Accounting for economic disparity in designing net-zero European energy systems

Abstract

High-resolution energy system models, as powerful tools to represent energy systems in detail and assist energy transition planning, rarely account for economic disparity, unlike broader-scale tools such as integrated assessment models. In this study, by analysing net-zero European energy system designs through the lens of national gross domestic product (GDP) and household average income, we find that disparity-unaware high-resolution energy system models can produce results that are technically feasible but largely incompatible with economic realities. The investment in household heating technology may be disproportional to the income level of lower-income countries. Explicitly acknowledging economic disparity in such models reduces the danger of them proposing solutions which burden economically disadvantaged actors. Therefore, here, we explicitly include national GDP and household income disparity in a model for net-zero European energy system designs. We find that disparity-compatible systems are possible with a 1.1% total system cost increase compared to the least-cost ones. Unlike in disparity-unaware system designs, where energy infrastructure investments often reach over 20% of national GDP for some countries, we develop disparity-compatible designs which limit investments to below 5% in each country. Our results show that less affluent European countries may need substantial household-level financing to support their heating transition and to diversify their net-zero energy technology choices.