Quantifying the long-term economic benefits of European electricity system integration

Abstract

This paper analyses a set of model-based decarbonization scenarios in order to quantify the long-term economic benefits that arise from an increasing integration of the pan-European electricity system. It thereby focuses on the interplay between transmission infrastructure and renewable generation capacity expansion. We confirm earlier findings that, on aggregate, pan-European transmission capacity expansion constitutes a no-regret option for integrating increasing shares of variable renewables in mitigation scenarios with positive social returns on investment. However, it turns out that the change in total discounted system costs that occurs as transmission capacity expansion increases is modest in magnitude, with a maximum of 3.5% for a case with no expansion compared to one with massive expansion. In technical terms this means that the optimum is rather flat and that taking into account regional and local benefits and distributional aspects, could alter the evaluation of the economic benefits considerably. A crucial finding in this context is that the configuration of pan-European transmission infrastructure and the importance of specific country-connections, i.e. a "Southern" versus a "Northern" solution, crucially hinges on the relative development of specific investment costs for solar and wind technologies over the next decades.

Incorporating Power Transmission Bottlenecks into Aggregated Energy System Models

“…On the European level, most energy scenarios are characterized by ESMs where each country is represented by either a single or only a few modeled regions [11,12]. Therefore, spatial data are aggregated, or in other words, the total power generation and consumption of a defined region are concentrated at one point while neglecting intra-regional power flows.…”

Challenging the European Climate Debate: Can Universal Climate Justice and Economics be Reconciled with Particularistic Politics?

“…Coats, 2013). Modelling studies have revealed that -given the substantial uncertainties -an increased investment into photovoltaic energy in Southern Europe could be part of a cost-efficient European energy transition (Schmid and Knopf, 2013;Knopf et al, 2013). At the same time, economic analysis suggests that increased stimulus investments into European debt crises ridden states could reduce unemployment and relieve the deep recession (Koo, 2011;Andersen et al, 2012).…”

Transformative multivalue business models: A bottom‐up perspective on the hydrogen‐based green transition for modern wind power cooperatives

“…The traditional landscape with large and steady central power production units based on coal, nuclear, oil, and gas is increasingly being replaced by more decentralized and rapidly maturing power generation units such as wind and solar plants . This shift is increasingly putting pressure on various authorities and traditional market systems as they have to integrate these naturally fluctuating and widely dispersed energy sources into national and international main grid constellations that require grid upgrades to be constantly aligned with the interconnector needs …”

“…With neighbouring countries continuing their own build‐out of VRE sources, to a large extent correlating in production patterns with Danish VRE and thus putting further pressure on the price per megawatt hour (MWh) from VRE in general, these planned grid build‐outs are not expected to effectively mitigate the challenges facing the entire VRE investment ecosystem . Thus, highlighting the relevance of this study and identifying and exploring conceptual alternatives and potentials for VRE investors to sustain value of VRE‐producing assets via transformative technologies and multivalue business models, such integrative energy solutions—catalysing the green transition and sealing the gap between VRE capacity and VRE generation—may very well prove to be “the next big thing” on an international scale as well …”

“…4 This shift is increasingly putting pressure on various authorities and traditional market fluctuating and widely dispersed energy sources into national and international main grid constellations 5 that require grid upgrades to be constantly aligned with the interconnector needs. 6 According to the European Commission's Energy Roadmap 2050, 7 a high renewable scenario aims for 85% of all energy to come from renewables (with 65% from intermittent sources, for example, wind and solar). With recent statistics from the European Commission's fourth quarterly report on European electricity markets showing that wind power alone provided more than 10% on average of the entire European power generation mix in 2016 (even up to 15% on more occasions), compared with a 3.7% global average, the European Union is one of the first regions to experience the exponential complexities and balancing issues associated with transitioning to this new, green energy landscape.…”