Renewable vs. fossil electricity systems. A cost comparison. Power world 2050. Analysis of renewable, coal and gas-based electricity systems

The decarbonisation of the energy and, above all, the power system is the core component of any consistent climate protection strategy. For the electricity sector, this means, in the final analysis, the transition from a power supply based on lignite, hard coal, natural gas and other fossil fuels to one (almost) completely based on renewable energies by 2050. The fundamental technical feasibility of such a system, more than 90 percent of which would generate electricity from renewable energies, is no longer disputable today. The explanation for this is the partly rapid technological advances made in recent years, particularly those involving wind (on- and offshore) and solar energy, as well as the foreseeable further developments of central flexibility options (including flexible demand, battery storage and power-to-gas technologies). However, the question of the costs of this new electricity system has not yet been fully resolved. These cost calculations need to take into account, on the one hand, the total costs of an electricity system based on renewable energies and, on the other hand, the comparison to a power system that remains based on fossil fuels. Against this background, the present study provides a numerical analysis of the following questions: What are the technical and cost structures for a power system when 90 percent or more of the electricity is generated from renewable energies in 2050? How do the costs for different storage strategies (batteries vs. power-to-gas) differ? What technical, cost and emission structures result for a hypothetical fossil-based power system in 2050 if the further construction of electricity production plants based on wind and solar energy is immediately abandoned? How do the costs for various fossil-based power systems differ (conventional mix of lignite/hard coal/natural gas power plants vs. an electricity system based purely on natural gas)? For this purpose, a large number of model calculations with different framework conditions and sensitivity analyses were conducted in order to check the results for their robustness. As a result, the following conclusions can be drawn: 1. Currently, different forms of a renewable electricity system are conceivable for 2050. They differ in the composition of the fleet of renewable energy power plants and the interplay with grid infrastructures and different flexibility options. Hourly analyses show that such a renewable power fleet can fully cover Germany power supply and guarantee a high level of security of supply. 2. If the cost of a tonne of carbon dioxide (CO₂) is Euro 50 or more, renewable energy power systems in 2050 are mostly cheaper than or approximately as expensive as a conventional lignite/hard coal/natural gas power system - largely independently of the assumed fuel prices (Figure S-1). Only when lower CO₂ prices or a combination of low energy prices and CO₂ prices of less than Euro 50 are assumed for 2050, a lignite/hard coal/natural gas power mix leads to lower overall costs than a system based on renewable energy sources. 3. An electricity system based completely on natural gas power plants leads to similar or higher costs when high fuel prices are assumed and is cheaper than a renewable energy power system when low fuel prices are assumed - largely independently of the CO₂ price assumptions. 4. Compared to 1990, a new lignite/hard coal/natural gas power system would have 7 to 24.5 percent, a power system based entirely on natural gas 59 percent, and an almost fully renewable power system 96 percent lower CO₂ emissions in 2050. In the final analysis, only a renewable electricity system is compatible with the climate protection targets laid down in the Paris Agreement. 5. The systemic CO₂ abatement costs for switching from a fossil-based power system to one based almost fully on renewable energies amount, in most constellations, to between 40 and 60 Euro per tonne of CO₂. There are two exceptions: For the change from a power system based on natural gas to one based on renewable energies, abatement costs of approx. 125 Euro/t CO₂ arise in the case of permanently low fuel prices; in the case of high fuel costs, however, negative abatement costs of -15 Euro/t CO₂ arise. In summary, a power system that is almost entirely based on renewable energies in 2050 is not only necessary in climate protection terms and technically feasible, it is also attractive in cost terms from a system perspective. In the most probable future scenarios for Germany, an electricity supply based on renewable energies is either approximately as expensive as or is even cheaper than a fossil-based electricity system. Particularly with a view to the uncertainties about developments on the global fuel markets, a renewable energy power system also has the added value of shielding the national economy as a whole from increasingly volatile price developments for fossil fuels, thereby also strengthening the competitiveness of Germany as a business location.