SlideShare a Scribd company logo
1 of 20
Download to read offline
Simulating investment decision making
in the power sector under imperfect
foresight
Kris Poncelet
69th Semi-annual ETSAP Meeting
University College Cork
Cork, Ireland
22016-06-01
Reduce computational
complexity
Allows to increase level
of detail
Trade-off LT time
horizon versus level of
ST detail
Either optimization or
simulation paradigm
Capture imperfect
foresight and short-
term focus of decision
makers
More realistic decision
making?
Simulation paradigm
Myopic optimization: limited window of foresight
32016-06-01
Complementing optimization models
Optimization: what is the cost-optimal transition
pathway?
Simulation: which policies are needed to realize this
transition?
Assess effectiveness and efficiency of policies
42016-06-01
Liberalized electricity markets
Investment decision makers are private utilities
Invest if projected revenues allow a reasonable
internal rate of return IRR (incl. risk premium)
Generation assets have a long lifetime
Future revenue streams are uncertain
52016-06-01
Methodological analysis
2 scenarios:
Perfect foresight (PF)
Myopic foresight (MF10)
Focus on period 2020-2055
5-year periods
Power system inspired by
the Belgian system
Increasing carbon price
LUSYM Investment planning
model:
Partial equilibrium
8 representative days
Clustered unit commitment
62016-06-01
Perfect foresight 10-year foresight
Impact on results
72016-06-01
Liberalized electricity markets
Investment decision makers are private utilities
Invest if projected revenues allow a reasonable
internal rate of return IRR (incl. risk premium)
SR profits = revenues – operational costs
{𝐸[𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦] Γ—
1
1+𝐼𝑅𝑅 π‘¦βˆ’π‘§π‘¦ } β‰₯ 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘ 
82016-06-01
Perfect foresight scenario
Perfect foresight of:
Electricity prices (and capacity remuneration) in each
time step and all years (implicit)
Generation during each time step and all years
Generation costs (fossil fuel prices, maintenance, etc.)
=> Exactly know SR profits
=> {𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ—
1
1+𝐼𝑅𝑅 π‘¦βˆ’π‘§π‘¦ } = 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘ 
92016-06-01
Perfect foresight scenario
102016-06-01
Perfect foresight scenario
112016-06-01
122016-06-01
Perfect foresight scenario
Factors which can impact the SR profits:
Fossil fuel prices
Carbon price
Timing of decommissioning existing plants
Type, timing and amount of newly built capacity
Technological progress
Evolution of the electricity demand
Policy interactions
Market design changes
Interconnections
Private utilities do not have perfect information
The assumption of perfect foresight is not realistc
132016-06-01
Perfect foresight scenario
142016-06-01
Perfect foresight scenario - conclusions
{𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ—
1
1+𝐼𝑅𝑅 π‘¦βˆ’π‘§π‘¦ } = 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘ 
Perfect foresight for private utilities is unrealistic
Can lead to unrealistic simulation of investment
decisions
152016-06-01
Myopic foresight model
𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ—
1
1+𝐼𝑅𝑅 π‘¦βˆ’π‘§
π‘Ž+π‘€πΉβˆ’1
𝑦=π‘Ž =
𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘  βˆ’ π‘ π‘Žπ‘™π‘£π‘Žπ‘”π‘’ π‘£π‘Žπ‘™π‘’π‘’
Calculation of salvage value typically
based on two assumptions:
1. Total discounted value of an asset
equals the total discounted cost
2. value is distributed homogenously
over the asset’s life time
𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ—
1
1+𝐼𝑅𝑅 π‘¦βˆ’π‘§
π‘Ž+π‘€πΉβˆ’1
𝑦=π‘Ž =
π‘Žπ‘›π‘›π‘’π‘Žπ‘™π‘–π‘§π‘’π‘‘ 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘ Γ—
1
1+𝐼𝑅𝑅 π‘¦βˆ’π‘§
π‘Ž+π‘€πΉβˆ’1
𝑦=π‘Ž
TLIFE = 5
d = 10%
Time horizon = window of foresight
162016-06-01
Myopic foresight scenario
172016-06-01
Myopic foresight scenario
182016-06-01
Myopic foresight scenario - conclusions
𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ—
1
1+𝐼𝑅𝑅 π‘¦βˆ’π‘§
π‘Ž+π‘€πΉβˆ’1
𝑦=π‘Ž = 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘  βˆ’
π‘ π‘Žπ‘™π‘£π‘Žπ‘”π‘’ π‘£π‘Žπ‘™π‘’π‘’
Salvage value is determined exogenously
Homogeneous distribution of the value of an asset seems
optimistic (implications for dynamic recursive models)
=> No extrapolation of observed trends
Can lead to unrealistic simulation of investment decisions
Additional issues:
What is the window of foresight?
Window of foresight identical for all uncertain parameters
192016-06-01
{𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ—
1
1+𝐼𝑅𝑅 π‘¦βˆ’π‘§π‘¦ } =
𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘ 
Private utilities do not have perfect
foresight on short-run profits
Can lead to unrealistic investment
decisions
𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ—
1
1+𝐼𝑅𝑅 π‘¦βˆ’π‘§
π‘Ž+π‘€πΉβˆ’1
𝑦=π‘Ž
= 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘  βˆ’ π‘ π‘Žπ‘™π‘£π‘Žπ‘”π‘’ π‘£π‘Žπ‘™π‘’π‘’
No extrapolation of observed trends
in short-run profits
Can lead to unrealistic investment
decisions
Investment criterion: {𝐸[𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦] Γ—
1
1+𝐼𝑅𝑅 π‘¦βˆ’π‘§π‘¦ } β‰₯ 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘ 
Summary and conclusions
Perfect foresight Myopic foresight
Kris Poncelet, kris.poncelet@kuleuven.be
KU Leuven, energy and environment group
http://www.mech.kuleuven.be/en/tme/resea
rch/energy_environment/
Poncelet, K. et al., Myopic Optimization Models
for Simulation of Investment Decisions in the
Electric Power Sector. 13th International
conference on the European Energy Market, 6-
9 June 2016, Porto.
202016-06-01
Open questions
Optimization Vs. Simulation:
should TIMES be used for simulation?
What are the alternatives?

