Effects of perturbations in a dynamic system – The case of Nordic power production

Preprint, 2008

We use a dynamic model of the production of electricity and district heat in the Nordic countries to investigate the effects of small changes in the Nordic power-supply system. Our aim is to improve the understanding concerning marginal effects in this system and in dynamic production systems in general. Specifically, we investigate the effects of an earlier closing of a nuclear reactor, and of increases in short-term and long-term electricity demand. Our results demonstrate that a long-term perturbation has both short-term and long-term effects. To account for short-term effects only can be a serious limitation in a study aiming at describing the effects of decisions. Marginal effects in a dynamic system are likely to involve a complex and uncertain mix of different technologies. The magnitude of the effects can be greater than the perturbation itself and remain long after it has ended. Perturbations in one production system can also have marginal effects outside this system.