Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/70114.html
   My bibliography  Save this paper

Modelling the Electricity and Natural Gas Sectors for the Future Grid: Developing Co-Optimisation Platforms for Market Redesign

Author

Listed:
  • Foster, John
  • Wagner, Liam
  • Liebman, Ariel
Abstract
This report provides detail on the modelling and scenario frameworks for the economic analysis of the Future Grid. These frameworks and modelling platforms have been constructed to support the Future Grid Cluster in examining policy and market issues which will affect the electricity and natural gas markets in Australia. Initially we provide an overview of the co-optimisation and expansion of transmission networks and electricity generation for the future grid. In this section we outline not only the key mechanisms and analyses required, but also how we have and will continue to collaborate with the other projects within the Future Grid Cluster. In section 3 we provide an extensive analysis of the electricity market modelling platform PLEXOS. This section will outline, not only the mechanistic components of modelling electricity markets, but also some of the assumptions which are required to examine issues such as generation investment under uncertainty. The following section is a discussion of the natural gas modelling platform ATESHGAH. This model has been in construction for several years prior to the commencement of the Future Grid Cluster and represents a significant shift in gas market modelling methodology for Australia, compared to previous approaches. This model is capable of examining multiple issues associated with policy, market, economic, and physical aspects of gas production, transmission, sale and liquefied natural gas (LNG) export simultaneously. We have used this model to examine how Australia’s eastern gas market could be affected by the commencement of LNG exports from Curtis Island in 2015/16. In the remaining section, we present the scenario modelling framework as an overview and present some initial results for Scenario 1: Set and Forget. These results represent the first set of simulations and should thus be viewed as an initial attempt to undertake the large search space that the four scenarios evaluated in the Future Grid Forum encompass.

