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In Pursuit of the Green Transition—Electricity at Any Cost?

Author

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  • Fahlén, Per

    (Chalmers University of Technology)

  • Henrekson, Magnus

    (Research Institute of Industrial Economics)

  • Nilsson, Mats

    (Södertörn University)

Abstract

We examine EU and UK plans for achieving a fossil-free energy system by 2050, centered on massive electrification and large-scale deployment of wind and solar power. Using empirical trends, cost analyses, and system-function assessments, we argue that current strategies underestimate real economic, technical, and social challenges. Three scenarios for meeting 2050 electricity demand are compared: full reliance on renewables; a 50/50 split between wind-solar and nuclear; predominantly nuclear. Evidence shows that higher shares of weather-dependent generation correlate with higher electricity pric-es, greater volatility, and increased system integration costs. High renewable shares require extensive backup, storage, and grid reinforcement, raising complexity and environmental impacts. Overlooked costs are highlighted: reduced capacity value, transmission expansion, balancing services, and so-cial externalities. Sustainability must encompass environmental, economic, and social dimensions. A technologically diverse, dispatchable-power-based strategy—especially with expanded nuclear power— offers a more robust, cost-effective, and socially acceptable pathway to climate neutrality than a predominant reliance on intermittent renewables.

Suggested Citation

  • Fahlén, Per & Henrekson, Magnus & Nilsson, Mats, 2025. "In Pursuit of the Green Transition—Electricity at Any Cost?," IZA Discussion Papers 18179, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp18179
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L70 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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