AdobeStock_294215724 v2.jpeg

Integrating Substantial Renewable Energy in Europe and Eurasia

U.S.-sponsored analysis forecasts impact on grid, prices, and climate

Countries across Europe and Eurasia are planning to triple or quadruple the amount of wind and solar energy on their power systems by 2030. But for some countries—particularly those in Southeast Europe and the Black Sea region—it has been unclear if the addition of this volume of these renewables would be possible on the existing electricity grid, and how such a change might impact prices in the market and carbon emissions. Until now.

Experts have determined that the addition of these substantial renewables is possible, based on state-of-the-art modeling and analyses recently completed by the Europe and Eurasia Bureau of the United States Agency for International Development (USAID) and the United States Energy Association (USEA), in collaboration with utilities across these regions.

The results of two separate projects—one for 11 countries in Southeast Europe and one for 7 countries in the Black Sea region—confirm that under dozens of scenarios, the networks and markets in both regions can handle major increases in renewables. The reports on these results also point the way to key policy, regulatory, and planning considerations for decision-makers that will support these changes in the most effective manner.

In Southeast Europe, experts from the USEA/USAID Electricity Market Initiative (EMI) evaluated 10 market scenarios and 22 network scenarios that could occur by 2030, adjusting for key inputs such as: level of renewables, demand, hydrology, and carbon prices. Results show that:

• The carbon market credit system will have a substantial impact on reducing emissions, more than the addition of renewables.
• Prices in the day-ahead wholesale generation market will decline with the significant projected increases in wind and solar.
• The combination of new renewables, increased gas generation, and a carbon price will reduce the utilization of lignite and coal plants, and may increase the pace for countries to retire them.
• An increase in gas generation would be a cost-neutral way to reduce regional CO2 emissions.
• The region-wide grid is well-prepared to absorb even a quadrupling of renewables capacity by 2030 without reliability concerns.

In the Black Sea region, experts from the USEA/USAID Black Sea Transmission Planning Project (BSTP) also considered market and network scenarios that could occur by 2030, adjusting for key inputs such as: energy mix, carbon emissions, country balances, cross-border energy exchanges, load flows, voltage profiles, and grid operational security. Results show that:

• From a generation adequacy standpoint, the countries of the Black Sea region can triple the amount of renewable energy now installed on their networks with minimal network investment.
• Increasing the amount of renewable energy on the regional network will reduce the utilization of coal and lignite plants.
• Tripling the amount of renewable energy capacity installed on the regional grid will lead to a slight reduction of wholesale electricity prices by 2030.

Policymakers and industry leaders in these regions can be confident that their movement toward increased renewables—if supported by appropriate laws and regulations —is both feasible and affordable. To ensure success, policymakers and regulators should consider the following recommendations: 1) provide the proper incentives, interconnection and queueing policies, and locations for private investment in renewables; 2) prioritize the expansion of cross-border trade and coupling to foster regional clean energy projects and balancing markets; 3) assure adequate grid investment with enhanced tariffs and codes, and with regional planning; 4) strongly encourage bilateral and regional power exchanges and competitive markets for real-time, day-ahead, and longer-term markets; 5) anticipate and incorporate distributed energy resources into these markets, on an equal basis with wholesale power generation; and 6) proactively integrate natural gas to transition to a clean energy future through long-term generation planning, coordinated efforts with gas system operators, and robust gas planning for electricity needs.

The models and analytical frameworks developed in these reports can be used by policymakers and utilities as starting points for further country- and project-specific analyses to inform their decisions. Regulators may leverage these tools to assess the impact of new rates and incentives, and economic leaders can deploy them to better understand the impact of retiring older power generation facilities.