Web database: RES-E Policy Pathways for meeting 27% RES by 2030

Within work package 3 and 4 of the Towards2030-dialogue project several key aspects of the future RES policy making within the EU have been analysed from a both a qualitative and a quantitative perspective. Whereas the conceptual and analytical part is represented in related reports, this online database is dedicated to the model-based analyses. By clicking on the respective topic you can get further information on:

Approach and key assumptions 

General approach

This analysis builds on modelling works undertaken by the use of TU Wien’s Green-X model. More precisely, the outcomes of a quantitative policy analysis of various scenarios  on future RES deployment within the EU are used to indicate the impact of our suggested measures on related policy costs. 

Brief characterization of the Green-X model

Green-X is an energy system model that offers a detailed representation of RES potentials and related technologies in Europe and in neighbouring countries. It aims at indicating consequences of RES policy choices in a real-world energy policy context. The model simulates technology-specific RES deployment by country on a yearly basis, in the time span up to 2050, taking into account the impact of dedicated support schemes as well as economic and non-economic framework conditions (e.g. regulatory and societal constraints). Moreover, the model allows for an appropriate representation of financing conditions and of the related impact on investor’s risk. This, in turn, allows conducting in-depth analyses of future RES deployment and corresponding costs, expenditures and benefits arising from the preconditioned policy choices on country, sector and technology level.

Figure 1: Model coupling between Green-X (left) and HiREPS (right) for a detailed assessment of RES developments in the electricity sector

For specific purposes, e.g. for assessing the interplay between RES and future electricity market design that involves an analysis of the merit order effect and related market values of the produced electricity for variable and dispatchable renewables, Green-X was complemented by its power-system companion – i.e. the HiREPS model – to shed further light on the interplay between supply, demand and storage in the electricity sector thanks to a higher intertemporal resolution than in the RES investment model Green-X. 

Figure 1 gives an overview on the interplay of both models. Both models are operated with the same set of general input parameters, however in different spatial and temporal resolution. Green-X delivers a first picture of renewables deployment and related costs, expenditures and benefits by country on a yearly basis (2010 to 2030 (and up to 2050 for specific purposes)). The output of Green-X in terms of country- and technology-specific RES capacities and generation in the electricity sector for selected years (2020, 2030 (and 2050)) serves as input for the power-system analysis done with HiREPS. Subsequently, the HiREPS model analyses the interplay between supply, demand and storage in the electricity sector on an hourly basis for the given years. The output of HiREPS is then fed back into the RES investment model Green-X. In particular the feedback comprises the amount of RES that can be integrated into the grids, the electricity prices and corresponding market revenues (i.e. market values of the produced electricity of variable and dispatchable RES-E) of all assessed RES-E technologies for each assessed country. 

Key parameter

In order to ensure maximum consistency with existing EU scenarios and projections the key input parameters of the scenarios presented in this report are derived from PRIMES modelling and from the Green-X database with respect to the potentials and cost of RES technologies. Table 1 shows which parameters are based on PRIMES, on the Green-X database and which have been defined for this study. The PRIMES scenarios used for are the latest publicly available reference scenario (European Commission, 2016) and the climate mitigation scenarios PRIMES euco27 and PRIMES euco30 that build on the targeted use of renewables (i.e. 27% RES by 2030) and an enhanced use of energy efficiency compared to reference conditions – i.e. 27% (euco27) or 30% EE (euco30) by 2030, respectively. Please note that all PRIMES scenarios are intensively discussed in the EC’s winter package, cf. the Impact assessment of the recasted RED (SWD (2016) 410 final).

Although a target of 30% for energy efficiency has already been fixed for 2030, we show ranges with regard to the actual achievement of energy efficiency to cover both, a higher or substantially lower level of ambition in terms of energy efficiency policy: Under reference conditions an improvement in energy efficiency of 23.5% compared to the 2007 baseline of the PRIMES model is projected for 2030, whereas in the PRIMES euco27 scenario, assuming a strong ambition level for energy efficiency, an increase to 30% is assumed.