More Related Content

Viewers also liked

Demonstrating RES visualisation software
Demonstrating RES visualisation softwareDemonstrating RES visualisation software
Demonstrating RES visualisation softwareIEA-ETSAP
Β 
Addressing Uncertainty in TIMES Using Monte Carlo Analysis
Addressing Uncertainty in TIMES Using Monte Carlo AnalysisAddressing Uncertainty in TIMES Using Monte Carlo Analysis
Addressing Uncertainty in TIMES Using Monte Carlo AnalysisIEA-ETSAP
Β 
Modelling the demand in Spain with Med-Pro
Modelling the demand in Spain with Med-ProModelling the demand in Spain with Med-Pro
Modelling the demand in Spain with Med-ProIEA-ETSAP
Β 
Energy sector contribution to climate action
Energy sector contribution to climate actionEnergy sector contribution to climate action
Energy sector contribution to climate actionIEA-ETSAP
Β 
Emission impacts of marginal electricity demand in France
Emission impacts of marginal electricity demand in FranceEmission impacts of marginal electricity demand in France
Emission impacts of marginal electricity demand in FranceIEA-ETSAP
Β 
Decarbonise and Electrify – Is it Enough to Meet Emission Targets a Case Stud...
Decarbonise and Electrify – Is it Enough to Meet Emission Targets a Case Stud...Decarbonise and Electrify – Is it Enough to Meet Emission Targets a Case Stud...
Decarbonise and Electrify – Is it Enough to Meet Emission Targets a Case Stud...IEA-ETSAP
Β 
Residential heat pumps in the future Danish energy system
Residential heat pumps in the future Danish energy systemResidential heat pumps in the future Danish energy system
Residential heat pumps in the future Danish energy systemIEA-ETSAP
Β 
VEDAViz for ETSAP partners
VEDAViz for ETSAP partnersVEDAViz for ETSAP partners
VEDAViz for ETSAP partnersIEA-ETSAP
Β 
Workshop on Sustainability Performance of Energy Systems (SPES)
Workshop on Sustainability Performance of Energy Systems (SPES)Workshop on Sustainability Performance of Energy Systems (SPES)
Workshop on Sustainability Performance of Energy Systems (SPES)IEA-ETSAP
Β 
Linking TIAM and KLEM: Economic Impacts of WB2D mitigation pathways
Linking TIAM and KLEM: Economic Impacts of WB2D mitigation pathwaysLinking TIAM and KLEM: Economic Impacts of WB2D mitigation pathways
Linking TIAM and KLEM: Economic Impacts of WB2D mitigation pathwaysIEA-ETSAP
Β 
ETSAP-TIAM update and re-calibration
ETSAP-TIAM update and re-calibrationETSAP-TIAM update and re-calibration
ETSAP-TIAM update and re-calibrationIEA-ETSAP
Β 
Impact of technology uncertainty on future low-carbon pathways in the UK
Impact of technology uncertainty on future low-carbon pathways in the UKImpact of technology uncertainty on future low-carbon pathways in the UK
Impact of technology uncertainty on future low-carbon pathways in the UKIEA-ETSAP
Β 
Incorporating Homeowners’ Preferences for Heating Systems in the UK TIMES wit...
Incorporating Homeowners’ Preferences for Heating Systems in the UK TIMES wit...Incorporating Homeowners’ Preferences for Heating Systems in the UK TIMES wit...
Incorporating Homeowners’ Preferences for Heating Systems in the UK TIMES wit...IEA-ETSAP
Β 
Accounting for changes in investment flows in a soft-linked hybrid model
Accounting for changes in investment flows in a soft-linked hybrid modelAccounting for changes in investment flows in a soft-linked hybrid model
Accounting for changes in investment flows in a soft-linked hybrid modelIEA-ETSAP
Β 
Energy and environmental impacts of biomass use in the residential Sector: a ...
Energy and environmental impacts of biomass use in the residential Sector: a ...Energy and environmental impacts of biomass use in the residential Sector: a ...
Energy and environmental impacts of biomass use in the residential Sector: a ...IEA-ETSAP
Β 
Collaboration forum for ETSAP-TIAM based on GIT version control
Collaboration forum for ETSAP-TIAM based on GIT version controlCollaboration forum for ETSAP-TIAM based on GIT version control
Collaboration forum for ETSAP-TIAM based on GIT version controlIEA-ETSAP
Β 
Inclusion of demand-­‐side behavioural parameters in long-­‐term energy model...
Inclusion of demand-­‐side behavioural parameters in long-­‐term energy model...Inclusion of demand-­‐side behavioural parameters in long-­‐term energy model...
Inclusion of demand-­‐side behavioural parameters in long-­‐term energy model...IEA-ETSAP
Β 
Analysis of the relative roles of supply-side and demand-side measures in tac...
Analysis of the relative roles of supply-side and demand-side measures in tac...Analysis of the relative roles of supply-side and demand-side measures in tac...
Analysis of the relative roles of supply-side and demand-side measures in tac...IEA-ETSAP
Β 
Enhancing the TIMES New User Experience - Second Step, a VEDA TIMES-Starter M...
Enhancing the TIMES New User Experience - Second Step, a VEDA TIMES-Starter M...Enhancing the TIMES New User Experience - Second Step, a VEDA TIMES-Starter M...
Enhancing the TIMES New User Experience - Second Step, a VEDA TIMES-Starter M...IEA-ETSAP
Β 
Who pays for climate change mitigation? Integrated Assessment of equitable em...
Who pays for climate change mitigation? Integrated Assessment of equitable em...Who pays for climate change mitigation? Integrated Assessment of equitable em...
Who pays for climate change mitigation? Integrated Assessment of equitable em...IEA-ETSAP
Β 

Viewers also liked (20)

