GREPOM: An energy policy model

Energy policy analysis and energy modelling as applied in the case of Greece are reviewed. A complex of energy policy models in synergy is presented. These models have been developed by the Energy Policy Unit of the National Technical University of Athens and constitute the framework for analysing specific medium- and long-term policy options. A case study involving the use of new energy technologies is described. Scenarios relating to the penetration rate of new energy technologies are analysed and respective policy implications are discussed. A general conclusion to the research conducted is that with parallel work on both the content of specific policy issues and the policymaking process in general, substantial progress could be made in improving the decision-making potential of public policy organizations.     

Energy modelling: A new challenge for management science

The Arab oil embargo in 1973 and the subsequent price rises and production restrictions have given birth to a distinct branch within Management Science: energy modelling. This paper gives a critical and selective review on energy modelling, an industry which though thriving in an era of general economic anxiety, is showing signs of arrogant immaturity. After giving a historical background, the paper classifies energy models into three groups: open loop demand or supply models; energy closed loop models; energy-economy closed loop models. For each group the problem area is analysed and some illustrative examples are described. In the last sections, an attempt is made to sum up the experience that has been gained with energy modelling: the basic deficiencies, the impact of this activity on policy formulation and its position within Management Science. It is concluded that energy models, though very poor forecasting devices, can be very useful to policy makers as tools for analysis; energy model developers must convince potential model users and for that purpose they can benefit immensely from the 35-year-long experience accumulated by their colleagues in Management Science.     

A simplified algorithm for the depot location problem

This paper describes a simplified optimization algorithm used for the solution of a classical depot location problem as presented in a Greek Manufacturing Company. Algorithms in the literature for this type of problem are based on the assumption of predetermined fixed costs which are independent of the final size of the depots. This assumption is usually far from reality; the size of each depot does not remain constant during the optimization process and so does the associated fixed cost which is variable with the size of the depot. This assumption is relaxed in the proposed algorithm; the associated fixed cost is modified each time a new customer is allocated to a depot thus changing the required depot size.     

A methodological approach to strategic petroleum reserves

Energy constitutes a small fraction of the production inputs in the economy, yet the rigidity imposed by the short and medium term inability to substitute energy with other production factors in case of an energy shortage, requires the establishment of safeguard mechanisms to ensure sufficient energy supply during an emergency. These safeguards usually take the form of strategic energy reserves. A methodological approach is presented here, relating the level of strategic petroleum reserves, the decision variable, with the costs associated with their storage and the economic losses incurred by an energy shortage. This approach is based on the use of a decision tree, to portray emergency scenarios. Each scenario, a branch of the decision tree, can be evaluated in terms of a cost function which includes the inventory procurement and maintenance cost and the shortage cost inflicted by a petroleum shortfall.     

Modelling decentralized decision making in the energy sector

Large linear programming models, which have been widely used to determine the optimal structure of national energy systems, are based on the assumption that there is an absolutely centralized decision making process within the energy system. In this paper an attempt is made to match the real decision structure of a given energy system, by decomposing an LP energy model into smaller models, with the corresponding system decision centres. This is done by applying the ‘transfer price’ algorithm of Dantzing and Wolfe. The ‘master’ problem corresponds to the central planning unit, i.e. a Ministry of Energy, whereas the subproblems correspond to peripheral operating units, i.e. enterprises, usually state owned, which produce and distribute the energy carriers. The optimal plans of the peripheral units are submitted to the central unit, which through the mechanism of pricing of both common resources, inputs and energy services outputs, co-ordinates the overall planning of the energy system. An illustrative example is given referring to the Hellenic national energy system. The research reported is placed within a wider research endeavour, whose objectives and main line of work are also given.     

Electricity planning vs energy planning: A modelling approach

An essential part of the energy policy making process is the co-ordination of the sub-sectorial plans of energy producers in order to ensure that they are compatible with the broader goals of the global energy system. In this paper an attempt is made to underline the significance and estimate the size of this problem through an interplay of two optimization models; a global energy system model and an electricity subsystem model. The possibility of model interlink, leading to a higher level of co-ordination, is discussed.     

A model for forecasting energy economic systems

This paper presents a small integrated model which can be used for forecasting the behaviour of energy economic systems. The model is small, particularly when compared with the huge econometric modelling systems that are being used for the same purpose, and it is integrated in the sense that it forecasts both energy demand and gross domestic product simultaneously, taking into account the two way linkage existing between them. The energy economic system is formulated in a linear dynamic mode and Kalman filter is used for estimating the model. It is also applied for forecasting the state of the system in the future. The implementation of the model to the Greek energy economic system is presented as a case problem.