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Economic Disruptions in Long-Term Energy Scenarios – Implications for Designing Energy Policy

Author

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  • Govorukha, Kristina
  • Mayer, Philip
  • Rübbelke, Dirk
  • Vögele, Stefan

Abstract

The main drivers of transformation processes of electricity markets stem from climate policies and changing economic environments. In order to analyse the respective developments, modelling approaches regularly rely on multiple structural and parametric simplifications. For example, discontinuities in economic development (recessions and booms) are frequently disregarded. Distorting effects that are caused by such simplifications tend to scale up with an extension of the time horizon of the analysis and can significantly affect the accuracy of long-term projections. In this study, we include information on economic discontinuities and elaborate on their influences on short-and long-term modelling outcomes. Based on historical data, we identify the impact of a high-amplitude change in economic parameters and examine its cumulative effect on the German electricity market by applying a techno-economic electricity market model for the period from 2005 to 2014. Similar changes may consistently occur in the future and we expect that a more comprehensive understanding of their effects on long-term scenarios will increase the validity of long-term models. Results indicate that policy decision making based on modelling frameworks can benefit from a comprehensive understanding of the underlying simplifications of most scenario studies.

Suggested Citation

  • Govorukha, Kristina & Mayer, Philip & Rübbelke, Dirk & Vögele, Stefan, "undated". "Economic Disruptions in Long-Term Energy Scenarios – Implications for Designing Energy Policy," FEP: Future Energy Program 291802, Fondazione Eni Enrico Mattei (FEEM) > FEP: Future Energy Program.
    • Handle: RePEc:ags:feemfe:291802
    DOI: 10.22004/ag.econ.291802
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    2. Ren, Bo & Li, Huajiao & Shi, Jianglan & Ma, Ning & Qi, Yajie, 2022. "Detecting the control and dependence relationships within the global embodied energy trade network," Energy, Elsevier, vol. 238(PB).
    3. Süsser, Diana & Gaschnig, Hannes & Ceglarz, Andrzej & Stavrakas, Vassilis & Flamos, Alexandros & Lilliestam, Johan, 2022. "Better suited or just more complex? On the fit between user needs and modeller-driven improvements of energy system models," Energy, Elsevier, vol. 239(PB).
    4. Leonard Goke & Jens Weibezahn & Christian von Hirschhausen, 2021. "A collective blueprint, not a crystal ball: How expectations and participation shape long-term energy scenarios," Papers 2112.04821, arXiv.org, revised Dec 2022.
    5. Olave-Rojas, David & Álvarez-Miranda, Eduardo, 2021. "Towards a complex investment evaluation framework for renewable energy systems: A 2-level heuristic approach," Energy, Elsevier, vol. 228(C).
    6. Koščak Kolin, Sonja & Karasalihović Sedlar, Daria & Kurevija, Tomislav, 2021. "Relationship between electricity and economic growth for long-term periods: New possibilities for energy prediction," Energy, Elsevier, vol. 228(C).
    7. Kristina Govorukha & Philip Mayer & Dirk Rübbelke, 2023. "The landscape of European policies in the power sector: first-mover advantages," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 28(8), pages 1-25, December.

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    Keywords

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    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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