Linking promotion strategies for RES-E and for demand-side conservation in a dynamic European electricity market: Lessons from the EU projects OPTRES, FORRES and GREEN-X

Thomas Faber, Vienna University of Technology, Institute for Power Systems and Energy Economics, Energy Economics Group (EEG), Vienna, Austria
Reinhard Haas, Institute for Power Systems and Energy Economics, Energy Economics Group (EEG)
Claus Huber, Elektrizitäts-Gesellschaft Laufenburg Austria, Austria
Mario Ragwitz, Fraunhofer Institut für Systemtechnik und Innovationsforschung (FhG-ISI), Germany
Gustav Resch, Institute for Power Systems and Energy Economics, Energy Economics Group (EEG)

Keywords

promotion strategies, electricity, renewables, demand-side conservation, minimisation of costs for society

Abstract

The objective of this paper is to describe the derivation of least-cost strategies for an significant increase of electricity generation from renewables (RES-E) with minimal costs for European citizens and to investigate the role of accompanying demand-side conservation (DSC) activities. The analyses are conducted by using the model GREEN-X funded by the EC. It allows analyses for both, the EU as a whole as well as for every single member state.

Within the model the most important RES-E (e.g. biomass, wind-onshore and off-shore, geothermal, PV, solar thermal ...) technologies are described for every EU-15 country by means of dynamic cost-resource curves. Demand-side conservation measures are considered by aggregated cost-resource curves.

To analyse various scenarios different policy schemes can be selected, (e.g. feed-in tariffs, tendering systems, investment subsidies, tax incentives, quotas, tradable certificates) and modelled in a dynamic framework. The corresponding costs and benefits for companies and consumers are an output.

The major result is that DSC plays an important role for increasing the share of RES-E. E.g. the same deployment of RES in a conservation scenario leads to 28 % of RES-E by 2020 while in the BAU-scenario this share is only 20 %. Moreover, a certain quota of RES – e.g. 20 % – can be reached much cheaper if a certain share of money is invested in DSC.

The core conclusion of this analysis is: On EU level it is of superior importance to introduce integrated policies – policies focusing on the promotion of RES and on energy conservation simultaneously – to reap the utmost benefits from public money invested.