Variable renewable energy (VRE) generation from wind and sun is growing quickly in Europe. Already today, VRE's power contribution is at times close to the total demand in some regions with severe consequences for the remainder of the power system. Grid extensions are necessary for the physical integration of VRE, i.e., for power transports, but they also have important economic consequences for all power system participants.We employ a regional, power system model to examine the role of grid extensions for the market effects of VRE in Europe. We derive cost-optimal macroscopic transmission grid extensions for the projected wind and solar capacities in Europe in 2020 and characterize their effects on the power system with high regional and technological resolution.Without grid extensions, lower electricity prices, new price dynamics and reduced full load hours for conventional generation technologies result in * k.schaber@tum.de Preprint submitted to Energy PolicyDecember 22, 2011 proximity to high VRE capacities. This leads to substantial changes in the projected achievable revenues of utilities. Grid extensions partially alleviate and redistribute these effects, mainly for the benefit of baseload and the VRE technologies themselves.

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This study investigates influences of different factors on the CO 2 emissions of the global electricity generation system. The analysis has been performed through applying an electricity system investment and production optimization model based on linear programming. This model has been calibrated according to the real electricity generation data.The results show that the introduction of a global CO 2 -certificate price of 18 €/t would lead to a total abatement of several hundreds of million tons in 2006, i.e. 5% reduction of emissions compared to the baseline scenario without any carbon price.Through a sensitivity study, we show that in addition to the CO 2 -certificate price, relation between natural gas and coal price is crucial for the abatement achieved through fuel switching.On a long-term horizon, integration of wind is determined as the most economic option to respond to ambitious emissions reduction targets. A wind power capacity of 4913 GW in 2020 and 15729 GW by 2040 allows reducing the emissions by 35% and 78%, respectively, as compared to the emissions of year 2000 while the CO 2 -price rises from 18 to 44 €/ton. This can only be achieved if the capacities of cross-border power transmission interconnections are extended far beyond the existing levels.