European Journal of Scientific Research

ISSN 1450-216X Vol.26 No.3 (2009), pp.352-361

© EuroJournals Publishing, Inc. 2009
http://www.eurojournals.com/ejsr.htm

A Review of MARKAL Energy Modeling

Mohammad Reza Faraji Zonooz

Solar Energy Research Institute
E-mail: rf45ir@yahoo.com
Tel:+60-3-89214592; Fax: +60-3-89214593

Z.M. Nopiah
Solar Energy Research Institute

Ahmad Mohd.Yusof
Faculty of Economy, Universiti Kebangsaan Malaysia (UKM)
43600 Bangi, Selangor Darul Ehsan, Malaysia

Kamaruzzaman Sopian
Solar Energy Research Institute

Abstract

In this paper, an attempt has been made to understand and review the various
emerging issues related to the MARKAL energy modeling. Implementation in more than
40 countries and by more than 80 institutions, including developed, transitional, and
developing economies indicate wide acceptability. The need to develop comprehensive
energy models and their related infrastructures as the energy scenarios in Malaysia have
compelled Pusat Tenaga Malaysia (PTM) to considers the MARKAL for the long term
energy planning. Developing of the model is still in progress.

Keywords: MARKAL, Energy modeling, Energy/ Economic systems, Crude oil,

Malaysia

1. Introduction
Energy is a vital input for the social and economic development of any nation. With the possible
exceptions of agriculture and forestry, the use of energy has had a greater impact on the environment
than any other human activity—a result of the large scale and pervasive nature of energy-related
activities. Although energy and environmental concerns were originally local in character—for
example, health and safety issues associated with extraction, transport, or noxious emissions—they
have now broadened in scope to cover regional and global issues, such as security, acid rains and the
greenhouse effect. The economics of energy use and the cost of environmental control have turned into
major political issues and the subject of extensive national and international debates and regulations.
Figure 1 shows the economic growth rate and the growth in final energy consumptions from 2000 to
2025. (Sakurai, 2002)
Global oil and gas reserves are heavily concentrated, in Russia, Central Asia, the Middle East,
and North Africa. The Middle East will remain the largest oil-producing region; OPEC holds
A Review of MARKAL Energy Modeling 353

approximately 75% of proven reserves and its market share is projected to rise from 40% in 2005 to
50% in 2030.

Figure 1: Economic growth rate and growth in final energy consumption (2000-2025)

There has been strong growth in energy demand worldwide, particularly in emerging
economies, such as China and India. Greater competition for energy supplies is leading to tighter
global energy markets and higher prices.
International trade in fossil fuels is expected to double by 2030, increasing the interdependence
of consuming and producing regions. (Berr, May 2007). Figures 2 and 3 Show the global energy
demands and the world energy productions oil and gas, up to 2030 respectively.
As Malaysia’s economic activities globalize, clearly grasping the interactive connections in the
economic and energy supply and demand relationships between Malaysia and the other countries have
become increasingly important where we wish to analyze and extrapolate domestic economic and
energy trends. Today around 95% of the Malaysia’s energy demands are met by fossil fuels, which will
continue to be the predominant source of energy for decades to come.
Energy plays an important role in Malaysian economy and lifestyles; therefore, we need to be
confident that the market and Government energy policies will deliver reliable supplies of energy at
competitive prices to people and businesses.
354 Mohammad Reza Faraji Zonooz, Z.M. Nopiah, Ahmad Mohd.Yusof and
Kamaruzzaman Sopian

Figure 2: Global Energy Demand up To 2030, By Fuel

Figure 3: World Energy Productions (Oil & Gas)