Demonstrating RES visualisation software
Demonstrating RES visualisation softwareDemonstrating RES visualisation software
Demonstrating RES visualisation software
Β 
Addressing Uncertainty in TIMES Using Monte Carlo Analysis
Addressing Uncertainty in TIMES Using Monte Carlo AnalysisAddressing Uncertainty in TIMES Using Monte Carlo Analysis
Addressing Uncertainty in TIMES Using Monte Carlo Analysis
Β 
Modelling the demand in Spain with Med-Pro
Modelling the demand in Spain with Med-ProModelling the demand in Spain with Med-Pro
Modelling the demand in Spain with Med-Pro
Β 
Energy sector contribution to climate action
Energy sector contribution to climate actionEnergy sector contribution to climate action
Energy sector contribution to climate action
Β 
Emission impacts of marginal electricity demand in France
Emission impacts of marginal electricity demand in FranceEmission impacts of marginal electricity demand in France
Emission impacts of marginal electricity demand in France
Β 
Decarbonise and Electrify – Is it Enough to Meet Emission Targets a Case Stud...
Decarbonise and Electrify – Is it Enough to Meet Emission Targets a Case Stud...Decarbonise and Electrify – Is it Enough to Meet Emission Targets a Case Stud...
Decarbonise and Electrify – Is it Enough to Meet Emission Targets a Case Stud...
Β 
Residential heat pumps in the future Danish energy system
Residential heat pumps in the future Danish energy systemResidential heat pumps in the future Danish energy system
Residential heat pumps in the future Danish energy system
Β 
VEDAViz for ETSAP partners
VEDAViz for ETSAP partnersVEDAViz for ETSAP partners
VEDAViz for ETSAP partners
Β 
Workshop on Sustainability Performance of Energy Systems (SPES)
Workshop on Sustainability Performance of Energy Systems (SPES)Workshop on Sustainability Performance of Energy Systems (SPES)
Workshop on Sustainability Performance of Energy Systems (SPES)
Β 
Linking TIAM and KLEM: Economic Impacts of WB2D mitigation pathways
Linking TIAM and KLEM: Economic Impacts of WB2D mitigation pathwaysLinking TIAM and KLEM: Economic Impacts of WB2D mitigation pathways
Linking TIAM and KLEM: Economic Impacts of WB2D mitigation pathways
Β 
ETSAP-TIAM update and re-calibration
ETSAP-TIAM update and re-calibrationETSAP-TIAM update and re-calibration
ETSAP-TIAM update and re-calibration
Β 
Impact of technology uncertainty on future low-carbon pathways in the UK
Impact of technology uncertainty on future low-carbon pathways in the UKImpact of technology uncertainty on future low-carbon pathways in the UK
Impact of technology uncertainty on future low-carbon pathways in the UK
Β 
Incorporating Homeowners’ Preferences for Heating Systems in the UK TIMES wit...
Incorporating Homeowners’ Preferences for Heating Systems in the UK TIMES wit...Incorporating Homeowners’ Preferences for Heating Systems in the UK TIMES wit...
Incorporating Homeowners’ Preferences for Heating Systems in the UK TIMES wit...
Β 
Accounting for changes in investment flows in a soft-linked hybrid model
Accounting for changes in investment flows in a soft-linked hybrid modelAccounting for changes in investment flows in a soft-linked hybrid model
Accounting for changes in investment flows in a soft-linked hybrid model
Β 
Energy and environmental impacts of biomass use in the residential Sector: a ...
Energy and environmental impacts of biomass use in the residential Sector: a ...Energy and environmental impacts of biomass use in the residential Sector: a ...
Energy and environmental impacts of biomass use in the residential Sector: a ...
Β 
Collaboration forum for ETSAP-TIAM based on GIT version control
Collaboration forum for ETSAP-TIAM based on GIT version controlCollaboration forum for ETSAP-TIAM based on GIT version control
Collaboration forum for ETSAP-TIAM based on GIT version control
Β 
Inclusion of demand-­‐side behavioural parameters in long-­‐term energy model...
Inclusion of demand-­‐side behavioural parameters in long-­‐term energy model...Inclusion of demand-­‐side behavioural parameters in long-­‐term energy model...
Inclusion of demand-­‐side behavioural parameters in long-­‐term energy model...
Β 
Analysis of the relative roles of supply-side and demand-side measures in tac...
Analysis of the relative roles of supply-side and demand-side measures in tac...Analysis of the relative roles of supply-side and demand-side measures in tac...
Analysis of the relative roles of supply-side and demand-side measures in tac...
Β 
Enhancing the TIMES New User Experience - Second Step, a VEDA TIMES-Starter M...
Enhancing the TIMES New User Experience - Second Step, a VEDA TIMES-Starter M...Enhancing the TIMES New User Experience - Second Step, a VEDA TIMES-Starter M...
Enhancing the TIMES New User Experience - Second Step, a VEDA TIMES-Starter M...
Β 
Who pays for climate change mitigation? Integrated Assessment of equitable em...
Who pays for climate change mitigation? Integrated Assessment of equitable em...Who pays for climate change mitigation? Integrated Assessment of equitable em...
Who pays for climate change mitigation? Integrated Assessment of equitable em...
Β 

Similar to Modelling investment decision making in the power sector under imperfect foresight

TSO Reliability Management: a probabilistic approach for better balance betwe...
TSO Reliability Management: a probabilistic approach for better balance betwe...TSO Reliability Management: a probabilistic approach for better balance betwe...
TSO Reliability Management: a probabilistic approach for better balance betwe...Leonardo ENERGY
Β 
170901 allocationbeyondeuler final
170901 allocationbeyondeuler final170901 allocationbeyondeuler final
170901 allocationbeyondeuler finalGuido GrΓΌtzner
Β 
Lecture 3_Economics of Planning.pdf
Lecture 3_Economics of Planning.pdfLecture 3_Economics of Planning.pdf
Lecture 3_Economics of Planning.pdfssuser5feb82
Β 
CCooremans_5-160-16_Eceee2016_Mgt as a key driver of energy performance_06092016
CCooremans_5-160-16_Eceee2016_Mgt as a key driver of energy performance_06092016CCooremans_5-160-16_Eceee2016_Mgt as a key driver of energy performance_06092016
CCooremans_5-160-16_Eceee2016_Mgt as a key driver of energy performance_06092016Catherine Cooremans
Β 
WACC calculation methodology review
WACC calculation methodology reviewWACC calculation methodology review
WACC calculation methodology reviewARERA
Β 
Chapter 8 heterogeneous debt portfolio
Chapter 8   heterogeneous debt portfolioChapter 8   heterogeneous debt portfolio
Chapter 8 heterogeneous debt portfolioQuan Risk
Β 
Reinforcement Learning to Mimic Portfolio Behavior
Reinforcement Learning to Mimic Portfolio BehaviorReinforcement Learning to Mimic Portfolio Behavior
Reinforcement Learning to Mimic Portfolio BehaviorYigal D. Jhirad
Β 
Ogex 2016 - Oran, Algeria 2016-12-06
Ogex 2016 - Oran, Algeria 2016-12-06Ogex 2016 - Oran, Algeria 2016-12-06
Ogex 2016 - Oran, Algeria 2016-12-06George Grangeon-Amaral
Β 
Chapter 3 slides
Chapter 3 slidesChapter 3 slides
Chapter 3 slidesteg007
Β 
Optimization for a Smarter Energy World!
Optimization for a Smarter Energy World!Optimization for a Smarter Energy World!
Optimization for a Smarter Energy World!N-SIDE
Β 
Assessing the impact of electricity trades restriction in achieving the carbo...
Assessing the impact of electricity trades restriction in achieving the carbo...Assessing the impact of electricity trades restriction in achieving the carbo...
Assessing the impact of electricity trades restriction in achieving the carbo...IEA-ETSAP
Β 
Decision-criteria-Energy-projects-2023-2024.pdf
Decision-criteria-Energy-projects-2023-2024.pdfDecision-criteria-Energy-projects-2023-2024.pdf
Decision-criteria-Energy-projects-2023-2024.pdfajamal6
Β 
Chapter 18 internal ratings based approach
Chapter 18   internal ratings based approachChapter 18   internal ratings based approach
Chapter 18 internal ratings based approachQuan Risk
Β 
SPE Aberdeen - The Astonishing Simplicity of Offshore Energy Risk Management ...
SPE Aberdeen - The Astonishing Simplicity of Offshore Energy Risk Management ...SPE Aberdeen - The Astonishing Simplicity of Offshore Energy Risk Management ...
SPE Aberdeen - The Astonishing Simplicity of Offshore Energy Risk Management ...George Grangeon-Amaral
Β 
How to Validate you Client Churn Model
How to Validate you Client Churn ModelHow to Validate you Client Churn Model
How to Validate you Client Churn Modelcodefying
Β 
The Regolatory framework for Smart Grids in Italy
The Regolatory framework for Smart Grids in ItalyThe Regolatory framework for Smart Grids in Italy
The Regolatory framework for Smart Grids in ItalySvenja Bartels
Β 
CH 11 Cost of Capital.ppt
CH 11 Cost of Capital.pptCH 11 Cost of Capital.ppt
CH 11 Cost of Capital.pptIBNUUMARUDINUMEDI
Β 
Time Series Analysis_slides.pdf
Time Series Analysis_slides.pdfTime Series Analysis_slides.pdf
Time Series Analysis_slides.pdfRohanBorgalli
Β 
Kanban for Fixed Price Projects
Kanban for Fixed Price ProjectsKanban for Fixed Price Projects
Kanban for Fixed Price ProjectsSudipta Lahiri
Β 

