102nd Meeting of the EURO Working Group in Multiple Criteria Decision Aiding

Comparing profitability and common well-being as investment drivers in the energy transition: an agent-based approach

Not scheduled

20m

Siemens Auditorium (HIT E 51) (ETH Zürich)

Discussion Paper

Speaker

Agustín Cortés Hähnle (Deutsches Zentrum für Luft- und Raumfahrt (DLR))

Description

Motivation
Transformation pathways for the energy system are commonly assessed from a cost-efficiency or an emissions reduction perspective. Likewise, investors focus on profitability when assessing investments in technologies for this transition. Thus, prevailing modelling approaches in energy system analysis are specialised on these aspects. The energy transition and its necessary investments, however, have wider implications for the public interest: land use, job creation or public acceptance just to name a few. Yet, these aspects remain widely unaddressed in the current energy system modelling landscape. With this work, we contribute to close this gap, thereby focusing on the actors’ perspective.
Method
In the project ENERGOOD, we expand the agent-based electricity market model AMIRIS to consider common well-being, defined by a set of quantified indicators, as an additional degree of freedom for agents to decide on investments. In our model, agents decide simultaneously on their investment decisions, based on costs and revenue forecasts for each option. These are in turn derived from an endogenous long-term power price simulation and are used to form an expected net present value of each investment option as the central profitability metric. We now include a per agent multi-criteria assessment that is enriched by indicators of the common well-being in addition to profitability metrics . Thereby, we allow for a flexible weighting of indicators. This model setup allows us to investigate how the weighting between profitability and common well-being influences the choice of technology for investors. It also provides groundwork to explore incentives necessary to encourage investment behaviour geared towards an increase in well-being.
Results
We present differences among investment trajectories rather oriented towards common well-being as opposed to those oriented towards classical profitability considerations. Also, we analyse profit and common well-being levels of investors with different preferences and indicator weights in an overall electricity system setting.