Exhibit 6 Energy consumption and lower levelized cost of energy in Europe could offset increasing grid costs including distribution and system surcharges.
Evolution of EU-27 energy costs, ¹ index (100 = ~€1,200 billion)
~130
~40
–9 to 16
–3 to 7
~7
100
Long-term increased energy cost due to continued energy crisis
Reduction in energy consumption and lower levelized cost of energy could offset increasing grid costs (transmission and distribution, system surcharges) Operational expenditure (opex) reduction, electrification
90
Electrification technologies² and energy efficiency investments³ costlier than nongreen alternatives (=differential4)
Expected price drop in oil (from precrisis level) due to expected demand decline
84
2030 cost of energy with energy crisis
2030 cost of energy with investments
2030 cost of energy
2019 cost of energy
Opex increase, continued energy crisis
Differential capital expenditure increase, electrification
Opex reduction, commodities price change
Note: Total EU-27 energy cost based on detailed analysis on the energy cost of key countries (Germany, France, Italy, and Spain = ~55% of EU-27’s energy consumption in 2019). EU-27 cost was estimated proportionally assuming similar average cost of energy in the rest of EU-27. Fuels considered: electricity, hydrogen, natural gas, biogases, motor gasoline, biogasoline, synthetic gasoline, gas/diesel oil, biodiesel, and synthetic diesel. 1 According to TTF Brent futures (for 2024) as of Sept 2022, assuming gas price of €110/MWh compared with €17/MWh (preinvasion of Ukraine) for 2030. ² Eg, electric vehicles, heat pumps. ³ Eg, building retrofits. 4 =differential means consideration of delta cost of electrification tech vs nongreen alternative.
McKinsey & Company
engine. However, the up-front capital outlay could be a barrier to adoption. To make green technologies cost competitive in the short term, the European Union could consider offering subsidies, tax credits, and additional support while investing to scale up these technologies so they become less expensive. 2. Enabling active demand participation by removing regulatory and technical constraints for end users and promoting stabilization to mitigate volatility. Customers could use their own renewable distributed sources to participate in the provision of green energy and flexibility services. In this way, those customers could profit from stable, inexpensive distributed
To accelerate the energy transition without adversely affecting affordability, business leaders and policy makers could consider two key priorities: 1. Lowering financial barriers, such as high up-front investments, by providing incentives and subsidies for the adoption of clean technologies. The shift to more sustainable energy can require households to pay large sums for clean technologies. The longer- term savings to consumers on items such as air source heat pumps, upgraded building insulation, or electric vehicles may be important. The total cost of ownership of an EV, for example, is in many cases less than that of a vehicle powered by an internal-combustion
Accelerating the journey to net zero
65
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