Schneider Electric, a global energy technology leader, today published a report from the Schneider Electric Research Institute (SERI) examining how rising solar panel and battery adoption shapes total electricity costs.
The report, System Costs of Electricity: A new Baseline for the 21st Century Economy, modeled 40,500 scenarios across different combinations of solar, battery and grid costs to identify whether the rise of distributed energy resources (DERs) will ultimately raise or lower electricity costs overall.
It found that, when DER deployment is coordinated with electrification, the overall cost of running the electricity system could be cut by as much as 40% by the 2030s as solar panels and batteries scale up. These savings could translate into an additional 0.8% of GDP to the global economy by 2030.
Battery deployment was one of the most significant variables affecting total system costs. Under world-average cost conditions, a mismatch of battery durations across asset types can push total system costs to as much as 35% above the current benchmark.
The research found that the order in which solar, batteries and electrification are rolled out is just as important as how fast they scale. When deployment and demand growth move out of step — in either direction — total system costs can rise temporarily before falling. As renewables scale, it's critical to accelerate new electrified demand such as EVs, heat pumps, data centers, alongside continued battery rollout. This new demand backfills the grid capacity freed up by batteries and flexibility, spreading fixed costs over more electricity sold and driving down the price per megawatt-hour. This helps to reduce spikes in grid demand and flatten the load curve, which frees up capacity for other users.
The report finds that individual households, businesses and industries making decisions in their own interest tend to land close to the lowest-cost outcome for the system as a whole – which benefits other consumers on the grid. Policy should focus on enabling adoption, not dictating how much solar or storage any individual site installs. The report sets out three priorities for making that happen:
- Flatten the load curve. Incentives such as time-of-use tariffs and demand charges, paired with combined solar-and-battery incentives, help new deployments reduce peak demand and free up existing grid capacity.
- Keep supply and demand moving together. Investment incentives that support solar and electrification side-by-side, and building codes that require new construction to account for both, help prevent the costly mismatches that arise when one scales faster than the other.
- Build the supply chain to bring costs down faster. Affordable components, public procurement, streamlined permitting, and training to address the shortage of skilled installers are what will accelerate the cost declines that the 40% savings depend on.
"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, Europe Operations, Schneider Electric. “Ultimately, batteries are making solar much more interesting. But the whole system only becomes cheaper if these work in harmony with one another. That also means building the electricity demand to use them, not just focusing on adding supply. By scaling solar and batteries far quicker, Europe can get on a path towards energy sovereignty and competitiveness. The pieces are falling into place - what we need now is acceleration and coordination."
"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, Europe Operations, Schneider Electric. “Ultimately, batteries are making solar much more interesting. But the whole system only becomes cheaper if these work in harmony with one another. That also means building the electricity demand to use them, not just focusing on adding supply. By scaling solar and batteries far quicker, Europe can get on a path towards energy sovereignty and competitiveness. The pieces are falling into place - what we need now is acceleration and coordination."
“This research shows that sustainability and affordability can reinforce each other, but coordination is critical. Now the priority must be to turn ambition into action by accelerating electrified demand, enabling more flexible energy use to flatten the load curve and free up capacity, and removing barriers to solar and battery deployment,” said Esther Finidori, chief sustainability officer, Schneider Electric.
“This research shows that sustainability and affordability can reinforce each other, but coordination is critical. Now the priority must be to turn ambition into action by accelerating electrified demand, enabling more flexible energy use to flatten the load curve and free up capacity, and removing barriers to solar and battery deployment,” said Esther Finidori, chief sustainability officer, Schneider Electric.
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