Proof of Concept

We are pleased to share with you that the European Research Council has given us funding to develop and test a proof-of-concept prototype of an analytical tool for simulating the social and private impact on power markets of low-carbon investments (renewable energies, energy storage, electric vehicles, and hydrogen production).

The new tool will shed light on issues central to the energy transition’s success, making it precious for regulators, policymakers, energy-intensive consumers, and energy firms. In particular, the tool will be instrumental in informing the current policy debate on the electricity market reform. The tool will build on state-of-the-art game-theoretical models developed by Natalia Fabra through her ERC Consolidator Grant ELECTRIC CHALLENGES, providing the basis to simulate firms’ competitive and strategic behavior in electricity markets with large shares of renewable energies and energy storage. Those models also serve to assess the low-carbon investments’ impact on several metrics reflecting electricity market outcomes (prices, market shares, emissions, etc.) and firms’ financial profitability (pay-back period, NPV, IRR, etc.) The algorithm will be programmed in Python, and an internet-based interface will be developed for ease of use. Data from the Spanish electricity market will be used to test the tool, which will be further extended to other European power markets.

Relevant stakeholders in the sector have already shown their support and willingness to participate in the training and testing stages. The team combines a deep knowledge of the power sector and the energy transition policies, a deep understanding of the relevant economic questions, and a deep command of the methods for modeling and quantifying the performance of electricity markets.