According to a recent independent study by Aurora Energy Research, Germany is prepared for the electric vehicles revolution. Germany, like numerous other countries, is gradually adjusting to the emerging trend of electrification. Home to the strongest auto industry in Europe, the country is following the shifting focus of most car manufacturers towards electric and autonomous vehicles production.

German utilities ready for electrification

Germany’s power system is well positioned to accommodate a shift to 40% electric cars by 2035. Current calculations predict 31 terawatt hours (TWh) of additional power demanded by 2035. These forecasts assume a 5% of the current annual consumption and could be manageable, considering the expansion of  renewable generation units.

Germany will also phase out cheap nuclear and coal resources, leading to higher energy prices. Exchange-quoted power prices for the day-ahead will almost double, reaching €60 per megawatt hour (MWh) by 2035. Morevover, the transition to additional demand of 31 TWh, will require a cost of €2.7 per MWh within the quoted price.

The transition to electric cars on German roads could generate more income for utility companies, due to the increased demand for electricity. Thus, German utility companies could see EBIT gains in the range between  €500 and €700 million per year, if they exploit  cross-selling opportunities with start-ups in the chargepoint sector.

For example, they could offer time-of-use tariffs to charge cheaply at night-time or using electric vehicles as interim storage for inexpensive power, to release it at high-price times.

Affordable mass adoption of electric vehicles

The net economic cost of using electric vehicles would decline significantly by 2035, making e-mobility an affordable option for the masses.  Estimates of small passenger cars in Germany, in January 2017, amounted to approximately 46 million, among which an insignificant 0.1% were running on electricity. With around 10% of the cars being replaced every year, declining battery costs and higher climate change awareness, electric cars will soon be massively accepted.

Battery-powered cars will emit 40% less carbon dioxide in 2035 than those with combustion engines, assuming that the carbon efficiency of traditional ones will not improve. Higher battery density will ensure that driving ranges expand due to more powerful batteries, while charging infrastructures will be built to absorb the increasing demand.

Eventually, the combined effects of rising demand for EVs, electricity, batteries and related services will be positive for consumers, car manufacturers, utility companies and the environment.

E-mobility will be the more economic choice by then and its impact on the German power market will tend to be moderate.

Snezana Sokolovska

Snezana has extensive international background and business media experience. She is covering e-mobility, autonomous vehicles and smart technology at Electric Think.

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