Similar to Modelling investment decision making in the power sector under imperfect foresight (20)

TSO Reliability Management: a probabilistic approach for better balance betwe...
TSO Reliability Management: a probabilistic approach for better balance betwe...TSO Reliability Management: a probabilistic approach for better balance betwe...
TSO Reliability Management: a probabilistic approach for better balance betwe...
Β 
170901 allocationbeyondeuler final
170901 allocationbeyondeuler final170901 allocationbeyondeuler final
170901 allocationbeyondeuler final
Β 
Lecture 3_Economics of Planning.pdf
Lecture 3_Economics of Planning.pdfLecture 3_Economics of Planning.pdf
Lecture 3_Economics of Planning.pdf
Β 
CCooremans_5-160-16_Eceee2016_Mgt as a key driver of energy performance_06092016
CCooremans_5-160-16_Eceee2016_Mgt as a key driver of energy performance_06092016CCooremans_5-160-16_Eceee2016_Mgt as a key driver of energy performance_06092016
CCooremans_5-160-16_Eceee2016_Mgt as a key driver of energy performance_06092016
Β 
WACC calculation methodology review
WACC calculation methodology reviewWACC calculation methodology review
WACC calculation methodology review
Β 
Chapter 8 heterogeneous debt portfolio
Chapter 8   heterogeneous debt portfolioChapter 8   heterogeneous debt portfolio
Chapter 8 heterogeneous debt portfolio
Β 
Reinforcement Learning to Mimic Portfolio Behavior
Reinforcement Learning to Mimic Portfolio BehaviorReinforcement Learning to Mimic Portfolio Behavior
Reinforcement Learning to Mimic Portfolio Behavior
Β 
Ogex 2016 - Oran, Algeria 2016-12-06
Ogex 2016 - Oran, Algeria 2016-12-06Ogex 2016 - Oran, Algeria 2016-12-06
Ogex 2016 - Oran, Algeria 2016-12-06
Β 
Chapter 3 slides
Chapter 3 slidesChapter 3 slides
Chapter 3 slides
Β 
Optimization for a Smarter Energy World!
Optimization for a Smarter Energy World!Optimization for a Smarter Energy World!
Optimization for a Smarter Energy World!
Β 
Assessing the impact of electricity trades restriction in achieving the carbo...
Assessing the impact of electricity trades restriction in achieving the carbo...Assessing the impact of electricity trades restriction in achieving the carbo...
Assessing the impact of electricity trades restriction in achieving the carbo...
Β 
Decision-criteria-Energy-projects-2023-2024.pdf
Decision-criteria-Energy-projects-2023-2024.pdfDecision-criteria-Energy-projects-2023-2024.pdf
Decision-criteria-Energy-projects-2023-2024.pdf
Β 
Chapter 18 internal ratings based approach
Chapter 18   internal ratings based approachChapter 18   internal ratings based approach
Chapter 18 internal ratings based approach
Β 
SPE Aberdeen - The Astonishing Simplicity of Offshore Energy Risk Management ...
SPE Aberdeen - The Astonishing Simplicity of Offshore Energy Risk Management ...SPE Aberdeen - The Astonishing Simplicity of Offshore Energy Risk Management ...
SPE Aberdeen - The Astonishing Simplicity of Offshore Energy Risk Management ...
Β 
How to Validate you Client Churn Model
How to Validate you Client Churn ModelHow to Validate you Client Churn Model
How to Validate you Client Churn Model
Β 
The Regolatory framework for Smart Grids in Italy
The Regolatory framework for Smart Grids in ItalyThe Regolatory framework for Smart Grids in Italy
The Regolatory framework for Smart Grids in Italy
Β 
CH 11 Cost of Capital.ppt
CH 11 Cost of Capital.pptCH 11 Cost of Capital.ppt
CH 11 Cost of Capital.ppt
Β 
Time Series Analysis_slides.pdf
Time Series Analysis_slides.pdfTime Series Analysis_slides.pdf
Time Series Analysis_slides.pdf
Β 
Kanban for Fixed Price Projects
Kanban for Fixed Price ProjectsKanban for Fixed Price Projects
Kanban for Fixed Price Projects
Β 
Solwatt Energy Performance Contract
Solwatt Energy Performance ContractSolwatt Energy Performance Contract
Solwatt Energy Performance Contract
Β 

