An Economic Analysis
Appendix A: Model Technical Description
LIBEMOD (LIBEralization MODel for the European Energy Markets) is an economic computable equilibrium model for Western European natural gas and electricity markets. The model also includes world markets for oil and international tradable types of coal, as well as domestic markets for lignite and biomass. In one version of the model, all markets are competitive, including markets for transportation of energy goods and markets for reserve power capacity, whereas in another version of the model, there is imperfect competition in all markets, except the markets for reserve power capacity. There are seven goods in the model (steam coal, coking coal, lignite, natural gas, oil, electricity and biomass) that are produced, traded and consumed in each of the 16 model countries (Austria, Belgium (including Luxembourg), Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom (UK)). In addition, there is production, trade and consumption of steam coal, coking coal and oil in all exogenous countries. While fossil fuels are traded in annual markets, electricity is traded in period markets (summer versus winter, six periods during a 24-hour cycle) because power cannot be stored (except in limited-capacity hydro-reservoirs). In each model country, there are a number of technologies available for supplying electricity. These are (steam) coal power, lignite power, gas power, oil power, biomass power, nuclear, pumped storage hydro, reservoir hydro, waste power and wind power. We distinguish between the short-run version of the model and the longrun version. In the short-run version, the capacities...
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