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A computable price-driven equilibrium model of the energy system and markets for Europe

Exploitable results

The PRIMES project developed a partial equilibrium model for the European energy system which incorporates the following features: explicit computation of equilibrium energy prices; a flexible, modularised structure which enables the particular issues faced by individual sectors to be appropriately represented; detailed representation of both the country-specific energy systems and the overall EU energy market; an engineering-orientated representation of energy supply with a detailed representation of sectoral activity, energy use, energy savings and abatement technologies within individual demand sectors. The model was developed as follows. The first step involved the mathematical specification of the model architecture and the model building blocks. The basic model framework (input/output, accounts, trade matrix) for both the full and the minimum standards model was then specified and implemented. Then the individual supply and demand modules were developed. The environment module was overlaid onto this framework, model solution algorithms were then developed with the help of computer programming experts. Finally, the model was tested and preliminary results were evaluated. The PRIMES model combines the detailed 'bottom-up' technological approach conventionally used in energy system models with an accurate representation of the different energy markets and the feedback between supply and demand as determined by market prices. The PRIMES model achieved a high level of technological detail, making it an ideal tool for the analysis of energy research and design strategy. PRIMES incorporates a substantial amount of environmental data which makes it suitable for the examination of environmental policy options, such as energy taxes, emission constraints, and emission permit trading. It was also designed so that it can incorporate external costs associated with energy production.