Technology diffusion in energy-economy models: The case of Danish vintage models

Technological progress is an important issue in long-term energy demand pro jections and in environmental analyses. Different assumptions on technologi cal progress and diffusion of new technologies are among the reasons for di verging results obtained using bottom-up and top-down models for analysing the costs of greenhouse gas mitigation. This paper examines the effect on a ggregate energy efficiency of using technological vintage models to describ e technology diffusion. The focus is on short- to medium-term issues. Three different models of Danish energy supply and demand are used to illustrate the consequences of the vintage modelling approach. The fluctuating utilis ation rates for power capacity in Denmark are found to have a significant i mpact on average fuel efficiencies. Diffusion of electric appliances is lin ked to economic activity and saturation levels for each appliance. In the s ector of residential heat demand, fuel price increases are found to acceler ate diffusion by increasing replacement rates for heating equipment.