Proceedings of IIASA Working Seminar on Energy Modeling, May 28-29, 1974

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. --

INTERNATIONAL INSTITUTE FOR

llASA

^APPLIED SYSTEMS ANALYSIS

C O N F E R E N C E P R O C E E D I N G S

c p - 7 4 - 3 \

SCHLOSS M E N BURG 236 1 Laxen burg

AUSTRIA

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I n t e r n a t i o n a l I n s t i t u t e f o r

A p p l i e d S y s t e m s A n a l y s i s

PROCEEDINGS OF

IIASA W O R K I N G SEMINAR ON

ENERGY MODELLING May 2 8 - 2 9 , 1974

S c h l o s s L a x e n b u r q 2 36 1 L a x e n b u r q

A u s t r i a

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The v i e w s e x p r e s s e d a r e t h o s e o f t h e c o n t r i b u t o r s and n o t n e c e s s a r i l y t h o s e o f t h e I n s t i t u t e .

The I n s t i t u t e assumes f u l l r e s p o n s i - b i l i t y f o r minor e d i t o r i a l c h a n g e s made i n grammar, s v n t a x , o r w o r d i n g , a n d t r u s t s t h a t t h e s e m o d i f i c a t i o n s h a v e n o t a b u s e d t h e s e n s e o f t h e w r i t e r s ' i d e a s .

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TABLE OF CONTENTS

L i s t o f P a r t i c i p a n t s

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¹

Agenda

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⁶

I n t r o d u c t o r y Remarks by t h e I n s t i t u t e D i r e c t o r

H . R a i f f a

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8 I n t r o d u c t o r y Remarks by t h e Energy P r o j e c t L e a d e r

W . ~ a f e l e

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^{1 0}

PAPERS PRESENTED

E l e c t r i c i t y and Energy Systems

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D a n i e l B l a i n , Robert J a n i n , and P . B e r n a r d 1 4 D i s c u s s i o n

...

³⁰

A Comparison o f Mathematical Models f o r Long-Term P l z n n i n g o f t h e Economic O p e r a t i n q and E x t e n s i o n o f a System o f Power S t a t i o n s

...

G . Modemann and P. Winske 31

isc cuss ion

...

⁶⁷

A S t u d y o f I n f r a s t r u c t u r a l Impact on Lonq Ranqe Energy T r a n s p o r t s

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Acad. S t y r i k o v i c h 68

D i s c u s s i o n

...

⁷⁴

S t r a t e g i e s f o r a T r a n s i t i o n from F o s s i l t o N n c l e a r F u e l s

Wolf H a f e l e and Alan S. Manne

...

⁷⁶

World Energy Supply A n a l y s i s

R . J . Deam

...

⁷⁹

D i s c u s s i o n

...

¹¹⁵

I n t e r f u e l S L l b s t i t u t i o n and T e c h n o l o g i c a l Change

Kenneth C . Hoffman and E l l e n A . C h e r n i a v s k y

...

¹¹⁷

D i s c u s s i o n

...

¹⁴⁶

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A Concept f o r E v a l u a t i o n o f T i m i n g o f T r a n s i t i o n i n t o a N o n - F o s s i l E n e r g y Economy

M i t s u o T a k e i

...

^{1 4 8}

D i s c u s s i o n

...

¹⁵⁶

P r o g r e s s R e p o r t on a Review o f E n e r g y Models Developed i n V a r i o u s C o u n t r i e s

J . - P . . : h a r p e n t i e r

...

¹⁵⁷

D i s c u s s i o n

...

^{1 5 8}

New Ways a n d New P o s s i b i l i t i e s o f M o d e l l i n g t h e E l e c t r i c Power S y s t e m Development

I m r i c h Lencz

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^{1 6 0}

D i s c u s s i o n

...

^{1 7 3}

...

U.S. E n e r g y P o l i c y a n d Economic Growth, 1975-2000

Edward A . Hudson a n d D a l e W. J o r g e n s o n 174 Economic A n a l y s i s o f A l t e r n a t i v e E n e r g y Growth

P a t t e r n s , 1975-2000

Edward A . Hudson

...

²⁷⁹

...

D i s c u s s i o n 312

P r e l i m i n a r y P r e s e n t a t i o n o f t h e GLOSAS P r o p o s a l

G . Hough, T . Utsurni, and E.A. E s c h b a c h

...

³¹⁴

D i s c u s s i o n

...

³¹⁸

REPORTS OF THE WORKING GROUPS

Group 1 : M e t h o d o l o g i c a l P r o b l e m s o f E n e r g y M o d e l l i n g ( P r o j e c t i o n , O p t i m i z a t i o n o r Gaming Models)

R e p o r t

...

³²⁰

Group 2: The F o r m u l a t i o n o f Demand R e l a t i o n s i n t h e E n e r g y F i e l d

R e p o r t

...

³²⁴

Group 3: How t o A c c o u n t f o r t h e I m p a c t o f t h e R & D E f f o r t i n New T e c h n o l o g i e s ?

~ e p o r t

...

³²⁹

Group 4 : The Embedding o f E n e r g y Models i n t o a n Economy-Wide Model a n d t h e L i n k i n g o f S e v e r a l N a t i o n a l a n d R e q i o n a l Models

R e p o r t

...

³³⁵

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C o n c l u s i o n o f t h e E n e r q y P r o j e c t L e a d e r

W . H a f e l e

...

³³⁹

C o n c l u s i o n o f t h e I n s t i t u t e D i r e c t o r

H . R a i f f a

...

^{3 4 1}

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L i s t o f P a r t i c i p a n t s

Chairman o f C o n f e r e n c e : P r o f . Wolf H a f e l e , E n e r q y P r o j e c t L e a d e r

Co-Chairman : P r o f . A l a n S . Manne

S c i e n t i f i c S e c r e t a r y : D r . J e a n - P i e r r e C h a r p e n t i e r

AUSTRIA

D r . P e t e r S i n t

I n s t i t u t f u e r S o z i o - o e k o n o m i s c h e E n t w i c h k l u n g s f o r s c h u n g

F l e i s c h m a r k t 2 2 1010 Wien

D r . Hans Aubauer 2 . P h y s i k a l . I n s t i t u t d e r ~ n i v e r s i t a t Wien S t r u d e l h o f g a s s e 4 1 0 9 0 Wien

BULGARIA

Eng. V a n i o M i t o v

c / o The N a t i o n a l C e n t e r f o r C y b e r n e t i c s a n d Computer T e c h n i q u e s

9, S l a v j a n s k a S t r e e t S o f i a

CANADA

D r . P a u l G . B r a d l e y D e p a r t m e n t o f Economics

U n i v e r s i t y o f B r i t i s h Columbia 2075 Westbrook P l a c e

V a n c o u v e r , B r i t i s h Columbia D r . F.W. G o r b e t

A s s o c i a t e S e n i o r Economic A d v i s o r

D e p a r t m e n t o f E n e r g y , Mines a n d R e s o u r c e s O t t a w a , O n t a r i o K I A OE4

CZECHOSLOVAKIA

I n g . M i l o s D r a h n y , C s c .

S t e l l v e r t r e t e r d e s D i r e k t o r s d e s F o r s c h u n q s i n s t i t u t e s f u e r

E n e r g e t i k , Power I n s t i t u t e P a r t y z a n s k a 7 a

P r a h a 7

I n q . I m p r i c h L e n c z , C s c . Power I n s t i t u t e

P a r t y z a n s k a 7 a P r a h a 7

FEDERAL REPUBLIC OF GERMANY D i p l . I n g . Gerd Modemann Techn. H o c h s c h u l e Aachen

I n s t i t u t f u e r E l e k t r i s c h e Anlagen und E n e r q i e w i r t s c h a f t

L e h r a u f t r a q L e i s t u n g s r e a k t o r e n Aachen

D r . R i c h a r d Denton

I n s t i t u t f u e r S y s t e m t e c h n i k und I n n o v a t i o n s f o r s c h u n g d e r

F r a u n h o f e r - G e s e l l s c h a f t e .V.

B r e s l a u e r S t r a s s e 48 75 K a r l s r u h e

M r . P a u l Winzke

T e c h n . H o c h s c h u l e Aachen

I n s t i t u t f u e r E l e k t r i s c h e Anlaqen und E n e r g i e w i r t s c h a f t

L e h r a u f t r a q L e i s t u n g s r e a k t o r e n Aachen

D r . I . A . S t e w a r t

S e n i o r Economic A d v i s o r D e p a r t m e n t o f E n e r g y , Mines a n d R e s o u r c e s O t t a w a , O n t a r i o K 1 A OE4

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FRANCE

M. Robert J a n i n

Chef du S e r v i c e d e s E t u d e s Economi ques ~ g n g r a l e s E l e c t r ,cj

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de France

2 , r u e L o u i s Murat 75008 n a r i s

--

M.D. B l a i n

~ h a r a k de Mission

~ i n i s t & r e d e s Economies e t d e s F i n a n c e s

D i r e c t i o n de l a P r g v i s i o n 9 , r u e C r o i x des P e t i t s Champs 75001 P a r i s

M. L e v i

S e r v i c e d c s E t u d e s Economiques ~ 6 n 6 r a l e s E l e c ' r i c i t e fie F r a n c e 2 , r l e Louis Murat 75008 ? a r l ~

-- --

ITALY --

D r .

