SECURE Project - Security of Energy Considering its Uncertainty, Risk and Economic implications

The International Energy Agency defined energy security as the availability of a regular supply of energy at an affordable price (IEA, 2001a). The 2000 EC Green Paper on Security of Energy Supply states that the concept has physical, economic, social and environmental dimensions. Security of supply can therefore have different meanings concerning volumes, quality, prices and time. The level of security depends on the capacity of the energy system to cope with unexpected events. Risk coverage deals with probability and costs, and also with the "willingness to pay" that consumers, companies or governments show to reach acceptable levels of security. To build rational answers to energy supply insecurity means to calculate the costs and probability of supply disruptions. Supply disruption is the interruption of supply and the damaging imbalances between supply and demand. Security of supply depends on spare transportation and/or generation capacities and on the quality of system management, pricing mechanisms and mitigating market power. Geography is another key element. SECURE extends the current research and policy orientations in this field in many dimensions:

(i) it links the medium term economic models to indicators of energy security and social welfare. Focusing on risk modelling, SECURE uses the structures developed to assess the desirability and effectiveness of policies that are designed to reduce energy insecurity;

(ii) it derives estimates for the "willingness-to-pay" to avoid energy insecurity from households and industry. To develop strategies to mitigate energy supply insecurity is in fact to identify the means that citizens are willing to put in risk coverage. The data gathered will help identify which areas are perceived as priorities by final users and will provide key information to the quantitative analyses (e.g. sensitivity of final users' preferences to the degree of reliability of the energy systems and to better tailor the design of policy responses);

(iii) it develops quantitative long-term energy scenarios and simulations of the impact of energy security. The connection between policy debate and modelling represents an important advance of the security of supply analysis. Past large-scale energy models such as the POLES model have been used to explore consistent energy scenarios to 2050, with and without greenhouse gas emission constraints. SECURE goes a step forward by taking account of the impacts of uncertainties and strategies on the security of supply. The POLES model is relevant here: while it describes the oil market as "one great pool", it is very much detailed for natural gas, with a clear description of the different transport capabilities from one region to the other. SECURE links the POLES large-scale energy model to an Energy Risk Assessment (ERA) model developed within the project. The ERA model provides estimates of the expected utility of different scenarios with respect to energy supply and demand uncertainties. It incorporates elements of subjective advantages or "willingness-to-pay" for energy security. This way the model addresses the whole range of welfare implications of the different scenarios.

Last but not least, SECURE investigates a few hot topics, such as: (i) the role of energy efficiency and demand response in the electricity markets to improve security of supply; (ii) the role of severe accidents and terrorist threat for major energy chains; (iii) sector specific issues for each major energy source and technology (oil, natural gas, coal, nuclear, renewable sources and electricity).

The expected output of SECURE include a comprehensive methodological and quantitative framework to measure energy security of supply,energy security scenarios to 2030,  and policy recommendations on how to improve energy security taking into account costs, benefits and risks of various policy choices.


SECURE results may help designing EU’s energy insecurity mitigation strategies.
 

Seventh Framework Programme

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