Cost efficiency in the development of the German electricity system can be improved. The EWI shows, using its own electricity system model, that more than 70 billion euros could be saved, and identifies specific levers for improving cost efficiency.
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Electricity System: Savings of About 70 Billion Euros Possible Through the Transition
Compared to current transition plans, more than 70 billion euros could be saved in the German electricity system by 2045. To achieve this cost efficiency, the expansion of renewable energy capacity would need to be adjusted. If, instead, more controllable power plants were used in the long term, costs would rise compared to current transition plans. In contrast, this would lead to higher costs in the long term.
This is demonstrated by the report “Cost Efficiency in the Electricity System – Model-Based Analysis of Options for Reducing Electricity System Costs” by the Institute of Energy Economics at the University of Cologne (EWI), commissioned by the North Rhine-Westphalia Renewable Energy Association (Landesverband Erneuerbare Energien NRW e.V.). For this purpose, various scenarios and sensitivity analyses were defined and examined using the EWI’s own electricity system model, MELI.
Greater cost efficiency through tailored renewable energy expansion and decentralized flexibility
- Reduce costs: The specific levelized cost of electricity can be reduced by increasing the share of onshore wind energy and open-field PV technologies compared to previous plans.
- Reduce grid expansion: Locating onshore wind turbines closer to the load can also reduce costs by minimizing the need for grid expansion. In the scenario under consideration, 26 GW of onshore wind power will be installed in North Rhine-Westphalia by 2045.
- Increase system benefits: All scenarios assume a design of wind turbines that provides greater system benefits compared to current practice.
“The cost-efficiency of electricity generation can be significantly increased, particularly through the design of renewable energy plants that better serve the grid and the integration of decentralized flexibility,” says Dr. Philip Schnaars, Head of Research Area, who authored the report together with Polina Emelianova, Christoph Mehler, Lisa Restel, and Erik Schrader.
A permanently higher share of controllable power plants – and the associated reduction in the expansion of renewable energy – would increase system costs by up to 12 billion euros annually compared to an optimized renewable energy system.
