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

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  • Schmid, Eva
  • Knopf, Brigitte

Abstract

This paper aims to quantify the long-term economic benefits that arise from an increasing integration of the pan-European electricity system by means of comparing model-based decarbonization scenarios developed with the model LIMES-EU+. It explicitly accounts for 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. It leads to positive social returns on investment in all mitigation scenarios under analysis. However, the reduction in total discounted system costs stemming from transmission capacity expansion is modest in magnitude. Over the period 2010–2050 it reaches a maximum of 3.5% for a case with massive expansion compared to one in which the status quo remains. In technical terms this means that the optimum is rather flat and taking into account regional and local benefits and distributional aspects could alter the evaluation of the economic benefits. A crucial finding is that the configuration of pan-European transmission infrastructure and the importance of specific country-connections, i.e. a “Southern” versus a “Northern” solution, hinges on the relative development of specific investment costs for solar and wind technologies over the next decades.

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  • Schmid, Eva & Knopf, Brigitte, 2015. "Quantifying the long-term economic benefits of European electricity system integration," Energy Policy, Elsevier, vol. 87(C), pages 260-269.
  • Handle: RePEc:eee:enepol:v:87:y:2015:i:c:p:260-269
    DOI: 10.1016/j.enpol.2015.09.026
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    2. Gerbaulet, Clemens & von Hirschhausen, Christian & Kemfert, Claudia & Lorenz, Casimir & Oei, Pao-Yu, 2019. "European electricity sector decarbonization under different levels of foresight," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 973-987.
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    7. Geoffrey J. Blanford & Christoph Weissbart, 2019. "A Framework for Modeling the Dynamics of Power Markets – The EU-REGEN Model," ifo Working Paper Series 307, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
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    10. Martínez-Gordón, R. & Morales-España, G. & Sijm, J. & Faaij, A.P.C., 2021. "A review of the role of spatial resolution in energy systems modelling: Lessons learned and applicability to the North Sea region," Renewable and Sustainable Energy Reviews, Elsevier, vol. 141(C).
    11. Krakowski, Vincent & Assoumou, Edi & Mazauric, Vincent & Maïzi, Nadia, 2016. "Reprint of Feasible path toward 40–100% renewable energy shares for power supply in France by 2050: A prospective analysis," Applied Energy, Elsevier, vol. 184(C), pages 1529-1550.
    12. Reichenberg, Lina & Hedenus, Fredrik & Odenberger, Mikael & Johnsson, Filip, 2018. "The marginal system LCOE of variable renewables – Evaluating high penetration levels of wind and solar in Europe," Energy, Elsevier, vol. 152(C), pages 914-924.
    13. Jing, Rui & Kuriyan, Kamal & Lin, Jian & Shah, Nilay & Zhao, Yingru, 2020. "Quantifying the contribution of individual technologies in integrated urban energy systems – A system value approach," Applied Energy, Elsevier, vol. 266(C).
    14. Thomas Sattich & Inga Ydersbond & Daniel Scholten,, 2015. "Can EU’s Decarbonisation Agenda Break the State-Company Axis in the Power Sector?," Working Papers 2015.51, Fondazione Eni Enrico Mattei.
    15. Bauknecht, Dierk & Funcke, Simon & Vogel, Moritz, 2020. "Is small beautiful? A framework for assessing decentralised electricity systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 118(C).
    16. Clemens Gerbaulet & Casimir Lorenz, 2017. "dynELMOD: A Dynamic Investment and Dispatch Model for the Future European Electricity Market," Data Documentation 88, DIW Berlin, German Institute for Economic Research.
    17. Blanco, Herib & Faaij, André, 2018. "A review at the role of storage in energy systems with a focus on Power to Gas and long-term storage," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1049-1086.
    18. David Ritter & Roland Meyer & Matthias Koch & Markus Haller & Dierk Bauknecht & Christoph Heinemann, 2019. "Effects of a Delayed Expansion of Interconnector Capacities in a High RES-E European Electricity System," Energies, MDPI, Open Access Journal, vol. 12(16), pages 1-32, August.
    19. Reichenberg, Lina & Hedenus, Fredrik & Odenberger, Mikael & Johnsson, Filip, 2018. "Tailoring large-scale electricity production from variable renewable energy sources to accommodate baseload generation in europe," Renewable Energy, Elsevier, vol. 129(PA), pages 334-346.
    20. Ringkjøb, Hans-Kristian & Haugan, Peter M. & Solbrekke, Ida Marie, 2018. "A review of modelling tools for energy and electricity systems with large shares of variable renewables," Renewable and Sustainable Energy Reviews, Elsevier, vol. 96(C), pages 440-459.
    21. Lehmann, Paul & Ammermann, Kathrin & Gawel, Erik & Geiger, Charlotte & Hauck, Jennifer & Heilmann, Jörg & Meier, Jan-Niklas & Ponitka, Jens & Schicketanz, Sven & Stemmer, Boris & Tafarte, Philip & Thr, 2021. "Managing spatial sustainability trade-offs: The case of wind power," Ecological Economics, Elsevier, vol. 185(C).
    22. Pietzcker, Robert C. & Osorio, Sebastian & Rodrigues, Renato, 2021. "Tightening EU ETS targets in line with the European Green Deal: Impacts on the decarbonization of the EU power sector," Applied Energy, Elsevier, vol. 293(C).
    23. Philip Mayer & Christopher Stephen Ball & Stefan Vögele & Wilhelm Kuckshinrichs & Dirk Rübbelke, 2019. "Analyzing Brexit: Implications for the Electricity System of Great Britain," Energies, MDPI, Open Access Journal, vol. 12(17), pages 1-27, August.
    24. Nahmmacher, Paul & Schmid, Eva & Pahle, Michael & Knopf, Brigitte, 2016. "Strategies against shocks in power systems – An analysis for the case of Europe," Energy Economics, Elsevier, vol. 59(C), pages 455-465.

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    More about this item

    Keywords

    Mitigation; Transmission infrastructure planning; Renewable integration; Energy system modeling; European energy policy targets; Energy Union;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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