Impact of declining renewable energy costs on electrification in low-emission scenarios

Abstract

Cost degression in photovoltaics, wind power and battery storage has been faster than previously anticipated. In the future, climate policy to limit global warming to 1.5-2°C will make carbon-based fuels increasingly scarce and expensive. Here we show that further progress in solar and wind power technology along with carbon pricing to reach the Paris Climate targets could make electricity 25 cheaper than carbon-based fuels. In combination with demand-side innovation, for instance in emobility and heat pumps, this is likely to induce a fundamental transformation of energy systems towards a dominance of electricity-based end uses. In a 1.5°C-scenario with limited availability of bioenergy and carbon dioxide removal, electricity could account for 66% of final energy by midcentury, three times the current levels and substantially higher than in previous climate policy 30 scenarios assessed by the IPCC. The lower production of bioenergy in our high electrification scenarios markedly reduces energy-related land and water requirements.

Implications of variations in renewable cost projections for electric sector decarbonization in the United States

“…These scenarios illustrate the complex substitutability and cross elasticities across power sector resources, especially under deep decarbonization scenarios. Although the high-level takeaway that lower renewables costs reduce the value of and decarbonization costs aligns with other recent studies ( Grant et al., 2021 ; Luderer et al., 2021 ), we find more nuanced interactive effects across decarbonization portfolios and greater capacity of clean firm resources, energy storage, and carbon removal. The additional temporal, spatial, and technological detail in our modeling helps to better characterize the economics of these resources and facilitates these insights in areas that are omitted or greatly simplified in global integrated assessment models relative to the linked energy systems and capacity expansion model used here ( Bistline, 2021b ).…”

“…The extant literature using stylized cost trajectories for renewables indicates that investment decisions and policy costs are sensitive to technological cost assumptions, including those for variable renewables ( Bistline and Young, 2019 ; Cole et al., 2021 ) but also that model structure plays an important role ( Bistline, 2021b ; Mai et al., 2018 ). Other studies ( Grant et al., 2021 ; Luderer et al., 2021 ) look at the impact of lower wind and solar costs on electrification and economy-wide decarbonization using global integrated assessment models, whose lower temporal, spatial, and technological detail make them less appropriate for assessing power-sector-specific effects.…”

PRospective EnvironMental Impact asSEment (premise): a streamlined approach to producing databases for prospective Life Cycle Assessment using Integrated Assessment Models

“…To derive climate change mitigation pathways, constraints on GHG emissions are imposed (e.g., in terms of cumulative emissions until the end of the century), and the CO2 price is adjusted iteratively to meet the target GHG emissions level. In response to the price signal, the models derive de-carbonization strategies, for instance via efficiency improvements, bioenergy [38][39][40][41], or renewables-based electrification [42]. Other environmental constraints can be considered, such as the area of land available for bioenergy and crop production.…”

Transforming China's Power Systems To Facilitate Carbon Reductions

“…Electricity production is a major source of carbon emissions from energy production and consumption system, and is also one of the root causes of the global carbon crisis 1 . The full electrification of industry, construction, transportation, and other sectors in the future, for example, the rapid development of electric vehicles, will considerably boost electricity consumption 2 . The development strategy of the power sector is therefore central to addressing the carbon issue.…”