The Importance of European Cooperation for a Cost-Efficient Energy Transition
Cooperation and methodology
The study was developed through cooperation between the three transmission system operators TransnetBW, Austrian Power Grid, and Swissgrid, as well as d-fine and the Copenhagen School of Energy Infrastructure. The methodological framework is provided by the sector-coupled European energy system model PyPSA-TSO, which is based on the open-source framework PyPSA, which is used and continually developed further by APG in its operations and as part of the zusammEn2040 initiative. This model can be used to analyze and evaluate investments in the future energy system under the premise of minimal system costs. The modeled region is Europe, but the study focuses on Germany, Austria, and Switzerland.
Overview of the PyPSA-TSO energy system model used
Background
Europe has set itself the goal of achieving climate neutrality by 2050. The electrification of the demand sectors and the expansion of renewable energies, and the necessary grids are central pillars of the energy transition. The European Commission's Clean Industrial Deal points out that the decarbonization of the economy must go hand in hand with strengthening the competitiveness and resilience of the European industry. The Clean Industrial Deal includes plans to reduce energy prices, finance the energy transition, and work on global partnerships. This study is motivated by the need to highlight cross-border European cooperation as a crucial element in the transition to a carbon-neutral economy. Through a holistic analysis based on a European perspective with high spatial and temporal resolution, this study examines the interdependencies of the energy system, taking into account both cross-sectoral relationships and geographical specificities.
Objective and key questions
The aim of this study is to provide valuable insights into the European energy system and to present a powerful tool (sector-coupled energy system model) for the quantitative assessment of energy transition strategies. By incorporating a broad range of perspectives, the results are robust and aligned with various national targets.
Based on the evaluation of the following four scenarios, several theses are examined:
"Base" Scenario – Collective Efforts:
"Limited Transport Corridors" Scenario – Independent Pursuit
"Slow Wind" Scenario – Reduced Expansion of Wind Energy
"Anti-Flex" Scenario – Low System Flexibility Options
Overview of scenarios calculated as part of the study
Joint, cross-border coordination of the energy transition increases the cost efficiency of the energy system.
Limited Transport Corridors Scenario: Two contrasting scenarios – one with highly developed electricity connections between countries (Base Scenario – collective efforts) and one with high national self-sufficiency (at least 80%) and limited electricity transport capacities (Limited Transport Corridors Scenario) – illustrate the increasing relevance of improved connectivity and integration of the European electricity system.
An integrated and coordinated energy transition reduces Europe's dependence on foreign energy sources.
Slow Wind Scenario: Failure to meet national targets for renewable energy expansion will lead to a more expensive energy system and increased dependence on imports from outside Europe. This is analyzed using an extreme scenario with a 50% reduction in wind power expansion.
A climate-neutral, renewable energy system requires trans-regional and local flexibilities
Anti-flex Scenario: A scenario with significantly reduced storage and demand management options is used to highlight the importance of an interconnected European energy infrastructure, together with a flexible power plant fleet as a necessary backup. The higher volatility of renewable energies requires comprehensive strategies to maintain flexibility, which underlines the need for European cooperation.
Key findings and lessons learned:
Expanding European interconnection capacities leads to a reduction in system costs
A comparison of the Base Scenario with the Limited Transport Corridors Scenario clearly shows that strong market integration through sufficient electricity transmission capacities leads to significantly lower marginal costs for electricity. In a well-connected European energy system, the average marginal costs for electricity in Germany (69 vs. 80 €/MWh), Austria (71 vs. 143 €/MWh), and Switzerland (75 vs. 150 €/MWh) are significantly lower than those based on the scenario with limited electricity transmission capacities. This means a total increase of around 56% in annual total system costs with restricted electricity trading. By 2050, the additional investments required in national generation, storage, and conversion capacities due to a lack of transport corridors and high self-sufficiency targets will total +€124 billion in Germany, +€19 billion in Austria, and +€3.8 billion in Switzerland.
A renewable energy system leads to reduced import dependency and lower balancing costs in individual sectors
In the Slow Wind Scenario, the slower ramp-up of renewables leads to a lower electrification of consumption sectors and significantly higher dependence on gas compared to the Base Scenario. Imports of (renewable) methane and hydrogen will increase by 36% in Europe in 2050. At the same time, average marginal electricity costs are expected to rise significantly in Germany (+62%), Austria (+61%), and Switzerland (+52%).
The expansion of flexibilities is a prerequisite for the transition to a climate-neutral energy system
The Anti-Flex Scenario, with massively reduced storage options, requires significantly higher gas-fired power plant capacity compared to the Base Scenario to provide flexibility on the production side to meet the demand at all times. The limited expansion of storage capacity increases the demand for gas-fired power plants by 29% in Germany and 54% in Austria. In addition, there will be significant price spikes because dark doldrums cannot be bridged cost-effectively through storage and flexibilities.
Conclusion
Achieving a sustainable, cost-efficient energy future for Europe requires a balanced approach that includes coordinated investments in renewable energy sources, flexibility solutions, and interconnection capacities. Cross-sector and international cooperation and the use of holistic planning tools are key to a cost-efficient energy transition. European cooperation in the field of energy system modeling is sustainable and necessary for a shared, integrated view of our energy future.