The resource quality and the temporal generation pattern of variable renewable energy sources vary significantly across Europe. In this paper spatial distributions of renewable assets are explored which exploit this heterogeneity to lower the total system costs for a high level of renewable electricity in Europe. Several intuitive heuristic algorithms, optimal portfolio theory and a local search algorithm are used to find optimal distributions of renewable generation capacities that minimise the total costs of backup, transmission and renewable capacity simultaneously. Using current cost projections, an optimal heterogeneous distribution favours onshore wind, particularly in countries bordering the North Sea, which results in average electricity costs that are up to 11% lower than for a homogeneous reference distribution of renewables proportional to each country's mean load. The reduction becomes even larger, namely 18%, once the transmission capacities are put to zero in the homogeneous reference distribution. Heuristic algorithms to distribute renewable capacity based on each country's wind and solar capacity factors are shown to provide a satisfactory approximation to fully optimised renewable distributions, while maintaining the benefits of transparency and comprehensibility. The sensitivities of the results to changing costs of solar generation and gas supply as well as to the possible cross-sectoral usage of unavoidable curtailment energy are also examined.
For a cost efficient design of a future renewable European electricity system, the placement of renewable generation capacity will seek to exploit locations with good resource quality, that is for instance onshore wind in countries bordering the North Sea and solar PV in South European countries. Regions with less favorable renewable generation conditions benefit from this remote capacity by importing the respective electricity as power flows through the transmission grid. The resulting intricate pattern of imports and exports represents a challenge for the analysis of system costs on the level of individual countries. Using a tracing technique, we introduce flow-based nodal levelized costs of electricity (LCOE) which allow to incorporate capital and operational costs associated with the usage of generation capacity located outside the respective country under consideration. This concept and a complementary allocation of transmission infrastructure costs is applied to a simplified model of an interconnected highly renewable European electricity system. We observe that cooperation between the European countries in a heterogeneous system layout does not only reduce the system-wide LCOE, but also the flow-based nodal LCOEs for every country individually.
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