A model-based assessment of the impact of revitalised R&D investments on the European power sector

This paper presents an analysis of the effect of enhanced research and development (R&D) efforts for a set of low-carbon power technologies on the development of the European energy sector. It applies a methodology using the concept of Two-Factor-Learning, which quantitatively links trends in technology cost to both accumulated R&D investments and production volumes. The impacts of the latter on the energy sector are then simulated in a consistent manner with the POLES global energy model. On this basis, it compares the total system costs of an assumed increase in worldwide R&D investments that for the EU are in line with proposals made in its European Strategic Energy Technology Plan to a baseline development. It finds that an increase in research efforts at a global level will contribute to reducing the costs of currently less mature low-carbon technologies, thus accelerating their market entry. When comparing two scenarios that both fulfil the EU's 2020 energy and climate objectives and differing only in their R&D investment levels, the reduced technology costs allow EU support policies for renewables and carbon values to be reduced, and the cumulative (discounted) benefit of the accelerated research efforts is positive in the long term.