Based on PRIMES  Based on Green-X database  Defined for this assessment
Primary energy prices Renewable energy technology cost (investment, fuel, O&M) Renewable energy policy framework
Conventional supply portfolio and conversion efficiencies Renewable energy potentials  Reference electricity prices
CO2 intensity of sectors Biomass trade specification   
Energy demand by sector Technology diffusion / Non-economic barriers  
  Learning rates  
  Market values for variable renewables  

Table 1: Main input sources for scenario parameters

Qualitative assessment of RES-E policy pathways towards 2030

The overall objective of this task was to identify, describe and assess different possible pathways towards convergence of European RES policy in the period post 2020.

For that purpose, the task built on previous analysis of harmonisation pathways undertaken in the frame of the IEE project beyond2020. Within that project, several convergence pathways with different degrees of harmonisation of RES support in the post-2020 framework were analysed from a legal, economic, technical and political viewpoint. This section is focused on the convergence pathways that seem more realistic in line with the recent RES policy debate.

We started our research by compiling a list of RES policy convergence pathways for analysis. This list was based on an extensive literature review – including previous work in the beyond2020 project, recent official publications of the European Commission, and several other publications by research institutes, NGOs, industry organisations, etc. Inputs from stakeholder consultation (WP2) and from other members of the consortium are also taken into account to select suitable pathways for detailed analysis.

Figure 2 depicts the possible convergence pathways. Three of these are “top-down” processes driven by EU institutions. Additionally, we identified two possible bottom-up convergence pathways driven by voluntary Member State collaboration. Finally, we discussed a ‘reference’ convergence pathway in which there is no dedicated RES support. In this case, the EU would rely on the ETS carbon price as the only incentive to achieve the 2030 RES target.

Figure 2: Top-down and bottom-up RES policy convergence pathways

After completing the identification of the convergence pathways we characterised and described them according to the following main questions:

  • What is the scope and depth of convergence? What are the elements of RES policy that would converge under such a pathway?
  • What are the drivers and motivations for different stakeholders to follow that pathway?
  • What are the potential technical, legal and political challenges for each pathway?

The characterisation of the convergence pathways was followed by a qualitative pre-assessment along policy assessment criteria (effectiveness in achieving convergence/effectiveness in terms of RES deployment/efficiency/equity/political feasibility).

At a later stage of the project as it will be outlined in the corresponding results section, the pathways selected were subject of in-depth quantitative analysis by use of TU Wien’s Green-X model. The consolidated outcomes of both the qualitative and the quantitative analyses served to draft final policy recommendations. Below we focus on findings derived from the conceptual / qualitative assessment.

Summary of findings 

A list of RES policy convergence pathways for further analysis has been identified. These have been classified into two main categories:

  • Top-down convergence pathways i.e. those forms of convergence in RES policy driven by European Institutions. We have identified two main top-down convergence pathways for further analysis: Firstly, the implementation of a harmonised EU-wide RES support scheme. Secondly, the prescription of specific types of (market-based) instruments by the EU institutions to be implemented by Member States (e.g. strengthening of current state aid guidelines in the period 2020-2030).
  • Bottom-up convergence pathways i.e. those forms of convergence driven by Member States cooperating with each other. We have identified three main forms of bottom-up convergence: Firstly, increased coordination of national RES policies. Secondly, the partial opening of national RES support schemes. Thirdly, the implementation of joint RES support schemes at the regional level.

