Transaction Description:
APTO: A FIRM-LEVEL MODEL OF TECHNOLOGICAL IMPROVEMENT, PRODUCTION AND DIFFUSION IN THE ENERGY SECTOR -TECHNOLOGICAL PROGRESS IS THE FUNDAMENTAL DRIVER OF ECONOMIC PROSPERITY AND A STRONG TECHNOLOGY BASE IS ESSENTIAL FOR NATIONAL DEFENSE. WHILE TECHNOLOGIES OFTEN BEGIN IN THE LABORATORY, ONCE THEY ENTER THE COMMERCIAL WORLD, SUCCESS OR FAILURE DEPENDS ON A COMPLICATED SET OF INTERACTING FACTORS. DEVELOPMENT AND DEPLOYMENT OF TECHNOLOGIES DEPEND ON INVESTMENT, WHICH CAN COME FROM BOTH THE PUBLIC AND PRIVATE SECTORS. FOR MANY TECHNOLOGIES, INFRASTRUCTURE IS ESSENTIAL ? THE ELECTRICITY INDUSTRY CANNOT FUNCTION WITHOUT THE GRID AND THE OIL INDUSTRY CANNOT FUNCTION WITHOUT PIPELINES AND PORTS. SOME TECHNOLOGIES ARE INHERENTLY EASIER TO IMPROVE THAN OTHERS ? FOSSIL FUELS COST ABOUT THE SAME AS THEY DID A CENTURY AGO, WHILE SOLAR PANELS HAVE DROPPED IN PRICE SINCE THEIR FIRST COMMERCIAL USE IN 1958 BY ALMOST A FACTOR OF 10,000. A LACK OF CRITICAL MATERIALS OR SPECIALIZED KNOW-HOW CAN HAMPER PROGRESS. GOVERNMENT POLICIES CAN ACCELERATE OR SLOW THINGS DOWN, AND COMPETITION CAN SPEED THEM UP. ALL THESE FACTORS INTERACT WITH EACH OTHER IN A COMPLICATED, CONTEXT-SPECIFIC MANNER. THIS PROJECT WILL STUDY TECHNOLOGICAL PROGRESS IN THE ENERGY SECTOR AT THE FIRM LEVEL, CREATING A DETAILED HOLISTIC SIMULATION MODEL OF THE U.S. ENERGY SYSTEM AT THE LEVEL OF INDIVIDUAL FIRMS AND THEIR ENERGY ASSETS, SUCH AS POWER PLANTS AND OIL FIELDS. THIS SIMULATION WILL UTILIZED EMPIRICAL DATA ON ENERGY SYSTEMS, INFRASTRUCTURE, MARKET OPERATION, BALANCE SHEETS, AND INCOME STATEMENTS, INCLUDING ESSENTIALLY ALL THE ENERGY-GENERATING PLANTS IN THE U.S., THEIR OWNERS, COSTS, REVENUE AND PROFITS FOR THE LAST 30 YEARS. THE MODEL WILL BE DESIGNED TO UNDERSTAND HOW THE ENERGY SYSTEM WILL EVOLVE OVER THE NEXT TWENTY YEARS. GIVEN GOVERNMENT POLICIES, SUCH AS THE IRA OR THE CHIPS ACT, THE PROJECT WILL SIMULATE THE ENERGY SYSTEM FORWARD IN TIME AND EXPLORE DIFFERENT SCENARIOS TO UNDERSTAND THE EFFECTIVENESS OF GOVERNMENT POLICIES AND PRIVATE INVESTMENT STRATEGIES AND THE FACTORS THAT WILL BE KEY TO THEIR SUCCESS. EXISTING MODELS FOR ASSESSING ENERGY TECHNOLOGY PROGRESS CAN OVERSIMPLIFY THE COMPLEXITY OF COST STRUCTURES AND CAPABILITIES AMONG DIFFERENT TECHNOLOGIES. TO PREDICT WHETHER ONE TECHNOLOGY WILL REPLACE ANOTHER, WE MUST MOVE BEYOND UNIVARIATE FORECASTS OF TECHNOLOGY CHARACTERISTICS AND EXPLICITLY MODEL TECHNOLOGY DEPLOYMENT AND MARKET MECHANISMS. THIS PROJECT ENHANCES PROBABILISTIC MODELS OF TECHNOLOGICAL PROGRESS BY INCORPORATING THEM INTO A DATA-DRIVEN AGENT-BASED MODEL OF ACTUAL U.S. ENERGY FIRMS AND THEIR TECHNOLOGY PORTFOLIOS. THIS APPROACH ALLOWS DIFFERENTIATION BETWEEN COSTS AND PRICES, REPRESENTATION OF TECHNICAL CAPABILITIES MORE ACCURATELY, AND QUANTIFICATION OF THE LIKELIHOOD OF TECHNOLOGIES TO SUBSTITUTE OR COMPLEMENT EACH OTHER. BY INTEGRATING INVESTMENT DYNAMICS, TECHNOLOGICAL IMPROVEMENT, AND MARKET DYNAMICS IN A COHERENT FRAMEWORK, THE WORK WILL QUANTIFY THE IMPACT OF TECHNOLOGICAL CHANGE ON FIRMS, EMPLOYMENT, AND MATERIAL DEMAND IN A SPATIALLY EXPLICIT MANNER. THE GOAL OF THIS PROJECT IS TO MODEL THE EVOLUTION OF THE TECHNOLOGICAL ECOSYSTEM OF THE U.S. ENERGY SECTOR, EXPLICITLY CAPTURING THE FEEDBACK DYNAMICS BETWEEN TECHNOLOGICAL IMPROVEMENT, INVESTMENTS, AND FIRM PERFORMANCE. BY BUILDING ON AN AGENT-BASED MODEL OF U.S. ENERGY FIRMS, THEIR GEOLOCATED AND TECHNOLOGY-SPECIFIC, PHYSICAL ASSET PORTFOLIOS AND THEIR INTERACTIONS IN LOCAL ENERGY MARKETS, IT AIMS TO UNDERSTAND WHICH POLICIES WILL BE MOST EFFECTIVE IN ACCELERATING THE TRANSITION WHILE ENSURING ENERGY SECURITY AND MITIGATING BUSINESS RISKS. THIS APPROACH ALLOWS FOR DISENTANGLING TECHNICAL AND ECONOMIC PERFORMANCE (E.G., COSTS VS. PRICES AND ASSOCIATED CASH FLOWS FOR FIRMS) AND ANALYZING TECHNOLOGICAL AND ECONOMIC IMPACTS IN A SPATIALLY EXPLICIT MANNER. THIS AWARD REFLECTS NSF'S STATUTORY MISSION AND HAS BEEN DEEMED WORTHY OF SUPPORT THROUGH EVALUATION USING THE FOUNDATION'S INTELLECTUAL MERIT AND BROADER IMPACTS REVIEW CRITERIA.- SUBAWARDS ARE NOT PLANNED FOR THIS AWARD.
