Renewable energy scenarios for costs reductions in the European Union.

In 2014, the European Commission proposed a new renewable energy sources (RES) target in energy consumption by 2030 “to be delivered collectively” by the European Union as a whole, leaving unresolved the question of allocation among member countries. The aim of this paper is to propose and simulate a model of coordinated action among member countries based on two pillars, RES national binding targets and a quantitative cost minimization procedure based on a general translog function. We have considered RES national targets in three sectors: electricity, heating and cooling, transport. RES costs are differentiated according to learning-by-doing and RES productivity diffusion processes at the various RES production sites in the European Union. Three different scenarios are simulated and compared with the baseline case constituted by the 2020 cumulative RES target. The results show that, compared with the baseline, the costs of achieving RES binding targets, with the proposed decision process, can be reduced by up to 13% by 2030. These cost evaluations indicate that it is more efficient to produce RES in those countries that face lower technology costs, according to the comparative advantages of their territorial localization and the importance of the initial RES policy efforts. [ABSTRACT FROM AUTHOR]