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Moving forward blindly: Uncertainty, reliability, and the energy transition

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  • Bassière, Alicia
  • Benatia, David

Abstract

Despite profound uncertainties surrounding the energy transition, policymakers often rely on deterministic scenarios about future demand and supply conditions. This paper evaluates the consequences of such deterministic approaches for power sector decarbonization, highlighting hidden trade-offs between short-term capacity investment and future demand rationing. We develop a generation expansion model calibrated for Germany to examine various policy scenarios through 2040. Our findings indicate that deterministic planning can substantially underestimate the true costs of the decarbonization, exacerbate reliability risks, and jeopardize environmental targets. However, with the right environmental policies, even deterministic planning can provide a reliable path to a resilient, equitable, and sustainable energy future.

Suggested Citation

  • Bassière, Alicia & Benatia, David, 2025. "Moving forward blindly: Uncertainty, reliability, and the energy transition," Energy Economics, Elsevier, vol. 151(C).
    • Handle: RePEc:eee:eneeco:v:151:y:2025:i:c:s0140988325007108
    DOI: 10.1016/j.eneco.2025.108883
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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting

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