Industrial sector - PROMETHEUS

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The industry is represented in PROMETHEUS through different sectors and processes. The general modeling describes energy requirements per sector dependent on an activity variable and energy prices. Total demand of energy depends on the developments of activity variables (e.g. industrial production or value added) and energy prices.

PROMETHEUS models separately industrial demand for electric and nonelectric uses in each region. The model can also distinguish between energy intensive and non-energy intensive industrial ones depending on data availability. The evolution of industrial demand for electricity is assumed to be a function of electricity prices for industry and industrial value added in each region (that is exogenously specified using the GEM-E3 model). Demand for industrial electricity is covered by the electricity grid or combined heat and power (CHP) facilities or, finally, by fuel cells that use hydrogen. The gap in supply is calculated (with the substitution mechanism to be described below) and the ensuing competition between the above options determines their shares in electricity demand for industries. The total non-electric energy demand for industrial processes requiring steam and heat is determined by industry value-added⁡ and⁡ the average cost to provide energy services to industries, which is defined as the weighted average of fuel prices (coal, oil, gas, CHP, fuel cells) for industry consumers (using their shares in non-electric industrial energy demand of the previous year as weights). Coal, natural gas and oil together with CHP facilities and fuel cells (that can use hydrogen or natural gas) compete for gaining shares in the demand-supply gap for industrial non-electric uses. The inclusion of CHP and fuel cells in the set of competing technologies for non-electric uses is based on the rationale that their utilization for electricity production results in the co-production of a certain amount of heat which is subtracted from the gap for non-electric uses.

Industrial energy demand in PROMETHEUS is modelled in terms of useful energy services (such as industrial processes, heating, steam) and in terms of final energy commodities, ensuring energy balance between useful and final energies at all times. Demand for industrial energy services is assumed to be a function of macroeconomic drivers (GDP, industrial activity) and the average costs of meeting energy services based on econometrically estimated elasticities.  Central to the energy technology substitution mechanism is the notion of the “gap”, which is defined in terms of the difference between energy demand and the amount of energy that can be satisfied using existing equipment  (separately for electric and non-electric uses). The scrapping rate of technology includes normal scrapping, due to plants reaching the end of their lifetimes, and premature scrapping, due to changes in variable and fuel costs which render the continuation of the plant's operation economically unsustainable.Competition between technologies occurs in terms of market shares within the gap (separately for electric and non-electric uses). The allocation of new investments is modelled as a quasi cost-minimizing function (based on the Weibull specification) and is driven by the total cost of the competing options, including capital expenditures, operation & maintenance costs, carbon costs and costs to purchase energy carriers.  

Energy efficiency improvement is induced by increases in energy prices, technology/fuel choice at the energy use level and can be also obtained by direct investment on energy savings (e.g. industrial energy management). The saving possibilities are seen as cost-quantity curves which have limited potential and non-linear increasing costs. PROMETHEUS explicitly takes into account fossil fuel subsidies and taxes in the ten regions identified in the model and can simulate changes in end-user prices for individual energy consumers, e.g. removal of fossil fuel subsidies directed to industrial sectors in the Middle East and North Africa (MENA) region.  Emission constraints, energy efficiency goals, and regulations/standards are represented in PROMETHEUS and can influence the choice of technology for investment, the choice of final energy products and the overall energy efficiency investment. The accounting of costs (CAPEX, OPEX), and the performances in terms of emissions, renewables and energy efficiency are reported.

The choices of energy use technologies involve a variety of possibilities which differ in upfront investment costs and in variable costs depending on energy performance and efficiency. The scope of the industrial demand submodel of PROMETHEUS is to represent simultaneously:

  • the mix of technologies and fuels, including the use of CHP and fuel cells
  • the links to self-supply of energy forms (e.g. cogeneration of electricity and steam);
  • the explicit representation of energy saving possibilities;
  • the satisfaction of constraints through emission abatement, pollution permits and/or energy savings, and
  • Possible substitutions between energy forms, technologies and energy savings  
Alert-warning.png Note: The documentation of PROMETHEUS is 'under review' and is not yet 'published'!

Model Documentation - PROMETHEUS

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Model information
Model link
Institution E3Modelling (E3M), Greece,
Solution concept Partial equilibrium (price elastic demand)
Solution method Simulation
Anticipation Energy system simulation.Foresight is included only is some sub-modules (i.e. electricity generation)