Investments

Demand for electricity consumption will grow significantly with electric mobility. While industry has relatively steady consumption, the demand for electricity for transport can also be largely predicted through the day.

More interconnectivity, distributed production and multiple sources of more power-intensive consumption can lead to faster changes in the flow of electricity in the grid - not only in quantity but also in direction. Much of the new consumption is connected through so-called inverters, which convert AC to direct current or vice versa. Much of the new power generation will be connected via inverters

The power system in a fully electric Europe naturally has higher total costs than today's power system. Total costs will not be lower if production and consumption increase by 20-30 per cent. However, the relevant questions are whether the cost of a fully electric Europe is higher or lower than that of an energy system that is to a greater extent based on fossil fuels (as today) and how the cost per energy unit (kWh) is developing.

In the coming period many of today's components in the power grid will be replaced due to technical conditions. The lifespan of all grid systems is limited regardless of increased electrification. Also, new network facilities will be established for new customers and consumption in an increased variety of locations. In all cases, such investments will have to be made regardless of whether the electricity consumption is maximised or not.

When the grid is to be renewed, the additional costs of increasing capacity are relatively low. Therefore, for the part of the power grid that will be new in the next few years, we can assume that the grid will have sufficient capacity and robustness - also to cope with rapid electrification - without significant cost increases. However, many studies anticipate a sharp rise in prices over the coming years. This might not be the case. Recent DNV GL study indicate that with a consumption growth for households (between 5 and 10 TWh that accounts for charging electric cars), it is more likely that average grid rent (per energy unit) will fall than that it will increase. The reason is partly that 5-10 TWh is a large volume increase for households and partly that tariffs and smart management can help to charge when there is virtually free capacity in the network anyway. Analyses for NVE (DNV GL and Pöyry, 2019) also indicate that the cost increase, even without a favourable charging pattern, may be lower than the volume increase.

Another approach is to look at the alternative cost - that is, the cost of continued fossil energy use. A household that switches from fossil-fuelled car to electric car can expect significant cost savings. By way of illustration, we can compare today's costs for a gasoline-powered VW Golf and an electric Golf. The energy cost of an e-Golf is only 20 percent of the energy cost of a gasoline-powered Golf. For an annual mileage of 12,000 km this represents a saving of about NOK 7,500.

For the car owner, savings related to maintenance costs, fees, tolls and parking costs may amount to the same amount, before taking into account the acquisition cost and second-hand value. Electric cars are currently more expensive than similar cars for gasoline or diesel, at least before we take into account taxes. However, DNV GL's analyses show that it is only a matter of time before the picture is reversed. As long as the electric car is more expensive to acquire, this reduces the savings, but already today the net profit is positive for several car sizes and types.

For society as a whole, reduced emissions of exhaust gases and noise are clear gains. Saved costs related to refining and distribution of gasoline and diesel are included in the calculation of energy costs. Although reduced tolls, fees and discounts on parking and ferry to car owners do not count as socio-economic gain, there are obviously large societal gains in electrification of passenger cars. Such large savings can 'finance' significant restructuring costs and other additional costs of electrical solutions, while still ensuring a lower total cost.