Implementing a load duration curve of electricity demand in a general equilibrium model

- I model an electricity load duration curve in the GTAP CGE model.
- Generation, price and GDP impacts differ from a simple CES treatment.
- A fast tax introduction costs more due to merit order switching and decommissioning.
- Flattening the load duration curve increases Base power and GDP.
- Variability of intermittent generation leads to a cost to GDP.

Top-down computable general equilibrium models of energy-economy interactions have a limited representation of the electricity sector, typically using constant elasticities of substitution between generation types. Detailed bottom-up electricity models generally have embedded load duration curves with the electricity price determined by the marginal cost of generation. This study incorporates a simple representation of electricity generation with these bottom-up features directly into the GTAP general equilibrium model.The motivation for this study is to help project generation adjustments and macroeconomic costs associated with policies and shocks affecting the electricity sector. Various scenarios are shown using a simple hypothetical model with Base, Mid and Peak generation types: introducing an incremental output tax on Base generation, assuming mobile capital and then fixed capital; flattening the load duration curve; and introducing an intermittent generation source. Key results are: different responses in electricity generation, price and GDP to a simple constant elasticity of substitution treatment; higher macroeconomic costs associated with a faster tax introduction due to merit order switching and capital decommissioning; an increase in GDP and a shift towards Base generation from flattening the load duration curve; and a displacement of Base generation from the introduction of an intermittent generation source, with variability leading to an increase in Peak generation and a cost to GDP. The model code is made available for replication of results and further application and development.