Promotion of Electricity from Renewable Energy in Europe Post 2020—The Economic Benefits of Cooperation

Abstract

In Europe, the availability of renewable energies, especially from sun and wind, diff ers signi cantly across regions. Consequently, cooperation in the deployment of renewable energy among European countries potentially yields substantial efficiency gains. However, in order to achieve the 2020 renewable energy targets for electricity, Member States of the European Union almost purely rely on domestic production. For the period after 2020, a European renewable energy target has not yet been de fined, but decarbonization pathways outlined in the Roadmap of the European Commission include renewable energy shares of electricity generation to be 50-60% by 2030. Therefore, we analyze the benefi ts of cooperation compared to continuing with national renewable energy support after 2020. We use a large-scale dynamic investment and dispatch model of the European electricity system and find that compared to a 2030 CO2-only target(-40% compared to 1990 emission levels), electricity system costs increase by 5 to 7% when a European-wide renewable energy target for electricity generation (of around 55%) is additionally implemented. However, these additional costs are lower by 41 to 45% compared to the additional electricity system costs which would arise if the renewable energy target was reached through national support systems (without cooperation). Furthermore, we find that the cooperation gains (i.e., the cost reduction achieved by cooperation) are quite robust: They decrease only slightly when interconnectors are not further extended (compared to today) and depend only slightly on assumptions about investment cost developments of renewable energy technologies. With regard to the practical implementation of cooperation, however, unclear administrative issues and questions concerning the fair sharing of costs and bene fits between the Member States represent major obstacles that need to be tackled in order to reach renewable energy targets at the lowest costs possible.