Dr. Daniel Huppmann studied Mathematics at the Vienna University of Technology, where he earned an MSc degree in 2010. He joined the German Institute for Economic Research (DIW Berlin) as a student research assistant in 2008, started in DIW’s graduate (PhD) program in October 2011 and successfully defended his dissertation at the TU Berlin in June 2014. He is currently a Research Associate in the department Energy-Transportation-Environment at DIW Berlin. In his research, Daniel works at the intersection of Operations Research, game theory, and energy economics, with a focus on multi-stage games in the global crude oil and natural gas markets, and strategic investment in electricity networks.
Modeling Strategic Behavior in Global Energy Markets- the Role of OPEC and the Impact of US Climate Policy (abstract)
The first part of the talk focuses on the global crude oil market, in particular the role of OPEC, and the difficulty of properly capturing strategic behavior in real-world applications using equilibrium modeling. This article proposes a two-stage oligopoly model: in a game of several Stackelberg leaders, market power increases endogenously as the spare capacity of the competitive fringe goes down. This effect is due to the specific cost function characteristics of extractive industries. The model captures the increase of OPEC market power before the financial crisis and its drastic reduction in the subsequent turmoil at the onset of the global recession.The two-stage model better replicates the price path over the years 2003-2011 compared to a standard simultaneous-move, one-stage Nash-Cournot model with a fringe. This article also discusses how most large-scale numerical equilibrium models, widely applied in the energy sector, over-simplify and potentially misinterpret market power exertion.
The second part of the talk presents a large-scale global dynamic energy system and resource market equilibrium model (“MultiMod”). It combines endogenous fuel substitution within demand sectors and in power generation, detailed infrastructure capacity constraints and investment, as well as strategic behavior and market power aspects by suppliers in a unified framework. This model is the first-of-its-kind in which market power is exerted across several fuels. It bridges the divide between energy system models, focusing on fuel substitution and technology options, and sector specific models that have a detailed representation of infrastructure constraints and are able to capture strategic behavior. The model allows assessing and quantifying the impact of national or global climate policy and emission reduction targets on the global energy mix over the next decades. In the talk, Daniel will present current results from the Energy Modeling Forum, Round 31 (“North American Natural Gas and Energy Markets in Transition”), focusing on the impact of US shale gas scenarios and domestic energy policy (such as Technology Portfolio Standards) on global energy consumption patterns and the resulting import dependency and trade flows.
Graduate Seminar: Modeling Cyclone Risk and Seismic Building Vulnerability in Central America and the Caribbean
This seminar will introduce two research projects applied to the Country Disaster Risk Profiles initiative of the World Bank: a hurricane hazard model and a probabilistic seismic vulnerability tool (PSVT). The windstorm hazard model is a novel approach which yields characterizations of windstorm activity (rate of occurrence, trajectory and spatial wind field) in the Central American region for use in natural risk assessment. The generative mechanism of storms is formulated as a superposition of stochastic processes whose joint opera;on yields synthetic cyclones activity in the region. The outcomes of the model match observed data acceptably well. A brief reference to the risk estimation procedure will be offered. Vulnerability functions estimate building damage caused by an acting hazard intensity. The PSVT is a software tool for creating vulnerability functions for seismic risk analysis. The approach estimates structural response of user-defined models subjected to ground acceleration signals integrating the equations of motion. Ground signals are realizations of random process models of site–specific ground motion hazard.
Speaker: Dr. Gonzalo Pita
Adjunct Assistant Scientist, Department of Civil Engineering, Johns Hopkins University; Sr. Natural Risk and Vulnerability Specialist, The World Bank