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A special issue of Energies (ISSN 1996-1073). This special issue belongs to the section "C: Energy Economics and Policy".

Deadline for manuscript submissions: closed (30 April 2019) | Viewed by 55717

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Prof. Dr. Pantelis Capros

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School of Electrical and Computer Engineering, E3MLab, National Technical University of Athens, 9 Iroon Polytechniou Street, Zografou, 15773 Athens, Greece
Interests: applied economics; mathematical modelling for economic growth; energy markets and climate change
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Dear Colleagues,

Since the Paris Agreement, decarbonisation strategies have been in preparation (in the EU, this represents the forthcoming mid-century strategy). The aim is to achieve deep emission reductions in all sectors and in particular in the power and heat sectors, where the goal is to reach zero or even negative CO₂ emissions by 2050. Electricity shall become a carbon-free carrier to reduce emissions in otherwise inflexible sectors, notably in transport and heat uses. It is likely that the power sector will also produce carbon-free fuels, such as hydrogen and clean gas or liquid fuels, to replace fossils eventually. The volume of power generation may increase considerably. The dispatchable carbon-free sources, such as nuclear and carbon capture and storage, have limitations in many countries. Therefore, the challenge for the power sector is to integrate large amounts of variable renewables while preserving reliability. The challenge is technical and economic and regards both the system configuration and the organization of the markets. Highly dispersed generation, prosumers, aggregators of renewables, highly interconnected multiple-country markets, grid expansion, batteries and interplay with solar PV and electric cars, chemical storage through power-to-X, business models for producing the clean fuels, and tariff setting methods are among the relevant issues. Analyzing these issues is also a challenge for the economic-engineering modelling and the economic analysis of the transition.

Prof. Pantelis Capros
Guest Editor

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Keywords

climate-change mitigation
economic and engineering modelling of energy systems and markets

Published Papers (13 papers)

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Research

27 pages, 3844 KiB

Open AccessArticle

A Regional Economy-Energy-Transport Model of the EU for Assessing Decarbonization in Transport

by Ioannis Charalampidis, Panagiotis Karkatsoulis and Pantelis Capros

Energies 2019, 12(16), 3128; https://doi.org/10.3390/en12163128 - 15 Aug 2019

Cited by 9 | Viewed by 4706

Abstract

The EU decarbonization strategy foresees deep cuts in CO₂ in the transport sector. Investment in infrastructure, manufacturing of new technology vehicles and production of alternative fuels induce macroeconomic changes in activity and employment for both national and regional economies. The objective of the paper is to present a newly built macroeconomic-regional model (GEM-E3-R general equilibrium model for economy, energy and environment for regions) for assessing impacts of transport sector restructuring on regional economies of the entire EU, segmented following NUTS-3 (nomenclature of territorial units of statistics). The model combines general economic equilibrium theory with location choice and New Economic Geography and implements a dynamic, fully endogenous agglomeration-dispersion mechanism for people and industries coupled with a gravity model for bilateral interregional flows. A novelty of the model is a two-layers structure: (i) the country-wide layer formulated as a global multi-sector, multi-country and multi-period computable general equilibrium (CGE) model; and (ii) the regional economy layer, which simulates impacts on regional economies, while considering country-wide economic trends as boundary conditions. The paper presents a use of the model in the assessment of regional economic effects of electrification of car mobility in Europe and wide use of domestically produced advanced biofuels. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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28 pages, 1894 KiB

Open AccessArticle

Modelling the EU Internal Electricity Market: The PRIMES-IEM Model

by Maria Kannavou, Marilena Zampara and Pantelis Capros

Energies 2019, 12(15), 2887; https://doi.org/10.3390/en12152887 - 26 Jul 2019

Cited by 13 | Viewed by 3644

Abstract

The paper presents a newly built model used to simulate the European Union (EU) internal electricity market and assess market reform policies. The model performs an hourly simulation of all stages of the wholesale markets at a Pan-European scale, covering the sequence of day-ahead, intra-day, and balancing/reserve auctions. The model includes market coupling in all market stages, estimates scarcity bidding by generators endogenously, and determines electricity trade as a flow-based allocation of interconnections via the market auctions implicitly. The model solves a unit-commitment program, formulated as a mixed-integer optimisation problem, under demand and generation constraints, interconnection possibilities, technical restrictions of the cyclic operation of power plants, and the provision of ancillary services. The novelty of this approach is the inclusion of distortions in all stages of the markets to evaluate the impacts of their removal, and the operation of the markets in a segmented versus an integrated manner in the EU. The model calculates revenues and costs per power plant in the EU on a country basis and the value of cross-border flows. The model evaluated market reform measures, including the abolishment of priority dispatch of renewable energy plants, the establishment of flow-based allocation of interconnectors without NTC limitations, the activation of demand response, and the market coupling in intra-day markets. The model application has been in the context of the electricity market design initiative included in the “Clean Energy for all Europeans” policy package proposed by the European Commission in 2016. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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24 pages, 3493 KiB