Conclusions from the qualitative assessment:

  • Different convergence processes may happen simultaneously and in parallel in the period 2020-2030. For instance, the strengthening of state-aid guidelines may be compatible with Member States increased coordination in RES support or the adoption of regional (joint) support schemes. The EU RES policy landscape for the 2020-2030 period consists, as laid down by the EC’s winter package, of a mix of these convergence pathways. As of the top-down convergence pathways, no directly harmonised EU-wide RES schemes were implemented. Instead, guidelines for their implementation were specified: support schemes on the energy market now shall be carried out in an “open, transparent, competitive, non-discriminatory and cost-effective” manner. Nonetheless, the new legislation puts a stronger emphasis on Bottom-up convergence pathways: Support schemes must be partially open to investors from other Member States. In order to further foster the regional cooperation Member States are obliged to consult neighbouring Member States and even to take into consideration their energy related interest in their integrated national energy and climate plan. At the level of the network operators, the regional cooperation shall be strengthened through the introduction of regional operation centres consisting of TSOs introduction of a European entity for DSOs. Bottom-up processes tend to be slower but are likely to enjoy higher levels of public acceptance.
  • While the newly proposed policy framework certainly encourages European convergence on RES policy, it has been criticised for its missing concrete top-down framework for the national RES support schemes. According to the former German Minister for Economics and Energy, the current patchwork carpet of national support schemes is unsuited for achieving global leadership in renewable energy  (BMWI 2016).

Results of the model-based analysis: RES-E policy pathways towards 2030 in accordance with (at least) 27% RES by 2030

By clicking on the respective topic below please make your selection: 

Assessed cases

This section illustrates the outcomes of the model-based assessment of future RES policy developments up to 2030 within the European Union and its Member States. Compared to the previous subsection, where the focus lies on the overall ambition level for RES and energy efficiency, the RES policy scope is now broadened and distinct RES-E policy pathway towards 2030 in accordance with the agreed 2030 EU RES target are assessed. 

Overview on RES policy scenarios used in this exercise:

Harmonised 
Quota
 
Harmonised (RES) support post 2020 (EU-wide quotas with certificate trading for RES-E)
Stringent State 
Aid 
Guidelines
 
Stringent implementation of State Aid Guidelines (National tenders for RES-E support through sliding premiums with partial or full market opening)
National Policies with 
common 
Guidelines
National Policies with common guidelines (National quotas with certificate trading for RES-E or national tenders for RES-E support through sliding premiums without market opening)
National Policies with strong Cooperation National Policies with strong Cooperation (National quotas with certificate trading for RES-E, incl. international trade; or national tenders for RES-E support through sliding premiums with partial market opening)
Regional Cooperation  Regional RES cooperation (Regionally harmonised quotas with certificate trading for RES-E, or regional tenders for RES-E support through sliding premiums)
ETS only ETS only (No dedicated support for new RES installations post 2020)

A list of RES policy (convergence) pathways has been identified in the course of work package 3 as outlined and from a qualitative perspective pre-evaluated in the corresponding qualitative assessment. These pathways build from a conceptual viewpoint on either a top-down (i.e. those forms of convergence in RES policy driven by European Institutions) or a bottom-up process (i.e. those forms of convergence driven by Member States cooperating with each other). The first category (top-down) involves the following pathways: 

