British utility firms face a major disruption in the next decade as residential renewable power generation and storage is set to become profitable for London households by 2030, according to new research.
The Centre for Climate Finance and Investment at Imperial College London has developed a new framework called "firm power parity" which forecasts the milestones at which on-site renewables will deliver the same service and cost as conventional energy supplies.
Until now, existing energy pricing models have understated the potential of renewable technologies.
The researchers said consumers were unlikely to leave the power grid completely until after 2030, but their gradual withdrawal from traditional utilities will have significant implications for electrical utilities and investors.
Renewable energy prices have fallen much more quickly than expected, but it is the rise of cheaper battery storage that will present a potential "game-changer" for one of the world’s largest industries over the next decade, the report said.
"The UK government has a big problem on its hands: solar and storage technologies are advancing rapidly and will bleed revenues from the utilities sector, yet we need a financially healthy industry to enable large-scale investments in smarter, more flexible electric power networks," said Charles Donovan, director of the Centre for Climate Finance.
"The transition ahead is going to be messy. For example, the expensive baseload power to be generated by Hinkley Point C may not even be needed if consumers make the profitable switch to onsite solar and storage indicated by our model," Donovan added.
Donovan said the new concept of firm power parity is more suited to the competitive landscape of renewable technologies as it calculates what is available when the sun is not shining.
“The results of our research are exciting as they show we will soon be entering a period where reliable and profitable solar power production by residential energy consumers becomes a reality in relatively cloudy places like London."