photovoltaic solar power panel in the field, green clean Alternative power energy concept.

27. 02 .2024

Democratization of the energy market

Solar panels, akin to real estate, represent a unique investment opportunity. The exploitation of this potential marks an exceptional economic development opportunity for Hungary. Current technology enables the production of photovoltaic (PV) panels that operate at over 90% efficiency for 25-30 years, thereby generating a steady cash flow over this period. This transformation from an energy-generating machine to a real estate-like asset redefines the 20th-century oil-gas energy market rules in the short term.

Instead of relying on diminishing EU subsidies, my proposal suggests channeling household savings into PV-based energy production. This idea was inspired by an interview with Robert F. Kennedy Jr., a presidential candidate in the USA, where he stated:

"Instead of big tech and big oil, I want to rely on the now perfecting new PV-EV-PW technologies because they enable the democratization of the energy market, where every property owner is simultaneously a power consumer and seller, and I want to make this a part of my presidential program."

I believe this would be an energy "New Deal" in the USA, and Hungary should adopt it as well. Reducing energy dependence is in the interest of families, the nation, the Carpathian Basin region, and even the European Union.

Hungary, currently with only 200,000 homes equipped with small-scale residential PV power plants (HMKE), could incorporate every rooftop into electricity production with the help of solar panels. Thus, every rooftop and every property owner could participate in the country's electricity supply and stability. The partial or complete electrical autonomy of family homes would increase the country's electrical autonomy. A distributed power grid is the most efficient, cheapest, most stable, and the low-cost electricity base resource would make all production and services more competitive. The currently very high energy prices, even replacing the reduced residential electricity costs, would provide returns higher than treasury bonds for the 3 million family house owners. The widespread adoption of PV-based HMKE only requires the stability of regulation for 20-30 years and the broad understanding of the PV HMKE real estate analogy, whereby PV investment also behaves like real estate but instead of rent, it reduces electricity costs over a very long term.

PV electricity production increases the volatility of the electrical grid, which the grid operator must initially balance. However, my proposal also includes a solution for this. Nuclear, gas, and coal-based balancing power plants belong to the "big tech-big power" domain, where democratization is technologically not possible. The balance of energy market supply can be ensured between the large industrial players operating in monopoly (nuclear) and oligopoly (gas-coal-oil) positions and the public by the expansion of small-scale residential PV power plants. Through the energy "new deal," household savings can be incorporated to create a robust and, in Nassim Nicholas Taleb's terms, "antifragile" energy grid with stable regulation, treasury bond-like returns, and the understanding of the real estate analogy, as households realize stable, passive income from rent or energy cost savings. The PV-based HMKE investment TODAY, through the replacement of electricity costs, fixes the electricity cost for 25-30 years in advance at today's prices for the consumer-investor, protecting them from price increases typically generated by external processes to the extent of the replaced consumption.

The aforementioned energy "new deal" can also be extended to grid regulation and energy storage, meaning that households and household savings can also be utilized in this area. Grid balancing can be achieved through the increasingly popular and cheaper electric vehicles (EVs) and household energy storage (Power Wall). In the near future, it may become evident that battery technology has also reached a useful lifespan that allows for real estate-like investment strategies in this area, making participation in the proposed energy "new deal" feasible.

EU-level regulation supports the repurposing of EV batteries after 5-10 years of dynamic use in cars, with the existing technology allowing these cells to be reused as household batteries (Power Wall). Thus, with a 20-30 year useful life, a battery cell behaves like real estate, generating passive income.

In 2022, the country's energy costs amounted to €17 billion. According to Bankmonitor data, household savings of HUF 13 million per household, totaling HUF 54,000 billion, are currently resting in bank deposits and treasury bonds. A 10-panel PV HMKE can be installed immediately at a cost of HUF 2 million, with a payback period of under 10 years even without annual accounting. The resulting 14GWp PV capacity can be comfortably financed with approximately 10% of existing household savings (HUF 6,000 billion – €15 billion), transforming the country from an energy importer to an energy exporter almost immediately without increasing state debt or requiring EU subsidies. Consequently, most PV electricity production would be in the hands of households. The existing rooftops and family homes' electrical connections gain a secondary function, replacing 10,000 hectares of arable land with 3 million rooftops, turning PV HMKE into a residential business and transforming the electricity distribution network from large central power plants into a buyer network, collecting and distributing locally produced electricity to the nearest consumers.

Another element of household energy independence is household energy storage, the first possible tool being the electric car, which spends 90% of its time parked. During this 90% parking time, the car battery can also serve as a storage and balancing function, generating income. This income can co-finance the currently expensive electric car, facilitating its rapid spread. The necessary intelligent charging network should be established by those operating daytime parking facilities. Office buildings, commercial establishments, and parking companies can also share in the energy regulation cash flow, making the two-way charging-storage network construction co-financeable through the energy market "new deal." Besides supporting the spread of EVs, the resources needed for household energy storage installations can be supplemented with funds from the EU ESG strategy aimed at reducing the European continent's hydrocarbon dependence. By channeling household and domestic SME sector savings as co-financers, a wide-based, diversified electricity production and storage system can be established and operated in an intelligent network.

The common feature of the three elements of the energy "new deal" is that they create secondary-dual functions, suitable for creating an energy competitive advantage. Involving household resources creates a competitive advantage for the country, protects agricultural land, and makes the country independent of international energy companies' manipulations, generating immediate economic growth. Not to mention that families receiving favorable returns through energy market democratization spend or invest the returns domestically.

Regarding the financing sources for my proposal, supporting and co-financing the three secondary-use assets can be resolved using the HUF 54,000 billion in household savings. The domestic real estate market is the most important household investment target alongside government securities. The PV-EV-PW lifespan exceeding 20 years has made these assets similar to real estate investments, producing predictable passive income by partially or fully replacing household electricity consumption and even generating revenue. Raising awareness of this among the public is a matter of information, support, and predictable regulation.

Energy markets and prices are cyclical. Investing at the beginning of the cost cycle accelerates returns. This is important because when regional PV electricity overproduction occurs, without PW storage, its price drops significantly. Electricity can be efficiently transmitted within a 1000 km radius. If Hungary produces PV electricity within this region, it will lower the daytime PV electricity price so much that similar energy "new deals" will offer much less favorable returns. The unavoidable electricity logistics role in the Carpathian Basin can generate significant revenue, making my proposal self-financing, not requiring EU funding, similar to all regional monopolies, from highways to railways to optical networks. After a 10-year payback period, PV electricity costs could drop significantly, ensuring the competitiveness of domestic industry and agriculture.

Through the electrical "new deal" and the democratization of the energy grid, we create an effective tool to strengthen financial stability and economic robustness!

László Vancskó
REM Group


The above has been translated from Hungarian to English with the use of AI.