Suggested Citation

  • Foster, John & Wagner, Liam & Liebman, Ariel, 2015. "Modelling the Electricity and Natural Gas Sectors for the Future Grid: Developing Co-Optimisation Platforms for Market Redesign," MPRA Paper 70114, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:70114
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/70114/1/MPRA_paper_70114.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gabriel, Steven A. & Zhuang, Jifang & Kiet, Supat, 2005. "A large-scale linear complementarity model of the North American natural gas market," Energy Economics, Elsevier, vol. 27(4), pages 639-665, July.
    2. Mohammed A. Al-Sahlawi, 1989. "The Demand for Natural Gas: A Survey of Price and Income Elasticities," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 77-90.
    3. Lise, Wietze & Hobbs, Benjamin F. & Hers, Sebastiaan, 2008. "Market power in the European electricity market--The impacts of dry weather and additional transmission capacity," Energy Policy, Elsevier, vol. 36(4), pages 1331-1343, April.
    4. Javier Estrada & Ole Fugleberg, 1989. "Price Elasticities of Natural Gas Demand in France and West Germany," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 77-90.
    5. Zio, Enrico & Aven, Terje, 2011. "Uncertainties in smart grids behavior and modeling: What are the risks and vulnerabilities? How to analyze them?," Energy Policy, Elsevier, vol. 39(10), pages 6308-6320, October.
    6. Gabriel, S.A. & Rosendahl, K.E. & Egging, Ruud & Avetisyan, H.G. & Siddiqui, S., 2012. "Cartelization in gas markets: Studying the potential for a “Gas OPEC”," Energy Economics, Elsevier, vol. 34(1), pages 137-152.
    7. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins & Robert C. Stowe, 2015. "An Assessment of the Energy-Efficiency Gap and Its Implications for Climate Change Policy," Working Papers 2015.28, Fondazione Eni Enrico Mattei.
    8. Donald G. Frahm & Lee F. Schrader, 1970. "An Experimental Comparison of Pricing in Two Auction Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 52(4), pages 528-534.
    9. Anne Neumann, 2009. "Linking Natural Gas Markets - Is LNG Doing its Job?," The Energy Journal, , vol. 30(1_suppl), pages 187-200, June.
    10. Stephen P. A. Brown and Mine K. Yucel, 2009. "Market Arbitrage: European and North American Natural Gas Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 167-186.
    11. Castro-Rodriguez, Fidel & Marín, Pedro L. & Siotis, Georges, 2009. "Capacity choices in liberalised electricity markets," Energy Policy, Elsevier, vol. 37(7), pages 2574-2581, July.
    12. Tooraj Jamasb and Michael Pollitt, 2005. "Electricity Market Reform in the European Union: Review of Progress toward Liberalization & Integration," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 11-42.
    13. Ibrahim Abada & Steven Gabriel & Vincent Briat & Olivier Massol, 2013. "A Generalized Nash–Cournot Model for the Northwestern European Natural Gas Markets with a Fuel Substitution Demand Function: The GaMMES Model," Networks and Spatial Economics, Springer, vol. 13(1), pages 1-42, March.
    14. Karsten Neuhoff, 2005. "Large-Scale Deployment of Renewables for Electricity Generation," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 21(1), pages 88-110, Spring.
    15. Roques, Fabien A. & Newbery, David M. & Nuttall, William J., 2008. "Fuel mix diversification incentives in liberalized electricity markets: A Mean-Variance Portfolio theory approach," Energy Economics, Elsevier, vol. 30(4), pages 1831-1849, July.
    16. Simshauser, Paul & Nelson, Tim & Doan, Thao, 0. "The Boomerang Paradox, Part I: How a Nation's Wealth Is Creating Fuel Poverty," The Electricity Journal, Elsevier, vol. 24(1), pages 72-91, January.
    17. Steven Gabriel & Yves Smeers, 2006. "Complementarity Problems in Restructured Natural Gas Markets," Lecture Notes in Economics and Mathematical Systems, in: Alberto Seeger (ed.), Recent Advances in Optimization, pages 343-373, Springer.
    18. Molyneaux, Lynette & Froome, Craig & Wagner, Liam & Foster, John, 2013. "Australian power: Can renewable technologies change the dominant industry view?," Renewable Energy, Elsevier, vol. 60(C), pages 215-221.
    19. Liam Wagner & Luke Reedman, 2010. "Modeling the deployment of plug-in hybrid and electric vehicles and their effects on the Australian National Electricity Market," Energy Economics and Management Group Working Papers 06, School of Economics, University of Queensland, Australia.
    20. Lal, Deepak, 1987. "The Political Economy of Economic Liberalization," The World Bank Economic Review, World Bank, vol. 1(2), pages 273-299, January.
    21. Egging, Rudolf G. & Gabriel, Steven A., 2006. "Examining market power in the European natural gas market," Energy Policy, Elsevier, vol. 34(17), pages 2762-2778, November.
    22. Ferris, Michael C. & Munson, Todd S., 2000. "Complementarity problems in GAMS and the PATH solver," Journal of Economic Dynamics and Control, Elsevier, vol. 24(2), pages 165-188, February.
    23. Byrnes, Liam & Brown, Colin & Foster, John & Wagner, Liam D., 2013. "Australian renewable energy policy: Barriers and challenges," Renewable Energy, Elsevier, vol. 60(C), pages 711-721.
    24. Wagner, Liam & Molyneaux, Lynette & Foster, John, 2014. "The magnitude of the impact of a shift from coal to gas under a Carbon Price," Energy Policy, Elsevier, vol. 66(C), pages 280-291.
    25. Paul L. Joskow, 2008. "Lessons Learned From Electricity Market Liberalization," The Energy Journal, , vol. 29(2_suppl), pages 9-42, December.
