Estimation of the EU electricity system capital value

Through a rough back-of-the envelope calculation we estimated to the total capital value of the EU electricity system, including generation, transmission & distribution and end-use.

Electricity generation

The EU-28 has roughly 1000 GW installed capacity (end of 2014) [i], figure 4]

The average investment cost for generation capacity  can be calculated from the following addition: 20% natural gas at 750€/kW; 15% hard coal at 1550 €/kW; 15% nuclear at 4200 €/kW; 15% off-shore wind at 1300 €/kW, 15% hydro at 2100 €/kW, 5% lignite at 1250 €/kW, 5% PV at 1250 €/kW, 5% biomass at 2500 €/kW, and 5% oil at 2100 €/kW. [i, figure 4 and Table 1]

The total cost = 2100 B€

Installations in buildings

There are 220 million residential buildings in Europe [ii], and 75% of the buildings are residential [iii].

So in total there are around 300 million buildings, with each an electrical installation.

A very rough estimation of 300 million installations at 4000 €/installation = 1200 B€

Transmission and distribution networks

The cost of the US transmission and distribution grid was estimated at 2100 B$. [[iv]]

There are 508 million inhabitants in the EU28 compared to 326 million in the US

2100 B$ x 508/326 inhabitants x 0.88 €/$ = 2900 B€

ICT appliances

The manufacturing of ICT appliances in the EU28 amounts to 0.0032% of the GDP, or 50 B€. [v]

The EU trade balance for ICT is 7.5 import compared to 5.4 export. [vi] and [vii]

Suppose a 10 year life-cycle for ICT appliances.

7.5/5.4 trade balance x 10 year life cycle = 700 B€

Household appliances

The manufacturing of household appliances in the EU28 amounted to 53 B€ in 2016 [viii], page 6.

Suppose a similar trade balance as for ICT appliances (7.5/5.4).

And a similar product life-cycle of 10 years.

53 B€ x 7.5/5.4 x 10 year life cycle = 700 B€

Railways and trams

The EU railway sector invested 40 B€ in 2011 [ix], page 22. Some of it is in Diesel trains, but on the other hand the trams and trolley busses are not included. Suppose a product life cycle of 25 years.

40 B$/year investments x 25 year life cycle = 1000 B€

Industrial end-use devices

A rough estimation is that industrial electrical end-use systems are worth the double from ICT and household appliances. That would be 1400 B€

Total

Adding the figures above leads to 10,000 B€

Notes

[i] Chalmers University of Technology, Investment Requirements in the EU Electricity Sector up to 2050, May 2015

[ii] OTB Research Institute for the Built Environment, Housing statistics in the European Union, September 2010

[iii] EU Commission, EU Buildings Factsheets

[iv] The Conversation, The old, dirty, creaky US electric grid would cost $5 trillion to replace. Where should infrastructure spending go?, March 2017

[v] Eurostat, ICT Sector – value added, employment and R&D, January 2018

[vi] The World Bank, ICT goods imports

[vii] The World Bank, ICT goods exports

[viii] APPLIA, The Home Appliance Industry in Europe 2017 – 2016

[ix] Ecorys and CER, The economic footprint of the railway transport in Europe, October 2014

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