Avoided external energy costs due to penetration of renewables: Evidence form Baltic States

European Union (EU) has set ambitious energy and climate targets for the EU Member States. Some EU Member States (MS) confirmed to attain 100% of renewables in power generation by 2050 and implement carbon-free economy target. The purpose of this study is to assess and compare the avoided external costs of electricity generation due to the penetration of renewables in the Baltic States by implementing EU energy and climate targets for 2020, 2030 and 2050. The switching to renewables has significant social benefits for the EU member states, as fossil fuel burning is linked with the climate change and emission of classical air pollutants (SO₂, NOx, particulate matter, NH₃, NMVOC), which can have various negative impacts on the human health. The analysis and forecasts of external costs of power generation by 2050 in the selected countries, i.e., the Baltic States, has shown that Estonia is able to achieve the highest avoided external costs and highest health benefits from renewable promotion due to the oil shale that is dominating in the power generation structure. The main input of this study performed in the Baltic States is to show how subsidies for renewables correspond to the reduction of external costs of power generation and to provide important policy implications for these countries. Moreover, this can be an example for other countries how to assess the benefits of renewables support.