Although renewables are c50% inflationary in static grids, this 12-page study shows how solar can be deflationary when coupled with flexible loads. By 2030, the total system costs of solar-powered EVs will be 12% below the costs of oil-fueled ICEs, on a pure economic basis, excluding CO2. We are updating our EV and oil demand forecasts.
Total system costs are the most valid way to compare the costs of energy sources as metrics such as LCOPE are incomplete. Renewables do seem to inflate total system costs by 50% in static grids, as re-capped on page 2.
But what if loads can flex to match the output profile of renewables? This 12-page report considers a sub-set of the vehicle fleet, which is stationary 95% of the time, energized entirely by solar, and then used for commuting in the morning and evening, per pages 3-4.
Our goal in this note is to make pure, good-faith economic estimates for the relative costs of solar-powered EVs, as described above, versus conventional ICEs. Total mobility costs are 12% lower, for the reasons on pages 5-7.
Limitations of our analysis are that this kind of scenario will only apply to a portion of the vehicle fleet, whereas total costs remain higher for commercial vehicles and trucks, or for vehicles that cover long distances, or travel to remove locations, which could only be served by low-utilization charging stations or battery swap stations, as discussed on pages 8-9.
In pure economic terms, regardless of decarbonization policies, there is economic justification for EV sales to continue accelerating, especially in the emerging world (perhaps even more so than the developed world!).
However, there is less justification for predicting a wholesale shift in the vehicle fleet, hence we are revising our long-term EV sales forecasts downwards and our long-term oil demand forecasts upwards, per pages 10-11.
This case study also shows that in particular contexts where electricity demand is flexible, total system costs of renewable-powered systems can be deflationary. This chimes with our previous analysis into solar+gas, and rescues our long-term solar growth forecasts, as discussed on page 12.