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A reliable and cost-effective electricity system transition requires both the identification of optimal target states and the definition of political and regulatory frameworks that enable these target states to be achieved. Fundamental optimization models are frequently used for the determination of cost-optimal system configurations. They represent a normative approach and typically assume markets with perfect competition. However, it is well known that real systems do not behave in such an optimal way, as decision-makers do not have perfect information at their disposal and real market actors do not take decisions in a purely rational way. These deficiencies lead to increased costs or missed targets, often referred to as an “efficiency gap”. For making rational political decisions, it might be valuable to know which factors influence this efficiency gap and to what extent. In this paper, we identify and quantify this gap by soft-linking a fundamental electricity market model and an agent-based simulation model, which allows the consideration of these effects. In order to distinguish between model-inherent differences and non-ideal market behavior, a rigorous harmonization of the models was conducted first. The results of the comparative analysis show that the efficiency gap increases with higher renewable energy shares and that information deficits and policy instruments affect operational decisions of power market participants and resulting overall costs significantly.

We conduct a novel experimental approach of inter-and intramodel comparisons with five power market models to give robust policy recommendations for decarbonization pathways of Europe until 2050. We determine the impact of model type (optimization vs. simulation), planning horizon (intertemporal vs. myopic), temporal resolution (8760 vs. 384 hours), and spatial resolution (28 countries vs. 12 mega-regions). The model type fundamentally determines the evolution of capacity expansion. Planning horizon (assumed foresight of firms) plays a minor role for scenarios with high CO 2 prices. For low CO 2 prices in turn, results from myopic models deviate considerably from those of intertemporal models. Lower temporal and spatial resolutions foster wind power via storage and via neglected transmission boundaries, respectively. Using simulation instead of optimization frameworks, a shorter planning horizon of firms, or lower temporal and spatial resolutions might be necessary to reduce the computational complexity. We deliver recommendations on how to limit the discrepancies in such cases.

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