Technology shift modeling using rectangular-choice-of-technology approach: The case of the Philippine electricity mix

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ID: 286921
2025
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Abstract
The urgent need to mitigate global warming, driven largely by CO2 emissions from the energy sector, has accelerated efforts toward clean energy transitions especially in developing countries where electricity demand is rising and fossil-based technologies still dominate. Planning the technology shift requires balancing economic and environmental trade-offs while evaluating broader sectoral impacts. This study develops a technology shift model framework based on a multi-objective Rectangular-Choice-of-Technology (RCOT) approach tailored to the Philippine context, aiming to optimize the electricity generation mix in 2040. The model simultaneously minimizes total annual system generation costs and CO2 emissions from the power generation (PG) sectors. The model incorporates constraints on electricity demand, generation capacity, and resource use, while integrating technology-specific operational characteristics, operational cost structures, and environmental intensities. The Philippine Input-Output (I-O) Table was restructured into a rectangular form to disaggregate the electricity sector into existing and emerging technologies, including offshore wind and nuclear, allowing endogenous optimization of technology choices. Through ε-constraint optimization, the model reveals a linear trade-off between system cost and emissions reduction, where achieving a 1 MtCO2eq reduction in PG emissions increase annual generation costs by approximately PHP 78.8 billion. Among the scenarios, the Min(e) configuration achieves the lowest emissions (79.64 MtCO2eq), while Min(Z) offers the lowest system cost (PHP 5.84 trillion). The balanced (BAL) solution achieves a 26.4% emissions reduction and PHP 520 billion in annual cost savings compared to the policy baseline, while boosting total economic output by 21.2% (PHP 119.28 trillion). The transition also shifts sectoral dynamics, increasing the share of Other Services sector by 6.59% and reducing reliance on fossil-linked sectors (–21.41%) in favor of renewable-supporting manufacturing industries (+30.92%). These results could inform policy extension toward aligning industrial and workforce development strategies in key sectors with clean energy deployment to transform the energy transition into a broader economic development agenda. Calibration with historical data and external benchmarking confirm the model’s internal consistency, reliability, and transferability. Sensitivity analysis further validates its robustness to key assumption changes, particularly parameters influencing marginal generation cost and demand changes. By establishing a scalable RCOT-based framework that bridges optimization with economic impact analysis, this study addresses the lack of integrated energy-environment-economy models tailored for developing countries, promoting data-driven system-level planning for a sustainable energy transition.
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Authors Diamante, Darius Joseph R.
Journal Malay Journal
Year 2025
DOI
DOI not found
URL
https://animorepository.dlsu.edu.ph/etdm_mecheng/33
Keywords Keywords not found

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