What do we (not) know about Europe s electricity system in 2050?

Transcription

1 What do we (not) know about Europe s electricity system in 25? The impact of technological uncertainty on the leastcost electricity mix

2 Motivation Introduction of MERGE Policy cases Results Conclusions and policy implications Caveat: not going to discuss the need for climate policy

3 Motivation Main Question: What is the least-cost technology mix for Europe s 25 electricity market? Why is this question important? Optimal policy consists of pricing carbon and stimulating technologies Insight into the 25 electricity mix provides guidance for innovation policy. Note: innovation should be broadly defined in our view and includes: Learning-by-Research (develop new technology) Learning-by-Doing (building capacity)

4 Motivation - continued Line of thought (reminiscent of portfolio theory): Innovation policy should be geared more towards technology A: If its expected market share in 25 is higher. If the variance of its expected market in 25 share is lower.

5 We use an extension of MERGE MERGE = A Model for Evaluating Regional and Global Effects of GHG reduction policies MERGE s goal is to maximize welfare given certain economic, physical, and policy constraints: Encompasses the entire economy, depletion of all fossil fuels, all emissions (climate and air) and all options Costs of options are in line with projections from IEA and IIASA Limited supply of sustainable biomass per region (World=275 EJ) Can be used for biofuel and electricity Explicit interaction between electricity and transport Cars use fuel (oil, gas, hydrogen, electricity) Fuels may be produced in a various ways (incl. conversions) Coal gasification: hydrogen for heat, transport, electricity

6 We use an extension of MERGE - continued MERGE s goal is to maximize welfare given certain economic, physical, and policy constraints: Options for electricity: Gas, Coal, Biomass (with and without CCS) Nuclear and Advanced Nuclear Hydro, Onshore and Offshore wind, Solar PV (no CSP yet!) Intermittent supply of wind and solar on an hourly basis Possibility to build backup capacity (cheap low efficiency gas) Take policy objectives as given (max. concentration of CO2eq gases by 21): Weak and a strong policy case (55 ppm CO2e) Twelve technology scenario s for each policy case

7 Label on Figures 9 & 1 Description (see Scenarios section above) Bio Trade Solid biomass can be traded internationally Default Default scenario Pes. On-Shore On-shore wind is limited to 4 GW total Pes. Off-Shore Off-shore wind costs do not decline over time (or high wear and tear) Hi Int. Costs Integration cost term is doubled relative to default scenario No New Nuc No new nuclear capacity is allowed No Co-H2 IGCC+CCS with co-production of hydrogen is not allowed No CCS CCS is not allowed + Opt. Solar No CCS + optimistic assumptions about the cost of solar PV ($75/kW in 25) + Off-shore No CCS + Opt. Solar plus no decline in off-shore wind costs + No Nuc No CCS + Opt. Solar + Pes. Off-shore plus no new nuclear + On-shore No CCS + Opt. Solar + Pes. Off-shore + No New Nuc + limited on-shore wind

8 Two Policy Cases Billion tons CO2-e Billion tons CO2-e Baseline Weak Policy 55 CO2-e Global CO2eq emissions Corresponding CO2eq emissions in Europe

9 Europe s 25-Electricity Mix (strong policy) 6 Solar PV Off-shore Wind 5 On-Shore Wind Gas 4 Gas+CCS Coal PWh 3 Coal+CCS Bio (new) 2 Bio+CCS Nuclear (adv) 1 Nuclear Bio/Waste Bio Trade Default Pes. On-shore Pes. Off-shore Hi Int. Costs No New Nuc No Co-H2 Opt. Solar No CCS + Off-shore + No Nuc + On-shore Hydro

