This directory contains matlab files that can be used to compute the equilibrium for the Application section of
Liski and Murto: "Uncertainty and energy saving investments"

To run the programs, simply type "Example" in matlab.

The main program that can easily be modified is "Example.m". The program computes equilibrium paths and effects for consumer and producer
surpluses for certain parameter values. The main program utilizes the following matlab functions:

ComputeEquilibrium.m is the main function for computing the equilibrium.

AnnualRevenue.m contains the estimated demand data, and computes the annual expected revenue for a unit of 
new capacity, given the current level of total capacity, oil price, and the feed-in tariff.

AnnualCost.m computes the expected cost of satisfying the whole annual demand.

Elprice.m contains the estimated supply data, and computes the electricity price for a given month, with given demand realization.

FindValueFunction.m is a value-function iteration algorithm that is used in computing the optimal investment threshold for a myopic
investor. It is also used in computing welfare effects.

ComputeWelfareEffects.m takes as inputs the equilibrium capacity paths computed without feed-in tariff, and 
with a given feed-in tariff.
The function returns the consumers' gain, the producers' loss, and the total welfare loss that results from the feed-in tariff.

EstimationData.mat contains historical (2000-05) price, reservoir, output, demand and fuel price paths.


DATA SOURCES:

electricity prices
source: Nord Pool
period: 2000-05
observation: weekly average system price
use: estimation of supply

weekly demand
source: Organization for Nordic Transmission System Operators (Nordel)
period: 2000-07
observation: weekly average
use: demand distibutions

imports to and exports from the Nordic area
source: Organization for Nordic Transmission System Operators (Nordel)
period: 2000-07
observation: weekly average
use: estimation of supply

production
source: Organization for Nordic Transmission System Operators (Nordel)
period: 2000-07
observation: weekly average of electricity generation for all capacity forms
use: estimation of supply

reservoir levels
source: Norwegian Water Resources and Energy Directorate (NVE), Swedenergy
and the Finnish Environment Institute
period: 2000-05
observation: weekly sum of reservoirs in the three countries
use: instruments in the estimation of supply

fuel prices
source: Reuters
period: 2000-05
observation: weekly average European Brent spot price
use: estimation of supply