Open AccessArticle

Exploring Low-Carbon Futures: A Web Service Approach to Linking Diverse Climate-Energy-Economy Models

by Getachew F. Belete, Alexey Voinov, Iñaki Arto, Kishore Dhavala, Tatyana Bulavskaya, Leila Niamir, Saeed Moghayer and Tatiana Filatova

Energies 2019, 12(15), 2880; https://doi.org/10.3390/en12152880 - 26 Jul 2019

Cited by 9 | Viewed by 4732

Abstract

The use of simulation models is essential when exploring transitions to low-carbon futures and climate change mitigation and adaptation policies. There are many models developed to understand socio-environmental processes and interactions, and analyze alternative scenarios, but hardly one single model can serve all the needs. There is much expectation in climate-energy research that constructing new purposeful models out of existing models used as building blocks can meet particular needs of research and policy analysis. Integration of existing models, however, implies sophisticated coordination of inputs and outputs across different scales, definitions, data and software. This paper presents an online integration platform which links various independent models to enhance their scope and functionality. We illustrate the functionality of this web platform using several simulation models developed as standalone tools for analyzing energy, climate and economy dynamics. The models differ in levels of complexity, assumptions, modeling paradigms and programming languages, and operate at different temporal and spatial scales, from individual to global. To illustrate the integration process and the internal details of our integration framework we link an Integrated Assessment Model (GCAM), a Computable General Equilibrium model (EXIOMOD), and an Agent Based Model (BENCH). This toolkit is generic for similar integrated modeling studies. It still requires extensive pre-integration assessment to identify the ‘appropriate’ models and links between them. After that, using the web service approach we can streamline module coupling, enabling interoperability between different systems and providing open access to information for a wider community of users. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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15 pages, 3003 KiB

Open AccessArticle

Assessment of Renewable Energy Deployment Roadmaps

by Ignacio Mauleón

Energies 2019, 12(15), 2875; https://doi.org/10.3390/en12152875 - 26 Jul 2019

Cited by 3 | Viewed by 2411

Abstract

This research implements a methodology to the joint assessment of the photovoltaic and onshore wind investment roadmaps put forward by the main institutions in the field, International Renewable Energy Association (Irena) and the International Energy Agency, to achieve a low carbon emissions economy with near zero net greenhouse gases emissions. The two energies taken together account for over 80% of the renewable energy deployments envisaged by both roadmaps. The assessment is conducted according to economic criteria (the levelized cost of energy, capital requirements and financial risks), and environmental (carbon avoided, its value, and its cost). Given the recent Intergovernmental Panel on Climate Change (IPCC) report on the urgency to tackle climate change, accelerated deployments of the roadmaps are assessed as well. Overall, it is found that the roadmaps are financially sound, even under an accelerated scenario. Possible limits to the deployment of renewable energies roadmaps derived from the availability of raw materials and other constraints are also discussed, showing likely constraints for lithium batteries but not for photovoltaic and wind energies. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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17 pages, 771 KiB

Open AccessArticle

A Structural Decomposition Analysis of China’s Consumption-Based Greenhouse Gas Emissions