;.

B i o n d i Montedison Company

Laroo Donegani 1

Milan JAPAN

D r . Mitsuo T a k e i Manaqe r

R e s e a r c h D i v i s i o n

The I n s t i t u t e o f Energy Economics

No. i O Mora Bldg.

2 8 Nishikubo Sakuragawa-Cho Minato-Ku

T o k e

L

D r . Pusao Mori C h i e f E n g i n e e r

C e n t r a l Research L a b o r a t o r y M i t s u b l s ? E l e c t r o C o r p o r a t i o n

2-3 Korunouchi

2-Chome C'l:yoda-Ru Tokyo

M r . Yukio S e k i y a

The I n s t i t u t e o f Energy Economics

No. LO Mori Bidg.

28 N i s h i k u b o Sakuragawa-Cho Minato-Ku

Tokyo

POLAND

P r o f . J e r z y H o l u b i e c

The P o l i s h Academy o f S c i e n c e s c / o Academia P a l a z z a

del l e S c i e n z e 2 V i c o l o D o r i a 00187 Rome

P r o f . W

.

Frankowski I n s t y t u t Badan Jadrowych Swierlc !c/Nars zawy

Warsaw

UNITEn SINGDOM

-

^.--

P r o f . P . . S . Deam Enerqy Research U n i t Queen Mary Col-lege Mile End goad London E l 4NS U.S.A.

D r . Xenneth C . Hoffman Head E n u i n e e r i n a D i v i s i o n Department o f A p p l i e d S c i e n c e Broo!rbavcn N a t i o n a l L a b o r a t o r y

Upton, New Yorlc 11973

M r . Franlc J . A l e s s i o Manaqer

E l e c t r i c Power Research I n s t i t u t e 3412 H i 1 lvicw Avenue

P . O m Box 10412

P a l o A l t o , C a l i f o r n i a 94304 P r o f . Thomas Connolly

Department o f Mechanical E n g i n e e r i n g

S t a n f o r d U n i v e r s i t y

S t a n f o r d , C a l i f o r n i a 94

3 0 5

M r . Gordon Houqh Arbesbachgasse 4/4/15

1190 VJi.en

-

P r o f . Gordon Xaufman

S l o a n S c h o o l ~f Yaqagement Massachilsetd-s I n s t i t u t e o f T e c h n o 1 . 0 ~

Cambridqe, M a s s a c h u s e t t s 02139 P r o f . Dale W. J o r g e n s o n

Department of Economics Harvard 1Jr.i v e r s i t y

Cambridge, M a s s a c h u s e t t s 02138

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U.S.A. ( c o n ' t ) M r . E. S c h m i d t

A s s i s t a n t t o V i c e P r e s i d e n t f o r R e s e a r c h a n d Development G e n e r a l E l e c t r i c C o r p o r a t i o n 5 7 0 L e x i n g t o n Avenue

New Y o r k , New York D r . E r n e s t G . S i l v e r

I n s t i t u t e f o r E n e r g y A n a l y s i s P.O. Box 117

Oak R i d g e , T e n n e s s e e 37830 M r . J a m e s A . W a l k e r

Management A s s o c i a t e E x e c u t i v e Off i c e o f t h e P r e s i d e n t

New E x e c u t i v e O f f i c e B l d g . Room 8104

W a s h i n g t o n , D . C

.

20503 U.S.S.R.

Acad. S t y r i k o v i c h

The Academy o f S c i e n c e s S t a t e C o m m i t t e e f o r USSR

C o u n c i l o f M i n i s t e r s f o r S c i e n c e a n d T e c h n o l o g y

11, Gorky S t r e e t Moscow

D r . Minaev

D r . K i c h a t o v

11, Gorky S t r e e t MOSCOW

D r . K u z o v k i n

The Academy o f S c i e n c e s S t a t e C o r n n i t t e e f o r USSR

C o u n c i l o f M i . n i s t e r s f o r S c i e n c e a n d T e c h n o l o g y

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Representatives from International Organizations

IAEA (Karntner Ring 11, 1010 Wien)

-

Mr. Rurik Krymm

Head of Economic Study Section Division of Nuclear Power Reactors Dr. Georg Woite

Division of Nuclear Power and Reactors

OPEC (Dr. Karl Lueger-Ring 10, 1010 Wien)

-

Dr. A. Khene

Secretary General OPEC Mr. M. Olorunfem

Senior Financial Analyst Mr. C. Faidi

Senior Exploration Officer

UNITED NATIONS

Mr. Clement Lopez-Polo United Nations Economic Commission for Europe Palais des Nations

1211 Geneva 10

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IIASA S t a f f

P r o f e s s o r Howard R a i f f a

...

D i r e c t o r

D r . Andrei Bykov

...

S e c r e t a r y t o IIASA RESEARCH SCHOLARS

P r o f . Wolf H a f e l e ( P r o j e c t L e a d e r ) D r . Rudolf Avenhaus

D r . J e a n - P i e r r e C h a r p e n t i e r P r o f . Michel Grenon

D r . N i k o l a i Kourochkin P r o f . Alan S. Manne D r . C e s a r e M a r c h e t t i D r . R i c h a r d P a t z a k D r . Atsuyuki S u z u k i D r . N o r b e r t Weyss Mrs. T r u u s Koopmans D r . A l f r e d Voss

D r . D i e t e r S e l l i n g s c h e g g D r . Robert T r e i t e l

D r . J a c q u e s Girod

P r o f . George D a n t z i g ( P r o j e c t L e a d e r ) P r o f . T j a l l i n g Koopmans

D r . Johann M i l l e n d o r f e r SCIENTIFIC RAPPORTEURS D r . D i e t e r S e l l i n g s c h e g g D r . J e a n - P i e r r e C h a r p e n t i e r D r . N o r b e r t Weyss

D r . J e a n - P i e r r e P o n s s a r d

Energy Systems (Chairman) Energy Systems

Energy Systems ( S c i e n t i f i c S e c r e t a r y ) Energy Systems

Energy Systems

Energy Systems (Co-Chairman) Energy Systems

Energy Systems Energy Systems Energy Systems Energy Systems Energy Systems*

Energy Systems*

Enerqy Systems*

Methodology Methodology Methodology

Working Group I

Working Group I1

Working Group I11

Working Group I V

*

S h o r t - t e r m a p p o i n t m e n t .

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Agenda T u e s d a y , May 2 8

Morning

8:30- 9 : 1 5 REGISTRATION

SESSION 1

9:15- 9 : 3 0 Welcome a n d I n t r o d u c t i o n ( H . R a i f f a , W . H a f e l e ) 9:30-10:15 ( A ) E l e c t r i c i t y a n d E n e r g y ( R . J a n i n

-

F r a n c e )

S y s t e m s

10:15-11:OO (B) A Comparison o f Mathe- ( G . Modemann

-

^FRG)

m a t i c a l Models f o r Long- Term P l a n n i n g o f t h e Economic O p e r a t i n g a n d E x t e n s i o n o f a S y s t e m o f Power S t a t i o n s 11:OO-11:15 C o f f e e B r e a k

11:15-12:OO ( C ) A S t u d y o f I n f r a s t r u c t u r a l (Acad. S t y r i k o v i c h

-

I m p a c t o f Long Range

E n e r g y T r a n s p o r t s USSR)

12:OO-12:45 ( D ) S t r a t e g i e s f o r a (W. H a f e l e , A . Manne

-

T r a n s i t i o n from F o s s i l

t o N u c l e a r F u e l s IIASA)

12:45-14: 30 Lunch

A f t e r n o o n

14:30-17:30 D i s c u s s i o n s i n Working Groups

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Wednesday, May 2 9 Morning

SESSION 2

9 : 30-10: 15 ( A ) World Energy S u p p l y ( R . Deam

-

^UK)

A n a l y s i s

1 0 : 15-11:OO ( B ) I n t e r f u e l S u b s i t u t i o n ( K . Hoffman

-

USA) and T e c h n o l o g i c a l Change

11:OO-11:15 C o f f e e Break

11: 15-12:OO ( C ) A Concept f o r E v a l u a t i o n (M. T a k e i

-

J a p a n ) o f Timing o f T r a n s i t i o n

i n t o a N o n - F o s s i l Energy Economy

12:OO-12:45 ( D l P r o g r e s s R e p o r t on a ( J . P . C h a r p e n t i e r

-

Review o f Enerqy Models

Developed i n V a r i o u s IIASA)

C o u n t r i e s

12:45-14:15 Lunch

A f t e r n o o n

14:15-16:OO S p e c i a l R e p o r t s

New Ways and New ( I . Lencz

-

CSSR)

P o s s i b i l i t i e s o f M o d e l l i n g the E l e c t r i c Power

System Development

Energy P o l i c y P r o j e c t o f ( D . J o r g e n s o n

-

^USA)

t h e F o r d F o u n d a t i o n

GLOSAS P r o p o s a l ( G . Hough

-

^USA)

16 :OO-16 : 15 C o f f e e Break

1 6 : 15-18:OO I n f o r m a l D i s c u s s i o n ,

i n c l u d i n g R e p o r t s from t h e Working Groups and f u r t h e r Research T o p i c s

