by dr. l. mantzos energy-economy-environment modeling laboratory iccs/ntua

E3M – Lab

Tools and approaches for developing projection estimates relevant to LRTAP

Convention and NEC reporting

The PRIMES model

By Dr. L. MantzosBy Dr. L. MantzosEnergy-Economy-Environment Modeling LaboratoryEnergy-Economy-Environment Modeling Laboratory

ICCS/NTUAICCS/NTUA

October 2006, ThessalonikiOctober 2006, Thessaloniki

30 October 2006 2E3M – Lab

PRIMES energy system modelPRIMES energy system model1.1. Energy system model: mixed bottom-up (engineering) Energy system model: mixed bottom-up (engineering)

and top-down (microeconomic behaviors)and top-down (microeconomic behaviors)2.2. Modular, with separate modules for demand and supply Modular, with separate modules for demand and supply

by sectorby sector3.3. Market-oriented: market equilibrium prices drive energy Market-oriented: market equilibrium prices drive energy

balancing of demand and supply per fuel and marketbalancing of demand and supply per fuel and market4.4. Detailed (for 30 countries) and comprehensive (whole of Detailed (for 30 countries) and comprehensive (whole of

energy system, EU-wide networks)energy system, EU-wide networks)5.5. Environment-oriented (climate change, links with RAINS Environment-oriented (climate change, links with RAINS

for air pollution, links with special models for transport)for air pollution, links with special models for transport)6.6. Policy-oriented for a large variety of instruments Policy-oriented for a large variety of instruments

(subsidies, taxes, certificates, permit markets, R&D, …)(subsidies, taxes, certificates, permit markets, R&D, …)7.7. Very detailed electricity sector sub-modelVery detailed electricity sector sub-model


PRIMES: Price-driven and agent-PRIMES: Price-driven and agent-based simulation of marketsbased simulation of markets

► Fundamental distinction of PRIMES from other modelling Fundamental distinction of PRIMES from other modelling methodologies:methodologies: The behaviour of agents (e.g. households, steel industry, trade sector, The behaviour of agents (e.g. households, steel industry, trade sector,

power generation, etc.) is simulated individually according to power generation, etc.) is simulated individually according to microeconomic theory, including behavioural patterns, such as habits, microeconomic theory, including behavioural patterns, such as habits, comfort, risk management etc.comfort, risk management etc.

As a result of individual behaviours, demand and supply of energies is As a result of individual behaviours, demand and supply of energies is formulated, both for short term and long term including investmentformulated, both for short term and long term including investment

Simultaneous energy markets are cleared to determine prices that Simultaneous energy markets are cleared to determine prices that balance demand and supply; prices are mostly driven according to balance demand and supply; prices are mostly driven according to Ramsey-Boiteux methodology (adaptable to both regulated monopoly Ramsey-Boiteux methodology (adaptable to both regulated monopoly and competitive markets) plus a mark-up reflecting market powerand competitive markets) plus a mark-up reflecting market power

Market equilibrium is static within a period but evolution is dynamic in Market equilibrium is static within a period but evolution is dynamic in a time forward manner as investment is endogenously driven by supply a time forward manner as investment is endogenously driven by supply demand imbalances and technology profitability expectations.demand imbalances and technology profitability expectations.

► Policies and measures, the world energy markets, technology and Policies and measures, the world energy markets, technology and the economy drive behaviour and market equilibrium.the economy drive behaviour and market equilibrium.


