Are Renewables Profitable in 2030? A Comparison between Wind and Solar Across Europe

36 Pages Posted: 31 Aug 2018

See all articles by Valentin Bertsch

Valentin Bertsch

The Economic and Social Research Institute

Valeria Di Cosmo

Economic and Social Research Institute (ESRI); Fondazione Eni Enrico Mattei (FEEM)

Date Written: August 31, 2018

Abstract

The European Union has set ambitious targets for emission reduction and the penetration of renewable energy, including the electricity generation sector as one of the major emitters of CO2. After a period of subsidy-driven investments, the costs of renewables decreased strongly making investments more attractive. Since European countries differ strongly in terms of natural resources, we analyse the profitability of wind onshore and offshore and solar PV across Europe to determine where it is optimal to invest in the future and to understand which factors drive the profitability of the investments. We use a power systems model to simulate the whole European electricity market in 2030. Using the renewable revenues determined by the model, we calculate the internal rate of return to analyse how profitable each technology is in each country. We find that investments in the considered technologies are not homogeneously profitable across Europe. This suggests that 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. Wind offshore does not seem to be profitable without financial support.

Keywords: Renewable Energy Targets, Renewable Electricity Generation, RES-E Target, EU Electricity Market, Profitability

JEL Classification: Q4, Q42

Suggested Citation

Bertsch, Valentin and Di Cosmo, Valeria, Are Renewables Profitable in 2030? A Comparison between Wind and Solar Across Europe (August 31, 2018). FEEM Working Paper No. 28.2018. Available at SSRN: https://ssrn.com/abstract=3241987 or http://dx.doi.org/10.2139/ssrn.3241987

Valentin Bertsch

The Economic and Social Research Institute ( email )

Whitaker Square
Sir John Rogerson's Quay, Dublin 2
Dublin, D02 K138
Ireland

Valeria Di Cosmo (Contact Author)

Economic and Social Research Institute (ESRI) ( email )

Whitaker square Sir john Rogerson's Quay
Dublin 2
Dublin
Ireland

Fondazione Eni Enrico Mattei (FEEM) ( email )

C.so Magenta 63
Milano, 20123
Italy

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