Simulation study on the low carbon transition process in Japan’s electricity market

Abstract

Low carbon transition (LCT) is a key issue in the future development of human society, and the full application of renewable electricity is the top priority. The process of transition is extremely complex, involving policies, markets, technologies, and other aspects. Only when all fields work simultaneously can they effectively promote the diffusion of low carbon energy. Therefore, various countries have proposed different policies to stimulate the development of low carbon energy according to the structures of their own electricity systems. In this study, the Japan’s electricity market is regarded as an object, an agent-based model is presented to describe the process of LCT in the said market. The model takes the market as core, integrates the subsidy promotion and technological development mechanisms, and restores all aspects involved in LCT as much as possible. Simulation results are highly consistent with historical data on the development of the Japanese electricity market in the past 10 years. The development of low carbon energy soon (within 10 years) is predicted, and the results are very close to the goals set by the Japanese government. Finally, we find that the main driving force for Japan’s low carbon energy development in this stage is the country’s feed-in tariff (FIT) policy, so we focus on the subsidy promotion mechanism and sum up an empirical formula which can be used as a quantitative analysis tool for FIT policy.

Keywords

• Low carbon technology
• Agent-based model
• Technological development
• Industry growth
• Electricity market
• Feed-in tariff