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Evolution of the electricity market in Germany: Identifying policy implications by an agent-based model

Johannes Herrmann and Ivan Savin

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: The diffusion of renewable electricity generating technologies is widely consid- ered as crucial for establishing a sustainable energy system in the future. However, currently the required transition is unlikely to be achieved by market forces alone. For this reason, many countries implement various policy instruments to support this process, also by re-distributing costs related to the policy instruments applied among all electricity consumers. This paper presents a novel history-friendly agent-based study aiming to explore efficiency of different mixes of policy instruments by means of a differential evolution algorithm. Special emphasis of the model is devoted to possibility of small scale renewable electricity generation without any further inputs, but also to storage of this electricity using small scale facilities being actively developed over the last decade. Both combined pose an important instrument to be used by electricity consumers to achieve partial or full autarky from the electricity grid, particularly after accounting for decreasing costs and increasing efficiency of both due to continuous innovation. Another distinct feature of this study is attention to stability of the electricity grid since more consumers becoming autarkic make, on the one hand, electricity in the grid more expansive, while on the other hand, supply of the electricity more vulnerable.

JEL-codes: C63 Q42 Q48 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cmp, nep-ene, nep-hme, nep-ino, nep-ore and nep-reg
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