
RES in a larger volume and including the costs of their integration are more expensive.
In summary, there will be a sharp increase in the production costs of electricity and heat.
All this will be reflected in the final prices for end consumers.
- For the calculation we use the LCOE (Levelized Cost of Energy) indicator, which includes all production costs for the entire life cycle of individual sources.
- The calculation takes into account a discount rate of 5% and the price of a carbon dioxide emission allowance of € 50 for 2020, € 100 for 2030 and € 200 for 2050.
- The price of electricity will increase to 2 to 2.5 times compared to the already high price (€ 80 / MWh).
04. How much will it all cost?
Emission-free energy based on new expensive resources will be incomparably more expensive in all respects.
The price of power electricity and other components of the price of electricity will rise.
As a result, it will cost us all multiples of current prices.
- Compared to today, in 2030 we expect an increase in the price of energy by about 50-70%.
- In 2050, energy prices could double to three times today's prices.
- In case of significant pressure on absolute decarbonization, the price may jump even more.
05. How to prepare for rising energy prices?
In particular, industrial companies and large consumers should consider a completely new energy concept, own resources, cogeneration options or new ways of connecting to networks.
We will help you create an energy concept that not only saves you a significant part of your costs, but also allows you to profit financially from changes in energy.
We will take a closer look in the third story of energy, where you will learn why decarbonisation wants small resources.