Brussels (Platts)--13Apr2010/616 am EDT/1016 GMT

The cost of decarbonizing the European Union's power sector by mid-century, including a switch to 80% renewables, is only slightly higher than following a high-carbon business as usual strategy, according to a study by the European Climate Foundation to be published Tuesday.

Nearly all the EU's power generation capacity, except Scandinavian hydropower, will have to be renewed by 2050, said Tom Brookes, ECF's communication manager.

"The key finding of the Roadmap 2050 project is that the challenge is basically the same in either a high-carbon, low-carbon or zero-carbon energy scenario, in terms of overall cost and scale," Brookes told reporters ahead of publication.

The study found that the weighted average cost of new build power in the EU over the next 40 years, assuming a fuel mix of 80% renewables, 10% carbon capture and storage and 10% nuclear by 2050, would only be 6-7% more than the high-carbon business as usual baseline.

It also found that there was little cost difference between an 80% renewable power option, and having 60% or 40% renewables, assuming the remaining fuel mix was split equally between CCS and nuclear.

The final cost to the consumer in the three different fuel mixes was also similar, Brookes said.

"A weighted average cost over 40 years is a blunt instrument, but we didn't include a carbon price or fossil fuel price shocks," said Brookes. "If you add a Eur20 ($27) carbon price the cost of renewables would be cheaper than the baseline."

EUR52 BILLION/YEAR INVESTMENT NEEDED TO 2050

The study estimated that under the 80% renewable power option the EU would have to invest Eur52 billion/year over the next 40 years on decarbonization to cut its greenhouse gas emissions by at least 80% by 2050.

At least some of this investment could be shifted from other sectors, such as oil and gas, said Brookes.

The EU would also have to increase its energy efficiency by 3%/year so that power demand in 2050 was not higher than under a business as usual approach, he said.

Decarbonizing power would require a big increase in the EU's grid capacity, but this would be in line with the trend of recent years, said Brookes.

The study assumes much bigger power interconnections in key regions. For example, the 80% renewables option would need a 47 GW link between France and Spain to take advantage of Spain's wind and solar generation potential.

But the study did not look at how to overcome political problems and local residents' opposition, he said.

Previous attempts to build overhead power cables between France and Spain across the Pyrenees have struggled for years to get planning permission in the face of strong local opposition.

The study will be launched in the presence of EU dignitaries including energy commissioner Gunther Oettinger and climate action commissioner Connie Hedegaard.

The European Commission is preparing its own roadmap for a low carbon EU energy system, and plans to present an interim document to EU leaders at their June summit.

ECF was founded in 2007 by six philanthropic organizations, and receives no corporate or government funding, said Brookes.

--Siobhan Hall, siobhan_hall@platts.com