by Haidi Gao, Alun Gu, Gehua Wang and Fei Teng

Energies 2019, 12(15), 2843; https://doi.org/10.3390/en12152843 - 24 Jul 2019

Cited by 10 | Viewed by 3491

Abstract

The trends of consumption-based emissions in China have a major impact on global greenhouse gas (GHG) emissions. Previous studies have only focused on China’s energy-related consumption-based emissions of CO₂ or specific non-CO₂ GHGs without taking overall consumption-based non-CO₂ GHG emissions into account. Based on a constructed global non-CO₂ GHG emissions database, combined with CO₂ emissions data, this paper fills this gap through an examination and analysis of China’s GHG emissions using a global multi-regional input–output (MRIO) model for 2004, 2007 and 2011, and identifies the major factors driving changes in consumption-based emissions through a structural decomposition analysis (SDA). The results show that compared with CO₂ emissions, CH₄, N₂O and F-gases emissions all increased more rapidly. Among consumption-based non-CO₂ GHG emissions, investment-based emissions experienced the fastest growth, but the net exports of non-CO₂ GHG emissions dropped drastically in recent years. While investment in total final consumption demand is the most influential factor for CO₂ emissions, household consumption most significantly affects the growth in consumption-based non-CO₂ GHG emissions. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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28 pages, 1447 KiB

Open AccessArticle

Economic-Engineering Modelling of the Buildings Sector to Study the Transition towards Deep Decarbonisation in the EU

by Theofano Fotiou, Alessia de Vita and Pantelis Capros

Energies 2019, 12(14), 2745; https://doi.org/10.3390/en12142745 - 17 Jul 2019

Cited by 17 | Viewed by 3310

Abstract

The paper presents a newly developed economic-engineering model of the buildings sector and its implementation for all the European Union (EU) Member States (MS), designed to study in detail ambitious energy efficiency strategies and policies, in the context of deep decarbonisation in the long term. The model has been used to support the impact assessment study that accompanied the European Commission’s communication “A Clear Planet for All”, in November 2018. The model covers all EU countries with a fine resolution of building types, and represents agent decision-making in a complex and dynamic economic-engineering mathematical framework. Emphasis is given to behaviours driving the energy renovation of buildings and the ensuing choice of equipment for heating and cooling. The model represents several market and non-market policies that can influence energy decisions in buildings and promote deep energy renovation. Moreover, the paper presents key applications for supporting policies targeting ambitious reduction of energy consumption and carbon emissions in buildings across Europe. The results illustrate that the achievement of ambitious energy-efficiency targets in the long-term heavily depends on pursuing a fast and extensive renovation of existing buildings, at annual rates between 1.21% and 1.77% for the residential sector and between 0.92% to 1.35% for the services sector. In both cases, the renovation rates are far higher past trends. Strong policies aimed at removing non-market barriers are deemed necessary. Electrification constitutes a reasonable choice for deeply renovated buildings and, as a result, almost 50% of households chooses electric heating over gas heating in the long term. However, heat pumps need to exploit further their learning potential to be economical and implementable for the various climatic conditions in Europe. The results also show that the cost impacts are modest even if renovation and decarbonisation in buildings develop ambitiously in the EU. The reduced energy bills due to energy savings can almost offset the increasing capital expenditures. Fundraising difficulties and the cost of capital are, however, of concern. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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25 pages, 2641 KiB

Open AccessFeature PaperEditor’s ChoiceArticle

Factors Influencing Electric Vehicle Penetration in the EU by 2030: A Model-Based Policy Assessment

by Stergios Statharas, Yannis Moysoglou, Pelopidas Siskos, Georgios Zazias and Pantelis Capros

Energies 2019, 12(14), 2739; https://doi.org/10.3390/en12142739 - 17 Jul 2019

Cited by 47 | Viewed by 7714

Abstract

The European Commission (EC) has set ambitious CO₂ emission reduction objectives for the transport sector by 2050. In this context, most decarbonisation scenarios for transport foresee large market penetration of electric vehicles in 2030 and 2050. The emergence of electrified car mobility is, however, uncertain due to various barriers such as battery costs, range anxiety and dependence on battery recharging networks. Those barriers need to be addressed in the 2020–2030 decade, as this is key to achieving electrification at a large scale in the longer term. The paper explores the uncertainties prevailing in the first decade and the mix of policies to overcome the barriers by quantifying a series of sensitivity analysis scenarios of the evolution of the car markets in the EU Member States and the impacts of each barrier individually. The model used is PRIMES-TREMOVE, which has been developed by E3MLab and constitutes a detailed energy-economic model for the transport sector. Based on model results, the paper assesses the market, energy, emission and cost impacts of various CO₂ car standards, infrastructure development plans with different geographic coverage and a range of battery cost reductions driven by learning and mass industrial production. The assessment draws on the comparison of 29 sensitivity scenarios for the EU, which show that removing the barriers in the decade 2020–2030 is important for electrification emergence. The results show that difficult policy dilemmas exist between adopting stringent standards and infrastructure of wide coverage to push technology and market development and adverse effects on costs, in case the high cost of batteries persists. However, if the pace of battery cost reductions is fast, a weak policy for standards and infrastructure is not cost-effective and sub-optimal. These policies are shown to have impacts on the competition between pure electric and plug-in hybrid vehicles. Drivers that facilitate electrification also favour the uptake of the former technology, the latter being a reasonable choice only in case the barriers persist and obstruct electrification. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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24 pages, 317 KiB

