  For a cost efficient design of a future renewable European electricity
system, the placement of renewable generation capacity will seek to exploit
locations with good resource quality, that is for instance onshore wind in
countries bordering the North Sea and solar PV in South European countries.
Regions with less favorable renewable generation conditions benefit from this
remote capacity by importing the respective electricity as power flows through
the transmission grid. The resulting intricate pattern of imports and exports
represents a challenge for the analysis of system costs on the level of
individual countries. Using a tracing technique, we introduce flow-based nodal
levelized costs of electricity (LCOE) which allow to incorporate capital and
operational costs associated with the usage of generation capacity located
outside the respective country under consideration. This concept and a
complementary allocation of transmission infrastructure costs is applied to a
simplified model of an interconnected highly renewable European electricity
system. We observe that cooperation between the European countries in a
heterogeneous system layout does not only reduce the system-wide LCOE, but also
the flow-based nodal LCOEs for every country individually.
