Benefits and costs of renewable electricity in Europe

The European Union (EU) is committed to the deployment of electricity from renewable energy sources (RES-E). However, the large and recent increase in the RES-E penetration has raised the concern of policy makers in the EU Member States (MS) about the costs of public promotion of RES-E. Nevertheless, an economic analysis of the RES-E contribution should include the policy costs of RES-E deployment, but also its benefits. This would contribute to support the debate on renewable energy policy targets in the EU and its MS. The aim of this paper is to close this gap in the literature with a novel methodology and put those policy costs into perspective by evaluating some of the most relevant benefits of RES-E deployment in the EU and its MS. The results show that RES deployment due to RES-E support has led to two main benefits (lower CO2 emissions and fossil fuel savings), which are slightly below those costs. Behind this broader picture, significant country and technology differences emerge. The benefits are above policy costs for hydro and wind, and below those costs for bioenergy, solar photovolatics and other RES-E.