A hybrid method of system dynamics and design of experiments for investigating the economic and environmental indicators of electricity industry

Abstract

Electricity plays a pivotal role in the socio-economic development of nations. However, heavy reliance on fossil fuels for electricity generation, as observed in Iran, poses significant environmental challenges. This study proposes a novel hybrid methodology that combines system dynamics modeling and Design of Experiments (DOE) to examine economic and environmental indicators within Iran's electricity sector. The system dynamics model delineates four key subsystems: consumption, production, CO2 emissions, and power trade. By integrating DOE into this framework, various economic and environmental metrics are assessed for the year 2040. Through a comprehensive analysis of variable impacts on these indicators, optimal levels are identified to achieve favorable outcomes. Notably, variables such as the allocation coefficient of export income to capacity development and electricity export price emerge as critical determinants. Due to economic, environmental, and economic-environmental indicators, the most appropriate level of allocation of export income towards capacity development is estimated at 30, 10, and 20 percent, respectively. The study recommends allocating 80 % of the capacity development budget to renewable energy sources and 20 % to thermal power plants to optimize future conditions. In business as usual, the Export CO2 emission damage to export income index will be 0.19. In implementing the proposed scenario, according to the economic-environmental index, this value will decrease and reach 1.73E-06, which indicates the improvement of electricity export from the economic-environmental dimension. This research underscores the importance of balancing economic prosperity with environmental sustainability in electricity industry planning and policy formulation.