Modeling the low-carbon transition of the European energy system - A quantitative assessment of the stranded assets problem

Konstantin Löffler,Thorsten Burandt,Karlo Hainsch,Pao-Yu Oei

doi:10.1016/j.esr.2019.100422

Abstract

In this paper, multiple pathways for the European energy system until 2050 are computed, focusing on one of the major challenges of the low-carbon transition: the issue of unused capacities and stranded assets. Three different scenarios are analyzed, utilizing the Global Energy System Model (GENeSYS-MOD) for calculations. A major feature is the introduction of limited foresight and imperfect planning to the multi-sectoral approach of the model. A swift transition towards renewable energy sources is needed in order to ensure the goal of staying below 2 °C is maintained. This leads to the underutilization of current fossil-fueled plant capacities, an effect compounded by the prioritization of short-term goals over long-term targets. In the worst case, capacities with a combined value of up to 200 billion € corresponding to 260 GW total capacity may end up stranded by 2035, with significant shares in the coal and gas sectors. Contrary, in the baseline scenario featuring perfect foresight, this amount can by reduced by as much as 75%. Thus, the need for strong, clear signals from policy makers arises in order to combat the threat of short-sighted planning and investment losses.

Highlights

Introduction and literature reviewAs a leading economic force, Europe has to play a key role in the transition towards renewable energies
As well as other fossil-fuel phase-outs are being enforced across multiple European countries, while ambitious climate goals are being set among members of the European Union [5,6]
The European energy system is on the brink of change

Summary

Introduction and literature review

As a leading economic force, Europe has to play a key role in the transition towards renewable energies. A recent study by Mercure et al [15] comes to a similar result They asses future energy demand projections and changes in fossil fuel assets value. Johnson et al [7] conclude similar findings They emphasize that the construc tion of coal power plants, especially without installed CCS technology, would have to be reduced significantly, emphasizing the use of existing capacities over new construction. Notable examples are the studies of Gerbaulet et al [30] and Keppo and Strubegger [31] Both articles limit the foresight of optimization models and feature similar results: A limited foresight leads to limited investments in renewable resources in the earlier modeling periods.

The current status of the energy system

Current political landscape

Model and data

Results

Conclusion