Modelling the Energy Sector in a Computable General Equilibrium Framework: A new approach to integrated bottom-up and top-down modelling

TY - GEN

T1 - Modelling the Energy Sector in a Computable General Equilibrium Framework

T2 - A new approach to integrated bottom-up and top-down modelling

AU - Berg, Rasmus Kehlet

AU - Eskildsen, Janek Bligaard

PY - 2019

Y1 - 2019

N2 - Transition to a society with net-zero greenhouse gas emissions requires a massive expansion of capacitybased on intermittent energy sources such as wind and solar. But how can society safeguard energysupply with increased intermittency? How large are the social costs of integrating a much highershare of intermittent renewable energy in the system likely to be? In this paper, we develop a techno-economic model of the Danish energy sector using plant-level information from the Danish energysystem model, Ramses. We formulate a new efficient integration methodology that allows for a directintegration with a larger computable general equilibrium (CGE) model. We show that our modelingapproach nests the traditional linear programming approach in bottom-up energy system models. Tofully account for intermittency in energy production, we model energy production on an hourly basis.The model also includes novel specifications of three key instruments expected to mitigate the costsof intermittency: Network capacity for trade in electricity, flexibility in short-run energy demand,and energy storage. Finally, the model is calibrated to Danish data for 2017 and as an illustrativeexample of the usefulness of our approach, we simulate the effects of increasing domestic intermittentrenewable energy production.

AB - Transition to a society with net-zero greenhouse gas emissions requires a massive expansion of capacitybased on intermittent energy sources such as wind and solar. But how can society safeguard energysupply with increased intermittency? How large are the social costs of integrating a much highershare of intermittent renewable energy in the system likely to be? In this paper, we develop a techno-economic model of the Danish energy sector using plant-level information from the Danish energysystem model, Ramses. We formulate a new efficient integration methodology that allows for a directintegration with a larger computable general equilibrium (CGE) model. We show that our modelingapproach nests the traditional linear programming approach in bottom-up energy system models. Tofully account for intermittency in energy production, we model energy production on an hourly basis.The model also includes novel specifications of three key instruments expected to mitigate the costsof intermittency: Network capacity for trade in electricity, flexibility in short-run energy demand,and energy storage. Finally, the model is calibrated to Danish data for 2017 and as an illustrativeexample of the usefulness of our approach, we simulate the effects of increasing domestic intermittentrenewable energy production.

M3 - Other contribution

ER -