Market and Economic Impact Models Refinements to Match User Needs

This report discusses the improvements made in the three economic impacts models that are the modeling ensemble of SENTINEL Work Package 5, namely, the European Electricity Market Model (EMMA), the WEGDYN computable general equilibrium (CGE) model and the Business Strategy Assessment Model (BSAM). EMMA is a techno-economic model, developed to simulate the integrated north-western European power system. It models both dispatch of and investment in power plants, minimizing total costs with respect to investment, production, and trade decisions under a large set of technical constraints. WEGDYN belongs to the class of macroeconomic models, which depict the whole economy, separated into different production sectors and demand agents. At the global level, it can be configured at flexible country/regional levels. At the country/regional level, it can be configured at flexible sectoral levels. The model also differentiates private and public households across European countries/regions. The Business Strategy Assessment Model (BSAM) is an agent-based simulation model which simulates the Day-Ahead Scheduling (DAS) of wholesale electricity markets. It outputs the system marginal price (SMP), the electricity mix, the generation schedule of all resources, the profit/loss of each generator, and the level of curtailment applied to renewable energy sources. It is currently developed and calibrated to model the specificities of the Greek wholesale electricity market. Together these three models aim to capture micro- and macroeconomic impacts of the energy transition. Improvements were made to the structure and functioning of these three models to match user needs.

Based on the literature review on modelling trends and paradigms, the expertise of the involved project partners, and considering user needs, we identified the following key areas for enhancing the capabilities of economic impact models covered in this project:

• Exploration of distributional effects at the level of economic sectors (incl. energy) and private and public households by improving the WEGDYN model.
• Exploration of the effects of (de)commissioning and (in) flexible energy production at a higher resolved technological level by adding these features to the EMMA model.
• Evaluation of the evolution of the electricity mix as RES technologies’ capacity increases in the generation portfolio by using the improved BSAM model
• Provision of a comprehensive, consistent and tractable assessment of the trade-offs and synergies related to the energy transition (distributional effects, emission reduction targets, competitiveness, etc.) by soft linking of EMMA, BSAM and WEGDYN.