More from IEA-ETSAP

Variable Renewable Energy in China's Transition
Variable Renewable Energy in China's TransitionVariable Renewable Energy in China's Transition
Variable Renewable Energy in China's TransitionIEA-ETSAP
Β 
The Nordics as a hub for green electricity and fuels
The Nordics as a hub for green electricity and fuelsThe Nordics as a hub for green electricity and fuels
The Nordics as a hub for green electricity and fuelsIEA-ETSAP
Β 
The role of Norwegian offshore wind in the energy system transition
The role of Norwegian offshore wind in the energy system transitionThe role of Norwegian offshore wind in the energy system transition
The role of Norwegian offshore wind in the energy system transitionIEA-ETSAP
Β 
Detail representation of molecule flows and chemical sector in TIMES-BE: prog...
Detail representation of molecule flows and chemical sector in TIMES-BE: prog...Detail representation of molecule flows and chemical sector in TIMES-BE: prog...
Detail representation of molecule flows and chemical sector in TIMES-BE: prog...IEA-ETSAP
Β 
Green hydrogen trade from North Africa to Europe: optional long-term scenario...
Green hydrogen trade from North Africa to Europe: optional long-term scenario...Green hydrogen trade from North Africa to Europe: optional long-term scenario...
Green hydrogen trade from North Africa to Europe: optional long-term scenario...IEA-ETSAP
Β 
Optimal development of the Canadian forest sector for both climate change mit...
Optimal development of the Canadian forest sector for both climate change mit...Optimal development of the Canadian forest sector for both climate change mit...
Optimal development of the Canadian forest sector for both climate change mit...IEA-ETSAP
Β 
Presentation on IEA Net Zero Pathways/Roadmap
Presentation on IEA Net Zero Pathways/RoadmapPresentation on IEA Net Zero Pathways/Roadmap
Presentation on IEA Net Zero Pathways/RoadmapIEA-ETSAP
Β 
Flexibility with renewable(low-carbon) hydrogen
Flexibility with renewable(low-carbon) hydrogenFlexibility with renewable(low-carbon) hydrogen
Flexibility with renewable(low-carbon) hydrogenIEA-ETSAP
Β 
Bioenergy in energy system models with flexibility
Bioenergy in energy system models with flexibilityBioenergy in energy system models with flexibility
Bioenergy in energy system models with flexibilityIEA-ETSAP
Β 
Reframing flexibility beyond power - IEA Bioenergy TCP
Reframing flexibility beyond power - IEA Bioenergy TCPReframing flexibility beyond power - IEA Bioenergy TCP
Reframing flexibility beyond power - IEA Bioenergy TCPIEA-ETSAP
Β 
Decarbonization of heating in the buildings sector: efficiency first vs low-c...
Decarbonization of heating in the buildings sector: efficiency first vs low-c...Decarbonization of heating in the buildings sector: efficiency first vs low-c...
Decarbonization of heating in the buildings sector: efficiency first vs low-c...IEA-ETSAP
Β 
The Regionalization Tool: spatial representation of TIMES-BE output data in i...
The Regionalization Tool: spatial representation of TIMES-BE output data in i...The Regionalization Tool: spatial representation of TIMES-BE output data in i...
The Regionalization Tool: spatial representation of TIMES-BE output data in i...IEA-ETSAP
Β 
Synthetic methane production prospective modelling up to 2050 in the European...
Synthetic methane production prospective modelling up to 2050 in the European...Synthetic methane production prospective modelling up to 2050 in the European...
Synthetic methane production prospective modelling up to 2050 in the European...IEA-ETSAP
Β 
Energy Transition in global Aviation - ETSAP Workshop Turin
Energy Transition in global Aviation - ETSAP Workshop TurinEnergy Transition in global Aviation - ETSAP Workshop Turin
Energy Transition in global Aviation - ETSAP Workshop TurinIEA-ETSAP
Β 
Integrated Energy and Climate plans: approaches, practices and experiences
Integrated Energy and Climate plans: approaches, practices and experiencesIntegrated Energy and Climate plans: approaches, practices and experiences
Integrated Energy and Climate plans: approaches, practices and experiencesIEA-ETSAP
Β 
Updates on Veda provided by Amit Kanudia from KanORS-EMR
Updates on Veda provided by Amit Kanudia from KanORS-EMRUpdates on Veda provided by Amit Kanudia from KanORS-EMR
Updates on Veda provided by Amit Kanudia from KanORS-EMRIEA-ETSAP
Β 
Energy system modeling activities in the MAHTEP Group
Energy system modeling activities in the MAHTEP GroupEnergy system modeling activities in the MAHTEP Group
Energy system modeling activities in the MAHTEP GroupIEA-ETSAP
Β 
Applying science fiction to approach the future
Applying science fiction to approach the futureApplying science fiction to approach the future
Applying science fiction to approach the futureIEA-ETSAP
Β 
Will it leak?: Discussions of leakage risk from subsurface storage of carbon ...
Will it leak?: Discussions of leakage risk from subsurface storage of carbon ...Will it leak?: Discussions of leakage risk from subsurface storage of carbon ...
Will it leak?: Discussions of leakage risk from subsurface storage of carbon ...IEA-ETSAP
Β 
Long-Term Decarbonization Pathways In Emerging Economies: Insights From 12 Mo...
Long-Term Decarbonization Pathways In Emerging Economies: Insights From 12 Mo...Long-Term Decarbonization Pathways In Emerging Economies: Insights From 12 Mo...
Long-Term Decarbonization Pathways In Emerging Economies: Insights From 12 Mo...IEA-ETSAP
Β 

More from IEA-ETSAP (20)

