Integrated Power and Economic Analysis of Austria’s Renewable Electricity Transformation

Abstract

Austria has set the goal to transform its electricity sector to 100% renewable energy sources by 2030. The transition to highly renewable power systems is not only a technical challenge but also has economic implications due to high investment needs. Furthermore, electricity price and demand are interlaced and influence each other, which requires both technical and economic analyses. In order to provide these comprehensive integrated analyses, we present a novel approach of linking the technical model of the continental European electricity system ATLANTIS with the macroeconomic model DYNK. This allows us, inter alia, to analyze the effects of increasing shares of renewables on wholesale electricity prices and demand, and to perform a sensitivity analysis with respect to CO2 prices. Our results show that increasing CO2 prices greatly affect coal-fired generation abroad, which in turn promotes the role of gas-fired generation, at least until 2030. For Austria, this results in increased national gas-fired generation and electricity exports. Therefore, gas-fired power plants still determine the Austrian market price for electricity in the merit order, which leads to higher electricity prices due to CO2 pricing. In turn, however, higher electricity prices only cause a marginal reduction in the electricity demand in Austria.