Renewable energy is the cheapest form of power generation even with the additional costs of grid, storage, and backup
WindEurope’s latest study, in cooperation with Hitachi Energy, has found that a system powered by renewable energy is the cheapest form of power generation, even after accounting for grid, storage, and backup costs
WindEurope and Hitachi Energy have laid out the total system costs for five energy scenarios: four deliver net zero, and one ‘slow transition’ scenario in which Europe does not meet its climate targets.
Of these scenarios, those that rely more on nuclear, hydrogen, or CCS would be more costly than a renewables-based scenario. By 2050, the cost difference ranges from €487b to €860b.
A renewables-based energy system is €1.6 trillion cheaper than a system in which Europe fails to deliver on net zero. The difference in cost is mainly due to residual fuel costs and costs of carbon in the slow transition scenario. By 2035, the renewables scenario saves €331 billion in comparison to the slow transition scenario.
The cumulative savings from running its energy system on renewables are equivalent to what Europe collectively spends on healthcare annually, as well as 9% of the European Union’s GDP.
The renewables-based energy system entails a significant rise in the share of electricity in the energy mix, and electrification requires major investment, especially in heavy industry. WindEurope factored this into the study, but even when investment in electrification was accounted for, a renewables-based scenario remains the cheapest overall.
A system based on high shares of renewables also guarantees system stability and has a significant energy security margin, with energy production outstripping demand.
The study also found that a renewables-based energy system is the most resilient to external shocks. Of all scenarios, the renewable system had the lowest dependency on energy imports, down from 71% in 2030 to 22% in 2050. The slow transition scenario had a rate of dependency of 78% in 2030 and 54% in 2050.
A renewable energy-based system also offers additional benefits, namely for employment. The European wind industry employs 440,000 people today and is set to employ 600,000 by 2030.