2. Discussion
2.1. Markal
MARKAL (acronym for MARKet ALlocation) is a widely applied bottom-up, dynamic technique,
originally and mostly a linear programming (LP) model developed by the Energy Technology Systems
Analysis Program (ETSAP) of the International Energy Agency (IEA) (ETSAP, 2001). MARKAL
depicts both the energy supply and demand sides of the energy system. It provides policy makers and
planners in the public and private sectors with extensive details on energy producing and consuming
technologies, and it can provide an understanding of the interplay between the macro-economies and
energy use. As a result, this modeling framework has contributed to national and local energy planning,
and to the development of carbon mitigation strategies. The MARKAL family of models is unique,
with applications in a wide variety of settings and global technical support from the international
A Review of MARKAL Energy Modeling 355

research community. Implementation in more than 40 countries and by more than 80 institutions,
including developed, transitional, and developing economies indicates wide acceptability.
As with most energy system models, energy carriers in MARKAL interconnect the conversion
and consumption of energy. This user-defined network includes all energy carriers involved in primary
supplies (e.g., mining, petroleum extraction, etc.), conversion and processing (e.g., power plants,
refineries, etc.), and end-use
Demand for energy services (e.g., boilers, automobiles, residential space conditioning, etc.).
The demand for energy services may be disaggregated by sector (i.e., residential, manufacturing,
transportation, and commercial) and by specific functions within a sector (e.g., residential air
conditioning, heating, lighting, hot Water, etc.).
The optimization routine used in the model’s solution selects from each of the sources, energy
carriers, and transformation technologies to produce the least-cost solution subject to a variety of
constraints. The user defines technology costs, technical characteristics (e.g., conversion efficiencies),
and energy service demands.
As a result of this integrated approach, supply-side technologies are matched to energy service
demands. Some uses of MARKAL include (APEC, Sep 30, 2002):
1. Identifying least-cost energy systems and investment strategies;
2. Identifying cost-effective responses to restrictions on environmental emissions and wastes
under the principles of sustained development;
3. Evaluating new technologies and priorities for research and development (R&D);
4. Evaluating the effects of regulations, taxes, and subsidies;
5. Performing prospective analysis of long-term energy balances under different scenarios.
6. Establishing baselines and evaluating issues of addition and assessing project impacts
(GHG savings) in the context of Kyoto Protocol joint implementation (JI), Clean
Development Mechanism (CDM), and emissions trading (ET) opportunities, and evaluating
the value of regional and international cooperation.
Table 1 provides an overview of the current MARKAL family of models. With few exceptions,
individual versions are additive, and they can be used in combination with each other where
appropriate. In some instances however, features are mutually exclusive as they represent different
modeling techniques that address the same needs.
MARKAL’s collaborative approach to model development is implemented through an open
architecture provided by the General Algebraic Modeling System (GAMS, see (Brooke et all. 1992)).
Although the theory and mathematics underlying the model is complex, MARKAL users can
effectively work with the model without a complete command of the computational methods
employed.
The MARKAL family of models provides a flexible, well-understood, proven, verifiable, and
evolving methodology that can contribute insights to assist with informed decision-making. (Seebregts,
et all 2001)
MARKAL is a demand driven model with the user providing the forecasts for the final demand
for energy and material services for all time frames. The forecasts are obtained from other sources or
models. These service demands are not equal to the final demand for certain energy carriers or
materials, e.g., the demand for residential houses (in physical units) will result in a final demand for
heating energy and building materials.
Traditionally these demand levels have been price insensitive, i.e., the demand level remains
unchanged if the supply prices change. This demand level is represented by the dotted line in Figure 4
The model generates a supply curve that satisfies the objective function and which is stepwise because
it is built up by discrete technologies. The total cost derived from the solution can be interpreted as the
integral under all assumed supply curves. (Koen E.L, et all 2004).
356 Mohammad Reza Faraji Zonooz, Z.M. Nopiah, Ahmad Mohd.Yusof and
Kamaruzzaman Sopian

Table 1: Overview of the MARKAL family of models

Member /Version Type of Model Short Description (Reference or Example)

MARKAL LP Standard model. Exogenous energy demand (Fishbone et al.1983)
Coupling to macro-economic model energy demand endogenous.
MARKAL-MACRO NLP
(Hamilton et al. 1992)
Coupling to micro-economic model, energy demand endogenous,
MARKAL-MICRO NLP
responsive to price changes. (Regemorter and Goldstein 1998)
As MARKAL-MICRO but with step-wise linear representation of
MARKAL-ED (MED) LP demand function. (Lolou and Lavigne 1996)
Linkage of multiple countries specific MARKAL-MED With multiple
MARKAL NLP regions and MARKAL-MACRO, including trade of emission Permits.
(Bahn et al. 1998)
Besides energy flows (electricity, heat) material flows with material
MARKAL LP flows and recycling of materials can be modeled in the RES. (Gielen
et al.1998)
Stochastic Programming. Only with standard model. With
MARKAL SP
Uncertainties (Ybema at al. 1998)
Endogenous technology learning based on learning-by-doing curve.
MARKAL – ETL MIP Specific cost decreases as function of cumulative experience. (Barreto
and Kypreso 1999)

