Low carbon transition in a distributed energy system regulated by localized energy markets

Low carbon transition becomes an urgent need of modern societies for energy conservation and environmental protection. The purpose of this work is to evaluate the roles of market regulation, energy consumption and energy capacity in low carbon transition for distributed energy systems through an agent-based simulation. A set of agent behavioral rules for the competition of high carbon and low carbon energies mimics the local dynamics of the energy production of distributed energy systems and the energy consumption of industrial firms under the impact of energy market fluctuation. Simulation results show that under the condition of increased energy capacities with a positive feedback between supply and demand, low carbon transition can be facilitated by the combination of market adjustment favoring low carbon energies and the policy adjustment for low energy consumptions. By contrast, with low energy capacities and high energy consumptions, transitions from high-carbon economy to low-carbon economy inevitably render a catastrophic economic depression. Policy implications for different situations of countries are drawn regarding the regulation of localized energy markets for restricting the supply of high carbon energy while cultivating the demand for low carbon energy, and the improvement on energy saving, energy production efficiency, and storage capacity.