    26. Rutherford, Thomas F., 1995. "Extension of GAMS for complementarity problems arising in applied economic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1299-1324, November.
    27. Peter R. Hartley and Kenneth B. Medlock III, 2009. "Potential Futures for Russian Natural Gas Exports," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 73-96.
    28. Nhu Che & Tom Kompas, 2014. "The Structure and Dynamics of Liquefied Natural Gas Pricing in Asia and the Pacific and Implications for Australia," Crawford School Research Papers 1409, Crawford School of Public Policy, The Australian National University.
    29. Andreas Ehrenmann & Karsten Neuhoff, 2009. "A Comparison of Electricity Market Designs in Networks," Operations Research, INFORMS, vol. 57(2), pages 274-286, April.
    30. William E., Lilley & Luke J., Reedman & Liam D., Wagner & Colin F., Alie & Anthony R., Szatow, 2012. "An economic evaluation of the potential for distributed energy in Australia," Energy Policy, Elsevier, vol. 51(C), pages 277-289.
    31. Patrick T. Harker, 1986. "Alternative Models of Spatial Competition," Operations Research, INFORMS, vol. 34(3), pages 410-425, June.
    32. Rolf Golombek & Eystein Gjelsvik & Knut Einar Rosendahl, 1995. "Effects of Liberalizing the Natural Gas Markets in Western Europe," The Energy Journal, , vol. 16(1), pages 85-111, January.
    33. Roques, Fabien A., 2008. "Market design for generation adequacy: Healing causes rather than symptoms," Utilities Policy, Elsevier, vol. 16(3), pages 171-183, September.
    34. Nhu Che & Tom Kompas, 2014. "Economic Analysis of the Effects of Eastern Australia's LNG Exports in Asia-Pacific on Domestic Gas Users," Crawford School Research Papers 1410, Crawford School of Public Policy, The Australian National University.
    35. Holz, Franziska & von Hirschhausen, Christian & Kemfert, Claudia, 2008. "A strategic model of European gas supply (GASMOD)," Energy Economics, Elsevier, vol. 30(3), pages 766-788, May.
    36. Robert S. Pindyck, 1979. "The Structure of World Energy Demand," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661772, April.
    37. Denny, Eleanor & O'Malley, Mark, 2009. "The impact of carbon prices on generation-cycling costs," Energy Policy, Elsevier, vol. 37(4), pages 1204-1212, April.
    38. Kjetil T. Midthun & Mette Bjorndal & Asgeir Tomasgard, 2009. "Modeling Optimal Economic Dispatch and System Effects in Natural Gas Networks," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 155-180.
    39. MacGill, Iain & Outhred, Hugh & Nolles, Karel, 2006. "Some design lessons from market-based greenhouse gas regulation in the restructured Australian electricity industry," Energy Policy, Elsevier, vol. 34(1), pages 11-25, January.
    40. Bower, John & Bunn, Derek, 2001. "Experimental analysis of the efficiency of uniform-price versus discriminatory auctions in the England and Wales electricity market," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 561-592, March.
    41. Egging, Ruud & Gabriel, Steven A. & Holz, Franziska & Zhuang, Jifang, 2008. "A complementarity model for the European natural gas market," Energy Policy, Elsevier, vol. 36(7), pages 2385-2414, July.
    42. Gnansounou, Edgard, 2008. "Assessing the energy vulnerability: Case of industrialised countries," Energy Policy, Elsevier, vol. 36(10), pages 3734-3744, October.
    43. John Foster & Liam Wagner & Alexandra Bratanova, 2014. "LCOE models: A comparison of the theoretical frameworks and key assumptions," Energy Economics and Management Group Working Papers 4-2014, School of Economics, University of Queensland, Australia.
    44. Kim, Jin-Ho & Shcherbakova, Anastasia, 2011. "Common failures of demand response," Energy, Elsevier, vol. 36(2), pages 873-880.
    45. Liam Wagner & John Foster, 2011. "Is There an Optimal Entry Time for Carbon Capture and Storage? A Case Study for Australia's National Electricity Market," Energy Economics and Management Group Working Papers 07, School of Economics, University of Queensland, Australia.
    46. Moura, Pedro S. & de Almeida, Aníbal T., 2010. "The role of demand-side management in the grid integration of wind power," Applied Energy, Elsevier, vol. 87(8), pages 2581-2588, August.
    47. Chyong, Chi Kong & Hobbs, Benjamin F., 2014. "Strategic Eurasian natural gas market model for energy security and policy analysis: Formulation and application to South Stream," Energy Economics, Elsevier, vol. 44(C), pages 198-211.
    48. Hecking, Harald & Panke, Timo, 2012. "COLUMBUS - A global gas market model," EWI Working Papers 2012-6, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    49. GABRIEL, Steven & SMEERS, Yves, 2006. "Complementarity problems in restructured natural gas markets," LIDAM Reprints CORE 1804, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    50. Jamasb, Tooraj & Pollitt, Michael, 2008. "Liberalisation and R&D in network industries: The case of the electricity industry," Research Policy, Elsevier, vol. 37(6-7), pages 995-1008, July.
    51. Maroeska G. Boots, Fieke A.M. Rijkers and Benjamin F. Hobbs, 2004. "Trading in the Downstream European Gas Market: A Successive Oligopoly Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 73-102.
    52. Newbery, David M., 2002. "Problems of liberalising the electricity industry," European Economic Review, Elsevier, vol. 46(4-5), pages 919-927, May.
    53. Faye Steiner, 2000. "Regulation, Industry Structure and Performance in the Electricity Supply Industry," OECD Economics Department Working Papers 238, OECD Publishing.
