Deploying Balancing Power Generation Technologies Could Save €65 Trillion By 2050, Shows Wärtsilä’s Global Power System Modelling
The Wärtsilä report shows that without integrating balancing power technologies, areas the size of Europe will need to be covered with renewable energy to achieve a clean energy future.
Wärtsilä’s global power system model, published in A crossroads for net zero reportingwhich compares two pathways from 2025 to 2050 aimed at reducing greenhouse gas emissions and limiting global warming in line with the goals of the Paris Agreement. In the first pathway, only renewable energy sources such as wind and solar and energy storage are added to the electricity mix. In the second pathway, balancing generation technology is also added to the system, which can be quickly ramped up to support intermittent renewables when needed.
Models show that an electricity system that includes balancing power offers significant advantages in terms of cost and CO2 emissions reductions. The model shows that this path would result in cumulative savings of €65 trillion by 2050 compared to a renewables-only path, as less renewable energy capacity is required. This would average €2.5 trillion per year – equivalent to more than 2% of global GDP in 2024.
The report outlines how the effectiveness of renewable energy can be maximized if supported by balancing power plants, which is key to scaling up renewable energy.
In Africa, Morocco is a good example: “Morocco aims to achieve 52% renewable energy generation by 2030, but integrating renewable energy on such a scale faces challenges. Our model in Morocco proposes a balancing system of renewables, battery storage and flexible power plants including 60% grid balancing engines. This combination optimizes renewable energy integration, reduces fuel costs and ensures the reliability of a cost-effective, low-emissions pathway to achieve this goal. The same conclusion has been reached in South Africa: Eskom’s recent 3 GW GASIPPPP tender for super-flexible gas confirms the need for this flexible generation identified in our model. Plans to increase installed renewable energy capacity to 17.7 GW by 2030”, explains Kenneth Engblom, Vice President Africa and Europe.
Main findings
1. Reduced costs: Research shows that the deployment of balancing power plants will reduce the cost of future power systems by up to 42% compared with renewable energy and energy storage pathways alone, equivalent to 65 trillion euros
2. Reduced emissions: Adding balancing power could reduce total power sector CO2 emissions by 21% (19 Gt) between now and 2050 compared to renewables and a pure storage path
3. Reduced energy waste: Models show that using balanced power can enhance power system optimization, reducing energy waste due to renewable energy curtailments by 88% by 2050 compared to a renewable energy and storage-only approach. . A total of 458 000 terawatt hours of brownouts will be avoided, enough to power the world for more than 15 years at current electricity consumption
4. Reducing renewable energy capacity and land required: By adding balancing power plants, we can cut in half the renewable energy capacity and land needed to achieve decarbonization goals.
Anders Lindberg, President and Executive Vice President of Wärtsilä Energy:
“While there is more renewable energy on our grid than ever before, it is not enough on its own. To achieve a clean energy future, our modeling shows flexibility is critical.
“We need to act now to integrate the right level and type of balancing technology into our electricity system. This means rapidly retiring inflexible assets and transitioning to sustainable fuels. Balancing power plants are not only important; they are critical for Supporting higher levels of renewable energy is vital.”
A call to action for the power industry
Decisive action across the electricity sector is critical to achieving a low-cost, low-emission energy transition in line with the 2050 Paris Agreement. When investing and planning power systems, there must be whole-system thinking, rather than just focusing on accelerating the construction of renewable energy.
1. Accelerate the expansion of renewable energy and balancing technologies to ensure affordable electricity
- Achieve rapid expansion of renewable energy by upgrading transmission systems, streamlining permitting processes, and investing in regional interconnectors.
- Rapidly scale short- and long-term balancing techniques to ensure grid reliability and resiliency. Together, these technologies support rapid growth in renewable energy, reduce reliance on inflexible assets such as coal-fired power plants, and accelerate emissions reductions.
- Mobilize financing to ensure that renewable energy and balancing power projects are developed at the necessary scale and pace.
2. Redesign electricity markets to incentivize flexibility
- Reform electricity market structures to support greater integration of variable renewable energy. A balance should be incentivized to provide the necessary flexibility to optimize renewable energy systems.
- Increase the scheduling granularity of the wholesale energy market to 5-minute resolution. Shorter, more precise time frames for pricing and supply adjustments will support variable renewable energy integration and incentivize flexible balancing power plants that can respond quickly to changes in electricity demand.
- Introduce new ancillary services to ensure the stability of the power grid. As renewable energy penetration increases, so does the demand for ancillary services, and supply can be co-optimized with energy and balancing requirements and delivered through balancing technologies.
- Establish bankable revenue models for low-runtime balancing power plants, including mechanisms such as flexibility-related capacity payments and scarcity pricing.
3. Choose the right future-proof technology and prepare for sustainable fuels
- Choose balanced technologies that are future-proof and ready to introduce sustainable fuels to enable full decarbonization of the power sector from the mid-2030s.
- Support the rapid development of renewable energy and the phase-out of conventional technologies by using natural gas as a transition fuel for flexible balancing power plants. Annual CO2 emissions from the electricity sector could be reduced by more than 75% by 2035 (compared to 2023 levels) through a gas-balancing transition.
- Prepare for the introduction of sustainable fuels by building the expertise and infrastructure required to ensure a seamless transition to a fully decarbonized power sector in the future. Competitiveness or cost parity of sustainable fuels requires policy action, which could take the form of subsidies, regulations, carbon taxes or a combination of these measures.
The full report can be found here.
