IE 461 Energy Policy and Planning
This course investigates the substance of essential energy policy issues and provides the necessary skills for their planning. Electricity market restructuring and climate change mitigation are addressed as today’s two distinct energy policy challenges. Fundamentals of electricity markets are explored in the first part of the course. The market clearing mechanism for electricity trading in a competitive environment is elaborated with focus on the underlying microeconomic theory. Short- and long-run equilibrium conditions in the electricity market are studied. The grid and reliability issues are explored together with the implied formulations for modeling power flow and auctions. An interactive power market simulation game is included to complement the understanding of theoretical issues. In the second part of the course, the basic concepts and different approaches used in energy and environmental policy modeling are explored ranging from technologically detailed bottom-up energy models to top-down policy models. Modeling energy flow, optimization and equilibrium, modeling the macroeconomy and representing energy-economy interactions form the learning objectives of this part. Particular emphasis is on the theory of production in general and constant elasticity of substitution (CES) type production functions in particular.