Pradyumna C. Bhagwat

Simulating climate and energy policy with agent-based modelling: The Energy Modelling Laboratory (EMLab)

We present an approach to simulate climate and energy policy for the EU, using a flexible and modular agent-based modelling approach and a toolbox, called the Energy Modelling Laboratory (EMLab). The paper shortly reviews core challenges and approaches for modelling climate and energy policy in light of the energy transition. Afterwards, we present an agent-based model of investment in power generation that has addressed a variety of European energy policy questions. We describe the development of a flexible model core as well as modules on carbon and renewables policies, capacity mechanisms, investment behaviour and representation of intermittent renewables. We present an overview of modelling results, ongoing projects, a case study on current reforms of the EU ETS, and we show their relevance in the EU context.

Cross-border effects of capacity mechanisms

This paper uses an agent-based model of interconnected electricity market to analyze the cross-border impact of a capacity market and a strategic reserve on consumer costs and on investment in generation capacity in the affected markets. We find that both capacity mechanisms can improve investment signals and cause positive cross border effects. The interconnected energy-only market could free ride on the additional capacity and may deter investment in this market. If a capacity market and a strategic reserve are implemented in neighboring regions, there appears to be a negative spillover effect on the strategic reserve due to the capacity market.

The effect of German strategic reserves on the central European electricity market

The increase in intermittent electricity generation is increasing investment risk in the electricity market. A capacity mechanism can contribute to security of supply. Germany is considering an expansion of its small strategic reserve in the south. In this paper the effects of deploying a strategic reserve in the German market are modelled to analyse (1) the leakage of the effectiveness of a strategic reserves to neighbouring countries; and (2) the effect of a strategic reserve on investment behaviour. We conclude that in Germany, a strategic reserve can be an effective capacity mechanism.