Deploying Balancing Power Generation Technologies Could Save EUR65 Trillion by 2050, Shows Wartsila's Global Power System Modelling

Wärtsilä report shows an area the size of Europe will need to be covered with renewable power to reach a clean energy future, without the integration of balancing power technologies.

Wärtsilä’s global power system modelling, published in the Crossroads to net zero report, compares two pathways from the year 2025 to 2050 with the aim to reduce greenhouse gas emissions and limit global warming, as per the Paris Agreement targets. In the first pathway, only renewables, such as wind and solar power, and energy storage are added to the power mix. In the second pathway, balancing power generation technologies, that can be ramped up quickly when needed to support intermittent renewables, are also added to the system.

The modelling shows that a power system including balancing power has significant advantages when it comes to both cost and CO2 reductions. The model reveals that this pathway would generate cumulative savings of EUR 65 trillion by 2050 compared to a renewables-only pathway, due to less renewable capacity needed. This would average EUR 2,5 trillion per year – an equivalent to over 2% of 2024’s global GDP.

The report outlines that the effectiveness of renewables can be maximised if supported by balancing power plants, which are key in scaling up renewable energy.

Key findings:

1. Reduced costs: The study shows that compared to a renewables and energy storage-only pathway, the deployment of balancing power plants will reduce the cost of future power systems by as much as 42%, equalling EUR 65 trillion
2. Reduced emissions: Adding balancing power can reduce the total cumulative power sector CO2 emissions between now and 2050 by 21% (19 Gt), compared to the renewables and storage-only path
3. Less wasted energy: The modelling shows that the use of balancing power allows for enhanced power system optimisation, resulting in 88% less wasted energy due to renewable curtailment by 2050, compared with a renewable and energy storage-only pathway. In total, 458 000 TWh of curtailments would be avoided, enough to power the whole world with the current electricity consumption for more than 15 years
4. Less renewable capacity and land needed: By adding balancing power plants, we can halve renewable capacity and land needed to meet our decarbonisation targets.

Håkan Agnevall, CEO and President of Wärtsilä, says:

"Our modelling shows that there is a viable and cost-efficient path to decarbonise the power sector."

"We have all the technologies we need to accelerate the shift to renewables-led power systems – but going green is not black or white. Renewable-led power systems require flexibility in various forms: energy storage alongside balancing power plants utilising gas as a transition fuel, before sustainable fuels are available, are critical to reach global climate goals."
 

Calls to action for the power sector
Decisive actions from the entire power sector are crucial to achieve a low-cost and low-emission energy transition in line with the 2050 Paris Agreement. Instead of only focusing on the acceleration of renewable build up, a holistic system level thinking must be in place when investing in and planning power systems.

1. Enable accelerated expansion of renewables and balancing technologies to ensure affordable electricity

• Enable fast expansion of renewables by upgrading transmission systems, streamlining permitting processes, and investments in regional interconnectors.  
• Rapidly expand short and long duration balancing technologies to ensure grid reliability and resilience. Together, these technologies support the rapid growth of renewable energy, reduce reliance on inflexible assets, such as coal plants, and accelerate emission reductions.
• Mobilise financing to secure the development of renewable and balancing power projects at the necessary scale and speed.

2. Redesign electricity markets to incentivise flexibility

• Reform electricity market structures to support greater integration of variable renewable energy. Balancing should be incentivised to provide essential flexibility to optimise renewable energy systems.
• Increase dispatch granularity to 5-minute resolution in energy wholesale markets. Shorter and more precise time frames for pricing and supply adjustments will support variable renewable energy integration and incentivise flexible balancing power plants that can respond quickly to changes in electricity demand.   
•  Introduce new ancillary services to guarantee grid stability. The need for ancillary services increases with higher renewable penetration, and the supply can be co-optimised with energy and balancing requirements and provided by balancing technologies.
• Establish bankable revenue models for low-running-hour balancing power plants, including mechanisms like flexibility-linked capacity payments and scarcity pricing.

3. Choose the right future proof technologies and prepare for sustainable fuels

• Select balancing technologies that are future proof and ready for the introduction of sustainable fuels to fully decarbonise the power sector from the mid-2030s onwards.
• Support rapid ramp up of renewables and enable the phase out of legacy technologies, by using natural gas as a transition fuel for flexible balancing power plants. Bridging the transition with gas balancing can cut more than 75% of annual power sector CO2 emissions by 2035 (in comparison to 2023 level).
• Prepare for the introduction of sustainable fuels by building the needed expertise and infrastructure to ensure a seamless transition to a fully decarbonised power sector in the future. Competitiveness or cost-parity of sustainable fuels will require policy action, which could be in the form of subsidies, regulation, carbon taxes or a mix of these.

Anders Lindberg, President Wärtsilä Energy & Executive Vice President, says:

"While we have more renewable energy on our grids than ever before, it is not enough on its own. To achieve a clean energy future, our modelling shows that flexibility is essential."

"We need to act now to integrate the right levels and types of balancing technologies into our power systems. This means rapidly phasing out inflexible assets and transitioning to sustainable fuels. Balancing power plants are not merely important; they are critical in supporting higher levels of renewable energy."