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Using modeling to generate alternatives (MGA) to expand our thinking on energy futures

Joseph F. DeCarolis

Energy Economics, 2011, vol. 33, issue 2, 145-152

Abstract: Energy-economy optimization models - encoded with a set of structured, self-consistent assumptions and decision rules - have emerged as a key tool for the analysis of energy and climate policy at the national and international scale. Given the expansive system boundaries and multi-decadal timescales involved, addressing future uncertainty in these models is a critical challenge. The approach taken by many modelers is to build larger models with greater complexity to deal with structural uncertainty, and run a few highly detailed scenarios under different input assumptions to address parametric uncertainty. The result is often large and inflexible models used to conduct analysis that offers little insight. This paper introduces a technique borrowed from the operations research literature called modeling to generate alternatives (MGA) as a way to flex energy models and systematically explore the feasible, near-optimal solution space in order to develop alternatives that are maximally different in decision space but perform well with regard to the modeled objectives. The resultant MGA alternatives serve a useful role by challenging preconceptions and highlighting plausible alternative futures. A simple, conceptual model of the U.S. electric sector is presented to demonstrate the utility of MGA as an energy modeling technique.

Keywords: Mathematical; methods; (JEL:; C02); Optimization; Uncertainty; Modeling (search for similar items in EconPapers)
Date: 2011
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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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