Powering Europe - European Wind Energy Association

The technology mix and sequence of the Wind scenario’s
merit order curve very much resembles that of the
Reference scenario. The main difference is the greater
wind power generation, which shifts all the more expensive
generation technologies to a higher cumulative
generation volume (to the right in the curve). This
means the generation volume of nuclear technologies
and lignite stays constant in both scenarios. The volumes
of coal, gas and non-wind renewable generation
volumes are lower in the Wind scenario than in the
Reference scenario. The detailed generation volumes
are illustrated and compared in Table 2. It can be concluded
that in the Wind scenario, wind power mainly
replaces generation from coal and gas technologies,
which are replaced because they have the highest
short-term marginal costs. However, in the Wind scenario
as in the Reference scenario, the marginal technology
type at the equilibrium price of 7.5 €cent/kWh
are combined cycle gas turbines.
Both scenarios show the market in equilibrium. According
to the methodology, in addition to the wind
capacities, the modelling tool finds capacities needed
to meet demand in order to reach equilibrium. Here
lies the main difference between the two scenarios.
The Reference scenario contains a significantly higher
investment volume in conventional capacities than the
Wind scenario. Coal capacity investments are about
30,000 MW higher and natural gas technology investments
are about 5,000 MW higher than in the Wind
scenario. The main reason for the price differences in
the two scenarios is the difference in long-term marginal
costs due to the differing investments.
tablE 2: GEnERation VolUMEs in thE yEaR 2020 PER tEChnoloGy
in TWh nuclear lignite Coal wind non-wind
renewables
chApTEr 6 themeritordereffectoflarge-scalewindintegration
In the merit order curves above, the cost differences
are mainly due to the technology used and are related
to the type of fuel. For instance in both the scenarios,
nuclear and coal power plants have lower marginal
costs than most of the gas powered plants. 11 This is
due to the lower fuel costs for coal and nuclear.
It can be seen that the results are very sensitive to
fuel price assumptions and the assumed relative difference
between the coal and gas prices. In order to
estimate the impact of the fuel price assumptions and
its uncertainty, a sensitivity analysis has been made
and is described in a later chapter of this report.
Furthermore, the short-term marginal cost levels for
the conventional technologies also vary in the two
scenarios because of the resulting difference in the
CO2 price. One impact of increased wind power generation
will be reduced demand from the power sector
for emission allowances under the EU ETS through
lower baseline emissions. This means the residual demand
for abatements from the industry sector and additional
fuel switching in power and heat production
is reduced. As a result, carbon price levels also go
down and consequently, the Wind scenario results in a
carbon price level of €30/tonne of CO2 in 2020 compared
to €48/tonne in the Reference scenario.
Therefore, lignite, coal and gas technologies show a
higher short-term marginal cost level in the Reference
scenario than in the Wind scenario due to the difference
in carbon costs.
natural gas others
Reference
Scenario 800 165 1,638 161 611 563 27
Wind Scenario
800 165 1,373 648 603 457 26
11 This refers to the plants’ short run marginal costs which include fuel costs, carbon costs and non fuel variable operation costs. In a
long run marginal cost consideration, also including capital costs for the overnight investment coal technologies usually show higher
cost levels than gas technologies.
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