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I n t r o d u c t o r y Remarks by t h e I n s t i t u t e D i r e c t o r H . R a i f f a

The r e s e a r c h program a t IIASA s t a r t e d up i n t h e summer of 1973 w i t h t h e a r r i v a l of o u r f i r s t s c i e n t i s t s , and by t h i s summer we s h o u l d be a b o u t 60 s t r o n g i n t h e s c i e n t i f i c a r e a . The r e s e a r c h p r o j e c t s i n c l u d e n i n e p r i n c i p a l a r e a s of r e s e a r c h . Three of them a r e s e r v i c e - o r i e n t e d : methodology, d e s i g n and management of l a r g e o r g a n i z a t i o n s , and computer s y s t e m s and s c i e n c e s . Then t h e r e a r e what we c a l l t h e s i x " a p p l i e d " p r o - j e c t s : i n t e g r a t e d i n d u s t r i a l s y s t e m s , u r b a n and r e g i o n a l s y s - tems, e c o l o g y , b i o - m e d i c i n e , e n e r g y , and w a t e r r e s o u r c e s . We t h i n k of t h e r e s e a r c h program a s b e i n g c o n d u c t e d i n a s o r t of m a t r i x f o r m a t , where we have o u r a p p l i e d p r o j e c t s from e n e r g y a l l t h e way t o t h e i n d u s t r i a l p r o j e c t s , and t h e n t h e r e m a i n i n g t h r e e p r o j e c t s i n v o l v i n g methodology, computer s c i e n c e s , and o r g a n i z a t i o n s y s t e m s a r e c o n c e i v e d t o be s e r v i c e o r i e n t e d . I n t h e s e s e r v i c e - o r i e n t e d p r o j e c t s we hope t o i n c o r p o r a t e a wide r a n g e of s k i l l s by employing a p p l i e d m a t h e m a t i c i a n s , computer s c i e n t i s t s , p e o p l e i n m a n a g e r i a l s c i e n c e s and b e h a v i o r a l s c i e n c e s , p o l i c y a n a l y s t s and i n c l u d i n g even l a w y e r s . h i s t o r i a n s , e t c .

I f we l o o k a t t h e e n e r g y p r o j e c t , t h e r e a r e now a b o u t 1 0 o r 12 p e o p l e t h a t a r e p r i m a r i l y i n t h e p r o j e c t i t s e l f , b u t t h a t g r o u p i s enhanced by a group of s e r v i c e - o r i e n t e d p e o p l e who work i n r e l a t i o n s h i p w i t h t h e e n e r g y p r o j e c t , a s w e l l a s i n t h e w a t e r and e c o l o g y a r e a s . Now, some of you m i g h t wonder why we c h o s e t o have n i n e p r o j e c t s when we have s u c h a s m a l l pro- f e s s i o n a l s t a f f h e r e . The c h o i c e of a p r o j e c t i s a c o m b i n a t i o n of s c i e n c e and p o l i t i c s , and i t was v e r y d i f f i c u l t t o g e t a g r e e - ment on one o r two t o p i c s . I t h i n k by h a v i n g a menu of i n t e r - r e l a t e d p r o j e c t s we a r e a b l e t o have an a c c e p t a b l e program.

~ u t t h i s p r e s e n t s t e r r i b l e problems f o r u s . What we hope we w i l l d o i n o u r r e s e a r c h s t r a t e g y i s have a four-pronged a t t a c k .

We a r e busy a t t h i s p o i n t b u i l d i n g up o u r i n h o u s e r e s e a r c h c a p a b i l i t y and we hope t o draw s c i e n t i s t s from a l l o u r n a t i o n a l member o r g a n i z a t i o n s . We a r e now 1 3 i n s t i t u t i o n s from 13 na- t i o n s s u p p o r t i n g IIASA, b u t g r a d u a l l y we w i l l expand a t t h e r a t e of 2 o r 3 new n a t i o n a l member o r g a n i z a t i o n s p e r y e a r .

The f i r s t p h a s e of o u r program i s t h e b u i l d i n g up of o u r i n h o u s e r e s e a r c h a c t i v i t i e s . The e n e r g y p r o j e c t i s p r o b a b l y t h e most advanced i n t e r m s of t h e t i m e - t a b l e o f o u r p r o j e c t s . We have a n asymmetric r a t e of development of t h e v a r i o u s p r o - j e c t s . We a r e hoping t h a t IIASA e v e n t u a l l y w i l l become p a r t

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of a network of research institutions and we hope that we will be able to work in collaboration with other international as well as national institutions. One of the international institutions with which we collaborate in the energy area is obvious- ly the International Atomic Energy Agency (IAEA, located here in Vienna), but in other projects we will be dealing with the UNESCO, WHO, WMO, and other members of the U.N. family. Then there are institutions like IFAC, IFIP and others of similar ilk where we can hope to work out some collaborative effort.

But in addition to collaboration with international institutions, we hope that we will have a strong linkage with institutions within nations. Thus, for example, the Institute of Control Science in Moscow is a natural link to us, and many of the things that we will be doing here they will support in terms of their research organization. We hope in the meteorological area, for example, to get cooperation with such institutions as the British Meteorological Office, NCSR in Boulder, Colorado, the Hydrometeorological Institute in the Soviet Union, etc.

We have an obligation not only to do research of our own and in collaboration with others, but to be what we call a sophisticated clearing-house for information--we have an exchange agency role: to find out what is being done in differ- ent places that is of relevance to our research program here, and to be catalyst in that kind of dissemination. One way of informing a wider community of the research efforts that are going on, on topics of relevance to our research program here,

is to have international conferences and working seminars, of which this is one. I hope that through this means we will not only be able to get an exchange of information, but that maybe some of the activities that are done here in the next two days will be the source of collaborative efforts of our re- searches here and research institutions elsewhere.

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I n t r o d u c t o r y Remarks by t h e E n e r g y P r o j e c t L e a d e r

When t h e i d e a a r o s e t o h a v e an e n e r q y p r o j e c t h e r e a t IIASA, t h e i n t e n t i o n was t o a c c o m p l i s h two t h i n g s

s i m u l t a n e o u s l y : f i r s t , t o make a s u b s t a n t i a l c o n t r i b u t i o n t o t h e problem o f e n e r g y a s s u c h , and s e c o n d , w i t h i n t h i s e f f o r t , t o d e v e l o p methods t o d e a l w i t h e n e r g y s y s t e m s , t h a t i s t o s a y methods t h a t p e r m i t d e a l i n g w i t h t h e s y s t e m a s p e c t o f e n e r g y . The m e t h o d o l o g i c a l r e q u i r e m e n t s f o r t h i s t a s k a r e h i g h , and t h e hope i s t h a t i n d e a l i n g w i t h e n e r g y we c a n l e a r n s o m e t h i n g o f r e l e v a n c e t o t h e

methodology o f s y s t e m s a n a l y s i s .

A g a i n s t t h i s b a c k g r o u n d t h e E n e r g y P r o j e c t i s c o n c e n t r a t i n g n o t s o much o n a d e t a i l e d i n v e s t i g a t i o n o f a s p e c i f i c a s p e c t o f e n e r g y ; n e i t h e r a r e we c o n c e n t r a t i n g on t h e q u e s t i o n o f how t o improve t h e p e r f o r m a n c e o f a t r a n s f o r m e r , f o r e x a m p l e , o r o f a n u c l e a r r e a c t o r . T h e r e a r e w i d e c o m m u n i t i e s , e n g i n e e r i n g communitj-es a n d o t h e r s , i n t h e w o r l d t h a t a r e h i g h l y c a p a b l e o f f u l f i l l i n g t h e s e t a s k s . Our f u n c t i o n a s we s e e i t i s t o i d e n t i f y p r o b l e m s s u c h a s t h e q u e s t i o n o f i n t e r f a c e , a n d o t h e r s t h a t s t i l l h a v e t o b e i d e n t i f i e d o r t h a t come up i f t h e s c a l e o f e n e r q y a c t i v i t i e s becomes w i d e and e v e n t u a l l y g l o b a l i n n a t u r e . Thus we h a v e l e a r n e d t h a t e n e r q y p r o d u c t i o n i s t h e m a j o r a r e a o f i n t e r e s t , b u t a l s o t h e h a n d l i n g o f e n e r g y i s o f c o n c e r n , o r what we c a l l t h e embedding o f e n e r g y i n t o v a r i o u s s p h e r e s , s u c h a s t h e a t m o s p h e r e , t h e h y d r o s p h e r e , a n d t h e s o c i o s p h e r e . A s a c o n s e q u e n c e we a r e a d d r e s s i n g o u r s e l v e s t o a number o f q u e s t i o n s t h a t w e r e n o t n e c e s s a r i l y e x p l i c i t l y and e x t e n s i v e l y s t u d i e d i n t h e p a s t . F o r i n s t a n c e , we a r e t r y i n q t o i d e n t i f y t h e e f f e c t o f w a s t e h e a t on t h e c l i m a t e , we a r e t r y i n g t o u n d e r s t a n d t h e e s t a b l i s h m e n t o f s t a n d a r d s t h a t a r e t y p i c a l o f t h e d e v e l o p m e n t o f t e c h n o l o g y , a n d we a r e t r y i n q t o do some.thing a b o u t r i s k e v a l u a t i o n , w i t h t h e u n d e r s t a n d i n g t h a t t h e y a r e t h e d r i v i n g f o r c e s o f modern t e c h n o l o g y .

