Research project EWaGI
Energy transition and competitiveness: An analysis of the heterogeneous behaviour of companies and its macroeconomic implications
In order to achieve the goal of climate neutrality by 2045, the energy transition must also be implemented in the German industry. the German government has introduced a number of policy-measures, e.g. the Renewable Energy Sources Act (EEG) or trading in CO2 certificates to promote the energy transition and internalize negative external effects of greenhouse gas emissions. Changes of the regulatory frameworks as well as increasing uncertainty due to geopolitical developments have an impact on price structures on the electricity markets. For companies in the manufacturing industry in particular, electricity price increases have a substantial impact on the cost structure and lead to a competitive disadvantage. On the other hand, such price signals can also have a positive effect on a company's own competitiveness, for example by promoting a switch to other energy sources or self-generation. Against this background, the EWaGI research project (funded by the Federal Ministry for Economic Affairs and Energy) analyses how companies adapt their behavior to rising electricity prices in detail.
Research project EWaGI | |
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Duration | December 2022 to November 2025 |
Funded by | Federal Ministry for Economic Affairs and Energy |
Project participants | - Institute of Networked Energy Systems
- Universität Bielefeld – Fakultät für Wirtschaftswissenschaften – Economic Theory and Computational Economics
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The aim of this project is to examine empirically the behavior of companies in response to changing electricity prices at the microeconomic level and, to determine the effects of changing electricity prices on the competitiveness of companies. In addition, an agent-based macroeconomic model will be used to analyse the effects of various electricity price scenarios on sectoral and macroeconomic development, taking particular account of the heterogeneous adjustment strategies of companies.
Against this background, effectiveness of potential economic and energy policy measures will be examined. The results will increase the understanding of the behavior of heterogeneous actors in response to increasing electricity price and their economic consequences. Furthermore, the results can be analysed regarding their implications for energy and economic policy measures.
The empirical analysis focuses on two topics, first, the effects of electricity price changes on the competitiveness of companies and, second, the reaction of heterogeneous firms to these changes. To this end, different types of behavior are examined, including the tendency of companies to invest in energy efficiency, change their energy mix, or even generate their own electricity. The project also focuses on the development of an agent-based simulation model for computational analysis of the economic effects of selected energy policy scenarios and the investigation of various policy measures with regard to their effectiveness in avoiding possible long-term economic disadvantages due to changing energy prices. The project participants are pursuing the goal of combining two innovative methods: On the one hand, multi-level modelling (MLM) as an empirical tool, and on the other hand, agent-based modelling (ABM) as a computer-based simulation approach.
In the EWaGI research project, these two methods will be combined for the first time in order to analyze the effects of energy policy on sectoral and macroeconomic developments, taking particular account of the heterogeneous adaptation strategies of companies. It is expected to provide nuanced and novel insights by adequately modelling the behavior, heterogeneity, and interactions of firms at both the micro and macro level.
The main focus of the Institute of Networked Energy Systems is to apply the multi-level modelling described above in the context of an analysis of industrial companies based on the AFiD database (Official company data for Germany). The aim is to statistically investigate the behavior of industrial companies in response to changes in electricity prices and to make this information available in a form suitable for agent-based macroeconomic modelling. Furthermore, the Institute aims to prepare case studies of policy design options for industry in the context of the energy transition and to participate in analyzing the macroeconomic impact from an energy-economical perspective.
The agent-based model created as part of the project will be made available subsequently to the public as an open source tool. The data and assumptions used for the analyses within the model will also be made publicly available in a suitable format. It is also planned to document and publish all the analysis steps in detail.