Figure 4: Elastic demand curve in MARKAL

2.2. Variants of MARKAL

Variants of MARKAL include:
• MARKAL: Least-cost energy system configuration within constraints (demands levels and
environmental limits)
• MARKAL-Elastic: MARKAL + demands that respond to prices
• MARKAL-MACRO: MARKAL + price sensitive demands + GDP impacts
• MARKAL-Multi-region: MARKAL/Elastic/MACRO coupling of >1 database (towards 22-
region Global)
• MARKAL-Stochastic: MARKAL/Elastic with multi-stage stochastics
• MARKAL-ETL: MARKAL/Elastic/Stochastic with endogenous technology learning
(Goldstein, 2000).
A Review of MARKAL Energy Modeling 357

2.3. MARKAL: An Economic Optimization Energy System Model

Two technologies may differ very slightly in cost, but because of the way the linear program operates
the optimal mix of technologies may include all of one and none of the other. It is therefore of interest
to know how much improvement is needed in those technologies that do not appear in the solution.
This is indicated in the MARKAL solution by the "reduced cost."
As MARKAL can be used to determine the impact on total energy system costs, changes in
economy-wide energy intensity, and in the case of electrical systems, changes in emissions levels,
price of electricity and meeting demands, and changes in other characteristics of the energy system
resulting from the implementation of renewable technologies, it is well suited for different
assessments.
MARKAL finds the “best” Reference Energy Systems (RES) for each time period by selecting
the set of options to minimize total system cost over the entire planning horizon.
The constraints of program include: System constraints such as energy balance, demands,
electrical system, and user imposed policy constraints, including emissions caps, technology portfolio
standards, taxes and subsidies. MARKAL Framework Overview is depicted in Figure 5.

Figure 5: MARKAL Framework Overview

3. Malaysia Modeling Energy/ Economic Systems

Table 2 indicates that, of the 21 APEC Member Economies, more than two-thirds (15) have or are
developing Economy-level MARKAL models. In addition, several cities and provinces in China
(including Shanghai and Hong Kong, Guangzhou) have developed local energy planning frameworks
using MARKAL. A number of China’s other major municipalities and provinces have expressed strong
interest in similar undertakings. With this established network of users and Member Economy models,
improved energy efficient technology characterizations should enhance the energy system planning
activities currently in progress in the APEC region.
The need to develop comprehensive energy models and their related infrastructures requires no
further justification as the energy scenarios in Malaysia are dynamically changing according to national
as well as international concerns and aspirations. The energy sector was once regarded as one as a sub
sector is now considered as a major economic one within the Malaysian economy.
In our previous study (Ahmad Mohd.Yusof, et all 1983), an energy economy model for
Malaysia was developed by using the basic structure of MARKAL but extending it to include a
358 Mohammad Reza Faraji Zonooz, Z.M. Nopiah, Ahmad Mohd.Yusof and
Kamaruzzaman Sopian

relatively detailed representation of the economic sectors especially the energy model (TENAGA) and
the multi sectoral planning model (DERMA) has been developed.
MARKAL was considered by Pusat Tenaga Malaysia (PTM) to study the long term energy
planning. The program is a flexible, multi time period linear programming model of a generalized
energy system. However, the model’s description prevented the running of it due to a lack of reliable
data (Ahmad mohd. Yusof 2000 & 2004).

Table 2: APEC Member Economies and MARKAL Capabilities

Economy-Level MARKAL Models No

MARKAL Models Under Development MARKAL Models
Australia Malaysia Brunei Darussalam
Canada New Zealand Chile
China Thailand Papua New Guinea
Hong Kong, China Vietnam Peru
Indonesia The Russian Federation
Japan Singapore
Korea
Mexico
Philippines
Chinese Taipei
United States

This model must serve as a tool for energy demand and supply, forecasting and planning to
highlight the various forthcoming issues e.g. energy supply security, energy restructuring and
competition. Further, it must provide data for a scenario analysis of which the user can compute, plot
and design short, medium,or long-term energy forecasts based on different scenarios.

