This amount of oil would be replaced by ~800 TWh of electricity, which could be generated by a ~450 GW park of renewables (wind and solar). The investment required for this renewable capacity would be in the range of €500 billion, which can be paid back in about 7 years by the savings made in imports.
Going electric not only diverts money from imports to indigenous industry, but it generates net savings after a few years of operation.
Cash flows from future energy cost savings don’t provide a stand-alone business case for deep retrofits, hence the need to consider other (multiple) benefits of energy efficiency and to adopt a systems approach to building energy renovation.
As for the systems approach, the revised EPBD (2018) seems to pave the way. The valuation of multiple benefits is more of a struggle. It’s now up to the Member States to come up with building renovation plans that sufficiently take greater recognition of areas such as health, energy poverty alleviation, air quality improvements, and supply security.
Current energy prices are based on commodity prices for fossil fuels, (low) interest rates but high capital costs for renewables, taxes, subsidies, trade patterns and so on. Retail electricity prices are two to three times higher than gas prices, and the cost of carbon to final consumers is limited.
How will these parameters evolve by 2050? Electricity should be decarbonised by then. For the moment, we have little information about the future cost of bioenergy carriers. Synthetic gas and fuels, if derived from electricity, should be a multiple of the electricity cost, though flexibility services could mitigate this effect. The cost of alternative hydrogen production routes is unknown, as are regulators’ plans for energy taxation and subsidies in the future.
This tweet referred to research from the Regulatory Assistance Project (RAP) proving that the EU Energy Efficiency Obligations (EEOs) can deliver consumer savings worth more than 4 times the costs of meeting the EEOs. But this only becomes apparent when a full evaluation is made.
To gain broader acceptance for EEOs, more emphasis could be placed on their cost effectiveness, enhancing consumer spending power and improving business competitiveness.
Both for energy efficiency and for many forms of renewable energy, the major part of the financial effort is situated in the initial investment, which is then paid back over the years. Making lifecycle costing into a standard practice for energy related investments would therefore stimulate the energy transition.
And more generally, the energy transition moves the energy system from being primarily fuel-based to a mixed basis of fuel and capital. In such a context, lowest-first-cost is not a good idea, as it will increase system costs.
Let’s avoid turning capital goods into consumables, and pay attention to durability and circularity.