The g o a l w h i c h we hope t o a c h i e v e e v e n t u a l l y i s t o b e o f h e l p t o t h e d e c i s i o n maker. T h a t i s t o s a y , w e h a v e t o e v a l u a t e a n d e x e c u t e methods t h a t a l l o w f o r t h e c o m p a r i s o n o f o p t i o n s . They a r e o p t i o n s f o r t h e p r o v i s i o n o f l o n g - t e r m e n e r g y , f o r i n s t a n c e , t h e n u c l e a r o p t i o n , t h e s o l a r o p t i o n , o r t h e g e o t h e r m a l o p t i o n .

A l l t h i s t h e n i m m e d i a t e l y l e a d s t o t h e i d e n t i f i c a t i o n o f t h e t i m i n g o f t h e problem: which p r o b l e m i s f i r s t , w h i c h i s s e c o n d ? I n w h a t r e s p e c t c a n we t a k e a l i t t l e t i m e

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and c a r e f u l l y p r e p a r e o u r s e l v e s f o r a v e r y c h a l l e n g i n g problem which might f a c e u s s l i g h t l y l a t e r i n t h e t i m e ahead? Q u i t e o f t e n it h a s been o b s e r v e d t h a t it i s e a s y t o p r e d i c t c e r t a i n f e a t u r e s o f t h e f u t u r e . Yet it i s by f a r more d i f f i c u l t t o s a y when t h e y a r e q o i n g t o happen. L e t me s t a t e t h a t I , f o r m y s e l f , had

a n t i c i p a t e d an e n e r g y c r i s i s i n t h e f o r e s e e a b l e f u t u r e , b u t a t t h e t i m e I d i d n o t u n d e r s t a n d t h a t i t would

a r r i v e s o soon. For t h e s e r e a s o n s t h e i d e n t i f i c a t i o n o f t h e t i m i n g o f t h e problem i n o u r judgment i s a major g o a l f o r s y s t e m s a n a l y s i s i n t h e f i e l d o f e n e r g y .

A s p e c i f i c c o n c l u s i o n o f an e v a l u a t i o n o f t i m i n g would be t o i d e n t i f y t h e f o l l o w i n g s t r a t e g i e s : What

i s t o be done on which time s c a l e and i n what p e r s p e c t i v e ? To what e x t e n t , f o r i n s t a n c e , i s e n e r g y c o n s e r v a t i o n

p o s s i b l e ? What i s t h e p h a s i n g o f v a r i o u s a c t i o n s t o be t a k e n i n t h e e n e r g y f i e l d ? Here we need some s e n s o r t h a t t e l l s us a b o u t p o s s i b l e r e a c t i o n s , f o r i n s t a n c e , t o e n e r g y c o n s e r v a t i o n s t e p s , o r a b o u t t h e n a t u r e o f t h e consequences i f t h e p a r t i t i o n between e l e c t r i c and non- e l e c t r i c s e c o n d a r y e n e r g y were changed.

We f e e l t h a t t h i s s e n s o r t h a t h e l p s u s t o a s s e s s t h e e v a l u a t i o n o f t i m i n g and s t r a t e g i e s i s e n e r g y m o d e l l i n g . I am v e r y g r a t e f u l , t h e r e f o r e , f o r t h e p o s s i b i l i t y o f b e i n g w . t h you t o d a y , and I am happy t h a t f o r two d a y s we have t h e o p p o r t u n i t y o f d e a l i n g w i t h t h e problem o f m a t h e m a t i c a l m o d e l l i n g o f e n e r g y demand and s u p p l y . I f t h i s i s done i n a s o p h i s t i c a t e d manner, t h e s e t e c h n i q u e s can be u s e d f o r t h e i d e n t i f i c a t i o n o f n e c e s s a r y s t e p s , f o r i n s t a n c e , i n t h e R & D f i e l d , i n i n v e s t m e n t s o r w i t h r e g a r d t o n e c e s s a r y i n f r a s t r u c t u r a l improvements. We c a n n o t a f f o r d t o do it by t r i a l and e r r o r . We r a t h e r have t o do i t on t h e b a s i s o f m a t h e m a t i c a l m o d e l l i n g . The p u r p o s e s o f t h i s c o n f e r e n c e a r e t w o - f o l d : on t h e one hand, i t w i l l f a m i l i a r i z e u s w i t h t h e l a t e s t accomplishments i n t h a t f i e l d , a n d , on t h e o t h e r hand, i t s e r v e s a s a p l a t f o r m o f exchange, o r what P r o f . R a i f f a c a l l e d " h o p e f u l l y s o p h i s t i c a t e d b u t n e v e r t h e l e s s a c l e a r i n g h o u s e . "

T h i s m e e t i n g t o d a y h a s two f o r m a l morning s e s s i o n s , where s e v e r a l p a p e r s w i l l be p r e s e n t e d a s i n d i c a t e d i n t h e agenda. T h i s a f t e r n o o n t h e r e w i l l b e d i s c u s s i o n s i n working g r o u p s , a n d , w i t h a s u f f i c i e n t number o f

h i s t o r i c a l rooms a v a i l a b l e , i t w i l l b e p o s s i b l e t o have f o u r p a r a l l e l s e s s i o n s t h a t w i l l c o n c e n t r a t e on v a r i o u s s p e c i f i c t o p i c s a s t h e y come up i n t h e d i s c u s s i o n s . A t t h e end o f t h e morning d i s c u s s i o n , p e r h a p s a l l o f u s s h o u l d d i s c u s s which t o p i c s s h o u l d b e c e n t r a l t o t h e a f t e r n o o n d i s c u s s i o n s . N a t u r a l l y , i n o r g a n i z i n g a c o n f e r e n c e , one i s w e l l a d v i s e d t o p r e p a r e p o s s i b l e

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s u g g e s t i o n s a n d t o e m p h a s i z e p o s s i b l e s u b j e c t s f o r d i s c u s s i o n s . L e t

m e

r e p e a t , h o w e v e r , t h a t t h e s e p r o p o s e d t o p i c s c a n b e d i s c u s s e d , i f s o d e s i r e d , b u t

w e

d o n o t n e c e s s a r i l y h a v e t o s t i c k t o them.

On Wednesday a f t e r n o o n

w e

w i l l t r y t o h a v e a con- c l u s i o n o r a d i s c u s s i o n o f f u r t h e r r e s e a r c h t o ~ i c s . T h i s would a l l o w e v e r y b o d y t o make s t a t e m e n t s o r o b s e r v a t i o n s , i f h e d e s i r e s t o d o s o , a n d t h i s b r i n g s

m e

t o t h e e n d o f my i n t r o d u c t o r y r e m a r k s .

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PAPERS PRESENTED

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E l e c t r i c i t y a n d E n e r g y S y s t e m s D a n i e l B l a i n , R o b e r t J a n i n , a n d P . B e r n a r d

The m o s t c h a r a c t e r i s t i c f e a t u r e o f t h e d e v e l o p m e n t o f e l e c t r i c i t y c o n s u m p t i o n i n F r a n c e d u r i n g t h e t w e n t y y e a r s 1 9 5 0 - 1 9 7 0 i s i t s r e g u l a r i t y . I n d e e d , d u r i n g t h i s p e r i o d , a f a i r l y c l e a r l y marked d i c h o t o m y c o u l d b e o b s e r v e d i n t h e p o w e r m a r k e t , i n w h i c h two s e p a r a t e a n d d i s t i n c t s e c t o r s w e r e a p p a r e n t : t h e f o s s i l e n e r g y s e c t o r ( c o a l a n d l i q u i d o r g a s e o u s h y d r o c a r b o n s ) , o n t h e o n e h a n d , a n d t h e e l e c t r i c i t y s e c t o r on t h e o t h e r .

T h e r e w e r e d o u b t l e s s some l i n k s b e t w e e n t h e s e t w o s e c - t o r s , o w i n g t o t h e f a c t t h a t t h e s e c o n d h a d t o o b t a i n s u p - l i e s f r o m t h e f i r s t f o r p r o d u c i n g s e c o n d a r y e l e c t r i c e n e r g y , w h i c h e x p a n d e d f a i r l y r a p i d l y d u e t o t h e f a c t t h a t h y d r a u l i c s i t e s c a p a b l e o f b e i n g e q u i p p e d e c o n o m i c a l l y became p r o g r e s - s i v e l y e x h a u s t e d . But t h e r e w e r e h a r d l y any d o w n s t r e a m l i n k s i n t h e s y s t e m , o w i n g t o t h e f a c t t h a t t h e s t r u c t u r e o f f i n a l u s e s - f o r p o w e r i n t h e two s e c t o r s p r o v e d t o b e r e m a r k - a b l y s t a b l e . And s o , w h e r e a s d i f f e r e n t f o s s i l - t y p e e n e r g y s o u r c e s c o m p e t e d v e r y a c t i v e l y o n t h e h e a t i n g m a r k e t p a r t i c - u l a r l y , t h e g r o w t h o f e l e c t r i c i t y t o o k p l a c e e s s e n t i a l l y i n c a p t i v e m a r k e t s , w h e r e t h e u s e o f e l e c t r i c i t y was p r a c t i c a l - l y n o t c o n t e s t e d : l i g h t i n g , t e l e t r a n s m i s s i o n s y s t e m s , e l e c - t r o l y s i s , m e t a l r e f i n i n g , p o w e r f o r s m a l l a n d medium s i z e d u n i t s .

