The economic competitiveness of flexibility options: A model study of the European energy transition
Niels Oliver Nagel, Jon Gustav Kirkerud, Torjus Folsland Bolkesjø
Abstract
The European energy transition towards renewable energy is increasingly ambitious and climate targets have been reinforced. Options to increase the flexibility of the energy system are expected to become more valuable with higher shares of variable renewable energy. This paper analyzes the economic benefits of key flexibility options in the Northern, Western and Central European energy system under six increasingly ambitious climate targets towards 2030. The value of and competition between flexibility options is investigated by comparing total system costs and profits. The BALMOREL energy system modeling framework is applied, minimizing system costs. The study results show the increasing value of all flexibility measures with increasingly ambitious climate targets. Demand side management has a large impact on system costs when climate targets are low, while sector coupling with the district heat sector and interconnector investments have an increasing impact with more ambitious climate targets. Biomass is essential for achieving deep decarbonization.