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Quantifying the Long-Term Economic Benefits of European Electricity System Integration

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  • Eva Schmid

    (Potsdam Institute for Climate Impact Research)

  • Brigitte Knopf

    (Potsdam Institute for Climate Impact Research)

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.

Suggested Citation

  • Eva Schmid & Brigitte Knopf, 2014. "Quantifying the Long-Term Economic Benefits of European Electricity System Integration," Working Papers 2014.03, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2014.03
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    References listed on IDEAS

    as
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    Cited by:

    1. 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.
    2. repec:wsi:ccexxx:v:04:y:2013:i:supp0:n:s201000781340006x is not listed on IDEAS
    3. Knopf, Brigitte & Nahmmacher, Paul & Schmid, Eva, 2015. "The European renewable energy target for 2030 – An impact assessment of the electricity sector," Energy Policy, Elsevier, vol. 85(C), pages 50-60.
    4. 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.
    5. Krakowski, Vincent & Assoumou, Edi & Mazauric, Vincent & Maïzi, Nadia, 2016. "Feasible path toward 40–100% renewable energy shares for power supply in France by 2050: A prospective analysis," Applied Energy, Elsevier, vol. 171(C), pages 501-522.
    6. 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.
    7. repec:eee:rensus:v:81:y:2018:i:p1:p:1049-1086 is not listed on IDEAS
    8. 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.

    More about this item

    Keywords

    Transmission Infrastructure Planning; European Energy Policy Targets; Mitigation;

    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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