A Sectoral Micro-Economic Approach to Scenario Selection and Development: The Case of the Greek Power Sector

Abstract

Generating policy-relevant scenarios is instrumental for understanding and developing policy measures. These are especially relevant to the power sector. Practitioners have been working on policy-relevant scenarios for the ex-ante assessment of policy measures in a meaningful way for end-users related to climate change mitigation and adaptation strategies. This paper presents a method for generating such policy relevant scenarios by focusing on the actor-contingent elements of the scenarios, i.e., the developments that are within the control of system actors to change or bring about. Several scenario techniques focusing on systematic-formalized or quantitative approaches have been published on this front over the past few years. Here, we introduce a methodology that is best suited for the assessment of the expected effect of different policy measures on the involved stakeholders’ behavior as well as for the analysis of the interactions between different policy measures as reflected on their impact on the strength and direction of the provided incentives. The applicability of our methodology is demonstrated for the case of the Greek power market. It was further evaluated in view of the challenges related to the issues of generation capacity adequacy and increased fiscal deficit. The strategic implications of the proposed approach concern the demonstration of the benefits from adopting a policy assessment methodology that focus on stakeholder expectations and interactions.