Yearly subsidy expenses not annual investment subsidy

[kristofferand]

Hi, 

I am modelling a policy involving a subsidy on process in a TIMES model. To this aim I use the attribute NCAP_ISUB. However when the NCAP_ISUB is reported in VEDA-BE or read from the gdx-file it seems by default to be reported in terms of annualized investment subsidy based on the process lifetime and the process discount rate ?! Is there currently a way to get information on the actual yearly subsidy paid (not annualized) from TIMES or do I have to calculate this information manually after the model run?  This is highly relevant from a government fiscal point of view. 

Best regards,

Kristoffer

[Antti-L]

Do you mean that you would like the investment subsidies reported in terms of lump-sum payments in the commissioning years of each subsidised new capacity installation? Or did I not understand the idea correctly?

If lump-sum investment subsidy reporting is what you mean, you are right that apparently no-one has requested such in the past 15 years, but you are the first. However, if other users agree, such a reporting parameter can certainly be added.

[kristofferand]

Do you mean that you would like the investment subsidies reported in terms of lump-sum payments in the commissioning years of each subsidised new capacity installation? Or did I not understand the idea correctly?

If lump-sum investment subsidy reporting is what you mean, you are right that apparently no-one has requested such in the past 15 years, but you are the first. However, if other users agree, such a reporting parameter can certainly be added.

Dear Antti,

Thank you for your reply.

You are exactly right, I would like the additional reporting of the lump-sum investment subsidy payment.

My belief is that it may be relevant for other TIMES users working in a policy setting. As policymakers want to have an estimate of the subsidies expenses that has to be shoulder by the government budget each year going forward. And the Cost_Invx attribute does not serve this purpose if investment subsidy goes to a process with a lifetime extending the period length of the milestone years. And of course, the same issue is also relevant for investment taxes in TIMES. 

Best regards,

Kristoffer

[Antti-L]

Ok, thanks.  If any other users have opinions about this, please comment here.

You are probably aware that there is a resembling reporting attribute for lump-sum investment costs. Those costs are reported for each period, and not for each individual year. The lump-sum investment cost payments associated to the individual commissioning years of any period are directly summed together, and the sum is then reported as the total lump-sum investment cost for that period.
Question: Would this method be satisfactory also for the reporting of the lump-sum investment subsidy payments, by period?

[kristofferand]

Ok, thanks.  If any other users have opinions about this, please comment here.

You are probably aware that there is a resembling reporting attribute for lump-sum investment costs. Those costs are reported for each period, and not for each individual year. The lump-sum investment cost payments associated to the individual commissioning years of any period are directly summed together, and the sum is then reported as the total lump-sum investment cost for that period.
Question: Would this method be satisfactory also for the reporting of the lump-sum investment subsidy payments, by period?

Yes,  that method definitely be satisfactory :-)

[Antti-L]

Ok, thanks.

Unless anyone else has further opinions, it will be implemented that way in the next version of TIMES.

[kristofferand]

Ok, thanks.

Unless anyone else has further opinions, it will be implemented that way in the next version of TIMES.

Dear Antti,

Great that you have added the feature :-D

I do have two questions related to the new user constraint reported under the attribute Cap_New, i.e. LUMPIX and INVX+.

1. LUMPIX captures the lump-sum investment subsidy by period, right? 
2. And what does the the user constraint INVX+ capture? In my scenario it seems to be a fixed proportion of LUMPIX.

Cheers,

Kristoffer

[Antti-L]

Right, LUMPIX reports the lump-sum investment subsidies/taxes, but without the impact of any hurdle rate.

But if you have defined a hurdle rate, you should remember that it is applied to the subsidies as well (see documentation, Part II for details). Investment taxes and subsidies are thus by design treated in the same way as the normal investment costs (as designed by professor Richard Loulou), with the hurdle rate being applied to all.

INVX+ thus gives the additional impact of the hurdle rate on the investment taxes/subsidies.  I thought that one might want to have it separated out, because the finance of the subsidies might not be considered to be affected by the hurdle rate in the same way as the investor.

[kristofferand]

Right, LUMPIX reports the lump-sum investment subsidies/taxes, but without the impact of any hurdle rate.

But if you have defined a hurdle rate, you should remember that it is applied to the subsidies as well (see documentation, Part II for details). Investment taxes and subsidies are thus by design treated in the same way as the normal investment costs (as designed by professor Richard Loulou), with the hurdle rate being applied to all.

INVX+ thus gives the additional impact of the hurdle rate on the investment taxes/subsidies.  I thought that one might want to have it separated out, because the finance of the subsidies might not be considered to be affected by the hurdle rate in the same way as the investor.

That is perfect and very usefull ! Thank you :-D

[kristofferand]

Dear Antti,

I have a follow up question: Would it be possible also to report lump-sum investments cost, as if there where unaffected by the hurdle rate?

The background for this requests is that I am currently using the hurdle rate (technology specific discount rate in TIMES) to reflect market barriers related to residential heat savings investment. My assumption is that these market barriers reflect a "lack of information" not actual financial investment cost to the households.

However, I need actual financial investment cost as an input into a CGE model. Currently I calculate the financially cost post-TIMES optimization, by adjusting the lump-sum investment cost, based on CRFs/CRF equation (page 163 in the TIMES documentation part II) . Although this works, it is somewhat tedious, and it furthermore forces me to standardize the economic life time of each energy savings measure to the same number of years.

To avoid this it would be a great help if you could add the attribute "lump-sum investments cost unaffected by the hurdle rate" to the reporting from TIMES at some point in the future.

Cheers,

Kristoffer

[Antti-L]

The split of investment costs according to hurdle rate is available as a reporting option. It splits the cost into the base component and the risk premium component. See the documentation, Part III, Table 15: RPT_OPT Options Settings.

https://iea-etsap.org/docs/Documentation_for_the_TIMES_Model-Part-III_July-2016.pdf

[kristofferand]

Dear Antti,

Thank you for your swift response some time ago. I have finally been able to read the documentation and try it out.

I have added the following text "PARAMETER RPT_OPT / OBJ.1 1/;"  to the bottom-up of the "%Scenario%".run-file. When doing so "INV+" is reported under the attribute "New_Cap" in the GDX-file, which I understand to be the lump-sum investment cost without the impact of any hurdle rate, right?

Thank you once again :-D

/Kristoffer

[Antti-L]

Hmm..., no.  INV+ gives the impact of the risk premium (hurdle rate = riskless rate + risk premium).
You should see the lump-sum investments reported under Cap_New being divided into LUMPINV and INV+ (earlier INV and INV+), when you use that option, such that summing these together gives the full lump-sum investment.

[kristofferand]

Thank you for that additional clarification :-)