3.1. Crude Oil

Private organizations regularly issue other price forecasts (Table 3). Typically, the analytical core of
these models includes energy supply equations estimated based on historical mineral abundance,
exploration and capital investment data, and energy demand equations estimated over macroeconomic
models of the economy. The data used in such equations may represent the best information available
to researchers at the time, but is by definition, historical (Budzik, p., 2004). An example of Oil energy
system for MARKAL model is shown in Figure 6.
A Review of MARKAL Energy Modeling 359
Table 3: Energy models

Model Name Symbol Proprietor Energy Markets Description

US MARKAL MARKAL US department of All energy Large national model that represents
Energy; markets including detailedtechnologies or groups of technologies
Brookhaven imports and in all the end- use sectors. Each technology
National Laboratory exports competes with other options on the basis of
initial capital costs and its energy performance.
Energy 2020 E2020 Canadian Energy All Canadian and A system dynamics approach similar to that
Research Institute US energy used n a former US Department of Energy
markets model called FOSSIL2 and later IDEAS.
National Energy NEMS US Energy All US energy A large engineering-economy models of all
Information markets including energy markets. This model combines
Administration imports and considerable detail about technology options
exports with a representation of end-use demand and the
energy market and policy structure.
Policy Office Electricity POEMS US Department of All US energy Developed initially to conduct electricity
Modeling System Energy markets including restructuring analysis in greater regional detail
imports and than is available in NEMS.The natural Gas
exports market is represented the same as in the 2002
version of the NEMS system.
NANGAS/IPM NANGAS US Environmental US electricity and The system uses a natural gas model
Protection Agency; gas markets (NANGAS) and an integrated planning model
ICF consulting including exports for electricity (IPM) jointly to conduct the
and imports environmental impacts of fuel market changes.
North American Regional NARG California Energy Canadian and US This model covers numerous natural gas
Gas Commission gas markets regions. Plays close attention to recent
electricity trends and their potential effect on the
natural gas market.
Model for US and CRA Charles River Canadian and US Calibrating natural gas supply and demand
International Natural Gas Associates gas markets condition with NEMS for the United States and
Simulations (MUSINGS) with Canadian sources and the National
Petroleum Council for Canada.

Figure 6: Example of Oil energy system for MARKAL model

3.2. Model Development

The development of comprehensive framework for energy models plays an important role. The
component of the integrated Malaysian energy model consists of three major modules namely energy
supply (specified on Crude oil), energy conversion and interface modules. Refer to figure 7.
360 Mohammad Reza Faraji Zonooz, Z.M. Nopiah, Ahmad Mohd.Yusof and
Kamaruzzaman Sopian

Figure 7: Component of the integrated Malaysian energy

Energy Energy Conversion Interface

Supply & Technology Modules
Module Modules

Energy
Producing
Technologies Economic

Crude Oil
Conversion
Technologies Environmental

Energy
Consuming Energy
Technologies Demand

Simulation of model reliability must be conducted as well. It includes database and aintenance
systems and optimization techniques.
Malaysian Energy Model will be developed through Linear Programming (LP) used to answer
any question that may arise regarding energy and its demand, including prediction of future energy
demands.

Conclusion
This article presents an overview and essence of nearly two decades of MARKAL model
developments. The MARKAL family of models has contributed to energy/environmental /economic
planning since early 1980s. Energy, once regarded as a sub sector, is now considered as a major
economic sector within the Malaysian economy. MARKAL was considered by Pusat Tenaga Malaysia
(PTM) to study the long term energy planning. The model examines the potential role of evolving
technologies and pressing policy issues related to the interactions between energy, the environment,
and economic activities. As crude oil is a major contributor to the world economy, its effects on
modeling Malaysia’s energy /economic systems are of critical importance. Developing of the model is
still in progress.
A Review of MARKAL Energy Modeling 361

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