Are fossil fuels cheaper than electricity for steam generation?
Any individual with the authority to decide on purchasing a steam boiler should consider the option of acquiring an electric steam generator. Electric boilers (commonly referred to as generators for steam and hot water) already demonstrate higher social and financial profitability than those fueled by fossil fuels.
This differential tendency towards increasing prices of CO2 emission rights aims to guide productive sectors towards investing in fossil decarbonization (defossilization). In other words, the cost of emissions is increasing, making it cheaper to invest in defossilization than to pay for pollutant gas emissions.
This undeniable trend that underpins our statement regarding social and financial profitability will result in the following:
- The increase in the price of oil and gas will no longer be temporary but rather structural. We will enter a sustained growth in prices that will reduce the competitiveness of consuming companies.
- The price of one ton of CO2 will reach around 180 euros in 2025. In 2012, one ton of CO2 was valued at 8 euros, remaining between 8 and 10 euros until 2018. By 2020, it was around 28 euros, and a year later, it doubled its price. As of today (18/09/2022), the annual average value is 81.23 euros per ton, according to the German Institute for Economic Research (DIW).
- The pressure on companies to reduce greenhouse gas emissions will increase significantly as the emission reduction targets set in 1990 have not yet been achieved. The current objective is to reduce emissions by 55% by 2030, based on 1990 values. Environmental policies are obliging companies to move towards renewable energy sources. Various European organizations, such as the European Green Deal (EGD), and laws like the Renewable Energy Sources Act (EGG), are guiding consumers and businesses towards a preference for energy from renewable sources. It is estimated that by 2025, renewable energy consumption will represent between 40% and 45%, reaching between 55% and 60% by 2035. The European Green Deal aims for carbon neutrality by 2050.
- The energy mix will lose prominence in favor of electric energy, and in the short to medium term, we will witness a significant migration towards electric consumption of equipment in general, particularly boilers that are currently fueled by fossil fuels. Large consumers will be the first to make this shift because seeking energy efficiency alone will not be enough to meet the set objectives.
- The great instability in fossil fuel prices worldwide due to the peculiarities of most producing countries and limited resources raises serious doubts about the future of boilers fueled by fossils. This situation questions the return on potential investment objectives. To achieve the defined goals, governments and the EU have launched plans and will continue to promote the transition from fossil fuels to electric energy. There will be aids and subsidies to expedite, if possible, the return on investments in electric steam generators.