Deep transformations of the energy sector: A model of technology investment choice
Florian Landis and
Energy Economics, 2017, vol. 68, issue S1, 136-147
Economy-energy equilibrium models have emerged as a dominant tool to investigate future pathways taking into account technological aspects, economic behavior, markets, and policy. A challenge for any model is to represent situations which involve large departures from a benchmark mix of energy technologies which would be associated with “deep” transformations of the energy sector (e.g., energy mix with a high penetration of renewables or near-complete decarbonization). This paper proposes a model which differentiates technologies at the level of investments and which is capable of representing large shifts in the market shares of competing technologies that produce a homogeneous energy good (e.g., electricity). We compare the partial equilibrium properties of the proposed technology investment choice model with the standard approach for modeling technology competition based on product differentiation. We also embed both approaches in a numerical general equilibrium multi-sector Ramsey growth framework. We find that the technology investment choice model overcomes some important limitations of the standard approach and is more suited to accommodate large changes in market shares of energy technologies in response to highly stringent energy and climate policy.
Keywords: Modeling electricity supply; Technology choice; Investment differentiation; Constant elasticity of transformation; Energy sector transformation (search for similar items in EconPapers)
JEL-codes: Q43 D92 C68 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:68:y:2017:i:s1:p:136-147
Access Statistics for this article
Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant
More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Haili He ().