Bridging policy and modelling: A review of policy representation in bottom-up energy system models

Abstract

Bottom-up energy system models play a key role in supporting policy development. Therefore, understanding how policy instruments are integrated within these models is essential for shaping effective energy policies, particularly in emerging areas like sector coupling. Nevertheless, current literature lacks a comprehensive mapping of how policies are represented in bottom-up energy models. To address this gap, this study reviews a representative sample of recent modelling studies with a strong policy representation and focus. It specifically examines the types of instruments modelled, how scenarios are constructed, the indicators used to assess policy performance and the treatment of sector coupling. The review reveals that nearly all the analysed studies include CO2 pricing, followed by financial incentives, bans, and technology/sector performance standards. Additionally, over half of the studies examine policy instruments in isolation, lacking a more integrated policy mix approach. Scenario-building approaches are split between solution analysis and solution discovery, with some studies exploring more innovative methods beyond traditional scenario analysis. Regarding indicators, the majority of studies focus on CO2 emissions and system costs, with limited attention to cost distribution and social impacts. Finally, while sector coupling is recongised in most studies, specific policies to facilitate it are rarely addressed. Based on these findings, this study provides recommendations for model developers to advance beyond currently established practices, while being aware of the capabilities and limitations of bottom-up energy system models.