Open AccessArticle

Energy System Modelling of Carbon-Neutral Hydrogen as an Enabler of Sectoral Integration within a Decarbonization Pathway

by Stavroula Evangelopoulou, Alessia De Vita, Georgios Zazias and Pantelis Capros

Energies 2019, 12(13), 2551; https://doi.org/10.3390/en12132551 - 02 Jul 2019

Cited by 33 | Viewed by 5811

Abstract

This paper explores the alternative roles hydrogen can play in the future European Union (EU) energy system, within the transition towards a carbon-neutral EU economy by 2050, following the latest policy developments after the COP21 agreement in Paris in 2015. Hydrogen could serve as an end-use fuel, a feedstock to produce carbon-neutral hydrocarbons and a carrier of chemical storage of electricity. We apply a model-based energy system analysis to assess the advantages and drawbacks of these three roles of hydrogen in a decarbonized energy system. To this end, the paper quantifies projections of the energy system using an enhanced version of the PRIMES energy system model, up to 2050, to explore the best elements of each role under various assumptions about deployment and maturity of hydrogen-related technologies. Hydrogen is an enabler of sectoral integration of supply and demand of energy, and hence an important pillar in the carbon-neutral energy system. The results show that the energy system has benefits both in terms of CO₂ emission reductions and total system costs if hydrogen technology reaches high technology readiness levels and economies of scale. Reaching maturity requires a significant investment, which depends on the positive anticipation of market development. The choice of policy options facilitating visibility by investors is the focus of the modelling in this paper. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

33 pages, 5544 KiB

Open AccessArticle

Long-Term Solar Photovoltaics Penetration in Single- and Two-Family Houses in Switzerland

by Evangelos Panos and Stavroula Margelou

Energies 2019, 12(13), 2460; https://doi.org/10.3390/en12132460 - 26 Jun 2019

Cited by 16 | Viewed by 3699

Abstract

The Swiss energy strategy aims at increasing electricity generation from solar power by 2050, to fulfil Switzerland’s commitments in the Paris Agreement. However, the market of single- and two-family houses is characterized by low return rates for excess power injected to the grid, and the installation of rooftop solar photovoltaic (PV) is sensitive to financial incentives. We assess the drivers influencing the diffusion of rooftop solar PV systems until 2050, by employing an agent-based model. An agent is a single- or two-family house, and its decision to invest depends on the economic profitability of the investment, the agent’s income, environmental benefits (injunctive social norm), awareness and knowledge about the solar PV technology, and the impact of the social network (descriptive social norm). The model includes a synthetic population of agents, statistically equivalent to the true population. We also investigate the impact of different support policies, technology learning rates, electricity prices, and discount rates on the investment decision. We find that the concept of prosumer emerges, mainly via self-consumption strategies. The diffusion process of rooftop solar PV systems in single- and two-family houses gains momentum in the future. In the near-term, PV deployment is sensitive to the profitability of the investment, while after the year 2030, peer effects play an increasing role in the agents’ investment decisions. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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18 pages, 1658 KiB

Open AccessArticle

Multi-Footprint Constrained Energy Sector Planning

by Jui-Yuan Lee and Han-Fu Lin

Energies 2019, 12(12), 2329; https://doi.org/10.3390/en12122329 - 18 Jun 2019

Cited by 9 | Viewed by 2656

Abstract

Fossil fuels have been heavily exploited since the Industrial Revolution. The resulting carbon emissions are widely regarded as being the main cause of global warming and climate change. Key mitigation technologies for reducing carbon emissions include carbon capture and storage (CCS) and renewables. According to recent analysis of the International Energy Agency, renewables and CCS will contribute more than 50% of the cumulative emissions reductions by 2050. This paper presents a new mathematical programming model for multi-footprint energy sector planning with CCS and renewables deployment. The model is generic and considers a variety of carbon capture (CC) options for the retrofit of individual thermal power generation units. For comprehensive planning, the Integrated Environmental Control Model is employed in this work to assess the performance and costs of different types of power generation units before and after CC retrofits. A case study of Taiwan’s energy sector is presented to demonstrate the use of the proposed model for complex decision-making and cost trade-offs in the deployment of CC technologies and additional low-carbon energy sources. Different scenarios are analysed, and the results are compared to identify the optimal strategy for the energy mix to satisfy the electricity demand and the various planning constraints. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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24 pages, 1432 KiB

