System Dynamics Based Simulation Models for Power Market and Passenger Road Transport

After the liberalization of the electricity generation industry, capacity expansion decisions are made by multiple self-oriented power companies. Unlike the centralized environment, decision-making of market participants is now guided by price signal feedbacks and by an imperfect foresight of future market conditions (and competitor actions). In such an environment, decision makers need to better understand the long-term dynamics of the supply and demand sides of the power market. Therefore, Dr. Pasaoglu have developed a system dynamics model in order to better understand and analyse the decentralized and competitive electricity market dynamics in the long term. The developed simulation model oversees a 20 year planning horizon; it includes a demand module, a capacity expansion module, a power generation module, an  accounting  and  finance  module, various competitors, a  regulatory body and a power pooling system. Many features, singularities and tools of decentralized markets, such as; capacity withholding, enforced divestment,  long-term  contracts,  price-elastic demands, incentives / disincentives, are also incorporated  into the model. By means of such a decision tool, companies and regulators have a better opportunity to understand possible consequences of different decisions that they may make under different policies and market conditions. Dr. Pasaoglu has converted the model to a microworld and the microworld has been used as an educational tool in the “Energy Policy and Planning” courses in Sabanci University and Bogazici University, Turkey. The main part of the seminar is devoted to presentation of this model. Some findings of the scenario analysis will be discussed.

During the last 10 minutes of the seminar, Dr. Pasaoglu will present a system dynamics based study that analyses the behavioural partners of propulsion technology transitions in the EU road transportation sector. Due to factors such as globalization, changing customer needs and economic and environment pressures, the European road transport sector is continually undergoing transformations, including technology transitions. The EU emission targets set by the European Union to gradually decrease the CO₂ intensity of new car fleets lead to significant technology improvements in internal combustion engine based vehicles. However, as the potential to further improve these technologies are limited; there is a strong need to deploy alternative vehicles (“electro-mobility”) in the medium to long term in order to meet the emission reduction targets. In the European Union, electric vehicle technology is perceived as an important option to reduce emissions and fuel dependency. Although the market penetration of alternative vehicles will mainly depend on their cost competitiveness vis-à-vis conventional vehicles, there are other factors, such as infrastructure availability, consumer awareness, technological features of the cars (range, speed, safety, fuel consumption, environmental factors, technology maturity etc.), service availability and governmental supports, that are affect the deployment of these vehicles. Consequently, there is uncertainty about the market viability and the future market penetration of the technologies. It is therefore of critical importance to base technology transition expectations on a solid foundation, taking into account the main drivers and parameters influencing technology transition. The aim of this study is to provide a system dynamics based simulation model, incorporating all the major market players’ decisions, activities and their feedbacks and interactions with each other, in order to better understand transitions of future propulsion technologies in the EU road transport sector. In this seminar, the main modules and roles of each stakeholder including their interactions will be presented as well as some of the preliminary findings.

This seminar is organised by the Erasmus Centre for Future Energy Business.