Regional effects of energy policy

RegPol is a project originated from the research cooperation in the FME CenSES, - a centre for sustainable energy studies. The project started in May 2012, with IFE, NTNU and SINTEF as research partners, and with the last-mentioned as project manager. The project has been financed by the ENERGIX program run by the Research Council, and by private energy companies and local public authorities as user partners. The user partners has been: Trønderenergi, NVE, Enova, NTE Holding (the first three years), and Møre and Romsdal, Sør-Trøndelag, Nord-Trøndelag and Nordland county authorities. The background for the project is as follows: In the future production of energy will take place in a more dispersed way, and both production and consumption will increasingly take place at different locations. Correspondingly, the investments in the energy sector will also follow this pattern. As a consequence one must give more attention to the geographical dimension in the development of the energy sector. Increased contributions from wind, bio and solar energy sources imply more unpredictable fluctuations in production and supply of energy. This requires more flexibility in the network together with a balancing production and storage possibilities from other energy sources, like for instance hydropower. On the demand side, distortions between energy forms, like for instance electrifying of the car fleet, will affect the need for network capacity. Also (possible) development of new energy demanding activities will have implications on network capacity. Therefore, a corresponding geographical description of industrial and commerce development should be given attention. The expected development in the energy sector itself also calls for infrastructure investments of different types, and this activity will contribute to a higher economic activity in different regions. The ambition of the RegPol project has been to develop a joint model framework for the regional energy system (production and distribution) and the regional economy. This will hopefully give energy producers, network companies, regional planning authorities and other regional economic actors a better basis for both judging the development and taking appropriate decisions. At the same time, this should give a better understanding of how the national energy policy affects regional interests and decisions, and how to use local priorities actively in the regional policy. At the end of the project an updated regional version of the energy system model TIMES is available, where the energy system is divided in the 5 regional prize zones in Norway. TIMES is a bottom-up optimizing model with a technology-rich description of the energy system. In addition, we have developed a new multiregional equilibrium model in cooperation with the REGMODELL project called REMES (a Regional Equilibrium Model with focus on the Energy System). REMES is a top-down macro type economy model. The present model A version of REMES is adapted to the user cases and is regionally divided in 6 regions (the el-price zones + the Continental shelf), and up to 43 commodities and 47 industries. Through a special data pre-processing unit, the number of regions, commodities and industries is flexible. In parallel, different ways of linking the two models have been tested within a so-called hybrid model framework. This has been the main perspective in the PhD-work in the project. Actual ways of linking the models are soft-linking, hard-linking and full integration. In the first case, results are adapted and interchanged manually between the models, while this is done automatically in the hard-linked case. An integrated model implies that the models are built together in one common model. The different ways of linking the models is tested in two user cases: In the first case, the models are soft-linked to analyse effects of the green electricity certificates. Here, TIMES is given a special design for detailed treatment of planned regional wind power development in Mid-Norway, and the REMES model is designed in different ways to cope with this. Simulations are carried out as a support to decide where in the country new windmill production should take place, how regional demand will develop and what resulting regional el- zone prices will be. The other case is related to green transport, where CO2 emission target is a point of departure. In the TIMES model such emissions are quantified as a consequence of the development in demand for energy in combination with the development in different energy carriers. In addition, we have introduced CO2 emissions as a parameter in the REMES model and hard-linked the two models. This has improved the possibilities for policy instrument analysis by simulating and revealing the consequences from CO2-emissions targets for the economy in a regional perspective.

The aim of the project is to combine the modelling and analysis expertise at SINTEF, NTNU and IFE, and to learn more about the interaction between the economy and the energy system, and to provide decision support to policy makers and decision makers in t he energy sector and industry sector. In this work we will also include contributions from international partners with excellent competence on SCGE modelling (TNO) and energy systems modelling (ASATREM). It is natural to study this in the interface betwee n the energy system and the economic system focusing on: - Improving geographical representation of transport links, production and demand in energy system models. - Better representation of the energy sector and related sectors like transport and indust ry in regional economic models. - Strengthening the link between energy system models and regional economic models to avoid sub-optimization in the energy system. Our project develops a hybrid modelling approach for the regional level combining a TIMES m odel of the regional energy system, a macro economic equilibrium model at the national level and a multiregional SCGE model at the regional level.