PRIMES model featuresPRIMES model features► Explicit technologies in demand and supplyExplicit technologies in demand and supply► Technology dynamicsTechnology dynamics

vintagesvintages penetration of new technologiespenetration of new technologies inertia from past structures and inertia from past structures and pace of capital turnoverpace of capital turnover

► Time-of-use varying load of network-supplied Time-of-use varying load of network-supplied energy carriers to synchronise electricity, steam, energy carriers to synchronise electricity, steam, renewables, pipeline gasrenewables, pipeline gas in both demand and supplyin both demand and supply

► Non-linear relations:Non-linear relations: Economies of scale and Learning by doing for Economies of scale and Learning by doing for

technologiestechnologies Consumer choices and saturation effectsConsumer choices and saturation effects Supply cost-curves for potential of resources, new Supply cost-curves for potential of resources, new

technologies and the use of new sites for energy technologies and the use of new sites for energy plantsplants


Recent work on PRIMES Recent work on PRIMES modelmodel1.1. New improved electricity and steam sub-New improved electricity and steam sub-

modelmodel2.2. DC linear optimal power flowDC linear optimal power flow

Single bus per country (34 nodes)Single bus per country (34 nodes) All present and future interconnectorsAll present and future interconnectors Endogenous flows and trade of electricityEndogenous flows and trade of electricity

3.3. Existing and under construction power plants Existing and under construction power plants inventory – dispatching calibrated for 2005inventory – dispatching calibrated for 2005

4.4. Extended list of new power technologies (145) Extended list of new power technologies (145) with and without cogeneration or CO2 capturewith and without cogeneration or CO2 capture

5.5. Economics of investment and pricing related Economics of investment and pricing related to liberalized market conditionsto liberalized market conditions

6.6. Environmental policies including ETS Environmental policies including ETS representedrepresented


Energy-Economy-Environment Energy-Economy-Environment System CoverageSystem Coverage

Economy systemEconomy system► GDP, demographics, exchange and interest ratesGDP, demographics, exchange and interest rates► Activity by sector (18 sectors), income of householdsActivity by sector (18 sectors), income of households► Transport flowsTransport flows

Energy demand systemEnergy demand system► Consumption habits, durable goods and comfortConsumption habits, durable goods and comfort► Manufacturing technology, kind of industry and energy Manufacturing technology, kind of industry and energy

needsneeds► Transportation modes/means and technologies as drivers of Transportation modes/means and technologies as drivers of

energy needsenergy needsEnergy supply systemEnergy supply system

► Primary energy supply (depletable and renewable sources)Primary energy supply (depletable and renewable sources)► Secondary energy supply (power generation, refineries, etc.)Secondary energy supply (power generation, refineries, etc.)► Energy System BalancesEnergy System Balances

Energy MarketsEnergy Markets► Competition, price formation and regulation, import/exportCompetition, price formation and regulation, import/export

Environment ImpactsEnvironment Impacts► Energy-related emissionsEnergy-related emissions► Environmental impacts and pressures, damagesEnvironmental impacts and pressures, damages► Preventive and corrective measuresPreventive and corrective measures

Economy

Demand

SupplyPrice

s

Environment


Energy-Economy-Environment Energy-Economy-Environment System CoverageSystem Coverage

12 industrial sectors, subdivided into 26 sub-sectors using energy 12 industrial sectors, subdivided into 26 sub-sectors using energy in 12 generic processes (e.g. air compression, furnaces)in 12 generic processes (e.g. air compression, furnaces)

5 tertiary sectors, using energy in 6 processes (air conditioning, 5 tertiary sectors, using energy in 6 processes (air conditioning, office equipment)office equipment)

4 dwelling types using energy in 5 processes and 12 types of 4 dwelling types using energy in 5 processes and 12 types of electrical durable goods (e.g. refrigerator, washing machine, electrical durable goods (e.g. refrigerator, washing machine, television)television)

4 transport modes, 10 transport means and 10 vehicle 4 transport modes, 10 transport means and 10 vehicle technologiestechnologies

14 fossil fuel types, 4 new fuel carriers (e.g. hydrogen, methanol, 14 fossil fuel types, 4 new fuel carriers (e.g. hydrogen, methanol, biofuels) 10 renewable energy typesbiofuels) 10 renewable energy types

