The Limits of New Renewable Energy Sources Integration in Electricity Sector in the EU Countries: Economic Aspects

In a large number of published works possibilities and limits of building an electricity power industry based on new renewable energy sources (NRESs) in the European countries have been analyzed in detail. As a rule, these works focus on technological aspects of building a principally new energy system, which pave the green road for NRESs penetration. The present article concentrates on economic factors and constrains in transition towards fully decarbonized electricity. Our input in the literature is the following. Firstly, we show that intensive restructuring of electricity sector in the EU is unfolding against the background of stagnation and even slight decline of demand for electricity. Sluggish dynamics of the European economy for the two last decades, additionally accentuated by the exogenous shock of global coronavirus infection, put in question possibility of substantial growth of demand or electricity in the medium- and long-term perspective. Secondly, the price of transition is rising electricity tariffs for households and companies from the real sector. Econometric calculations prove that electricity price is directly proportional to the share of NRESs in the total electricity generation and to the level of tax on carbon emissions. Thirdly, two groups of countries have crystallized in the EU that aim at realization of two different strategies of electricity decarbonization. While countries with high per capita GDP and long market history mostly place a bet on NRESs promotion, countries of comparatively low level of development and limited capacities for economic maneuver try to decarbonize electricity by promoting nuclear energy and it objectively bounds NRESs penetration.