Implications of Limited Foresight and Sequential Decision Making for Long-term Energy System Planning: An Application of the Myopic MESSAGE Model

Keppo, I. & Strubegger, M. (2009). Implications of Limited Foresight and Sequential Decision Making for Long-term Energy System Planning: An Application of the Myopic MESSAGE Model. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-09-006

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Abstract

This paper presents the development and demonstration of a limited foresight energy system model. The presented model is implemented as an extension to a large, linear optimization model, MESSAGE. The motivation behind changing the model is to provide an alternative decision framework, where information for the full time frame is not available immediately and sequential decision making under incomplete information is implied. While the traditional optimization framework provides the globally optimal decisions for the modeled problem, the framework presented here may offer a better description of the decision environment, under which decision makers must operate. We further modify the model to accommodate flexible dynamic constraints, which give an option to implement investments faster, albeit with a higher cost. Finally, the operation of the model is demonstrated using a moving window of foresight, with which decisions are taken for the next 30 years, but can be reconsidered later, when more information becomes available. We find that the results do demonstrate some of the pitfalls of short term planning, e.g. lagging investments during earlier periods lead to higher requirements later during the century. Furthermore, the energy system remains more reliant on fossil based energy carriers, leading to higher greenhouse gas emissions. reliant on fossil based energy carriers, leading to higher greenhouse gas emis

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