Sub-systems: power and steam generation, refineries, gas supply, Sub-systems: power and steam generation, refineries, gas supply, biomass supply(*), hydrogen supply(*), primary energybiomass supply(*), hydrogen supply(*), primary energy

150 power and steam technologies150 power and steam technologies 7 types of emissions from energy processes (partly unabated)7 types of emissions from energy processes (partly unabated)


System CoverageSystem Coverage► Geographical coverageGeographical coverage

Each EU-25 member-state taken individuallyEach EU-25 member-state taken individually In addition candidates and neighbours, such as In addition candidates and neighbours, such as

Bulgaria, Romania, Turkey, Norway, SwitzerlandBulgaria, Romania, Turkey, Norway, Switzerland Western Balkan countries (in 2007)Western Balkan countries (in 2007)

► Network coverageNetwork coverage Electricity and gas interconnections over EurasiaElectricity and gas interconnections over Eurasia For electricity and gas markets, the European For electricity and gas markets, the European

countries can be taken all togethercountries can be taken all together► Time frameTime frame

2000 to 2030 by five-years periods2000 to 2030 by five-years periods Seasonal and daily patterns for electricity, steam Seasonal and daily patterns for electricity, steam

and gas loadand gas load


Data input sourcesData input sources►NEW CRONOS - EUROSTATNEW CRONOS - EUROSTAT

Energy Balance sheets (as available in Energy Balance sheets (as available in SpringSpring 2005) 2005) Macroeconomic dataMacroeconomic data Population data and projectionPopulation data and projection

► various databases developed under EC various databases developed under EC programsprograms MURE, ICARUS, ODYSEE – demand sectorsMURE, ICARUS, ODYSEE – demand sectors SAPIENTIA, TECHPOL – supply technologiesSAPIENTIA, TECHPOL – supply technologies

►NEMS model database, US DOENEMS model database, US DOE► UNIDO data UNIDO data ► Industry associationsIndustry associations► Various surveys and qualitative Various surveys and qualitative

informationinformation► Specifically commissioned studiesSpecifically commissioned studies► Stakeholders’ consultationsStakeholders’ consultations


Energy-Economy-Environment Energy-Economy-Environment Models and their linksModels and their links

Energy demand-supply

prices and market equilibrium

for the EU areaPRIMESPRIMES

model

World energy

oil, gas, coalprices

POLES model

Transport activity

and flowsSCENES model

Macroeconomic/sectoral activity GEM-E3 model

Environmental impacts RAINS

EU refineries - IFPRenewables potential ECN, Observer

EU power plants – ESAPTechnologies: Tractebel

Energy efficiency Wuppertal, …


InputInput forfor a scenario a scenario with with PRIMESPRIMES

GDP and economic GDP and economic growth per sector (many growth per sector (many sectors)sectors)

World energy supply outlook World energy supply outlook – world prices of fossil – world prices of fossil fuelsfuels

Tax and subsidy policiesTax and subsidy policies Interest rates, risk premiums, etc.Interest rates, risk premiums, etc. Environmental policies and constraintsEnvironmental policies and constraints Technical and economic characteristics of future Technical and economic characteristics of future

energy technologies energy technologies Energy consumption patterns, Parameters affecting Energy consumption patterns, Parameters affecting

supply curves for primary energy, siting potential supply curves for primary energy, siting potential for new plants, parameters about comfort, rational for new plants, parameters about comfort, rational use of energy, tastes and habitsuse of energy, tastes and habits

Parameters of supply curves for primary energy, Parameters of supply curves for primary energy, energy savings, new sites, renewables potential…energy savings, new sites, renewables potential…


Output of a scenarioOutput of a scenario► Per country and time periodPer country and time period

Detailed energy balance (EUROSTAT format)Detailed energy balance (EUROSTAT format)►Electricity demand per use and sectorElectricity demand per use and sector