Variable Renewable Energy in China's Transition
Variable Renewable Energy in China's TransitionVariable Renewable Energy in China's Transition
Variable Renewable Energy in China's Transition
Β 
The Nordics as a hub for green electricity and fuels
The Nordics as a hub for green electricity and fuelsThe Nordics as a hub for green electricity and fuels
The Nordics as a hub for green electricity and fuels
Β 
The role of Norwegian offshore wind in the energy system transition
The role of Norwegian offshore wind in the energy system transitionThe role of Norwegian offshore wind in the energy system transition
The role of Norwegian offshore wind in the energy system transition
Β 
Detail representation of molecule flows and chemical sector in TIMES-BE: prog...
Detail representation of molecule flows and chemical sector in TIMES-BE: prog...Detail representation of molecule flows and chemical sector in TIMES-BE: prog...
Detail representation of molecule flows and chemical sector in TIMES-BE: prog...
Β 
Green hydrogen trade from North Africa to Europe: optional long-term scenario...
Green hydrogen trade from North Africa to Europe: optional long-term scenario...Green hydrogen trade from North Africa to Europe: optional long-term scenario...
Green hydrogen trade from North Africa to Europe: optional long-term scenario...
Β 
Optimal development of the Canadian forest sector for both climate change mit...
Optimal development of the Canadian forest sector for both climate change mit...Optimal development of the Canadian forest sector for both climate change mit...
Optimal development of the Canadian forest sector for both climate change mit...
Β 
Presentation on IEA Net Zero Pathways/Roadmap
Presentation on IEA Net Zero Pathways/RoadmapPresentation on IEA Net Zero Pathways/Roadmap
Presentation on IEA Net Zero Pathways/Roadmap
Β 
Flexibility with renewable(low-carbon) hydrogen
Flexibility with renewable(low-carbon) hydrogenFlexibility with renewable(low-carbon) hydrogen
Flexibility with renewable(low-carbon) hydrogen
Β 
Bioenergy in energy system models with flexibility
Bioenergy in energy system models with flexibilityBioenergy in energy system models with flexibility
Bioenergy in energy system models with flexibility
Β 
Reframing flexibility beyond power - IEA Bioenergy TCP
Reframing flexibility beyond power - IEA Bioenergy TCPReframing flexibility beyond power - IEA Bioenergy TCP
Reframing flexibility beyond power - IEA Bioenergy TCP
Β 
Decarbonization of heating in the buildings sector: efficiency first vs low-c...
Decarbonization of heating in the buildings sector: efficiency first vs low-c...Decarbonization of heating in the buildings sector: efficiency first vs low-c...
Decarbonization of heating in the buildings sector: efficiency first vs low-c...
Β 
The Regionalization Tool: spatial representation of TIMES-BE output data in i...
The Regionalization Tool: spatial representation of TIMES-BE output data in i...The Regionalization Tool: spatial representation of TIMES-BE output data in i...
The Regionalization Tool: spatial representation of TIMES-BE output data in i...
Β 
Synthetic methane production prospective modelling up to 2050 in the European...
Synthetic methane production prospective modelling up to 2050 in the European...Synthetic methane production prospective modelling up to 2050 in the European...
Synthetic methane production prospective modelling up to 2050 in the European...
Β 
Energy Transition in global Aviation - ETSAP Workshop Turin
Energy Transition in global Aviation - ETSAP Workshop TurinEnergy Transition in global Aviation - ETSAP Workshop Turin
Energy Transition in global Aviation - ETSAP Workshop Turin
Β 
Integrated Energy and Climate plans: approaches, practices and experiences
Integrated Energy and Climate plans: approaches, practices and experiencesIntegrated Energy and Climate plans: approaches, practices and experiences
Integrated Energy and Climate plans: approaches, practices and experiences
Β 
Updates on Veda provided by Amit Kanudia from KanORS-EMR
Updates on Veda provided by Amit Kanudia from KanORS-EMRUpdates on Veda provided by Amit Kanudia from KanORS-EMR
Updates on Veda provided by Amit Kanudia from KanORS-EMR
Β 
Energy system modeling activities in the MAHTEP Group
Energy system modeling activities in the MAHTEP GroupEnergy system modeling activities in the MAHTEP Group
Energy system modeling activities in the MAHTEP Group
Β 
Applying science fiction to approach the future
Applying science fiction to approach the futureApplying science fiction to approach the future
Applying science fiction to approach the future
Β 
Will it leak?: Discussions of leakage risk from subsurface storage of carbon ...
Will it leak?: Discussions of leakage risk from subsurface storage of carbon ...Will it leak?: Discussions of leakage risk from subsurface storage of carbon ...
Will it leak?: Discussions of leakage risk from subsurface storage of carbon ...
Β 
Long-Term Decarbonization Pathways In Emerging Economies: Insights From 12 Mo...
Long-Term Decarbonization Pathways In Emerging Economies: Insights From 12 Mo...Long-Term Decarbonization Pathways In Emerging Economies: Insights From 12 Mo...
Long-Term Decarbonization Pathways In Emerging Economies: Insights From 12 Mo...
Β 

Recently uploaded

Understanding the Impact of video length on student performance
Understanding the Impact of video length on student performanceUnderstanding the Impact of video length on student performance
Understanding the Impact of video length on student performancePrithaVashisht1
Β 
Prediction Of Cryptocurrency Prices Using Lstm, Svm And Polynomial Regression...
Prediction Of Cryptocurrency Prices Using Lstm, Svm And Polynomial Regression...Prediction Of Cryptocurrency Prices Using Lstm, Svm And Polynomial Regression...
Prediction Of Cryptocurrency Prices Using Lstm, Svm And Polynomial Regression...ferisulianta.com
Β 
BΓ‘o cΓ‘o Social Media Benchmark 2024 cho dΓ’n Marketing
BΓ‘o cΓ‘o Social Media Benchmark 2024 cho dΓ’n MarketingBΓ‘o cΓ‘o Social Media Benchmark 2024 cho dΓ’n Marketing
BΓ‘o cΓ‘o Social Media Benchmark 2024 cho dΓ’n MarketingMarketingTrips
Β 
Bengaluru Tableau UG event- 2nd March 2024 Q1
Bengaluru Tableau UG event- 2nd March 2024 Q1Bengaluru Tableau UG event- 2nd March 2024 Q1
Bengaluru Tableau UG event- 2nd March 2024 Q1bengalurutug
Β 
Data Analytics Fundamentals: data analytics types.potx
Data Analytics Fundamentals: data analytics types.potxData Analytics Fundamentals: data analytics types.potx
Data Analytics Fundamentals: data analytics types.potxEmmanuel Dauda
Β 
Elements of language learning - an analysis of how different elements of lang...
Elements of language learning - an analysis of how different elements of lang...Elements of language learning - an analysis of how different elements of lang...
Elements of language learning - an analysis of how different elements of lang...PrithaVashisht1
Β 
Unleashing Datas Potential - Mastering Precision with FCO-IM
Unleashing Datas Potential - Mastering Precision with FCO-IMUnleashing Datas Potential - Mastering Precision with FCO-IM
Unleashing Datas Potential - Mastering Precision with FCO-IMMarco Wobben
Β 
Neo4j_Jesus Barrasa_The Art of the Possible with Graph.pptx.pdf
Neo4j_Jesus Barrasa_The Art of the Possible with Graph.pptx.pdfNeo4j_Jesus Barrasa_The Art of the Possible with Graph.pptx.pdf
Neo4j_Jesus Barrasa_The Art of the Possible with Graph.pptx.pdfNeo4j
Β 
How to Build an Experimentation Culture for Data-Driven Product Development
How to Build an Experimentation Culture for Data-Driven Product DevelopmentHow to Build an Experimentation Culture for Data-Driven Product Development
How to Build an Experimentation Culture for Data-Driven Product DevelopmentAggregage
Β 
Neo4j Graph Summit 2024 Workshop - EMEA - Breda_and_Munchen.pdf
Neo4j Graph Summit 2024 Workshop - EMEA - Breda_and_Munchen.pdfNeo4j Graph Summit 2024 Workshop - EMEA - Breda_and_Munchen.pdf
Neo4j Graph Summit 2024 Workshop - EMEA - Breda_and_Munchen.pdfNeo4j
Β 
Microeconomic Group Presentation Apple.pdf
Microeconomic Group Presentation Apple.pdfMicroeconomic Group Presentation Apple.pdf
Microeconomic Group Presentation Apple.pdfmxlos0
Β 
Stochastic Dynamic Programming and You.pptx
Stochastic Dynamic Programming and You.pptxStochastic Dynamic Programming and You.pptx
Stochastic Dynamic Programming and You.pptxjkmrshll88
Β 
Data Collection from Social Media Platforms
Data Collection from Social Media PlatformsData Collection from Social Media Platforms
Data Collection from Social Media PlatformsMahmoud Yasser
Β 
TCFPro24 Building Real-Time Generative AI Pipelines
TCFPro24 Building Real-Time Generative AI PipelinesTCFPro24 Building Real-Time Generative AI Pipelines
TCFPro24 Building Real-Time Generative AI PipelinesTimothy Spann
Β 
STOCK PRICE ANALYSIS Furkan Ali TASCI --.pptx
STOCK PRICE ANALYSIS  Furkan Ali TASCI --.pptxSTOCK PRICE ANALYSIS  Furkan Ali TASCI --.pptx
STOCK PRICE ANALYSIS Furkan Ali TASCI --.pptxFurkanTasci3
Β 
PPT for Presiding Officer.pptxvvdffdfgggg
PPT for Presiding Officer.pptxvvdffdfggggPPT for Presiding Officer.pptxvvdffdfgggg
PPT for Presiding Officer.pptxvvdffdfggggbhadratanusenapati1
Β 
Enabling GenAI Breakthroughs with Knowledge Graphs
Enabling GenAI Breakthroughs with Knowledge GraphsEnabling GenAI Breakthroughs with Knowledge Graphs
Enabling GenAI Breakthroughs with Knowledge GraphsNeo4j
Β 
Using DAX & Time-based Analysis in Data Warehouse
Using DAX & Time-based Analysis in Data WarehouseUsing DAX & Time-based Analysis in Data Warehouse
Using DAX & Time-based Analysis in Data WarehouseThinkInnovation
Β 
Paul Martin (Gartner) - Show Me the AI Money.pdf
Paul Martin (Gartner) - Show Me the AI Money.pdfPaul Martin (Gartner) - Show Me the AI Money.pdf
Paul Martin (Gartner) - Show Me the AI Money.pdfdcphostmaster
Β 
STOCK PRICE ANALYSIS Furkan Ali TASCI --.pptx
STOCK PRICE ANALYSIS  Furkan Ali TASCI --.pptxSTOCK PRICE ANALYSIS  Furkan Ali TASCI --.pptx
STOCK PRICE ANALYSIS Furkan Ali TASCI --.pptxFurkanTasci3
Β 

