Marc Oliver Bettzuge

Dr Marc Oliver Bettzüge has been a professor of economics, in particular energy economics, and Head of the Chair of Energy Economics - Department of Economics - at the University of Cologne since 2007. He is also Managing Director and Chairman of the Management Board of the Institute of Energy Economics at the University of Cologne (EWI). Professor Bettzüge has been a member of the German Parliament’s Study Commission on Growth, Wellbeing and Quality from 2011 to 2013. In addition he plays an active role in various committees and advisory boards.

 

 

Tell us a little about ewi Energy Research & Scenarios and the work that you do.

ewi Energy Research & Scenarios is a non-profit organization focussing on applied economic research on energy markets and energy policy. We have a team of about 35 people, many of them simultaneously pursuing their PhD at the University of Cologne. Besides conducting research projects, we also offer research and development support as well as economic advice to government, organisations and companies. Thus, we regularly provide decision-makers with sound quantitative support based on our strong economic and modelling expertise.

What role do energy system models play in your research?

Energy system models are at the analytical core of our research. We run, and continuously improve, models of global fuel markets as well as the European electricity, gas, and heat markets. The distinctive feature of our modelling approach is the strong emphasis on economic theory alongside a deep understanding of the relevant technologies. Thus, the insights generated from our models reveal important findings about economic interdependencies and effects on top of mere technology-based analysis.

How do you ensure the robustness of your simulation tools?

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Robustness is ensured by consistency-checks, back-testing and economic review. Consistency-checks verify that model results are internally consistent, e.g., energy balance sheets are correct, no technological boundaries are infringed etc. Back-testing runs the model with historical data, which is a viable way for identifying possible shortfalls of the model. However, due to fundamental difficulties with accurate back-testing in a complex energy environment, we also add what we call “economic review of the models”, namely checking models and model results with respect to their fit with economic theory and observed and foreseeable market behaviour.

How can energy systems modelling contribute to a successful energy transition in Europe?

Energy systems models are important analytical tools to assess potential market developments, including their reaction to certain political measures. Hence, decision-makers in the energy domain may use such models to obtain a more profound information base for their decisions and actions. Importantly, however, it should be stressed that models typically generate scenarios – not forecasts. Hence, it is important for decision-makers, and the general public, to adequately interpret the meaning of scenarios before coming to conclusions about their implications. Therefore, we have designed our models as “anti-black boxes“, and we devote a lot of time and effort to supplying transparency and interpretation alongside our scenario analyses.

What has your research revealed to be the most urgent issues facing the European energy system?

There is of course a difference between urgency and importance. From an economic perspective, the most urgent issue in electricity is the increasing geographic imbalance between supply and demand in the European electricity system, exacerbated by a rather slow expansion of the grid and an inadequate configuration of bidding zones. For the gas supply system, our models suggest that urgent decisions around Nord Stream 2 have wide-ranging political ramifications which should be transparently taken into account. With respect to importance, our models consistently show that the insufficient alignment of EU and national energy policies leads to inefficient and ineffective outcomes with respect to mitigating CO₂-emissions in Europe. Thus, a fundamental overhaul of the political approach to energy and climate policy would be ve