Are renewables profitable in 2030 and do they reduce carbon emissions effectively? A comparison across Europe

Valentin Bertsch () and Valeria Di Cosmo

MPRA Paper from University Library of Munich, Germany

Abstract: The European Union has set ambitious targets for expanding renewable energy to meet emission reduction goals. After a period of subsidy-driven investments, the costs of renewables decreased strongly and renewable support schemes shift towards more market-based approaches. We therefore analyse the market-based profitability of wind onshore and offshore and solar PV across Europe to determine where it is optimal to invest and understand which factors drive the profitability of investments. We use a power systems model to simulate the whole European electricity market in 2030. Using the renewables’ revenues determined by the model, we calculate the profitability of each technology in each country. We also analyse how effective renewables are in terms of emission reduction. Investments are found not to be homogeneously profitable across Europe, i.e. cooperation between European countries can be expected to achieve the overall targets at lower costs than nationally-driven approaches. We also find that in many countries, wind onshore and solar PV are profitable by 2030 in absence of any financial support, whereas wind offshore does never seem profitable without support. Finally, RES expansion alone will not guarantee an effective reduction of CO2 emissions.

Keywords: Renewable Energy; Renewable Energy Target; Renewable Electricity Target; EU Electricity Market; Profitability; Emission Reduction; Carbon Price; Carbon Price Floor (search for similar items in EconPapers)
JEL-codes: Q42 Q52 Q58 (search for similar items in EconPapers)
Date: 2020-07-13
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:101822

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