W h e r e a s t h e r e w e r e s o m e t i m e s l i n k s b e t w e e n t h e s e t w o s e c t o r s ( f o r r a i l t r a n s p o r t , f o r e x a m p l e ) , t h e y w e r e n o t nu- m e r o u s a n d w e r e i n s u f f i c i e n t t o j e o p a r d i z e t h e c o - e x i s t e n c e o f t h e two s e c t o r s , a s e a c h o n e o p e r a t e d i n i t s own p a r t i c u - l a r f i e l d .

Power m a r k e t p r o s p e c t s i n d i c a t e d t h a t t h i s s t a b i l i t y w o u l d g r a d u a l l y d i s a p p e a r a n d i n d e e d i t was s u d d e n l y b r o k e n by t h e r e c e n t i n c r e a s e i n t h e c o s t o f f o s s i l - t y p e p o w e r : t h e t w o s e c t o r s a r e no l o n g e r c l e a r l y s e p a r a t e . C o m p e t i t i o n b e t w e e n a l l f o r m s o f e n e r g y w i l l d o m i n a t e t h e e n e r g y s y s t e m , o w i n g t o t h e new c o m p e t i t i v e a s p e c t o f e l e c t r i c i t y o n t h e h e a t i n g m a r k e t . A c h a n g e o f t h i s k i n d i n t h e s i t u a t i o n h a s s e r i o u s c o n s e q u e n c e s o n t h e s t r u c t u r e s a n d i n t e r n a l o r g a n i z a - t i o n o f e l e c t r i c p o w e r p r o d u c e r s . I t a l s o makes i t n e c e s - s a r y t o r e - e x a m i n e c o m p l e t e l y t h e m e t h o d o l o g y c o n c e r n i n g f o r e c a s t s i n t h e l i g h t o f new c o n d i t i o n s b r o u g h t a b o u t by t h e i n c r e a s e i n t h e u s e o f e l e c t r i c e n e r g y .

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I n t h e p r e s e n t c o m m u n i c a t i o n , i t

i s

p r o p o s e d t o i l l u s - t r a t e i n t h e f i r s t p l a c e how t h e m e t h o d s u s e d f o r f o r e c a s t - i n g r e q u i r e m e n t s a n d p r o g r a m m i n g w e r e a d a p t e d t o p a s t g r o w t h c o n d i t i o n s . F u r t h e r o n , a n i n d i c a t i o n w i l l b e g i v e n o f how t h e y s h o u l d b e a d a p t e d t o s u i t p r e s e n t c o n d i t i o n s .

1. The T r e n d o f P a s t E v o l u t i o n

The s t r a t e g y o f t h e d e v e l o p m e n t o f e l e c t r i c e n e r g y came w i t h i n t h e c o n t e x t o f f a i r l y r e g u l a r w o r l d e c o n o m i c e v o l u - t i o n . The s u c c e s s i v e r e l a y o f s p e c i f i c u s e s c o m p r i s i n g t h e p a r t i c u l a r f i e l d f o r e l e c t r i c i t y was a l s o a r e g u l a t i n g f a c t o r i n t h e d e v e l o p m e n t o f t h e t o t a l demand. The f o r e c a s t demand c o u l d t h e r e f o r e b e b a s e d on c e r t a i n f a i r l y c l e a r l y d e t e r m i n e d l i n k s b e t w e e n v a r i a b l e s . On t h e o t h e r h a n d , t h e s u s t a i n e d r a t e o f s p o n t a n e o u s demand i n d u c e d f i r m s p r o d u c i n g , t r a n s - p o r t i n g , a n d d i s t r i b u t i n g e l e c t r i c i t y t o d e v e l o p a s t r a t e g y

t h a t m e r e l y a c c o m p a n i e d t h i s demand a n d s a t i s f i e d i t s r e - q u i r e m e n t s . I n t h i s c o n t e x t , i t was p e r f e c t l y l e g i t i m a t e t o c o n s i d e r t h a t demand w o u l d d e v e l o p e x o g e n o u s l y .

I t was t h e r e f o r e f e a s i b l e t o u s e f o r e c a s t i n g m o d e l s o f t h e s t a t i s t i c a l t y p e w h i c h t o o k t h e e s s e n t i a l o f t h i s e v o l u - t i o n i n t o c o n s i d e r a t i o n . By t h e i r v e r y n a t u r e , t h e y p o s - s e s s e d t h e g r e a t a d v a n t a g e o f e n a b l i n g e r r o r s t o b e m e a s u r e d a n d a c o n f i d e n c e l e v e l t o b e a s s e s s e d . I n t h e s e c o n d i t i o n s , t h e f o r e c a s t i n g m e t h o d s w e r e w e l l a d a p t e d t o t h e r e q u i r e m e n t s o f d e c i s i o n m a k e r s , i n t h e t e r m s o f a f a i r l y s i m p l e p r o c e d u r e - - a t l e a s t i n p r i n c i p l e - - c o n s i s t i n g n o t a b l y i n :

-

d e f i n i n g t h e c o s t o f f a i l u r e ; a n d

-

c o m b i n i n g s u p p l y w i t h demand, b o t h b e i n g random.

I t c o u l d j u s t i f i a b l y b e m a i n t a i n e d t h a t t h i s s y s t e m l e d t o t h e b e s t p o s s i b l e d e f i n i t i o n o f t h e v o l u m e o f s u p p l i e s r e q u i r e d .

More a n a l y t i c a l m o d e l s w e r e n o t e x c l u d e d when r e q u i r e d t o s a t i s f y r e q u e s t s f o r more s p e c i f i c i n f o r m a t i o n . However, w i t h o u t d e n y i n g t h e i r u t i l i t y , i t must b e s t a t e d t h a t t h e y o n l y p l a y e d a m i n o r r o l e .

1.1 E c p n o m e t r i c Models

The v a r i o u s d i f f e r e n t e c o n o m e t r i c a p p r o a c h e s p o s s i b l e a l l s h a r e a common c h a r a c t e r i s t i c : t h e y a l l d e p e n d o n t h e h y p o t h e s i s t h a t t h e s t r u c t u r a l r e l a t i o n s h i p s i d e n t i f i e d by o b s e r v a t i o n i n t h e p a s t w i l l b e m a i n t a i n e d i n t h e f u t u r e , i n s u c h a way t h a t f u t u r e i d e n t i f i c a t i o n o f t h e e x p l a n a t o r y

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v a r i a b l e s r e t a i n e d

i s

s u f f i c i e n t t o d e t e r m i n e t h e e v o l u t i o n o f t h e e n d o g e n o u s v a r i a b l e .

A s f o r t h e e x p l a n a t o r y v a r i a b l e s t h e y may t a k e d i f f e r e n t f o r m s . They may c o n s i s t o f t i m e a l o n e ( a u t o n o m o u s m o d e l s ) . They may S e o t h e r v a r i a b l e s , s u c h

as a

r e p r e s e n t a t i v e p a r a m e t e r o f e c o n o m i c o r i n d u s t r i a l a c t i v i t y , t h e c o s t o f e l e c t r i c pow- e r , d e m o g r a p h i c e v o l u t i o n , e t c . .

.

( c o n d i t i o n a l m o d e l s ) .

I n a g e n e r a l m a n n e r , t h e v a r i o u s d i f f e r e n t p o s s i b l e a p - p r o a c h e s w e r e t e s t e d . I n p r a c t i c e , t h e m o d e l s f i n a l l y

a d o p t e d - - b e c a u s e t h e y a p p e a r e d t o b e t h e m o s t p e r t i n e n t u n d e r a n a l y s i s - - w e r e f a i r l y s i m p l e i n f o r m .

1 . 1 . 2 The O v e r a l l A p p r o a c h

I t s main i n t e r e s t l i e s i n t h e s i m p l i c i t y o f t h e h y p o t h - e s i s u s e d . I n e f f e c t , i t i m p l i e s t h a t t h e m e c h a n i s m o f t h e g r o w t h o f a l l e l e c t r i c power c o n s u m p t i o n ( l o s s e s e i t h e r i n - c l u d e d o r e x c l u d e d , v a r y i n g w i t h e a c h c a s e ) , c o n s i d e r e d a s

a

w h o l e , w i l l r e m a i n u n c h a n g e d ; o r ,

a t

l e a s t , t h a t a n y c h a n g e s i n r h y t h m l i k e l y t o a f f e c t t h e m i n t h e f u t u r e

w i l l

b e m u t u a l - l y c o m p e n s a t e d f o r .

The m o s t i n t e r e s t i n g m o d e l f r o m t h i s a s p e c t

i s

a c o n d i - t i o n a l m o d e l o f t h e a d a p t i v e t y p e , i n w h i c h t h e s t r u c t u r a l r e l a t i o n s h i p r e t a i n e d i s t h e l i n k b e t w e e n i n c r e a s e s i n t h e t o t a l c o n s u m p t i o n o f e l e c t r i c i t y , e x c l u s i v e o f l o s s e s , a n d i n - c r e a s e s c o r r e s p o n d i n g t o t h e g r o s s i n t e r n a l p r o d u c t i o n i n v o l u m e . L o s s e s a r e a d d e d a f t e r w a r d s .