10 Weak (left) vs Strong (right) policy case PWh Bio Trade Default Pes. On-shore Pes. Off-shore Hi Int. Costs No New Nuc No Co-H2 Opt. Solar No CCS + Off-shore + No Nuc + On-shore PWh Solar PV 6 Off-shore Wind On-Shore Wind 5 Gas Gas+CCS 4 Coal Coal+CCS 3 Bio (new) Bio+CCS 2 Nuclear (adv) Nuclear 1 Bio/Waste Hydro Bio Trade Default Pes. On-shore Pes. Off-shore Hi Int. Costs No New Nuc No Co-H2 Opt. Solar No CCS + Off-shore + No Nuc + On-shore Solar PV Off-shore Wind On-Shore Wind Gas Gas+CCS Coal Coal+CCS Bio (new) Bio+CCS Nuclear (adv) Nuclear Bio/Waste Hydro

11 Transition paths for default scenario 6 Weak Policy 6 55 CO2-e Solar PV 5 5 Off-shore Wind On-Shore Wind 4 4 Gas Gas+CCS PWh 3 PWh 3 Coal Coal+CCS Bio (new) 2 2 Bio+CCS Nuclear (adv) 1 1 Nuclear Bio/Waste Hydro

12 Matching supply and demand over the year (21) Spill 8 8 Solar GW Annual duration GW Annual duration Wind Gas/Oil Coal+CCS Coal/Lignite Bio+CCS Nuclear Bio/Waste Hydro Default scenario

13 Matching supply and demand over the year (25) 1 Default 1 Limited 9 9 Spill 8 8 Solar 7 7 Wind GW Annual duration GW Annual duration Electrolysis Gas/Oil Coal+CCS New Bio Bio+CCS Nuclear Bio/Waste Hydro

14 Hourly electricity demand (MW, Spain,211-12) : AM : AM : AM : AM : AM Source: ENTSOE Spain s demand peaks in the winter! +1% = approx 4 MW Europe s demand also peaks in winter: +3% = approx 125 MW

15 Monthly Solar Irradiance in Europe Source: KNMI

16 Contribution to peak and off-peak demand 6 5 (a) 6 5 (a) 6 5 (a) GW Residual Load 2 1 GW Residual Load 2 1 GW Residual Load Sorted Load Hours Sorted Load Hours Sorted Load Hours Onshore wind Offshore wind Solar PV

17 25 Electricity and Carbon Prices (all scenario s) 2 16 Electricity Price $/MWh Baseline Weak (CCS) Weak (no CCS) 55 CO2-e (CCS) 55 CO2-e (No CCS) Carbon Price $/tco2

18 Main Conclusions and Policy Implications Optimal shares of all technologies vary widely Only onshore wind is prominent in EVERY scenario Share of solar PV in Europe is very small and in many cases zero; and should be concentrated in Southern Europe Biomass and coal CCS are the preferable complements to wind High shares of wind constrain nuclear, but after 25 advanced nuclear increases Without CCS, electricity will be (much) more expensive Policy Implications: Need for adaptative innovation policy in which all new technologies are stimulated (to some extent) Support should be adjusted over time depending on prospects

19 THANK YOU FOR YOUR ATTENTION! ANY QUESTIONS?

20 Default cost assumptions ($/kw) Coal (Pulverized) $2,1 $2,1 $2,1 $2,1 Coal Integrated Gasification Combined Cycle (IGCC) $2,4 $2,3 $2,2 $2,2 Coal IGCC with CCS $3,5 $3, $2,7 $2,7 Gas Single Cycle $625 $625 $625 $625 Natural Gas Combined Cycle (NGCC) $9 $9 $9 $9 NGCC with CCS $1,62 $1,5 $1,35 $1,35 Nuclear (Gen III) $4, $4, $4, $4, Nuclear (Gen IV) N/A N/A N/A $5,6 Biomass $2,3 $2,2 $2,1 $2,1 Biomass with CCS $3,4 $3,2 $3, $3, Wind On-shore $1,7 $1,7 $1,7 $1,7 Wind Off-shore $2,5 $2,2 $2,1 $2, Solar PV $2, $1,6 $1,2 $1,