An agent-based model for energy investment decisions in the residential sector

Abstract

Energy-related investment decisions in the buildings sector are heterogeneous in that the outcome for each individual varies according to budget, values, and perception of a technology, even if an apparently identical decision task is faced. In particular, the rate of adoption of new energy-efficient technologies is often hard to model and underlines the need for an advanced approach to capture diversity in decision-making, and enable the inclusion of economic, comfort, environmental and social aspects. This paper presents an enhanced agent-based model that captures several characteristics of consumer behaviour that influence investment decisions. Multiple agents with different objectives, search strategies, and decision methods are implemented. A case study is presented which illustrates the benefits of the approach for the residential sector in the UK. The agent-based method shows diversity in investment decisions, without requiring the constraints on uptake needed in many models. This leads to a range of technologies in the market during a transition phase, continuous investment in low capital cost technologies, and eventually the emergence of a low carbon system based on new mass market technologies. The system that emerges is vastly different from one observed when economically rational investment is assumed and uptake constraints are applied.