  • Harmonised Quota: As the most prominent representative of an EU-wide harmonised RES-E support we assume under this pathway that an EU-wide harmonised quota scheme will be implemented for supporting investments in new RES-E installations post 2020. More precisely, we took the assumption that an EU-wide harmonised support scheme is put in place for supporting new RES installations in the electricity sector that does not differentiate between different technologies. In this case the marginal technology to meet the EU RES-target sets the price for the overall portfolio of RES technologies in the electricity sector. The policy costs occurring in the quota system can be calculated as the certificate price multiplied by the RES generation under the quota system. These costs are then distributed in a harmonised way across the EU so that each type of consumer pays the same (virtual) surcharge per unit of electricity consumed.
  • Stringent State Aid Guidelines: Another form of top-down convergence is the prescription of specific types of (market-based) instruments by the EU institutions to be implemented by Member States (e.g. strengthening of current state aid guidelines in the period 2020-2030). Specifically, we took the assumption that a feed-in premium system (with sliding premiums) where support levels are determined in a tendering procedure (with pay-as-bid) would be the prescribed instrument to support investments in new RES-E installations post 2020. Moreover, two sub-scenarios were analysed: national tenders with partial or full-market opening.
  • National Policies with common Guidelines: Here the EU would prescribe common guidelines that Member States have to respect when implementing RES-E support post 2020. This would facilitate the convergence process and the implementation of best practices in policy design but would leave the choice of a support instrument in the hands of the Member States. Consequently, we have assessed here two distinct policy approaches: National quotas with certificate trading for RES-E (without international trade), and national tenders for RES-E support through sliding premiums (without market opening).
  • ETS only: Using ETS as the only instrument for investments in low carbon energy technologies would lead to RES-E policy “convergence” by removing support for new RES installations. This is prescribed in the “ETS only” pathway where no more dedicated support is allowed for new RES installations post 2020 (as a consequence of e.g. stringent EU regulation). Under this pathway the achievement of the agreed 2030 RES target is not prescribed and carbon prices are taken from PRIMES modelling (i.e. PRIMES euco27 as default). This scenario may serve as comparator for all other pathways and it may also help for identifying the necessary steps that need to be taken in forthcoming years to assure RES target achievement.

As RES-E policy pathways that stem from a bottom-up convergence process we analyse:

  • National Policies with strong Cooperation: Three main forms of bottom-up convergence have been identified within the corresponding qualitative assessment: increased coordination of national RES policies, the partial opening of national RES support schemes as well as other forms of RES cooperation, and the implementation of joint RES support schemes at the regional level. Whereas our fifth pathway is dedicated to the latter option (regional cooperation) here we focus on increased coordination and RES cooperation. As concrete examples we assess two distinct policy options: National quotas with certificate trading for RES-E, incl. international trade to allow for RES cooperation between Member States; and national tenders for RES-E support through sliding premiums with partial market opening.
  • Regional cooperation: Under this pathway Member States have been clustered into six different regions, which will have a common 2030 RES targets and an at regional level harmonised policy scheme for RES-E to facilitate its achievement. The predefined country clusters are listed in Table 2. Two distinct policy schemes have been analysed as concrete examples: Regionally harmonised quotas with certificate trading for RES-E, or regional tenders for RES-E support through sliding premiums. Please note that harmonisation at regional level affects here also the financing conditions: Similar to an EU-wide harmonisation we see here an alignment process concerning country-specific financing risks that takes place at the regional level and that is triggered by the harmonisation of the supporting framework.
Name of the region Member States
Britain United Kingdom and Ireland
Central Western Austria, Belgium, France, Germany, Luxembourg and the Netherlands
Nordpool Denmark, Estonia, Finland, Latvia, Lithuania and Sweden
OMIE Portugal and Spain
South-East Corridor Bulgaria, Croatia, Cyprus, Greece, Malta, Italy, Romania and Slovenia
Visegrad Czech Republic, Hungary, Poland and Slovakia 

Table 2: Overview of regional clusters for quantitative pathway modelling

Please note that all policy pathways build on a strengthening of national policies already in the period before 2020, serving to meet the given 2020 RES targets and where a gradual mitigation of currently prevailing non-economic RES barriers is presumed. 

