Opening the black box of energy modelling: Strategies and lessons learned

The global energy system is undergoing a major transition, and in energy planning and decision-making across governments, industry and academia, models play a crucial role. Because of their policy relevance and contested nature, the transparency and open availability of energy models and data are of particular importance. Here we provide a practical how-to guide based on the collective experience of members of the Open Energy Modelling Initiative (Openmod). We discuss key steps to consider when opening code and data, including determining intellectual property ownership, choosing a licence and appropriate modelling languages, distributing code and data, and providing support and building communities. After illustrating these decisions with examples and lessons learned from the community, we conclude that even though individual researchers' choices are important, institutional changes are still also necessary for more openness and transparency in energy research

Opening the black box of energy modelling: Strategies and lessons learned

The global energy system is undergoing a major transition, and in energy planning and decision-making across governments, industry and academia, models play a crucial role. Because of their policy relevance and contested nature, the transparency and open availability of energy models and data are of particular importance. Here we provide a practical how-to guide based on the collective experience of members of the Open Energy Modelling Initiative (Openmod). We discuss key steps to consider when opening code and data, including determining intellectual property ownership, choosing a licence and appropriate modelling languages, distributing code and data, and providing support and building communities. After illustrating these decisions with examples and lessons learned from the community, we conclude that even though individual researchers' choices are important, institutional changes are still also necessary for more openness and transparency in energy research

The market (in-)stability reserve for EU carbon emission trading: Why it might fail and how to improve it

The EU parliament has accepted a proposal of the EU commission on the backloading of EU emission allowances (EUA), where the auctioning of EUAs is postponed to future time periods. The EU commission has also proposed a market stability reserve (MSR), which is a quantity-based stabilisation policy that is aimed at controlling the volume of EUAs in circulation. Using an agent-based electricity market simulation with endogenous investment and a CO2 market (including banking), we analyse the backloading reform and the proposed MSR. We find backloading to only have a short-term impact of CO2 prices; regardless, there is a significant risk of high CO2 prices and volatility in the EU ETS. Our simulations indicate that the triggers of the proposed MSR appear to be set too low for the hedging need of power producers, effectively leading to a stricter cap in its initial 10–15 years of operation. While the current proposal may be improved by choosing different triggers, a reserve that is based on volume triggers is likely to increase price volatility, contrary to its purpose. Additional problems are the two-year delay in the response time and the abruptness of the response function, combined with the difficulty of estimating future hedging behaviour.Engineering, Systems and ServicesTechnology, Policy and Managemen

Adjusting the CO2 cap to subsidised RES generation: Can CO2 prices be decoupled from renewable policy?

The low prices in the European Emission Trading System (EU ETS) have triggered discussions of various possible reforms. One option is to decouple the CO 2 prices from renewable energy policy by adjusting the emission cap to renewable energy investment overshoots. We introduce two ways of reducing the CO 2 cap in response to overshoots of renewable policy investment over previously announced targets. We investigate these options with the agent-based model EMLab-generation. We find that both policy implementations are successful in restoring prices. They also ensure that making public investments that exceed policy targets contribute to carbon emission reduction, and that renewable policy does not benefit the most emission-intensive power plants. However, neither policy is suitable for achieving specifc levels of prices or price volatility.Engineering Systems and ServicesTechnology, Policy and Managemen

Cross-border electricity market effects due to price caps in an emission trading system: An agent-based approach

The recent low CO2 prices in the European Union Emission Trading Scheme (EU ETS) have triggered a discussion whether the EU ETS needs to be adjusted. We study the effects of CO2 price floors and a price ceiling on the dynamic investment pathway of two interlinked electricity markets (loosely based on Great Britain, which already has introduced a price floor, and on Central Western Europe). Using an agent-based electricity market simulation with endogenous investment and a CO2 market (including banking), we analyse the cross-border effects of national policies as well as system-wide policy options. A common, moderate CO2 auction reserve price results in a more continuous decarbonisation pathway. This reduces CO2 price volatility and the occurrence of carbon shortage price periods, as well as the average cost to consumers. A price ceiling can shield consumers from extreme price shocks. These price restrictions do not cause a large risk of an overall emissions overshoot in the long run. A national price floor lowers the cost to consumers in the other zone; the larger the zone with the price floor, the stronger the effect. Price floors that are too high lead to inefficiencies in investment choices and to higher consumer costs.Engineering, Systems and ServicesTechnology, Policy and Managemen

