Regarding IRE_PRICE

[Pernille.S]

The question is related to how to define the price of imported energy carriers to a multi regional TIMES model.

In the 7 region Norwegian TIMES model we have defined a IRE_PRICE in the importing processes for each of the 7 regions (not in the IMPEXP region).

I have tried to include the IRE_PRICE's in the IMPEXP region only instead of defining an IRE_PRICE in each region without luck. When I have tried this I get strange results.

In relation to this I have two questions:

1. Is it possible to include the IRE_PRICE's in the IMPEXP region only? If, yes how can I procees?

2. Is there a difference if one uses ACT_COST or IRE_PRICE in the importing processes?

Thanks!

Pernille

[Antti-L]

As the documentation indicates, IRE_PRICE must be specified in the internal region, which is importing the traded commodity from an external region, or exporting the traded commodity to an external region.  The TIMES objective function does not include any costs for external regions, but all costs must be attributed to the internal regions.  I think this makes perfect sense: Who would be paying the import price, if not the consumers in the importing region? The model generator could, of course, transfer any IRE_PRICE specified for external regions to the corresponding internal regions, but according to the original design, the region specified in IRE_PRICE must be an internal region, and therefore such a processing is currently not even possible.

Answers:
1. No, it is not possible to define any IRE_PRICE in the IMPEXP region.
2. Using IRE_PRICE is usually safer and more transparent than using ACT_COST. It is safer, because if you change the model in such a way that the external region in question becomes an internal region (thereby making the trade endogenous), the IRE_PRICE parameter will be automatically ignored. It is also more transparent, because in the cost reporting you can easily distinguish between the import/export costs/revenues and the activity costs. In addition, if the trade is bi-directional, ACT_COST would be applied to both imports and exports, while IRE_PRICE(IMP) would be a cost only for the imports but IRE_PRICE(EXP) would be a revenue.

However, if you don't mind about the lost transparency in cost reporting, in your case you could well use ACT_COST instead of IRE_PRICE, because the external region in question is IMPEXP, and not "SWE" for example (I am sure you would never make IMPEXP an internal region, but you might consider modeling Sweden as an internal region).

You could simplify the import price modeling by using a single import process from IMPEXP into one of your Norwegian regions, and then another endogenous trade process between that region and all the other regions. In this way you only need IRE_PRICE for the single exogenous import process.

[Pernille.S]

Thank you very much for your answer, explanations and tips!

I tried to look in the TIMES manual, but I must have failed to see that the IRE_PRICE needs to be defined in an internal region. Also, it is possible to define the IRE_PRICE in the IMPEXP region in Answer-TIMES and I guess I got confused.

Before knowing this, I thought it made sense to define the price of the energy carrier in the external region because in our case the price is often independent of the importing region.

Again, thank you for the help.

Pernille