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

WP 1 Methodological Developments

 

Objectives

To provide a state of the art review of existing methods of assessing the level of energy security and to provide a new structure that integrates these measures as part of a wider conceptual framework, and that generates new measures of energy security that have a firm basis in risk analysis.
The main other objective and output of this Work-Package is to develop an overall methodological framework that will applied to whole project and to the different tools to be developed measuring energy security.

Participants: FEEM, OME, RAMBOLL, LEI, Fraunhofer, JRC, TUD, PSI, CESI RICERCA/ERSE/RSE S.p.A., ERIRAS, BATH, GRCF, CEPS, TU_WIEN, CNRS

Description of work

Task 1: Taxonomy of definitions of energy security and a history of the measured levels of energy security in the EU

Lead: FEEM

Measures to be covered include the degree of dependence on foreign sources, measures of diversification of sources, indices of concentration, days of supply available in strategic reserves etc.  Data on these will be collected systematically for as many EU member states as possible.

Task 2: Foundations of energy security in risk analysis

Lead: FEEM; PSI

The reason that energy security is a matter of concern is the uncertainty it generates both in the users of energy as well as in the producers; an uncertainty that has economic and social costs.  Yet models of risk analysis such as the theory of Expected Utility or other articulations of the precautionary principle have not been systematically used to measure the level of risk inherent in given energy supply and demand profiles.  The risk premiums associated with such profiles can be calculated and this will be done using simplified but realistic models of risk aversion.  

Task 3: Linking of analytical measures of risk aversion to traditional measures of energy security

Lead: FEEM

The aim of this task is to link the analytical measures of risk aversion to the more common measures of energy security. The former are based on a full (or at least substantial) characterization of the probabilities of different events while the latter are sensible ad hoc measures that practitioners use.  This task will provide links between the two for plausible scenarios of energy supply and demand.  Naturally the ad hoc will not be perfect representations of risk premiums as calculated in Task 2, but it should be possible to carry out Monte Carlo experiments and see when and under which conditions the two sets of indicators are correlated; and what is the degree of correlation.

Task 4: Development of an overall methodological framework that will be applied to the whole project

Lead: FEEM; all partners

In this task a consistent general methodology will be developed which will then be applied to different types of security risks and to the different tools to be developed in subsequent work-packages. While the precise methodology will have to be decided during project execution, it could follow the following steps:
- Step 1: Assessment of EU vulnerability to energy risks
- Step 2: threat identification and assessment: potential threats to energy supplies must be clearly identified and an expert assessment of probability must be attached to it.
- Step 3: impact assessment. For each relevant threat the impact on the energy supply global or regional/local system must be assessed. Generally speaking, it will be shown that threats with higher probability to occur have limited impacts on the global system, while threats that might have a significant impact also have very low probability to occur.
- Step 4: cost assessment. What would be the economic cost of the impact of the threat.
- Step 5: remedies assessment. What can be done to either contain/reduce the probability of the threat or contain/reduce the impact of it occurring?
- Step 6: assessment of remedies and policies to tackle energy security threats by means of multi-criteria analysis of cost of remedies.
- Step 7: how remedies should be financed/paid for.

Workpackage 1 is carried out under the co-ordination of FEEM

Seventh Framework Programme

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