Key results on RES deployment

We start with an analysis of RES(-E) deployment for all of the six assessed policy pathways. More precisely, Figure 3 below shows the development of the RES share (left graphic) and RES-E (right graphic) in gross final energy demand throughout the period 2021 to 2030 in the EU 28. All the policy pathways with ongoing dedicated support (harmonised quota, stringent state aid guidelines, national policies with common guidelines, national policies with strong cooperation, regional cooperation) for RES deployment during the 2021-2030 period reach the EU RES target of 27% in 2030. In contrast to above, without dedicated support, i.e. in the case of the ETS only policy pathway, the RES(-E) shares in 2030 do not comply with the official targets and only reach 22.2 %, respectively 42.6 % in the electricity sector. The higher difference between pathways with and without dedicated support in the electricity sector (7 %) compared to RES share in the combined sectors transport, electricity and heating & cooling (5 %) indicates that dedicated support for renewable energy sources is particularly needed in this sector. In the case of policy pathways including dedicated RES support, the RES as well as the RES-E shares show almost linear trajectories from their 2020 share towards 2030. The differences in the trajectories between the different policy pathways including dedicated support are minor. Yet in the ETS only pathway, the RES share and RES-E share trajectories differ more significantly. In the electricity sector, an EU ETS-only pathway leads to slightly decreasing shares until 2024 and afterwards a moderate increase. As for the total RES share, it drops between 2020 and 2021 by 1.5 %. This is mainly due to the assumed omission of the blending obligation for biofuels, which entirely eliminates the RES share on final transport fuel demand. Yet from 2021 on it continuously increases until its 2030 share. This direct recovery of the RES share in the first half of the twenties is mainly driven by the increasing of energy efficiency improvements and the higher competitiveness of RES technologies in the heating sector.

Figure 3: Comparison of the resulting RES (left) and RES-E deployment (right) in relative terms (i.e. as share in gross final energy/electricity demand) over time in the EU 28 for all assessed RES-E policy pathways

Figure 4 now takes a closer look at the RES deployment at EU-28 level and compares the energy quantities produced from new RES(-E) installations built between 2021 and 2030. The figure indicates that almost half of the energy quantities and therefore half of the capacity needed to reach the EU RES targets requires dedicated policy support. Once again, differences between the policy pathways including dedicated support in relation to the total amount of energy produced is minor. 

Figure 4: Comparison of the resulting deployment by 2030 for new RES-E and RES installations only (from 2021 to 2030) in the EU 28 for all assessed RES-E policy pathways.

Complementary to the above, Figure 5 provides a technology breakdown of RES-E deployment at EU 28 level by 2030. The figure shows the amount of electricity generation by 2030 that stems from new installations in the assessed period 2021 to 2030, for each of the analysed policy pathways. It is apparent that onshore wind energy, followed by photovoltaics and in certain pathways also solid biomass and offshore wind energy dominate the picture. The technology-specific breakdown of the RES-E generation allows the identification of differences between the policy pathways including dedicated support, whereas the cumulated energy quantities in Figure 4 showed little differences. Technology-neutral pathways such as the harmonised quota system provides incentives to encourage more expensive and less mature RES-E options on a timely basis. Consequently, the deployment of biogas, geothermal electricity, but also to a certain extent offshore wind, is less developed in this pathway. The gap in deployment is compensated by an increased penetration of low to moderate cost RES-E options, in particular onshore wind and biomass used for co-firing or in large-scale plants. 

Figure 5: Technology-specific breakdown of RES-E generation from new plants (installed post 2020) by 2030 at EU 28 level for all assessed RES-E policy pathways.

Yet the pathway which differs most significantly from the others (besides the “ETS only” path, which does not include dedicated RES support) is the “National Policies with Common Guidelines” pathway. In this pathway the Members States cooperate only marginally and primarily depend on available national RES potentials. Accordingly the amount of generated offshore electricity is significantly increased to the expense of photovoltaics (and solid biomass). It is assumed that due to the lack of cooperation mechanism, countries from northern Europe have to rely to a greater extent on more expensive offshore energy as they dispose of lesser amounts of competitive photovoltaic potentials.   

