Going fully electric for your car and devices will be the cheapest option in four years, the report says – Stuff | CarTailz

Buying an electric vehicle and switching to all electronic devices in the home may cost more up front, but the cost equation will tip in favor of electric vehicles by 2026, according to an electricity industry report.

By 2026, homes that go fully electric will save money compared to sticking with a gas car and/or gas appliances, the study finds — with savings growing to hundreds and eventually thousands of dollars a year.

The report (by consultancy Sapere) was paid for by the Electricity Networks Association, which represents the network operators that bring electricity to homes. It uses models from the Climate Change Commission.

“Regardless of variables such as energy prices, there will be a turning point this decade where the transition to pure electric mobility will lead to savings,” said Graeme Peters, chairman of the board of the association. “For many Kiwis, those savings will add up to thousands of dollars over time.”

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The report found that people who installed solar panels and batteries would save even more money than those who just used the national grid, but it didn’t take solar power into account when calculating the tipping point where electricity became cheaper.

Using electricity to power current fossil-fueled devices like cars would lead to rising utility bills, but the decline in gasoline and gas spending would more than offset that, Peters said.

The report assumes that people mainly charge their vehicles at home.

“There is a fairness issue at play, however,” Peters said. “It looks like wealthier households will be the first to benefit from energy savings as they can afford to buy electric vehicles where the biggest cost savings will be found. The cost of ownership will be a barrier for many New Zealanders, especially until EV prices fall and a used car market emerges.”

The report does not look at cost savings from switching to mini electric vehicles – like e-bikes and e-scooters – instead of cars. Savings from the expansion of foot and public transport are also not taken into account. The Climate Change Commission says all of these modes of transport need to grow to maximize the cost, health and planetary benefits of greener use.

What the report assumes

By 2040, the difference in spending between a household that uses maximum fossil fuels and a home that runs entirely on electricity would be about $2,400 per year, the report said.

The calculations assume that electricity prices will rise steadily from 2024 onwards. But fossil fuels are projected to increase even more, which means switching to electric power is still cheaper from about four years, Sapere concluded. Manufacturers are also expected to make small gains in energy efficiency.

If electric vehicle prices fall less than expected, or energy costs change differently than forecast, it could take more than four years for electrification to catch on, but it will still happen, Sapere’s report said.

A new EV would cost the same as a petrol car by 2030, the report assumes, but lower maintenance and running costs would make EV ownership cheaper overall long before the sticker price is even considered. The acquisition cost of used electric vehicles is expected to take longer to reach price parity with used gasoline cars.

Electric vehicles should be as cheap to buy as petrol cars in 2030, but they are already cheaper to run and maintain.

Things

EVs should be as cheap to buy as gas cars in 2030, but they are already cheaper to run and maintain.

To arrive at its findings, two Sapere researchers estimated the total energy expenditure of an average New Zealand household under a range of different scenarios up to 2040, based on data used by the Climate Change Commission.

The totals are based on averaging the acquisition costs and the operating costs over the lifetime of vehicles and equipment into an annual figure.

The report examines the impact of fuel, gas and electricity price increases on a range of average households, including those with petrol or diesel cars, electric cars, electrical appliances and a mix of gas and electric installations (including for heating, hot water and cooking).

Price increases necessary?

The electricity industry says massive investment will be needed to ramp up renewable power generation as New Zealand goes electric. These costs could flow to households in the form of higher fixed costs.

However, a recent report by unions and a climate group accused the industry of paying too much dividends and underinvesting in infrastructure – at the expense of household energy bills rising more than necessary. The way the electricity market is structured means that power generation companies can benefit from higher overall prices when pricier coal plants are in operation, even if most of the country’s electricity comes from cheaper sources: wind, hydro and solar.

Energy Secretary Megan Woods said at the time that the union-backed report “lacked context” but took the allegations “seriously”. The industry said New Zealand’s energy sector has performed well on both price and reliability.

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