In-depth systems analysis for CO2-free electricity system 2035
What can a CO2-free electricity system in 2035 look like within the principles of the National Energy System Plan (NPE) and what market dynamics will follow? These were the key questions within the assignment from the Netherlands Enterprise Agency, the Ministry of Climate and Green Growth and TKI Urban Energy.
These questions were examined in a comprehensive study conducted by Witteveen+Bos' PMC Energy Systems Studies in collaboration with CE Delft. The conclusions were compiled in the report ‘Electricity mix and market dynamics in 2035 CO2-free electricity system’.
Within the study, Witteveen+Bos provided the model-based systems analysis, applying a two-stage rocket to arrive at the socially optimal configuration of the future energy system.
Model-based systems analysis and market dynamics
The first step involved calculating scenarios for the energy system, applying multiple modes on a Northern European scale, as well as extensive simulation and optimisation of system components such as:
- transport;
- network;
- (renewable) generation;
- conversion;
- storage.
In the second step, an innovative approach was added: the optimal energy system configurations were linked to a market model that simulated the corresponding market dynamics. This means, for instance, that energy prices, system component costs and total energy system costs have been taken into account in determining the optimal configuration of the future energy system for 2035.
In working out the scenarios, use was made of the open source model PyPSA, with which Witteveen+Bos' experts now have extensive experience and collaborate for further development with universities at home and abroad.
Our experts are now also called in by other parties in the energy chain, such as energy companies and investors, to use the energy model for new research questions. For instance, to quantitatively test new insights and to explore new interventions and techniques. For example, we will soon start a new assignment within project Delta 21, the exploratory study of a future-proof solution for the south-western delta with regard to water security, energy transition & nature restoration.
Key insights
The report ‘Electricity mix and market dynamics in 2035 CO2-free electricity system’ highlights a number of challenges that need to be acted upon to achieve a CO2-free energy system:
- in 2035, hourly energy prices are around 0 €/MWh about a third of the time. In other words, there are large surpluses of sustainable Energy. A third of the time, prices are very low, between €5 and €20/MWh, with sufficient production from renewables, nuclear and electricity storage to meet demand. In the remaining third of the hours, prices are higher due to demand management in industry and mobility and deployment of more expensive hydrogen plants;
- there is uncertainty about future revenues from new assets. This can hamper investments. For instance, the business case deteriorates as soon as demand grows slower than expected, or if the development of competing technologies is faster. However, sufficient (flexible) capacity is essential for the reliability of the energy system. Plus additional capacity for, say, a bad weather year or lagging technical development;
- knowledge development and upscaling of long-term storage and demand-side management in industry and mobility is essential. Short-term choices are required on the design of the energy system and policy to realise investment security;
- public policy largely determines the shaping of the energy mix. If a CO₂ reduction target of 95% instead of 100% is adopted in north-western Europe for 2035, the model largely replaces hydrogen plants with lower-cost natural gas plants;
- an innovative perspective is the added value of hydrogen production within the European energy system. If the trade-off is made on cost price per kilogram, own production falls more expensive than importing from abroad. If the system value is included, as was done in this study, a different price picture emerges: hydrogen production within Europe actually turns out to reduce social costs.
The report is available here.
With the basis laid by this Energy Systems Studies, we can relatively easily calculate the impact of developments on the energy market and/or the energy system.
Feel free to contact us to explore the possibilities.
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