Investment in the future electricity system - An agent-based modelling approach

O. Kraan*, G. J. Kramer, I. Nikolic

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

24 Citations (Scopus)
85 Downloads (Pure)

Abstract

Now that renewable technologies are both technically and commercially mature, the imperfect rational behaviour of investors becomes a critical factor in the future success of the energy transition. Here, we take an agent-based approach to model investor decision making in the electricity sector by modelling investors as actors with different (heterogeneous) anticipations of the future. With only a limited set of assumptions, this generic model replicates the dynamics of the liberalised electricity market of the last decades and points out dynamics that are to be expected as the energy transition progresses. Importantly, these dynamics are emergent properties of the evolving electricity system resulting from actor (investor) behaviour. We have experimented with varying carbon price scenarios and find that incorporating heterogeneous investor behaviour results in a large bandwidth of possible transition pathways, and that the depth of renewables penetration is correlated with the variability of their power generation pattern. Furthermore, a counter-intuitive trend was observed, namely that average profits of investors are seen to increase with carbon prices. These results are a vivid and generic illustration that outcome-based policy cannot be solely based on market instruments that rely on perfect rational and perfectly informed agents.

Original languageEnglish
Pages (from-to)569-580
Number of pages12
JournalEnergy
Volume151
DOIs
Publication statusPublished - 2018

Keywords

  • Agent-based modelling
  • Decarbonisation
  • Electricity
  • Electricity markets
  • Investor behaviour
  • Scenarios

Fingerprint

Dive into the research topics of 'Investment in the future electricity system - An agent-based modelling approach'. Together they form a unique fingerprint.

Cite this