Direct impacts of future RES deployment

Costs, expenditures and benefits
The outcomes of Green-X modelling related to capital, O&M, and fuel expenditures of RES as well as to additional generation costs, support expenditures and savings related to fossil fuel (imports) are presented in this section. The results are complemented by a qualitative discussion based on key indicators. 
Figure 6 summarises the assessed costs, expenditures and benefits arising from future RES deployment in the focal period 2021 to 2030. More precisely, these graphs show the required capital and operational  (O&M and fuel) expenditures and the resulting costs – i.e. additional generation cost, and support expenditures  for the assessed RES-E policy pathways (all on average per year throughout the assessed period). Moreover, they indicate the accompanying benefits in terms of supply security (avoided fossil fuels expressed in monetary terms – with impact on a country’s trade balance) and climate protection (Avoided CO2 emissions –expressed in monetary terms as avoided expenses for emission allowances). This comparative depiction is repeated at different levels of aggregation: the upper two graphs focus on new RES(-E) plants that are installed post 2020 whereas the graphs at the bottom allow for a comparison that involves all plants – i.e. new plants installed post 2020 as well as the large stock of RES(-E) plants installed in the years up to 2020. A further distinction is made between RES-electricity and total RES.
Please note further that we show ranges in costs, expenditures and benefits for certain policy pathways, reflecting the differences between the assessed policy variants that belong to a specific pathway: regional cooperation can for example be achieved through regionally harmonised quotas or through joint tenders at the regional level. Both policy options have been considered within our analysis, and the ranges indicate consequently the differences we observe between the two variants. 
RES-electricity,
new installation (post 2020)
Total RES,
new installations (post 2020)
RES-electricity,
all installations&
Total RES,
all installations

Figure 6: Indicators on yearly average cost, expenditures and benefits of RES at EU 28 level for all assessed cases, monetary expressed in absolute terms (billion €) per decade (2021 to 2030)

Some key observations can be made from Figure 6: 

  • Capital expenditures dominate the picture if we look at the upper tow graphs referring to new RES(-E) – i.e. plants that are installed in the years post 2020. This is because investments are accounted in our balancing in the year of instalment of a plant whereas benefits or costs relating to the operation of that plant also occur in the years beyond 2030 – and those are consequently not included in our assessment that focusses on the forthcoming decade (2021-2030). In contrast to above, benefits, and here in particular the monetary expression of fossil fuel avoidance, are higher than the required investments if we include in our aggregation in addition to new installations also the stock of existing plants (installed up to 2020). Another general observation is that costs like additional generation cost or support expenditures are lower in magnitude than the expressed benefits.
  • Not so surprisingly scenarios that reach a 27% RES target lead to overall costs and benefits in a comparable order of magnitude. The strongest differences between analysed pathways are however applicable if we look at new RES-electricity plants installed post 2020 (cf. Figure 6, top) whereas differences in costs or benefits diminish if we look at a higher level of aggregation – e.g. total RES, including new installations post 2020 and the stock of RES plants installed until 2020. The reason for this is that all assessed policy pathways, specifically the different policy concepts, affect only investments in new RES-E plants installed post 2020. Consequently, differences between assessed policy options are strongest at this level of aggregation.
  • Also it can be observed that an EU-wide harmonised policy pathway, here assessed at the example of a harmonised quota scheme, generally leads to lower capital expenditures / additional generation costs compared to the pathways where national policies determine investments in new RES post 2020. However these savings hardly can be passed on to consumers due to the marginal technology determining the price for all technologies under this particular policy design (i.e. harmonised quota with certificate trading).
  • A closer look at support expenditures indicates that the concrete design of the chosen policy path (i.e. here assessed through a comparison of quotas and tenders) induces variations of a similar magnitude than the selection of a policy pathway.
  • Furthermore when interpreting the numbers it has to be kept in mind that all scenarios assume a moderate reduction of energy demand in forthcoming years, here leading to a 27% decline compared to baseline by 2030. Thus stronger efficiency improvements – e.g. 30% energy efficiency instead of 27% could make a 27% RES target or a higher one much more easily achievable. 

