21.03.2019

For What, How and Where to Invest in the Energy System?

New policy brief by WIFO economists Stefan Schleicher and Angela Köppl
The achievement of climate targets and technological innovations are the driving forces behind the transformation of the energy system. The Policy Brief "Development plans for energy – what and where to invest in the energy system" argues that for investments in the energy system an overall perspective on the energy value chain is goal-oriented. A disclosure of the system boundaries allows the estimation of consequential effects, such as the necessary grid expansion when investing in a wind farm.

Such more comprehensive decisions are hardly mentioned in connection with the foreseeable restructuring of our energy system. Expansion plans usually focus only on a limited area, such as renewables, heat or electric cars.

However, such an isolated view of individual investments can be counterproductive. This is the experience of the accelerated expansion of renewables in Germany without consistent consideration of the necessary grids.

A transformation to integrated structures of the energy system could be implemented by appropriate regulatory framework conditions and incentives, which could be established as a principle in the planned Renewable Energies Development Act: the law should address the entire energy system; each investment should be compared with alternatives in the provision and use of energy; consequently, the more appropriate term Energy Expansion Act should be considered.

Additional information on the current state and dynamics of the Austrian energy system can be found in the Policy Brief "Analyses of the Austrian Energy Balance 2017" with facts on the influence of the economic situation and outside temperatures on energy consumption as well as information on the extent of data revisions in the energy balances.