The CompactPRIMES model is designed as an one-shot country-specific model for single-country projections, aiming at addressing energy system planning, power generation investment, energy price projections (accounting for existing subsidies) and climate change mitigation policies including energy efficiency policies. The model represents energy related CO2 emissions, environmentally oriented policy instruments and emission abatement technologies. The model is designed for medium-term and long-term projections and produces analytical quantitative results in the form of detailed energy balances up to 2050/2070. The model is a simulator of:
- Energy demand by sector and by energy product driven by the development of activity, income and energy prices
- Energy supply by energy carrier driven by energy demand and costs
- Energy prices resulting from explicit market equilibrium, and
- Investment in demand and supply sectors, driven by costs, technology progress and the dynamic turnover of the energy capital in the various sectors.
On the basis of CompactPRIMES, the ESA model (Energy System model for Azerbaijan) has been developed and calibrated to the 2015 statistics of Azerbaijan and implemented until 2050 in 5-year step resolution. The model captures the specificities of the Azerbaijani energy system and provides projections and counterfactual analysis of the energy demand and power and heat/steam supply sectors of Azerbaijan in order to assess the impacts of alternative scenarios for energy planning and climate change mitigation policies.
Methodologically the ESA model has the mathematical form of a market equilibrium model, which simulates the balancing between demand and supply of energy simultaneously for all energy commodities. The model is actor- and market-oriented, in the sense that it represents individual actors’ decisions in demand and supply of energy and the balancing of their decisions in simultaneous markets cleared by prices.
ESA consists of two (2) individual Modules that run sequentially and iterate in order to reach a market equilibrium:
- ESA Demand Module: This Module projects the demand for energy commodities and investments in the industrial, tertiary, agricultural, residential and transport sectors.
- ESA Power & Heat/Steam Supply Module: This Module is driven by the Demand Module and decides on how to serve the requirements for electricity and heat/steam as well as clean fuels when eligible. It includes in detail all Azeri power and district-heating plants, and also accounts for the steam and power produced in the industrial sector as well as the provision of ancillary services, reserve requirements and imports-exports. It optimizes simultaneously and inter-temporally the capacity expansion of the system, along with the dispatching of plants (Unit Commitment algorithm), calculating the tariffs of electricity and heat/steam per sector of final demand, as well as the tariffs for synthetically produced fuels (clean fuels).