Moreover, a significant difference between additional generation costs and support expenditures for RES can be observed. The following aspects are important to consider in this respect:

  • The expressed additional generation costs are calculated by summarising the average additional generation costs at technology level by country. Hence, some averaging trend occurs which underestimates the actual costs specifically if costs differ substantially between feedstock subcategories or sites. This becomes more important in the case of an accelerated RES deployment where the marginal plant possesses significantly higher cost than the average.
  • Additional generation costs are risk-neutral while for support costs the country-, policy- and technology-inherent investor’s risk is taken into consideration.
  • Additional generation costs shall mean the levelised cost of energy minus the reference price for conventional energy supply whereby the levellising is done over the lifetime. In contrast to this, investors typically insist on a shorter depreciation time which needs to be taken into account in policy design. This is consequently reflected in the resulting support costs.
  • Especially in the heat sector up-front support by means of investment incentives represents a common practice. For the calculation of related support expenditures no levellising of such costs was undertaken in order to indicate correctly the budgetary requirements.

Indicators on support expenditures for RES

Figure 7 complements the above depictions of RES deployment and overall economic impacts, indicating the resulting support expenditures for total RES (left) and for RES-electricity (right). More precisely, Figure 7 compares the required support expenditures (on average per year for the period 2021 to 2030) for all assessed RES-E policy pathways policy pathways, including policy variants that have been defined for selected paths. As outlined above, we can see that overall policy costs are in comparatively similar magnitude for all cases. An exception from that general trend is the “ETS only” scenario where costs are lower in magnitude. Under this pathway as applicable in Figure 7 no dedicated support for new RES (installed post 2020) is prescribed, leading to a RES share of about 22.2% in 2030 instead of the targeted minimum share of 27%. Of highlight, these graphs clearly indicate that the bulk of support expenditures in the forthcoming decade is dedicated to RES installations that have been erected in the years up to 2020: only 13% to 18% of total RES support in the forthcoming decade will be for new installations that will built in the years 2021 to 2030. A closer look at the electricity sector – where more than 85% of all RES support in the period 2021 to 2030 will be directed to – shows a similar range. Here new RES-E plants installed post 2020 account for 5% to 11% of all RES-E related support expenditures in the forthcoming decade.

Figure 7: Comparison of the required average (2021-2030) yearly support expenditures for RES (left) and RES-E (right) in the EU 28 for all assessed RES-E policy pathways.

Next a closer look is taken at the financial impact of RES support in the electricity sector, evaluating the performance of assessed policy pathways and the underlying support schemes, respectively. For doing so we remain at Figure 7(right): This graph allows for a comparison of the performance of the different RES-E policy pathways and, more specifically, also of the policy variants analysed under each pathway. In practical terms, we are now comparing the dark blue bars on top that represent the average (2021 to 2030) yearly support expenditures for new RES plants (installed post 2020) in the electricity sector.

Key results derived from this comparison are:

  • Of highlight, our model-based analysis shows clear preferences for feed-in premium schemes where support levels are determined in a tendering procedure in comparison to quota schemes with certificate trading.
  • Best performing appear here the policy variants where the allocation of RES investments is done at a multinational level rather than following a pure nationally oriented one. This can be facilitated through a partial or full market opening while using tenders as well as through regional cooperation and specifically the establishment of regional tenders. Yearly support expenditures for new RES installations vary then between 2.7 and 3.0 billion € on average throughout the forthcoming decade.
  • Pure national tenders without market opening lead to a different resource allocation that results in slightly higher policy cost: 3.7 billion € are the corresponding figure under this policy variant.
  • Worst performing among the assessed policy options are technology-neutral quota schemes with certificate trading thanks to the uniform pricing concept under this approach: here support for all RES-E is determined by the marginal option needed for achieving the targeted RES volumes. Average (2021-2030) yearly support expenditures for new RES (installed post 2020) range here from 4.6 to 6.1 billion €. Again, the lower boundary reflects a European or multinational approach whereas at EU level higher costs occur under a pure national policy orientation.
  • A complete phase-out of dedicated RES-E support as assumed in the “ETS only” pathway would lead to zero direct policy cost for new RES installations. It would however also result in a strong market crash in early years and only a partial recovery in later years close to 2030. RES-related investments in the forthcoming decade decline here by about 50% compared to all other policy variants, and in a similar magnitude we see the decline of RES-E deployment. Additionally, an indirect cost-burden may arise for consumer thanks to the merit-order effect that comes along with an enhanced RES-electricity deployment. The lack of RES-E generation needs to be compensated by a stronger use of conventional generation, and a higher fossil fuel use would, in turn, also lead to a stronger increase of wholesale electricity prices than applicable under the other policy pathways: on average throughout the focal years (2021-2030) wholesale prices increase by 1.0 €/MWh. This, in turn, causes higher cost for consumer in size of 3.5 billion € on average per year at EU level. If we consider in addition the decline of support costs for existing RES (installed up to 2030) thanks to the higher wholesale prices in the “ETS only” path we come up with 3.2 billion € as net cost for electricity consumer under this pathway. This is in the same order of magnitude than the support expenditures required to refinance the stronger RES uptake that is projected in all other policy pathways.

