Impact and costs of proposed scenarios for power sector decarbonisation: An Italian case study

Abstract

In the face of ever more ambitious global energy challenges, the European Union has set striving climate targets for 2030, planning to increase renewable energy penetration in the electricity generation as a key measure towards a clean energy transition. To respond to the challenge of keeping the increase in power sector costs, that inevitably arises when a profound reconfiguration of the electricity generation sector is expected, to the lowest possible, this paper aims to quantify the economic burden associated with the reduction of direct CO2 emissions through a comparative assessment of various alternatives proposed for 2030 ranked in terms of their cost-effectiveness.A sensitivity analysis is also applied to the main economic and energy parameters that make up CO2 mitigation costs to include those uncertainties that characterise future projections. The impact of electricity generation shares on CO2 mitigation costs is assessed thus providing a basis for the definition of alternative configurations for the Italian electricity sector capable to achieve the desired environmental performance with a limited economic impact.Finally, results reveal that those scenarios based largely on natural gas and solar source are characterized by high mitigation costs, while energy efficiency is essential for a virtuous and clean electricity sector along with the use of all available sources in appropriate shares, both renewable and non-renewable, to pursue the highest environmental objectives in a cost-effective manner. Although related to the Italian case, the methodology provided in this study can be applied to any other electricity sector to ultimately evaluate the economic burden arising from possible different configurations.