Universidad Pontificia Comillas. Madrid (Spain)
May 19th, 2017
Summary:
Convergence between apparently disjoint assessment tools is a continuous desire in modeler’s minds. This is no different when evaluating energy and environmental complex policies which entail multi sector effects not addressable without compromises between an exclusive Top-Down (TD) or Bottom-Up (BU) assessment.
This thesis aims to develop novel policy evaluation instruments suitable to assess the consequences of different electricity policies under both macro and micro economic perspectives simultaneously. The proposed approach should be able to account for the indirect effects characteristic of Computable General Equilibrium (CGE) models while also mimicking the detailed behavior of the electricity operation and investment present before only in bottom-up detailed models.
To fulfill this commitment, the thesis addresses three main challenges: the reconciliation between BU and TD data, the formulation of an electricity detailed CGE model (GEMED) and the formulation of a hybrid TD-BU model (H-GEMED).
The novelty of the GEMED model lies in two major aspects: the disaggregation of the electricity sector to include temporal, location and technology detail; and the introduction of the possibility for agents to react to time-varying prices under technological constraints.
H-GEMED goes one step further by formulating a complete integration between the TD and BU alternatives through a nonlinear mixed complementarity optimization model. BU features like the inclusion of backstop technologies and non-competitive technology retirement are taken care of endogenously under this approach with no problems.
Two relevant and current policy analysis cases are used to validate and compare the strengths and limitations of the instruments presented in the thesis. An electricity demand response program is used to assess the GEMED model and the macroeconomic consequences of a green tax reform and different tax revenue allocation schemes are evaluated using the H-GEMED model.
The results and conclusions obtained from the thesis strongly advocate in favor of the developed hybrid models whenever the assessment of the energy policy requires the rich description of the electricity sector production decisions and, at the same time, the accounting for indirect effects and inter-sectorial consequences.
Citation:
R. Rodrigues (2017), Hybrid modeling for electricity policy assessments. Universidad Pontificia Comillas. Madrid (Spain).
