EURO 2024 Copenhagen
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4011. Heterogenous investors in energy markets

Invited abstract in session TC-9: Market-based analyses in long-term energy system models, stream Energy Markets.

Tuesday, 12:30-14:00
Room: 10 (building: 116)

Authors (first author is the speaker)

1. Christoph Weber
University Duisburg-Essen

Abstract

With decarbonization, numerous and heterogenous new generation units are installed. Decisions on such investments depend on multiple, partly not observable factors. Many long-term energy models are yet formulated as linear programs and are therefore prone to abrupt changes in primal variables (“penny-switching”). Discrete choice models deal with heterogeneity in individual decisions and avoid penny-switching. Here an approach is presented to incorporate such decision modelling in a non-linear, convex optimization problem, along with technological and system constraints. The problem is reformulated using the entropy function of information theory and transformed to an essentially linear program with a few exponential cone restrictions.
A first application investigates wind and PV investments across Germany based on the novel approach and compares the outcomes to the results of standard LP formulations. It is shown that the regional spread of investments increases when unobserved heterogeneity is taken into account.

Keywords

Status: accepted

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