Recently uploaded (20)

Understanding the Impact of video length on student performance
Understanding the Impact of video length on student performanceUnderstanding the Impact of video length on student performance
Understanding the Impact of video length on student performance
Β 
Prediction Of Cryptocurrency Prices Using Lstm, Svm And Polynomial Regression...
Prediction Of Cryptocurrency Prices Using Lstm, Svm And Polynomial Regression...Prediction Of Cryptocurrency Prices Using Lstm, Svm And Polynomial Regression...
Prediction Of Cryptocurrency Prices Using Lstm, Svm And Polynomial Regression...
Β 
BΓ‘o cΓ‘o Social Media Benchmark 2024 cho dΓ’n Marketing
BΓ‘o cΓ‘o Social Media Benchmark 2024 cho dΓ’n MarketingBΓ‘o cΓ‘o Social Media Benchmark 2024 cho dΓ’n Marketing
BΓ‘o cΓ‘o Social Media Benchmark 2024 cho dΓ’n Marketing
Β 
Bengaluru Tableau UG event- 2nd March 2024 Q1
Bengaluru Tableau UG event- 2nd March 2024 Q1Bengaluru Tableau UG event- 2nd March 2024 Q1
Bengaluru Tableau UG event- 2nd March 2024 Q1
Β 
Data Analytics Fundamentals: data analytics types.potx
Data Analytics Fundamentals: data analytics types.potxData Analytics Fundamentals: data analytics types.potx
Data Analytics Fundamentals: data analytics types.potx
Β 
Elements of language learning - an analysis of how different elements of lang...
Elements of language learning - an analysis of how different elements of lang...Elements of language learning - an analysis of how different elements of lang...
Elements of language learning - an analysis of how different elements of lang...
Β 
Unleashing Datas Potential - Mastering Precision with FCO-IM
Unleashing Datas Potential - Mastering Precision with FCO-IMUnleashing Datas Potential - Mastering Precision with FCO-IM
Unleashing Datas Potential - Mastering Precision with FCO-IM
Β 
Neo4j_Jesus Barrasa_The Art of the Possible with Graph.pptx.pdf
Neo4j_Jesus Barrasa_The Art of the Possible with Graph.pptx.pdfNeo4j_Jesus Barrasa_The Art of the Possible with Graph.pptx.pdf
Neo4j_Jesus Barrasa_The Art of the Possible with Graph.pptx.pdf
Β 
How to Build an Experimentation Culture for Data-Driven Product Development
How to Build an Experimentation Culture for Data-Driven Product DevelopmentHow to Build an Experimentation Culture for Data-Driven Product Development
How to Build an Experimentation Culture for Data-Driven Product Development
Β 
Neo4j Graph Summit 2024 Workshop - EMEA - Breda_and_Munchen.pdf
Neo4j Graph Summit 2024 Workshop - EMEA - Breda_and_Munchen.pdfNeo4j Graph Summit 2024 Workshop - EMEA - Breda_and_Munchen.pdf
Neo4j Graph Summit 2024 Workshop - EMEA - Breda_and_Munchen.pdf
Β 
Microeconomic Group Presentation Apple.pdf
Microeconomic Group Presentation Apple.pdfMicroeconomic Group Presentation Apple.pdf
Microeconomic Group Presentation Apple.pdf
Β 
Stochastic Dynamic Programming and You.pptx
Stochastic Dynamic Programming and You.pptxStochastic Dynamic Programming and You.pptx
Stochastic Dynamic Programming and You.pptx
Β 
Data Collection from Social Media Platforms
Data Collection from Social Media PlatformsData Collection from Social Media Platforms
Data Collection from Social Media Platforms
Β 
TCFPro24 Building Real-Time Generative AI Pipelines
TCFPro24 Building Real-Time Generative AI PipelinesTCFPro24 Building Real-Time Generative AI Pipelines
TCFPro24 Building Real-Time Generative AI Pipelines
Β 
STOCK PRICE ANALYSIS Furkan Ali TASCI --.pptx
STOCK PRICE ANALYSIS  Furkan Ali TASCI --.pptxSTOCK PRICE ANALYSIS  Furkan Ali TASCI --.pptx
STOCK PRICE ANALYSIS Furkan Ali TASCI --.pptx
Β 
PPT for Presiding Officer.pptxvvdffdfgggg
PPT for Presiding Officer.pptxvvdffdfggggPPT for Presiding Officer.pptxvvdffdfgggg
PPT for Presiding Officer.pptxvvdffdfgggg
Β 
Enabling GenAI Breakthroughs with Knowledge Graphs
Enabling GenAI Breakthroughs with Knowledge GraphsEnabling GenAI Breakthroughs with Knowledge Graphs
Enabling GenAI Breakthroughs with Knowledge Graphs
Β 
Using DAX & Time-based Analysis in Data Warehouse
Using DAX & Time-based Analysis in Data WarehouseUsing DAX & Time-based Analysis in Data Warehouse
Using DAX & Time-based Analysis in Data Warehouse
Β 
Paul Martin (Gartner) - Show Me the AI Money.pdf
Paul Martin (Gartner) - Show Me the AI Money.pdfPaul Martin (Gartner) - Show Me the AI Money.pdf
Paul Martin (Gartner) - Show Me the AI Money.pdf
Β 
STOCK PRICE ANALYSIS Furkan Ali TASCI --.pptx
STOCK PRICE ANALYSIS  Furkan Ali TASCI --.pptxSTOCK PRICE ANALYSIS  Furkan Ali TASCI --.pptx
STOCK PRICE ANALYSIS Furkan Ali TASCI --.pptx
Β 

