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Improving the Representation of Energy Efficiency in an Energy System Optimization Model

Authors :
Patankar, Neha
Fell, Harrison G.
de Queiroz, Anderson Rodrigo
Curtis, John
DeCarolis, Joseph F.
Source :
Applied Energy, 306: 118083 (2022)
Publication Year :
2021

Abstract

Energy system optimization models (ESOMs) are designed to examine the potential effects of a proposed policy, but often represent energy-efficient technologies and policies in an overly simplified way. Most ESOMs include different end-use technologies with varying efficiencies and select technologies for deployment based solely on least-cost optimization, which drastically oversimplifies consumer decision-making. In this paper, we change the structure of an existing ESOM to model energy efficiency in way that is consistent with microeconomic theory. The resulting model considers the effectiveness of energy-efficient technologies in meeting energy service demands, and their potential to substitute electricity usage by conventional technologies. To test the revised model, we develop a simple hypothetical case and use it to analyze the welfare gain from an energy efficiency subsidy versus a carbon tax policy. In the simple test case, the maximum recovered welfare from an efficiency subsidy is less than 50% of the first-best carbon tax policy.<br />Comment: 31 pages, 7 figures, 2 tables (main body)

Subjects

Subjects :
Physics - Physics and Society

Details

Database :
arXiv
Journal :
Applied Energy, 306: 118083 (2022)
Publication Type :
Report
Accession number :
edsarx.2111.04769
Document Type :
Working Paper
Full Text :
https://doi.org/10.1016/j.apenergy.2021.118083