Energy System Planning Analysis Using the Integrated Energy and Macroeconomy Model

In the past, the energy planners through setting the desired level of economic growth simply used this figure as a base to which additional increases were made, dependent on changing population and supply conditions. Planning proceeded from the national, macroeconomic position, to the aggregate, sectoral and finally project levels. Such process was a virtual one-way linkage from economic growth rate to the energy sector; it is viewed in isolation from the reminder of the economy. Integration of energy system optimization model MARKAL and the macroeconomic growth model MACRO makes possible the analysis of two-way linkage between energy system and the economy. This paper presents review of relation between energy system and economy, including the basics of technology and economy oriented models and their integration in one model with applications.