WP 5 - Security and Reliability of Supply

Objectives

  • To derive estimates of externalities related to energy supply insecurities for EU and other selected countries;
  • To use estimates of externality costs in policy assessment of measures addressing energy security in the EU and other selected countries.

Description of work

This WP critically reviews the evidence for energy security issues to be treated as externalities in policy analysis ensuring that resulting estimates of such externalities are founded on the most up-to-date macro-economic and micro-economic cost data at EU and national country scales.

UBATH reviews and updates existing estimates of the costs of energy insecurity for primary fuels, and makes predictive estimates up to 2030 for the EU and selected other countries. These estimates use published outputs of existing macroeconomic and inter-sectoral models to make estimates of the macro-, regional and sectoral costs of the use of these fuels.

ECN critically reviews current estimates of values of loss of load (VOLLs) of electricity for EU and the other selected countries. These provide the basis for deriving country estimates to a time horizon of 2030. The findings of new studies expected to be published shortly on the costs of recent blackouts in a number of EU and other countries are also incorporated into the derivation of the forward-looking estimates.

An initial assessment of policy options to reduce - and insure against - the costs of energy insecurity is undertaken by CEPS and ECN, by comparing the costs of a number of policies with the benefits in terms of reduced energy insecurity. The assessment is based on a number of policy options: increased maintenance of strategic stockpiles, feed-in tariffs and tradable certificates as methods to increase renewable energy sources' share in the EU energy mix, taxes on fossil fuels, requirements of increased capacity in the electricity sector and other market-based instruments. Policy recommendations emanate from this analysis. They are critically reviewed by stakeholders and academia in the joint WPs 2-7 Stakeholders Workshop 1. The output from this exercise complements WPs 8-10 by ensuring that both energy security and environmental cost internalisation policy processes are consistent with each other.

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