    54. Sims, Ralph E. H. & Rogner, Hans-Holger & Gregory, Ken, 2003. "Carbon emission and mitigation cost comparisons between fossil fuel, nuclear and renewable energy resources for electricity generation," Energy Policy, Elsevier, vol. 31(13), pages 1315-1326, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anna Flessa & Dimitris Fragkiadakis & Eleftheria Zisarou & Panagiotis Fragkos, 2023. "Developing an Integrated Energy–Economy Model Framework for Islands," Energies, MDPI, vol. 16(3), pages 1-32, January.
    2. Foster, John & Wagner, Liam & Liebman, Ariel, 2017. "Economic and investment models for future grids: Final Report Project 3," MPRA Paper 78866, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Holz, Franziska & von Hirschhausen, Christian & Kemfert, Claudia, 2008. "A strategic model of European gas supply (GASMOD)," Energy Economics, Elsevier, vol. 30(3), pages 766-788, May.
    2. Chyong, Chi Kong & Hobbs, Benjamin F., 2014. "Strategic Eurasian natural gas market model for energy security and policy analysis: Formulation and application to South Stream," Energy Economics, Elsevier, vol. 44(C), pages 198-211.
    3. Egging-Bratseth, Ruud & Baltensperger, Tobias & Tomasgard, Asgeir, 2020. "Solving oligopolistic equilibrium problems with convex optimization," European Journal of Operational Research, Elsevier, vol. 284(1), pages 44-52.
    4. Jia, Weidong & Gong, Chengzhu & Pan, Kai & Yu, Shiwei, 2023. "Potential changes of regional natural gas market in China amidst liberalization: A mixed complementarity equilibrium simulation in 2030," Energy, Elsevier, vol. 284(C).
    5. Gijsbert T.J. Zwart, 2009. "European Natural Gas Markets: Resource Constraints and Market Power," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 151-166.
    6. Foster, John & Wagner, Liam & Liebman, Ariel, 2017. "Economic and investment models for future grids: Final Report Project 3," MPRA Paper 78866, University Library of Munich, Germany.
    7. Christian Growitsch & Harald Hecking & Timo Panke, 2014. "Supply Disruptions and Regional Price Effects in a Spatial Oligopoly—An Application to the Global Gas Market," Review of International Economics, Wiley Blackwell, vol. 22(5), pages 944-975, November.
    8. Holz, Franziska & Richter, Philipp M. & Egging, Ruud, 2016. "The Role of Natural Gas in a Low-Carbon Europe: Infrastructure and Supply Security," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 37(SI37), pages 33-59.
    9. Chi Kong Chyong & David Reiner & Dhruvak Aggarwal, 2021. "Market power and long-term gas contracts: the case of Gazprom in Central and Eastern European Gas Markets," Working Papers EPRG2115, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    10. Chi Kong Chyong & David M Reiner & Dhruvak Aggarwal, 2023. "Market Power and Long-term Gas Contracts: The Case of Gazprom in Central and Eastern European Gas Markets," The Energy Journal, , vol. 44(1), pages 55-74, January.
    11. Ibrahim Abada, 2012. "A stochastic generalized Nash-Cournot model for the northwestern European natural gas markets with a fuel substitution demand function: The S-GaMMES model," Working Papers 1202, Chaire Economie du climat.
    12. Feijoo, Felipe & Huppmann, Daniel & Sakiyama, Larissa & Siddiqui, Sauleh, 2016. "North American natural gas model: Impact of cross-border trade with Mexico," Energy, Elsevier, vol. 112(C), pages 1084-1095.
    13. Wang, Xiaolin & Qiu, Yangyang & Chen, Jun & Hu, Xiangping, 2022. "Evaluating natural gas supply security in China: An exhaustible resource market equilibrium model," Resources Policy, Elsevier, vol. 76(C).
    14. Massol, Olivier & Rifaat, Omer, 2018. "Phasing out the U.S. Federal Helium Reserve: Policy insights from a world helium model," Resource and Energy Economics, Elsevier, vol. 54(C), pages 186-211.
    15. Abada, Ibrahim & Briat, Vincent & Massol, Olivier, 2013. "Construction of a fuel demand function portraying interfuel substitution, a system dynamics approach," Energy, Elsevier, vol. 49(C), pages 240-251.
    16. Gong, Chengzhu & Wu, Desheng & Gong, Nianjiao & Qi, Rui, 2020. "Multi-agent mixed complementary simulation of natural gas upstream market liberalization in China," Energy, Elsevier, vol. 200(C).
    17. Ibrahim Abada & Steven Gabriel & Vincent Briat & Olivier Massol, 2013. "A Generalized Nash–Cournot Model for the Northwestern European Natural Gas Markets with a Fuel Substitution Demand Function: The GaMMES Model," Networks and Spatial Economics, Springer, vol. 13(1), pages 1-42, March.
    18. Massol, Olivier & Tchung-Ming, Stéphane, 2010. "Cooperation among liquefied natural gas suppliers: Is rationalization the sole objective?," Energy Economics, Elsevier, vol. 32(4), pages 933-947, July.
    19. Franziska Holz & Philipp M. Richter & Ruud Egging, 2013. "The Role of Natural Gas in a Low-Carbon Europe: Infrastructure and Regional Supply Security in the Global Gas Model," Discussion Papers of DIW Berlin 1273, DIW Berlin, German Institute for Economic Research.
    20. Tóth, Borbála Takácsné & Kotek, Péter & Selei, Adrienn, 2020. "Rerouting Europe's gas transit landscape - Effects of Russian natural gas infrastructure strategy on the V4," Energy Policy, Elsevier, vol. 146(C).

    More about this item

    Keywords

    Energy Economics; Electricity Markets;

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:70114. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.