Modeling Demand and Price Changes in Distributed Generation of Electrical Energy Using a System Dynamic Approach: Case of Iran

In this paper by means of a system dynamics model, we have addressed the issue of pricing and demand of the distributed generation of electricity in combined heat and power plants in Iran while considering environmental issues which has not been discussed in literature before. We proposed a model based on the relations between supply, price, and demand, considering the efficiency and pollution penalties, and investments in distributed energy generating gas CHP plants. Analysis of our model reveals that for the next twenty years the demand, price, and supply of the DG energy will increase relative to the total energy generated, with demand and price fluctuating due to seasonal changes. Our work uncovers the rich dynamic complexity of energy sector and can serve as a good example of applying systems thinking principles to complex real world problems.