Transport activity, modes/means and vehiclesTransport activity, modes/means and vehicles Association of energy use and activitiesAssociation of energy use and activities Power system investment and use of plantsPower system investment and use of plants Energy supply per subsystemEnergy supply per subsystem Energy costs, prices and investment expensesEnergy costs, prices and investment expenses Emissions from energyEmissions from energy

► Additional materialAdditional material GDP and economic outlookGDP and economic outlook World energy supply outlookWorld energy supply outlook


Baseline and ScenariosBaseline and Scenarios►Baseline is a reference scenario used Baseline is a reference scenario used

to compare with alternative scenariosto compare with alternative scenarios Baseline is not a forecast, nor the most Baseline is not a forecast, nor the most

likely futurelikely future Baseline should not overestimate nor Baseline should not overestimate nor

underestimate effect of current trends underestimate effect of current trends and policiesand policies

►Alternative scenarios do reflect new Alternative scenarios do reflect new policies and contrasted evolutionspolicies and contrasted evolutions


Available DocumentationAvailable Documentation► PRIMES model description and manual are PRIMES model description and manual are

available at:available at:www.e3mlab.ntua.grwww.e3mlab.ntua.gr

currently available PRIMES manual refers to PRIMES currently available PRIMES manual refers to PRIMES ver.1 (update will be available later)ver.1 (update will be available later)

► Description methodology and results are Description methodology and results are available through reports and publications, e.g.available through reports and publications, e.g. European Energy and Transport: Scenarios on Key European Energy and Transport: Scenarios on Key

Drivers (2005, DG-TREN)Drivers (2005, DG-TREN) European Energy and Transport: Scenarios on energy European Energy and Transport: Scenarios on energy

efficiency and renewables (2006, DG-TREN)efficiency and renewables (2006, DG-TREN) Economic analysis of EU climate policy based on the Economic analysis of EU climate policy based on the

“European Energy and Transport – Trends to 2030” “European Energy and Transport – Trends to 2030” (2006, DG-ENV)(2006, DG-ENV)

http://www.e3mlab.ntua.gr/


Accessibility and engagement Accessibility and engagement with MSwith MS

► The PRIMES database is not available to The PRIMES database is not available to general publicgeneral public

► Key assumptions and detailed results are Key assumptions and detailed results are made available to MS experts and other made available to MS experts and other stakeholders for comments and feedback, e.g.stakeholders for comments and feedback, e.g. Energy economic analysts meetings (DG-TREN) Energy economic analysts meetings (DG-TREN) CAFE program (DG-ENV)CAFE program (DG-ENV)

► Normally parameter values can be given upon Normally parameter values can be given upon request to clients commissioning a studyrequest to clients commissioning a study Especially when they are important in interpreting particular Especially when they are important in interpreting particular

resultsresults► Detailed PRIMES results are periodically Detailed PRIMES results are periodically

publishedpublished Under the responsibility of ECUnder the responsibility of EC


Database Update and Model Database Update and Model DevelopmentDevelopment

► The PRIMES model database is currently The PRIMES model database is currently being updated under the LREM project (DG-being updated under the LREM project (DG-TREN):TREN):EUROSTAT statistics up to 2004 and available information EUROSTAT statistics up to 2004 and available information

for 2005, 2006for 2005, 2006Revision of the power plant database, including Revision of the power plant database, including

information on new constructions and projects as well as information on new constructions and projects as well as techno-economic data on CCStechno-economic data on CCS

Updated information on prices, taxes and tariffsUpdated information on prices, taxes and tariffsUpdated information about renewables: potential, non Updated information about renewables: potential, non

linear cost curves, learning by doing, etc.linear cost curves, learning by doing, etc.► A new version of PRIMES is currently in the A new version of PRIMES is currently in the

process of being developedprocess of being developed Extension of time horizon to 2050Extension of time horizon to 2050 Biomass supply - biorefineriesBiomass supply - biorefineries Hydrogen economyHydrogen economy

E3M – Lab

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by dr. l. mantzos energy-economy-environment modeling laboratory iccs/ntua

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