F o r t h e p e r i o d 1 9 6 4 - 1 9 7 3 , t h e f o l l o w i n g e q u a t i o n i s o b t a i n e d :

A

c -

C w h e r e

r e p r e s e n t s t h e a n n u a l g r o w t h r a t e o f t h e t o t a l c o n s u m p t i o n , e x c l u s i v e o f l o s s e s , A p ' i ' b ' t h e a n n u a l g r o w t h r a t e o f t h e p . i . b . i n

p . i . b .

v o l u m e , a n d

E

a

w h i t e n o i s e

.

1 . 1 . 3 S e m i - G l o b a l Methods

A l t h o u g h a t t r a c t i v e i n i t s e l f , t h e s i m p l i c i t y o f t h e

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h y p o t h e s i s r e t a i n e d i n t h e o v e r a l l o r g l o b a l a p p r o a c h f a i l s t o make

i t

p o s s i b l e t o d e t e r m i n e t h e d i v e ~ s i t y o f t h e e v o l u - t i o n - - a l t h o u g h confirmed--of t h e main components of t h e t o t a l demand. I n p a r t i c u l a r , e v o l u t i o n i n F r a n c e o v e r t h e l a s t t e n y e a r s h a s r e v e a l e d a f a i r l y marked d i f f e r e n c e i n t h e g r o w t h r a t e b e t w e e n :

- t h e i n d u s t r i a l s e c t o r , where c o n s u m p t i o n h a s d e v e l - oped a t a m o d e r a t e r a t e ; and

- t h e a g r i c u l t u r a l s e c t o r , b o t h d o m e s t i c and t e r t i a r y , where t h e i n c r e a s e r a t e of c o n s u m p t i o n was c l e a r l y g r e a t e r .

Under t h e s e c o n d i t i o n s ,

i t

a p p e a r e d n e c e s s a r y t o e x p l o r e t h e e v o l u t i o n of e a c h of t h e s e demands by means of d i s t i n c t models on t h e p e r i o d 1964-1973.

LOG

C =

0.0998

t +

4 . 0 9 7 1 , ^(R

⁼

0 . 9 9 8 ) ( 6 . 0 0 0 4 ) ( 0 . 0 1 6 3 )

p r o v e d t o be i n s u f f i c i e n t t o t a k e t h e e v o l u - t i o n of n o n - i n d u s t r i a l c o n s u m p t i o n i n t o con- s i d e r a t i o n .

LOG C =

L o g a r i t h m of t h e a n n u a l consumption of e l e c - t r i c i t y i n t h e a g r i c u l t u r a l s e c t o r , b o t h d o m e s t i c and t e r t i a r y ,

t =

t i m e

( t =

0 i n 1 9 7 4 ) .

A s

f o r consumption i n t h e i n d u s t r i a l s e c t o r ,

i t

a p p e a r e d t h a t t h e v a r i a t i o n s i n t h e volume of t h e added v a l u e i n i n d u s - t r y e x p l a i n e d i t s e v o l u t i o n r e a s o n a b l y w e l l . The model u s e d t h e n l e a d s u s t o t h e f o l l o w i n g e q u a t i o n f o r t h e p e r i o d 1964- 1 9 7 3

:

A C

- 0 . 7 1

A V A I +

0 . 7 0

+ E

(R = , 0 . 5 7 ) - ( 0 , 3 9 1

( 2 . 5 )

i n which

hC

⁼

t h e a n n u a l growth r a t e of t h e consumption 6f e l e c t r i c i t y i n i n d u s t r y .

=

t h e a n n u a l growth r a t e o f t h e v a l u e added by i n d u s t r y , measured a t c o n s t a n t p r i c e s , and

E =

a w h i t e n o i s e .

A s w i t h t h e o v e r a l l o r g l o b a l a p p r o a c h , l o s s e s a r e d e t e r -

mined a f t e r w a r d .

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The v a r i a n c e o f t o t a l c o n s u m p t i o n i s c a l c u l a t e d by com- b i n i n g t h e v a r i a n c e o f e a c h component r e s u l t i n g f r o m e a c h p a r - t i c u l a r model.

I n t h e p a s t , t h i s s e m i - g l o b a l a p p r o a c h c o n f i r m e d t h e g l o b a l a p p r o a c h f a i r l y w e l l , a s t h e r e f e r e n c e r e s u l t s coming f r o m t h e s e d i f f e r e n t models p r o d u c e d r e l a t i v e l y w e l l g r o u p e d a v e r a g e f i g u r e s f o r t o t a l medium-term c o n s u m p t i o n .

1 . 1 . 4 The I n t r o d u c t i o n o f E l a s t i c i t y t o Power P r i c e s The models d e s c r i b e d up t i l l now o n l y u s e f i g u r e s r e - p r e s e n t i n g t h e volume o f economic o r i n d u s t r i a l a c t i v i t y a s e x p l a n a t o r y v a r i a b l e s . However, i n t h e t o t a l demand, i t was p o s s i b l e t o d i s c e r n s e v e r a l f a i r l y d i v e r s i f i e d u s e s w i t h r e s p e c t

t o t h e i r t e c h n i c o - e c o n o m i c o h a r a c t e r i s t i c s ( h i g h o r low

v o l t a g e s u p p l i e s , l o a d d u r a t i o n c u r v e f o r e a c h d i f f e r e n t u s e ) , a n d , i n c o n s e q u e n c e , w i t h r e s p e c t t o t h e i r p r i c e . B e s i d e s , t h e s e d i f f e r e n t p r i c e s d i d n o t n e c e s s a r i l y e v o l v e i n a h o m o t h e t i c

manner: f o r a f i r m a p p l y i n g a t a r i f f p o l i c y r e f l e c t i n g . c o s t s , t h e component e l e m e n t s o f t h e c o s t f o r e a c h one o f t h e s e u s e s w e r e n o t n e c e s s a r i l y t h e same, n o r more g e n e r a l l y a f f e c t e d by t h e same i n f l u e n c e s .

T h i s a n a l y s i s s h o u l d l o g i c a l l y l e a d u s t o q u e s t i o n t h e e x i s t e n c e o f e l a s t i c i t i e s o f c o n s u m p t i o n i n r e l a t i o n t o p r i c e a n d t o m e a s u r e them. However, t h e d i f f i c u l t i e s i n h e r e n t i n t h i s k i n d o f r e s e a r c h work must b e s t a t e d h e r e :

a ) a s e l a s t i c i t y i n p r i c e s o f e l e c t r i c i t y c o u l d ob- v i o u s l y n o t c o n s t i t u t e t h e o n l y e x p l a n a t i o n f o r t h e e v o l u - t i o n s r e c o r d e d , i t was e s s e n t i a l t o d e f i n e a s t r u c t u r e o f r e p u t e d l y homogeneous u s e s i n r e s p e c t o f a s m a l l number o f p a r a m e t e r s ;

b ) a t t e n t i o n had t o be g i v e n t o t h e p o s s i b l e c o - l i n e - a r i t y b e t w e e n t h e v a r i o u s v a r i a b l e s ;

c ) p r i c e s o t h e r t h a n t h o s e f o r e l e c t r i c power c o u l d i n f l u e n c e c o n s u m p t i o n d e v e l o p m e n t . I f t h e p r i c e o f combus- t i b l e s c o u l d be n e g l e c t e d b e c a u s e o f t h e p a r t i t i o n i n g o f t h e e n e r g y m a r k e t , t h e e x i s t e n c e o f a number o f c r o s s e d e l a s t i c - i t i e s was n e v e r t h e l e s s c o n c e i v a b l e : t h e p r i c e of e l e c t r i c h o u s e h o l d e q u i p m e n t , f o r e x a m p l e , f o r a l a r g e f r a c t i o n o f d o m e s t i c c o n s u m p t i o n , o r - - a n d a r e l e v a n t c a s e w i l l b e s e e n l a t e r - - t h e wages f o r c e r t a i n i n d u s t r i a l u s e s ( m e c h a n i z a t i o n o f t a s k s ) ;

d ) some u s e s m i g h t p r o v e t o b e s e n s i t i v e t o c l i m a t i c c o n d i t i o n s ; and

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e ) f A n a l l y , a n d i n

a

more e s s e n t i a l m a n n e r , s u p p o s i n g t h a t i t 3 s p o s s t b l e t o e s t i m a t e e l a s t i c i t i e s w i t h r e s p e c t t o p r i c e s , i n t e r p r e t a t i o n o f r e s u l t s would n e v e r b e v e r y e a s y , The r e a s o n f o r t h l s ? s t h a t s i n c e t h e number of u n i t c o s t s d e c r e a s e s w i t h t h e q u a n t i t i e s s u p p l i e d , most o f t h e t a r i f f s a p p l i e d a r e d e g r e s s i v e w i t h t h e quantities consumed by t h e u s e r . So t h e e x i s t e n c e of a l i n k q u a n t i t y v e r s u s p r i c e c o u l d j u s t a s w e l l r e p r e s e n t a c h a r a c t e r i s t i c o f t h e s u p p l y c u r v e a s a c h a r a c t e r i s t i c o f t h e demand c u r v e .