Modelling investment decision making in the power sector under imperfect foresight

  • 1. Simulating investment decision making in the power sector under imperfect foresight Kris Poncelet 69th Semi-annual ETSAP Meeting University College Cork Cork, Ireland
  • 2. 22016-06-01 Reduce computational complexity Allows to increase level of detail Trade-off LT time horizon versus level of ST detail Either optimization or simulation paradigm Capture imperfect foresight and short- term focus of decision makers More realistic decision making? Simulation paradigm Myopic optimization: limited window of foresight
  • 3. 32016-06-01 Complementing optimization models Optimization: what is the cost-optimal transition pathway? Simulation: which policies are needed to realize this transition? Assess effectiveness and efficiency of policies
  • 4. 42016-06-01 Liberalized electricity markets Investment decision makers are private utilities Invest if projected revenues allow a reasonable internal rate of return IRR (incl. risk premium) Generation assets have a long lifetime Future revenue streams are uncertain
  • 5. 52016-06-01 Methodological analysis 2 scenarios: Perfect foresight (PF) Myopic foresight (MF10) Focus on period 2020-2055 5-year periods Power system inspired by the Belgian system Increasing carbon price LUSYM Investment planning model: Partial equilibrium 8 representative days Clustered unit commitment
  • 6. 62016-06-01 Perfect foresight 10-year foresight Impact on results
  • 7. 72016-06-01 Liberalized electricity markets Investment decision makers are private utilities Invest if projected revenues allow a reasonable internal rate of return IRR (incl. risk premium) SR profits = revenues – operational costs {𝐸[𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦] Γ— 1 1+𝐼𝑅𝑅 π‘¦βˆ’π‘§π‘¦ } β‰₯ 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘ 
  • 8. 82016-06-01 Perfect foresight scenario Perfect foresight of: Electricity prices (and capacity remuneration) in each time step and all years (implicit) Generation during each time step and all years Generation costs (fossil fuel prices, maintenance, etc.) => Exactly know SR profits => {𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ— 1 1+𝐼𝑅𝑅 π‘¦βˆ’π‘§π‘¦ } = 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘ 
  • 12. 122016-06-01 Perfect foresight scenario Factors which can impact the SR profits: Fossil fuel prices Carbon price Timing of decommissioning existing plants Type, timing and amount of newly built capacity Technological progress Evolution of the electricity demand Policy interactions Market design changes Interconnections Private utilities do not have perfect information The assumption of perfect foresight is not realistc
  • 14. 142016-06-01 Perfect foresight scenario - conclusions {𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ— 1 1+𝐼𝑅𝑅 π‘¦βˆ’π‘§π‘¦ } = 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘  Perfect foresight for private utilities is unrealistic Can lead to unrealistic simulation of investment decisions
  • 15. 152016-06-01 Myopic foresight model 𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ— 1 1+𝐼𝑅𝑅 π‘¦βˆ’π‘§ π‘Ž+π‘€πΉβˆ’1 𝑦=π‘Ž = 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘  βˆ’ π‘ π‘Žπ‘™π‘£π‘Žπ‘”π‘’ π‘£π‘Žπ‘™π‘’π‘’ Calculation of salvage value typically based on two assumptions: 1. Total discounted value of an asset equals the total discounted cost 2. value is distributed homogenously over the asset’s life time 𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ— 1 1+𝐼𝑅𝑅 π‘¦βˆ’π‘§ π‘Ž+π‘€πΉβˆ’1 𝑦=π‘Ž = π‘Žπ‘›π‘›π‘’π‘Žπ‘™π‘–π‘§π‘’π‘‘ 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘ Γ— 1 1+𝐼𝑅𝑅 π‘¦βˆ’π‘§ π‘Ž+π‘€πΉβˆ’1 𝑦=π‘Ž TLIFE = 5 d = 10% Time horizon = window of foresight
  • 18. 182016-06-01 Myopic foresight scenario - conclusions 𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ— 1 1+𝐼𝑅𝑅 π‘¦βˆ’π‘§ π‘Ž+π‘€πΉβˆ’1 𝑦=π‘Ž = 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘  βˆ’ π‘ π‘Žπ‘™π‘£π‘Žπ‘”π‘’ π‘£π‘Žπ‘™π‘’π‘’ Salvage value is determined exogenously Homogeneous distribution of the value of an asset seems optimistic (implications for dynamic recursive models) => No extrapolation of observed trends Can lead to unrealistic simulation of investment decisions Additional issues: What is the window of foresight? Window of foresight identical for all uncertain parameters
  • 19. 192016-06-01 {𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ— 1 1+𝐼𝑅𝑅 π‘¦βˆ’π‘§π‘¦ } = 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘  Private utilities do not have perfect foresight on short-run profits Can lead to unrealistic investment decisions 𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦 Γ— 1 1+𝐼𝑅𝑅 π‘¦βˆ’π‘§ π‘Ž+π‘€πΉβˆ’1 𝑦=π‘Ž = 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘  βˆ’ π‘ π‘Žπ‘™π‘£π‘Žπ‘”π‘’ π‘£π‘Žπ‘™π‘’π‘’ No extrapolation of observed trends in short-run profits Can lead to unrealistic investment decisions Investment criterion: {𝐸[𝑆𝑅 π‘ƒπ‘Ÿπ‘œπ‘“π‘–π‘‘π‘  𝑦] Γ— 1 1+𝐼𝑅𝑅 π‘¦βˆ’π‘§π‘¦ } β‰₯ 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘  Summary and conclusions Perfect foresight Myopic foresight Kris Poncelet, kris.poncelet@kuleuven.be KU Leuven, energy and environment group http://www.mech.kuleuven.be/en/tme/resea rch/energy_environment/ Poncelet, K. et al., Myopic Optimization Models for Simulation of Investment Decisions in the Electric Power Sector. 13th International conference on the European Energy Market, 6- 9 June 2016, Porto.
  • 20. 202016-06-01 Open questions Optimization Vs. Simulation: should TIMES be used for simulation? What are the alternatives?