How to include demand shifts in Partial equilibrium model for scenarios

Problems with modeling
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Prantika
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How to include demand shifts in Partial equilibrium model for scenarios

Post by Prantika » 2 months ago

Hi!

I am writing a static equilibrium model but being a beginner in modeling I am facing lots of challenges. My aim is to build a Partial Equilibrium model to assess the implementation of some biofuel mandate policies. I have started with a simple model with 2011 as the baseline and 2030 being the projection year.

The problem which I am facing right now is that after I am introducing the shifting parameters for 2030 projections the model is not reacting. More specifically I want to implement the blending mandate of 20% for 2030 given shift in petrol demand for 2030. Actually, ethanol demand should be 20% of petrol demand in 2030. I have tried to implement the scenarios but the ethanol and petrol demand is coming out to be much less than expected.

My question is how can I insert the gasoline and ethanol demand shift in the following model-

Scalar
Shift2030GasolineDD shift in domestic gasoline demand by 2030 /0.0465/
Blend blending rate /0.018/
Ethfuel_BaseConsume Ethanol fuel use for blending in 2011 in million liters /365/
Ethfuel_ProcurePrice Fuel ethanol baseprice 2011 Rs. per liter ex-distillery(without taxes+marketing margin+transport)
/27/
Gasoline_BasePrice gasoline price before taxes and dealers' commission /32.64/

Gasoline_BaseConsume gasoline consumption in 2011 in million liters /20716/
Blend_Elasticity gasohol demand elasticity/-0.36/



Ethfuel_CentralTax central taxes base year Rs. per litre /2.7/
Ethfuel_StateTax VAT charged by states Rs. per litre /1.57/
Ethfuel_InterstateTax inbound-outbound state taxes average 2.55% Rs. per litre/0.675/
Ethfuel_TrasportCost cost of transportation from sugarmills to OMCs (blending point) /3.5/
Ethfuel_BlendCost cost of blending incurred by OMCs including denaturation charges /2.22/
Ethfuel_OtherTax other costs (purchase tax+permit fee+administrative charges /1.57/
*EthMargin ethanol marketing margins incurred by OMCs /19.1/
Ethanol_Subsidy subsidy on ethanol/0/
Co_productCredit /0/


Gasoline_RefiningCost Rs. per litre/6/
Gasoline_CentralTax gasoline central tax Rs. per litre /14.78/
Gasoline_StateTax gasoline state tax Rs. per litre /9.73/
Gasoline_DealerCommision dealer's commission on gasoline Rs. per litre /1.22/
*2030 Gasoline demand
* Shift2030GasolineDD shift in domestic gasoline demand by 2030 /0.0465/
*Aggarwal 2015 shift factor gasoline

Gasoline2030DD
Blend_Price
Gasohol_Dem
Gasoline_PriceBlendPoint
EthPrice_BlendPoint

Alpha_Gasohol intercept of fuel demand curve
Beta_Gasohol slope of fuel demand curve;


Blend = 0.018 + 0.182*scenarios('switch2030')*scenarios('Switch2030_OnlyMolass');
*Gasoline 2030 demand
Gasoline_BaseConsume = Gasoline_BaseConsume*(1 + (((1 + Shift2030GasolineDD)**(pyear-2011))- 1)*scenarios("switch2030"));
*Gasoline_RetailPrice = Gasoline_BasePrice + Gasoline_CentralTax + Gasoline_StateTax + Gasoline_DealerCommision;


Gasoline_PriceBlendPoint = (Gasoline_BasePrice + Gasoline_CentralTax);

EthPrice_BlendPoint = Ethfuel_ProcurePrice + Ethfuel_CentralTax + Ethfuel_StateTax + Ethfuel_InterstateTax
+ Ethfuel_TrasportCost + Ethfuel_BlendCost + Ethfuel_OtherTax;

Blend_Price = Blend*(EthPrice_BlendPoint) + (1- Blend)*(Gasoline_PriceBlendPoint) + Gasoline_StateTax + Gasoline_DealerCommision ;
Gasohol_Dem = (Gasoline_BaseConsume*(1 + (((1 + Shift2030GasolineDD)**(pyear-2011))- 1)*scenarios("switch2030")) + Ethfuel_BaseConsume);

Beta_Gasohol = Blend_Price/(Gasohol_Dem*Blend_Elasticity);
Alpha_Gasohol = Blend_Price - Beta_Gasohol*(Gasohol_Dem)*scenarios('switch2030')*scenarios('Switch2030_OnlyMolass');


Positive variable

FUEL_DEM blended fuel (total fuel consumption)
GASOLINE_DEM quantity of gasoline (fuel) consumption
ETHANOL_DEM total ethanol consumption
GASOLINE_SUP gasoline supply
Equation
ETH_SHARE
FUEL_EQUATION
GASOLINE_BALANCE

Constraint
Eth_Share.. ETHANOL_DEM =e= Blend*(ETHANOL_DEM + GASOLINE_DEM);

Fuel_Equation.. FUEL_DEM =E= ETHANOL_DEM + GASOLINE_DEM;

*========================Gasoline Balance=============================================

Gasoline_Balance.. GASOLINE_DEM =L= GASOLINE_SUP;



Thanks for help!!

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