The role of system dynamics modelling in sustainability planning

Abstract

The energy market architecture has a great impact on present and future economics and society. The sustainability of our whole global civilization depends on the transition into the post-fossil epoch. System dynamic modelling provides strong and effective tools to evaluate and communicate the future strategic possibilities of whole industries and national and global markets. Two main subsidy politics exist to speed up the diffusion of renewable energy technologies: Feed-in-Tariffs and Green Certificate Markets. Three system dynamic models of the Hungarian renewable electricity sector were developed: baseline system, Feed-in-Tariff, and Green Certificates. These models reveal the dynamics and efficiency of the different subsidy-systems. The focus of the model is the investor, whose decisions depend on the risks and the costs of the technologies. It is possible to develop future scenarios in order to investigate the renewable energy-mix over the short- and long-term and to compare the overall costs. The lack of historical data prohibits the verification of these models, because in Hungary the Feed-in Tariff system will be altered every year and the Green Certificates were never introduced. The approach is nevertheless very useful as planning method. It makes it possible to estimate the impact of alternative politics on the development of whole systems; thus it can be the basic methodology in all kinds of sustainability planning on all levels. Keywords: system dynamic modelling, sustainability planning, energy policy, renewable electricity system