Open AccessArticle

The Possible Role of Modular Nuclear Reactors in District Heating: Case Helsinki Region

by Konsta Värri and Sanna Syri

Energies 2019, 12(11), 2195; https://doi.org/10.3390/en12112195 - 10 Jun 2019

Cited by 18 | Viewed by 5210

Abstract

To answer the challenges presented by climate change, all aspects of our energy systems have to carry out a rapid transition towards decarbonisation. This is especially true for the European heating sector that still relies heavily on fossil fuels. District heating systems have been traditionally praised for their efficiency, but replacing old fossil fuel based combined heat and power (CHP) plants is an ongoing challenge, and also the sustainability of biomass as a large-scale option can be considered questionable. Small modular nuclear reactors are one of the potential sources of future CO₂-free district heat production. We evaluate the suitability and cost-effectiveness of these plants for district heating through literature review and scenario modelling. The technical aspects of small modular reactors seem promising but there is still a significant amount of uncertainty around both their costs and deployability. The scenario modelling assesses the investment in 300 MW_dh of new district heating capacity in the Helsinki Metropolitan area in 2030 either as a CHP plant or as a heat-only boiler. The results indicate that a modular nuclear heat-only boiler could be profitable, while profitable investment in a modular nuclear CHP plant relies heavily on future electricity market price levels. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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20 pages, 1989 KiB

Open AccessArticle

On the Influence of Renewable Energy Sources in Electricity Price Forecasting in the Iberian Market

by Diego Aineto, Javier Iranzo-Sánchez, Lenin G. Lemus-Zúñiga, Eva Onaindia and Javier F. Urchueguía

Energies 2019, 12(11), 2082; https://doi.org/10.3390/en12112082 - 31 May 2019

Cited by 14 | Viewed by 3216

Abstract

The mainstream of EU policies is heading towards the conversion of the nowadays electricity consumer into the future electricity prosumer (producer and consumer) in markets in which the production of electricity will be more local, renewable and economically efficient. One key component of a local short-term and medium-term planning tool to enable actors to efficiently interact in the electric pool markets is the ability to predict and decide on forecast prices. Given the progressively more important role of renewable production in local markets, we analyze the influence of renewable energy production on the electricity price in the Iberian market through historical records. The dependencies discovered in this analysis will serve to identify the forecasts to use as explanatory variables for an electricity price forecasting model based on recurrent neural networks. The results will show the wide impact of using forecasted renewable energy production in the price forecasting. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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13 pages, 746 KiB

Open AccessArticle

Data-Driven Natural Gas Spot Price Forecasting with Least Squares Regression Boosting Algorithm

by Moting Su, Zongyi Zhang, Ye Zhu and Donglan Zha

Energies 2019, 12(6), 1094; https://doi.org/10.3390/en12061094 - 21 Mar 2019

Cited by 44 | Viewed by 4530

Abstract

Natural gas is often described as the cleanest fossil fuel. The consumption of natural gas is increasing rapidly. Accurate prediction of natural gas spot prices would significantly benefit energy management, economic development, and environmental conservation. In this study, the least squares regression boosting (LSBoost) algorithm was used for forecasting natural gas spot prices. LSBoost can fit regression ensembles well by minimizing the mean squared error. Henry Hub natural gas spot prices were investigated, and a wide range of time series from January 2001 to December 2017 was selected. The LSBoost method is adopted to analyze data series at daily, weekly and monthly. An empirical study verified that the proposed prediction model has a high degree of fitting. Compared with some existing approaches such as linear regression, linear support vector machine (SVM), quadratic SVM, and cubic SVM, the proposed LSBoost-based model showed better performance such as a higher R-square and lower mean absolute error, mean square error, and root-mean-square error. Full article

(This article belongs to the Special Issue Climate Changes and Energy Markets)

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