N e v e r t h e l e s s , f a i l i n g a n y v e r y s e n s i t i v e i n f l u e n c e , c a l - c u l a t i o n s r e v e a l s i g n i f i c a n t b u t s m a l l l i n k s b e t w e e n p r i c e s and c o n s u m p t i o n .

F o r e x a m p l e , t h e r e

i s

a c o n n e c t i o n b e t w e e n t h e e v o l u t i o n o f c o n s u m p t i o n o f e l e c t r i c i t y i n i n d u s t r y f o r m o d u l a t e d u s e s

( m a i n l y m o t i v e power) and t h e r e l a t i o n b e t w e e n t h e p r i c e i n d e x f o r t h i s t y p e o f e l e c t r i c i t y s u p p l i e s and t h e h o u r l y wages i n d e x , a c o n n e c t i o n improved by t h e i n t r o d u c t i o n of a one y e a r l a g . The e q u a t i o n

i s

a s f o l l o w s :

i n which

QHTM = t h e m o d u l a t e d h i g h v o l t a g e c o n s u m p t i o n , p . i . b . = t h e g r o s s n a t i o n a l p r o d u c t i o n i n volume,

IPEW = t h e r a t i o e l e c t r i c i t y p r i c e v e r s u s h o u r l y wages.

I n t h e Appendix, a c o m p l e t e p r e s e n t a t i o n of t h e r e s u l t s o b t a i n e d f o r t h e f o u r main o p e r a t i n g c a t e g o r i e s w i l l b e f o u n d .

1 . 2 . A n a l y t i c a l Models

T h e r e

i s a

g r e a t t e m p t a t i o n t o p u s h a n a l y s i s f u r t h e r and t o t r y t o g e t a d e t a i l e d breakdown d f t h e c o n s u m p t i o n o f e l e c - t r i c i t y , by i s o l a t i n g , f o r e x a m p l e , e a c h o f t h e d i f f e r e n t b r a n c h e s o f i n d u s t r i a l a c t i v i t y , s o a s t o d i s c o v e r t h e t o t a l c o n s u m p t i o n by means o f s u m m a t i o n ,

A c t u a l l y , one h a s t o f a c e many d i f f i c u l t i e s w i t h t h i s a p p r o a c h , f o r e x a m p l e , t h e m u l t i p l i c a t i o n o f h y p o t h e s e s on t h e d e v e l o p m e n t of e a c h s e c t o r o f a c t i v i t y ; d i f f i c u l t i e s v e r y q u i c k l y become i n s u r m o u n t a b l e owing t o c o m b i n a t i o n s o f d i f f e r e n t random v a r i a b l e s . F i n a l l y , f o r e c a s t s o b t a i n e d by a g g r e g a t i o n of p a r t i a l r e s u l t s a r e e s s e n t i a l l y b a s e d on t h e p r e s e n t n o m e n c l a t u r e o f t h e b r a n c h e s . T h i s n o m e n c l a t u r e w i l l

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i n e v i t a b l y b e m o d i f i e d i n t h e f u t u r e as t e c h n i c a l p r o c e s s e s e v o l v e . I n c o n s e q u e n c e , o n e h a s t o do w i t h o u t p e r m a n e n t s t a t i s t i c a l c o m p e n s a t i o n which o p e r a t e s b e t w e e n e x p a n d i n g a n d d e c l i n i n g b r a n c h e s w i t h o u t t a k i n g i n t o c o n s i d e r a t i o n t h e s u c c e s s i v e r e l a y b e t w e e n u s e s , which we h a v e a l r e a d y d i s - c u s s e d , a n d t h e " c r e a t i v e d e s t r u c t i o n , " w h i c h , a c c o r d i n g t o S c h u m p e t e r , c a n be i d e n t i f i e d w i t h economic g r o w t h .

Must a l l t y p e s o f a n a l y t i c a l a p p r o a c h b e r e j e c t e d g l o b - a l l y ? C e r t a i n l y n o t . F i r s t o f a l l , t h e s e a p p r o a c h e s g i v e a p o s s i b i l i t y o f c r o s s c h e c k i n g i n f o r m a t i o n , however i m p e r f e c t i t m i g h t b e ; o n t h e o t h e r h a n d , t h e y a r e e s s e n t i a l i n c a s e s w h e r e s p e c i f i c i n f o r m a t i o n

i s

r e q u i r e d . A s a n e x a m p l e , l e t u s n o t e f o r e c a s t s c o n c e r n i n g t h e e v o l u t i o n of 1 o a d . d u r a t i o n c u r v e s , a n e l e m e n t t h a t c a n n o t b e d i s a s s o c i a t e d f r o m f o r e - c a s t s c o n c e r n i n g power c o n s u m p t i o n , i . e

.

t h e n e c e s s i t y t o l o c a l i z e f u t u r e c o n s u m p t i o n i n s i d e a g i v e n t e r r i t o r y .

F i n a l l y , a n a l y t i c a l m o d e l s a r e o f t e n l i k e l y t o s u p p l y p r e c i o u s i n f o r m a t i o n f o r m o d i f y i n g , i n o n e d i r e c t i o n o r an- o t h e r , t h e f a r e c a s t s p r o d u c e d by e c o n o m e t r i c m o d e l s . An i l l u s t r a t i o n o f t h i s

i s

s u p p l i e d by a n a n a l y s i s t e s t on i n - c r e a s e s i n i n t e r m e d i a t e c o n s u m p t i o n o f e l e c t r i c i t y ( a g r i c u l - t u r e , i n d u s t r y , t r a n s p o r t , t e r t i a r y s e c t o r ) i n t h r e e component p a r t s :

1 ) v a r y i n g l i k e g e n e r a l e c o n o m i c a c t i v i t y ;

2 l i n k e d t o m o d i f i c a t i o n s i n t h e w e i g h t s o f v a r i o u s b r a n c h e s o f a c t i v i t y , which a r e c a u s e d by s t r u c t u r a l c h a n g e s i n t h e f i n a l demand; and

3 )

l i n k e d t o t h e e v o l u t i o n o f t h e t e c h n i c a l c o e f f i - c i e n t s i n e a c h b r a n c h and r e f l e c t e d i n t h e c o n s e q u e n c e s o f t h e c m s u m p t i c n o f e l e c t r i c t t y o f c h a n g e s i n p r o d u c t i o n p r o c e s s e s .

S t u d i e s o f t h i s t y p e make i t p o s s i b l e t o q u a n t i f y t h e i n c i d e n c e s o f e l e c t r i c i t y d e v e l o p m e n t due t o a l l e v i a t i o n o f i n d u s t r i a l s t r u c t u r e s : i n c r e a s e s i n t h e r e l a t i v e i m p o r t a n c e o f l i g h t i n d u s t r i e s consuming l i t t l e power

a t

t h e e x p e n s e o f h e a v i e r i n d u s t r i e s ; e s t i m a t e s o f a n y a c c e l e r a t i o n s t h a t m i g h t b e e x p e c t e d

as a

r e s u l t o f m o d i f i c a t i o n s t o t e c h n i c a l p r o d u c t i o n p r o c e s s e s ; a n d i n a more g e n e r a l m a n n e r , d e t e c t i o n i n good t i m e o f any new f a c t s l i k e l y t o i n f l u c e n c e f u t u r e c o n s u m p t i o n i n a s i g n i f i c a n t manner.

I n c o n d i t i o n s g o v e r n i n g t h e g r o w t h o f e l e c t r i c i t y i n t h e p a s t ,

as

d e s c r i b e d a b o v e , t h e a n a l y t i c a p p r o a c h o n l y p l a y e d a n a c c e s s o r y r o l e . The f a c t

i s

t h a t demand d e v e l o p e d i n

a

r e g u l a r manner a n d e x o g e n o u s l y p l a c e d e c o n o m e t r i c a p p r o a c h e s I n

a

f a v o r a b l e p o s i t i o n . U n c e r t a i n t i e s c o n c e r n i n g t h e t o t a l w e r e v e r y l i m i t e d a n d e l e c t r i c i t y p r o d u c e r s c o u l d p r o c e e d t o

" a d j u s t " t h e i r p r o g r a m s w i t h i n a s y s t e m where s t a b i l i t y r e i g n e d ( t h e t e r m " a d j u s t m e n t " i s f u r t h e r m o r e s i g n i f i c a t i v e i n t h i s c o n n e c t i o n ) .

