World's largest private bank predicts solar-led power revolution

Zurich’s UBS Bank – the largest private bank in the world – has this week issued an extraordinary briefing paper to its clients and investors, advising them that "large-scale, centralized power stations" are 10-20 years away from extinction, and has backed solar PV as the power source most likely to rise to the fore.

The bank’s leading analysts expect solar technologies, cheaper storage and the rise in electric vehicles to ring the death knell for big power stations in Europe, with the transition likely to be complete within 20 years.

Centralized power stations, the briefing said, are too big and inflexible to continue to service the power needs of future generations. The authors of the report instead suggest that househoulds and businesses will increasingly find it cheaper and easier to generate and store their own power – even without subsidies.

UBS, with assets topping $1.5 trillion, sounded more akin to a socially conscionable NGO than a private banking institution for the world’s elite when it wrote: "Power is no longer something that is exclusively produced by huge, centralised units owned by large utilities."

The report continued: "By 2025, everybody will be able to produce and store power. And it will be green and cost-competitive, ie, not more expensive or even cheaper than buying power from utilities."

The authors of the report then urged UBS’ financial clients – many of whom represent the fabled 1% of the world’s elite – to "join the revolution", identifying solar as the technology proving most disruptive to the status quo.

"Solar is at the edge of being a competitive power generation technology," said the report. "The biggest drawback has been its intermittency. This is where batteries and electric vehicles come into play. Battery costs have declined rapidly, and we expect a further decline of more than 50% by 2020."

The twin pillars of cheaper storage and mass-produced electric vehicles will in turn spur more solar development, spinning energy towards a more democratized future sooner than we might think, said UBS.

Solar’s tipping point

The crucial tipping point is likely to arrive as early as 2020, according to the report. By that date, an investment in a home solar PV system (with a 20- or 25-year lifespan) allied to a small-scale battery storage system and electric car will pay for itself within six years. For consumers in most of Europe, this can all be achieved without government subsidies.

"In other words, a German buyer should receive 12 years of electricity for free," the report adds. After that date, things could get really interesting – economic incentives will be steered towards making every household energy independent, reducing the reliance on traditional power sources and snowballing towards a solar stranglehold on energy.

The report notes that not all power plants will have disappeared completely by 2025, but adds: "We would be bold enough to say that most of those plants retiring in the future will not be replaced."

UBS’s projections in the report adopt a simplified understanding of a potentially utopian future for solar advocates. Electric vehicles would charge at night, solar panels would provide energy during the day, and excess power would be stored in a domestic battery. Grid-feed would play a reduced role, relegated to the task of plugging intermittent gaps in the grid, mostly in the morning. Smarter grid systems will more efficiently manage a home’s energy supply.