The Impact of Shortage Risk Tolerance on a Future European Net-Zero Electricity System – A Multi-Objective Optimisation Approach

Energy system models are crucial tools for planning the transition to low-carbon power systems, particularly in the context of increasing renewable energy sources (RES) integration. However, the inherent variability and uncertainty of RES generation pose challenges for ensuring system reliability. As of today, capacity expansion models often enforce strict reliability constraints, leading to conservative investment decisions that may not reflect real-world risk tolerances, ultimately leading to overdimensioned systems. Reframing planning around acceptable risk can therefore have the potential to shift investment decisions from expensive and rarely used capacity to more valuable assets, such as targeted storage or transmission. 

Here, we implement an allowance for shortage tolerance in an electricity system model at NUTS2 resolution, using a multi-objective optimisation approach that minimises both total system cost and energy shortage risk. We explore the trade-offs between cost and reliability by analysing solutions on the Pareto front, and how they could influence the design of a future European power system with high RES penetration. Our findings expose which regions are most vulnerable to shortages, and allow for policy makers to make informed decisions on how to balance decarbonization, affordability, and local robustness.