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The Future Electricity Market Model - FEM: Model Description

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  • Darudi, Ali

Abstract

The Future Electricity Market Model (FEM) is a comprehensive technoeconomic model designed to simulate the investment, dispatch, and trade dynamics within the power systems of Switzerland and Europe. FEM operates as a partial equilibrium model of the wholesale electricity market, minimizing total system costs while adhering to a wide range of technical constraints. It provides projections of capacity mix, hourly prices, generation profiles, storage dispatch, flexible consumption, and cross-border electricity trading across different market areas. The model is formulated as a quadratic programming problem, implemented in Python, and solved using the Gurobi optimizer. With an hourly resolution over a year and a specific focus on the Swiss power system, FEM allows investment decisions solely within Switzerland, while the rest of Europe follows predefined development scenarios. Key features include the modeling of various renewable and conventional energy technologies, integration of storage systems, and incorporation of detailed electricity demand and trade constraints. In order to model the hydro power system more realistically, the model follows a hydro calendar year, i.e., the model starts at the beginning of October. Despite its deterministic approach, assuming perfect foresight, which may introduce an optimism bias, FEM serves as a powerful tool for analyzing the future dynamics of electricity markets under various scenarios.

Suggested Citation

  • Darudi, Ali, 2024. "The Future Electricity Market Model - FEM: Model Description," EconStor Preprints 306396, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:306396
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