Figure 6.8 shows that the introduction of renewable technologies under the Energy [R]evolution scenario slightly increases the costs of electricity generation compared to the Reference scenario. This difference will be less than 0.7 cents/kWh up to 2020. Note that any increase in fossil fuel prices beyond the projection given inTable 3.2 will reduce the gap between the two scenarios. Because ofthe lower CO2 intensity of electricity generation, by 2020 electricity generation costs will become economically favourable under the Energy Revolution scenario, and by 2050 generation costs will bemore than 6.9 cents/kWh below those in the Reference scenario.

Due to growing demand, we face a significant increase in society’s expenditure on electricity supply. Under the Reference scenario, the unchecked growth in demand, the increase in fossil fuel prices and the cost of CO2 emissions result in total electricity supply costsrising from today’s $ 16.5 billion per year to more than $ 101billion in 2050. Figure 6.9 shows that the Energy [R]evolutionscenario not only complies with CO2 stabilization and reduction targets but also helps to stabilise energy costs and relieve the economic pressure on society. Increasing energy efficiency andshifting energy supply to renewables leads to long term costs forelectricity supply that are one third lower than in the Reference scenario. It becomes clear that pursuing stringent environmental targets in the energy sector also pays off in terms of economics.