Complementary to above, Figure 8 provides a comparison of the dynamic evolution of the required support expenditures at EU 28 level in the period 2021 to 2030 for all RES (left) and RES-E (right) plants, including existing (installed up to 2020) and new (post 2020) installations in the focal period. As a general trend, one can see a strong decline of support expenditures over time: by 2030 support expenditures are slightly more than one third of the starting value as of 2020. This strong decline is caused by the expected strong increases in fossil fuel and carbon prices as well as by the ongoing decline in cost for renewables. As discussed previously, the largest part of the required support payments is dedicated to existing RES plants (installed up to 2020). A good indication how large that part is can be gained when looking at the “ETS only” pathway since under this policy path no dedicated support is foreseen for new RES installations post 2020. Differences between the other RES-E policy pathways where dedicated support is conditioned post 2020 are generally small, and the overall findings as outlined above when inspecting average support expenditures (cf. Figure 7) remain. Specifically in the years 2022 to 2027 lowest cost can be identified for those pathways where allocation of RES investments is done at a multinational level rather than following a pure nationally oriented one, e.g. through partial or full market opening in the case of tenders (see scenarios dedicated to the pathway “Stringent State Aid Guidelines”), or through enhanced regional cooperation when using tenders.

Figure 8: Comparison of the resulting yearly support expenditures over time for RES (left) and RES-E (right) in the EU 28 for all assessed RES-E policy pathways.

Figure 9: Comparison of financial support (premium to power price) for new RES-E installations at EU 28 level over time (2020 to 2030) (left) and on average (2021 to 2030) by technology (right)

Figure 9 (left) shows the dynamic development of the necessary financial support per MWh of RES-E generation for new installations (on average) up to 2030 and, complementary to that, Figure 9 (right) expresses average values (for the forthcoming decade 2021 to 2030) per technology. The amount represents the average additional premium on top of the power price (normalised to a period of 15 years) for a new RES-E installation in a given year from an investor's viewpoint; whilst, from a consumer perspective, it indicates the additional expenditure per MWhRES-E required for a new RES-E plant compared with a conventional option (characterised by the power price). Note that these figures represent values at EU 28 level, while differences may still occur at the country-level, even in the case of a strong level of convergence or harmonisation of support design.

The graphs clearly indicate a decline of the required financial support per MWhRES-E among all assessed cases, but differences between the policy variants can be observed. Generally, the average support is higher under a technology-neutral scheme compared to policy approaches that offer incentives tailored to the specific needs. In other words, as outlined above, our model-based analysis shows clear preferences for feed-in premium schemes where support levels are determined in a tendering procedure in comparison to technology-neutral quota schemes with certificate trading. 

Online database on country specific results

This online database provides further insights on country-specific results derived within our model-based analysis of RES-E policy pathways towards 2030.

Please make your selection on the topics of interest:
Please select one or more countries:

*Remark: Please note that RES-E deployment post 2020 is stipulated by the respective underlying policy scheme.