Aryanpur, V;Ghahremani, M;Mamipour, S;Fattahi, M;Gallachoir, BO;Bazilian, MD;Glynn, J

2022

April

Renewable & Sustainable Energy Reviews

Ex-post analysis of energy subsidy removal through integrated energy systems modelling

Validated

WOS: 3 ()

RESIDENTIAL ELECTRICITY DEMAND SUPPORT VECTOR REGRESSION RENEWABLE ENERGY ADAPTIVE NOISE CO2 EMISSIONS POWER-SYSTEM CONSUMPTION REFORM IRAN DECOMPOSITION

158

Energy subsidies can incentivise the overconsumption of energy resources and contribute to other economic or social distortions. In this paper, an ex-post analysis is presented that explores the extent to which electricity subsidy reform could have reduced Iran's energy demand during the period 1984-2017. It also quantifies the techno-economic and environmental benefits that could have been achieved through such reforms. A time-varying econometric model is linked to an energy systems optimisation model. The former estimates electricity demand under different subsidy removal scenarios, and the latter identifies the cost-optimal generation mix to meet the demand. The results of cost-optimal transition pathways under subsidy removal scenarios are compared with the real-world energy system development during the study horizon. The comparison reveals that the subsidy reform could have reduced the total cumulative electricity consumption by 22%. Renewable share in power generation could have increased from 5% to 15%. Moreover, the reform combined with a cost-optimal generation pathway would have saved $69 billion and avoided 944 million tons of CO2 emissions. The analysis also shows that every five-year delay in subsidy removal causes about 100 million tons of additional CO2 emissions. Finally, the paper presents lessons learnt for future energy modelling.

OXFORD

1364-0321

10.1016/j.rser.2022.112116