ABSTRACT
This chapter describes the underlying assumptions used to develop economic/energy scenarios for the analysis of renewable energy. It discusses the basic methodology, the structure and characteristics of the Dynamic General Equilibrium Model (DGEM) energy/economic model and reference Case fuel cost and energy supply assumptions. The chapter explores technology cost assumptions for electric generation, renewable and synthetic fuel equipment and economic and demographic assumptions used for the Reference Case. DGEM permits simulation of future energy and economic activity under a comprehensive set of assumptions covering changes in demographic, economic, or energy conditions. The Reference Case combines assumptions about all three variables renewables costs, renewables penetration and nonrenewbles costs which represent their respective most realistic estimate, or most likely outcome. The final set of energy assumptions relates to the levels of utilization of selected energy technologies. As in the Low Renewables Costs Scenario, assumptions regarding energy and economic adjustment mechanisms augment the energy price and technology cost changes.