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2 . New C o n d i t i o n s G o v e r n i n g t h e Growth o f E l e c t r i c i t y C o n s u m p t i o n

F o r some l i t t l e t i m e now, h o w e v e r , s i g n s o f a new s i t u - a t i o n h a v e become a p p a r e n t . F a c e d w i t h t h e medium- a n d l o n g - t e r m p r o s p e c t s c o n c e r n i n g t h e p r i c e s o f d i f f e r e n t t y p e s o f p o w e r , p r o d u c e r s 3 f e l e c t r i c i t y e x p e c t e d t h a t t h e p a r t i t i o n s e p a r a t i n g t h e f o s s i l e n e r g y s e c t o r a n d t h e e l e c t r i c i t y s e c - t o r o n t h e power m a r k e t w o u l d g r a d u a l l y d i s a p p e a r . They h a d d r a w n a n i m p o r t a n t c o n c l u s i o n : p r o s p e c t s c o n c e r n i n g t h e c o s t a n d r e l i a b i l i t y o f s u p p l i e s made c o s t - e f f e c t i v e n e s s

a

r a t h e r f a s t d e v e l o p m e n t o f n u c l e a r power p r o d u c t i o n . Never- t h e l e s s , t h i s d e v e l o p m e n t w o u l d d e p e n d on

a

s u f f i c i e n t s u r g e i n t h e c o n s u m p t i o n o f e l e c t r i c i t y , p a r t i c u l a r l y i n t h e h e a t - i n g m a r k e t , w h i c h , as we h a v e s e e n , h a s b e e n r e s e r v e d up t i l l now f o r t h e f o s s i l e n e r g y s e c t o r . H e n c e , a f i r s t d e c i s i o n : i t i s no l o n g e r enough j u s t t o f o l l o w demand; i t becomes e s s e n t i a l t o t a k e t h e a p p r o p r i a t e c o m m e r c i a l a n d p r o m o t i o n a l s t e p s t o a c t i v a t e t h i s demand.

A d e c i s i o n o f : h i s k i n d , w h i c h a n n o u n c e d t h e e n d o f c o n - d i t i o n s i n w h i c h demand was f o r m e d e n t i r e l y e x o g e n o u s l y , b r o u g h t a b o u t a n i n i t i a l u p s e t i n t h e s y s t e m : t h e n o t i o n o f a s t r u c - t u r a l i n v a r i a n t b e g a n t o f a d e a w a y . B u t i t was n e v e r t h e l e s s f a i r t o a s s u m e t h a t t h i s w o u l d b e g r a d u a l a n d t e m p o r a r y , as l o n g a s t h e g r o w t h o f t h e demand i s d i s t u r b e d .

The c o n s i d e r a b l e i n c r e a s e i n t h e p r i c e o f f o s s i l e n e r g y h a s s t i l l f u r t h e r u p s e t f o r e c a s t i n g m e t h o d o l o g y . I t means p a s s i n g f r o m a s y s t e m w i t h f i x e d f r o n t i e r s t o a n o p e n s y s t e m , i n w h i c h t h e r e i s no " n a t u r a l " l i m i t t o t h e e x p a n s i o n o f e l e c t r i c a l e n e r g y a n d w h i c h i s d o m i n a t e d by t h e s u b s t i t u t - a b i l i t y e x i s t l n g b e t w e e n d i f f e r e n t e n e r g y t y p e s . I n t h e m a t t e r o f p o w e r , e c o n o m i c c h o i c e s h a v e a l w a y s b e e n l o n g - r a n g e c h o i c e s . I t i s t h e r e f o r e up t o g o v e r n m e n t a u t h o r i t i e s t o f i x

a

medium- a n d l o n g - t e r m p r i c e on t h i s m a r k e t . G o v e r n m e n t s a r e c a p a b l e o f i n d u c i n g p r e s e n t a n d f u t u r e c h o i c e s i n c o n f o r m i t y w i t h t h e g e n e r a l p o w e r p o l i c y t h e y i n t e n d t o f o l l o w , p a r t i c - u l a r l y i n m a k i n g t h e n e c e s s a r y s u b s t i t u t i o n s p o s s i b l e i n t h e b e s t p o s s i b l e c o n d i t i o n s .

I n s o f a r a s f o r e c a s t i n g i s c o n c e r n e d , i n e r t i a a n d t i m e c o n s t a n t s f o r b i d t h e p u r e a n d s i m p l e a b a n d o n m e n t o f t h e m e t h o d s u s e d up t i l l now. I n t h e medium t e r m , r a d i c a l t r a n s f o r m a t i o n s c a n o n l y h a v e a n e f f e c t on r h e s y s t e m ' s m a r g i n , s i n c e e v e r y t h i n g t h a t a l r e a d y e x i s t s c o n s t i t u t e s , by i t s v e r y n a t u r e , a more s t a b l e k e r n e i w h i c h p a s t d e c i s i o n s h a v e s h a p e d i n a m a n n e r d i f f i c u l t t o r i - v e r s e .

On t h e o t h e r h a n d , i n t h e l o n g t e r m , i t i s e a s i e r t o d i s p o s e o f t h e i n i t i a l s i t u a t i o n : t h e r e l a t i v e p r i c e s w i l l b e c a l l e d

(30)

upon t o p l a y a d e t e r m i n i n g r o l e , a n d , o w i n g t o t h e q u a s i - t o t a l s u b s t i t u t a b i l i t y b e t w e e n t h e d i f f e r e n t f o r m s o f p o w e r , d i s t r i - b u t i o n o f t h e m a r k e t i s much more o p e n . I n t h i s d i s t r i b u t i o n , t h e m a s s i v e a d v e n t o f n u c l e a r p o w e r w i l l e n a b l e e l e c t r i c i t y t o p l a y a n i m p o r t a n t r o l e i n i t i a l l y . F o r a l o n g e r t e r m , t h o u g h , o t h e r o p e r a t i n g m o d a l i t i e s m u s t n o t b e n e g l e c t e d .

The e l e c t r i c i t y s e c t o r , a s r e g a r d s b o t h demand a n d p r o - d u c t i o n , i s t h u s f a c e d ~ i t h new u n c e r t a i n t i e s , a n d , i n o r d e r t o remove u n c e r t a i n t i e s on t h e d i s t r i b u t i o n o f m a r k e t s i n s i d e t h e p o w e r s e c t o r , o n e i s i n c l i n e d t o " g l o b a l i z e " t h e p r o b l e m . T h i s g l o b a l i z a t i o n c o n s t i t u t e s a r a d i c a l b r e a c h o f p r e s e n t

f o r e c a s t i n g m e t h o d s : i n s t e a d o f a f o r e c a s t f o r e l e c t r i c i t y , w h i c h i s q u a s i - a u t o n o m o u s a n d w h i c h s c a r c e l y t a k e s i n t o a c - c o u n t t h e i n t e r p l a y b e t w e e n t h e d i f f e r e n t f o r m s o f p o w e r , t h e e x t e n s i o n o f t h e p r o b l e m a i m s a t d e t e r m i n i n g , o n a n a t i o n a l p l a n n i n g b a s i s , t h e b e s t p o s s i b l e d i s t r i b u t i o n o f t h e f i n a l demand f o r p o w e r .

An a p p r o a c h o f t h i s k i n d h a s n o t y e t b e e n f o r m a l i z e d , b u t r e s e a r c h work i s b e g i n n i n g i n t h i s d i r e c t i o n . I t c o n - s i s t s o f t h e f o l l o w i n g : b a s e d o n a f o r e c a s t f o r f i n a l u s e s , w i t h o u t p r e - d e t e r m i n i n g t h e f o r m o r f o r m s o f e n e r g y t o b e u s e d , t h e d i f f e r e n t c h a i n s a r e f o l l o w e d up t o i n t e r m e d i a t e a n d p r i m a r y f o r m s o f e n e r g y ; t h e b e s t p o s s i b l e d i s t r i b u t i o n f r o m t h e ~ o i n ' o f v i e w o f t h e community i s t h e n e x a m i n e d .

The c r i t e r i a f o r e s t i m a t i n g t h e b e s t s o l u t i o n t o a p r o b - lem o f t h i s k i n d s h o u l d b e t o t a k e q u a l i t a t i v e a s p e c t s i n t o c o n s i d e r a t i o n , s u c h a s r e l i a b i l i t y o f s u p p l i e s o f p r i m a r y e n e r g y o r e x t e r n a l e f f e c t s ( n u i s a n c e s ) . I n s o f a r a s e a s i l y q u a n t i f i e d a s p e c t s a r e c o n c e r n e d , i t s h o u l d b e p o s s i b l e t o t a k e i n t o a c c o u n t t h e v a r i o u s c o s t s d e f i n i n g e a c h c h a i n :

a ) t h e c o s t o f s u p p l i e s o f f o s s i l e n e r g y a n d n u c l e a r c o m b u s t i b l e s ;

b ) i n v e s t m e n t a n d o p e r a t i n g c o s t s i n t h e p r o d u c t i o n p r o c e s s o f e l e c t r i c i t y ( a n d p o s s i b l y o f h y d r o g e n ) a n d c o s t s i n v o l v e d i n o t h e r p r o c e s s e s f o r t r a n s f o r m i n g f o s s i l - t y p e com- b u s t i b l e s ; a n d

c ) f i n a l l y , a n i m p o r t a n t i n n o v a t , i o n i n t h e a p p r o a c h s u g g e s t e d - - i n v e s t m e n t a n d o p e r a t i o n c o s t s i n c u r r e d by f i n a l c o n s u m e r s - - d e p e n d i n g b o t h o n t h e t y p e o f e n e r g y u s e d a n d o p e r a t i n g c o s t - e f f e c t i v e n e s s .

The m a i n p a r a m e t e r s g o v e r n i n g t h e p r o b l e m a r e a s f o l l o w s : 1 ) e v o l u t i o n o f t h e c o s t o f f o s s i l - t y p e a n d n u c l e a r

c o m b u s t i b l e s ;