Understanding power plant investment decision processes

In order to understand how companies make investment decisions under conditions of deep uncertainty, we interviewed a number of actors in the Dutch electricity sector. Most of the economic literature that is devoted to this question is prescriptive in nature, describing rational methods to the investment decision process (such as real options and portfolio analyses). While these analysis tools play a role in the investment decision, the actual process is much more complicated. The reason is that the investor never has all the information that he would need to make a rational decision. Our research shows that the investment process is guided by a set of satisficing goals, rather than profit maximization; a multi-stage project management approach is used to cope with the lack of information; and the resources for information processing limit the scope of the analysis. We find several differences between companies in their decision making process and goals. These are a consequence of company characteristics such as the company size, ownership, vertical integration and geographic focus. The chosen electricity generation technology and inter-organizational dynamics also affect the investment process.Engineering, Systems and ServicesTechnology, Policy and Managemen

The Stability Reserve in EU Carbon Emission Trading: Does it Deliver What it Promises?

In recent years the Europe Unions emission trading system (EU ETS) has experienced very low prices. This has triggered a political discussion about stabilising the EU ETS and improving incentives for investing in CO2 abatement. As a result of this discussion, the EU parliament accepted a proposal of the EU commission on the backloading of EU emission allowances (EUA), where the auctioning of EUAs is postponed to future time periods. Secondly the EU commission proposed a market stability reserve (MSR), which is a quantity based stabilisation policy, triggered by the amount of EUAs in circulation. Both policy measures together mark a significant change of the EU ETS policy framework. Using an agent-based electricity market simulation with endogenous investment and a CO2 market (including banking), we analyse the backloading reform and the proposed market stability reserve. We find backloading to have a short-term impact of CO2 prices; however, with and without backloading the EU ETS shows a risk of high CO2 prices and volatility. The market stability might act counter to its objectives: we found it to create a scarcity of credits and following this a high risk of CO2 price shocks and CO2 price volatility. This is because the target corridor for banking of the MSR is set below the hedging need of power producers.Engineering, Systems and ServicesTechnology, Policy and Managemen

Impacts of the introduction of CO2 price floors in a two-country electricity maket model

The recent low of CO2 prices in the European Union Emission Trading Scheme have triggered a renewed discussion, whether the introduction of a CO2 price oor would lower investor uncertainty and thus trigger more investment in low-carbon electricity generation. We compare the effects of a CO2 price floor on the dynamic investment pathway of an interlinked two country electricity system with a common CO2 emissiontrading scheme using a long-term focused agent-based model. Four cases are distinguished: No CO2 price floor, a CO2 price floor unilaterally levied as a complimentary variable tax on production in only one country and a common CO2 price floor in two countries. Preliminary results indicate that while a national price floor reduces price variance in the introducing country, the overall CO2 price variance increases. A common CO2 price oor was found to decrease overall price variance.Infrastructures, Systems and ServicesTechnology, Policy and Managemen

The effectiveness of a strategic reserve in the presence of a high portfolio share of renewable energy sources

To ensure sufficient investment in electricity generation capacity, mechanisms such as strategic reserves are being considered or already implemented. We analyze the effectiveness of a strategic reserve in the presence of a growing portfolio share of renewable energy sources (RES) with EMLab-Generation, an agent-based electricity market model. A strategic reserve can stabilize investment, but within limits. Uncertainty regarding future demand may cause the market to become instable, potentially leading to periods with very high electricity prices. In the presence of a large share of variable renewable energy sources, the reserve design should be adjusted or replaced by an alternative capacity mechanism.Energy & Industr

Renewable Energy for Electric Vehicles: Price Based Charging Coordination

In this paper we investigate the charging coordination of battery electric vehicles (BEV) with respect to the availability of intermittent renewable energy generation considering individual real world driving profiles in a deterministic simulation based analysis, mapping a part of the German power system in 2009. We propose a price based charging approach, initiated by an aggregator, which combines numerous BEVs in his fleet in order to optimize the utilization of energy from renewable sources, here wind and solar, thus offering a renewable tariff to consumers. Our results show that a price mechanism based on the availability of renewable energy and the charging availability of the BEVs combined with a voluntary reduction of the individual charging power to 1 kW, can increase the share of renewable energy charged in a year from 53 % to 75 % as compared to no charging coordination under similar conditions. An additional average cost evaluation of the proposed renewable energy tariff shows that wind power can be competitive with conventional sources at the end consumer level, while enabling considerable carbon emission reductions.Infrastructures, Systems and ServicesTechnology, Policy and Managemen