Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/248560 
Year of Publication: 
2021
Series/Report no.: 
ifo Working Paper No. 362
Publisher: 
ifo Institute - Leibniz Institute for Economic Research at the University of Munich, Munich
Abstract: 
Bottom-up optimization models neglect the inclusion of investment behavior We introduce three investor types that differ in their investment cost specifications, financing costs, and discounting. This leads to a substantially different pace and rate of adoption for specific generation technologies. For the European power market, 2050 wind (nuclear, gas-CCS) capacity ranges from 624 to 1,113 GW (84 to 194 GW, 383 to 502 GW), depending on the respective investor type. Accounting for type heterogeneity leads to 2050 wind (nuclear, gas-CCS) capacity of 912 GW (140 GW, 428 GW). Technologyspecific financing cost increase 2050 wind (nuclear, gas-CCS) capacity even to 1,069 GW (80 GW, 449 GW). Hence, our results confirm that accounting for more differentiated picture of electricity market investment with heterogeneous investor types can provide a starting point for tailor-made energy policies, thereby increasing the efficiency and effectiveness of public policies fostering the decarbonization of power markets.
Subjects: 
Investment behavior
investor type
investment cost
bottom-up optimization model
energy system model
power market model
JEL: 
C61
C68
Q40
Q41
Document Type: 
Working Paper

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