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IntERACT
- An Integrated Energy and Economic Model
Mr.Asbjørn Hegelund,Advisor,DanishEnergyAgency,azh@ens.dk
18 June 2019E...
Motivation
18 June 2019ETSAP Workshop  Summer 2019  Paris 2
Economists:
”Uniform CO2-price across sectors and countries!”
...
Model concept
18 June 2019 3
General Equilibrium
Feedback
Technological
Explicitness
Behavioural
Realism
TIMES-DK
CGE
TIME...
What’s included?
18 June 2019 4
TIMES-DK
Energy
System
Model
General
Equilibrium
Model
Change in demand for
energy service...
Application of IntERACT
18 June 2019ETSAP Workshop  Summer 2019  Paris 5
• Danish Energy Outlook
• Frozen policy scenario
...
Controlling the model
18 June 2019ETSAP Workshop  Summer 2019  Paris 6
Linear modelling  Winner takes all!
Different appr...
Distributed technologies
18 June 2019ETSAP Workshop  Summer 2019  Paris 7
Modelling energy efficiency policies
18 June 2019ETSAP Workshop  Summer 2019  Paris 8
• Households largely fail to adopt e...
What is the effect of the link?
18 June 2019ETSAP Workshop  Summer 2019  Paris 9
0
5
10
15
20
25
30
High temp. Heat
Servic...
Economy effect of CCS policy
18 June 2019ETSAP Workshop  Summer 2019  Paris 10
• The coal CCS policy reduces domestic prod...
Thank you for your attention
Learn more:
https://ens.dk/en/our-services/projections-and-models/models/documentation-intera...
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IntERACT - An Integrated Energy and Economic Model

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IntERACT - An Integrated Energy and Economic Model

  1. 1. IntERACT - An Integrated Energy and Economic Model Mr.Asbjørn Hegelund,Advisor,DanishEnergyAgency,azh@ens.dk 18 June 2019ETSAP Workshop Summer 2019 Paris 1
  2. 2. Motivation 18 June 2019ETSAP Workshop Summer 2019 Paris 2 Economists: ”Uniform CO2-price across sectors and countries!” Engineers: ”Design the optimal system!” Academic research: ”We provide insights…” Policymakers: ”We want to ban this technology by year 2035, what is the exact impact?” GAPGAP !
  3. 3. Model concept 18 June 2019 3 General Equilibrium Feedback Technological Explicitness Behavioural Realism TIMES-DK CGE TIMES-DK Energy System Model General Equilibrium Model Change in demand for energy services Price of energy services Energy subsidies and taxes Change in capital intensity ETSAP Workshop Summer 2019 Paris
  4. 4. What’s included? 18 June 2019 4 TIMES-DK Energy System Model General Equilibrium Model Change in demand for energy services Price of energy services Energy subsidies and taxes Change in capital intensity ETSAP Workshop Summer 2019 Paris CGE model • 18 economic sectors • One household • Government • Foreign trade Soft-link • 10 Economic sectors • Power and district heating sector • Residential sector TIMES-DK • Optimizes Danish energy system towards 2050 • 10 Economic sectors • Power and district heat sector • Residential sector • Transport sector • Electricity exchange with neighbouring countries • 32 time slices Andersen, Kristoffer S. et al. Energy, 2019, 169: 277-293.
  5. 5. Application of IntERACT 18 June 2019ETSAP Workshop Summer 2019 Paris 5 • Danish Energy Outlook • Frozen policy scenario • Analysis Assumptions for Energinet (TSO) • Best estimate for future energy system • Energy agreement 2021-2030 • Assessment of policy changes
  6. 6. Controlling the model 18 June 2019ETSAP Workshop Summer 2019 Paris 6 Linear modelling  Winner takes all! Different approaches: • Growth limitations • Share constraints • Technical limitations (e.g. direct firing for industrial processes) • Distributed technologies Variations over price, efficiency etc. • Hurdle rate for energy efficiency 0% 5% 10% 15% 20% 25% 30% 35% 40% 2015 2020 2025 2030 2035 2040 Shareoffuelinenergyservice Illustration of share and fuel growth constraints Upper share Lower share Upper fuel growth in given year Lower fuel growth in given year
  7. 7. Distributed technologies 18 June 2019ETSAP Workshop Summer 2019 Paris 7
  8. 8. Modelling energy efficiency policies 18 June 2019ETSAP Workshop Summer 2019 Paris 8 • Households largely fail to adopt energy efficiency investments that are cost-effective under market conditions! • Hurdle rate to cover many different risks/barriers, to catch real-world behavior. • So what happens if we change the substitution parameter in the CGE model? Example 1
  9. 9. What is the effect of the link? 18 June 2019ETSAP Workshop Summer 2019 Paris 9 0 5 10 15 20 25 30 High temp. Heat Service Medium temp. Heat Service Room Heat Electrical Motors Fork Lifts Services Lighting and IT 2012-€/GJ Baseline CCS Policy Effect on energy service prices by 2035 Policymakers: ”Cement production must use CCS to limit CO2 emissions!” Example 2
  10. 10. Economy effect of CCS policy 18 June 2019ETSAP Workshop Summer 2019 Paris 10 • The coal CCS policy reduces domestic production from the cement sector by €357 million in 2035, whereas net import increases by €316 million. • This suggest a carbon leakage of around 88 percent. It may be higher or lower depending on the CO2 emission associated with foreign concrete production. • So now the policymaker can make an informed decision. -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% Wholesale and retail Water and air transport Trains, buses and taxis Public services industries Private service industries Other utilities Other commodity production Motor vehicles - purchase and repair Metals, machinery and transport equipment Gas manufacturing and distribution Food Extraction of oil and gas Electricity and district heating Construction Chemical Concrete Agriculture Relative change in sectoral activity relative to baseline across the 20 sectors in the CGE model Policymakers: ”Thank you IntERACT!” Example 2
  11. 11. Thank you for your attention Learn more: https://ens.dk/en/our-services/projections-and-models/models/documentation-interact 18 June 2019ETSAP Workshop Summer 2019 Paris 11

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