Change logic of how LCOE is used to calculate commodity prices #288
Description
Thanks. That's a good point, and could be an issue in some circumstances.
The price calculation is important to determine internal commodity prices, which are then used in calculation of investment-related LCOE (and other objectives) of assets that consume those commodities, and so-on. The issue you describe would only be an issue where no commodity is produced by any technology in a time slice - which is very unlikely in a standard systems model - but could be an issue if the framework is used in unexpected ways (which is entirely possible).
For asset investment LCOE calculation, the change proposed here will make the LCOE just a single value that depends on annual utilisation (so essentially its the same in every time slice).
For the commodity price calculation (which presumably happens elsewhere in MUSE), where the commodity price is assumed to be based on LCOE (I think there are options here, it's either LCOE-based or marginal price based, where marginal price is variable costs only), there are a few defensible ways to do this. One could (a) use the output-weighted average LCOE of every asset contributing in the time slice, or (b) use the highest LCOE of all assets contributing in a time slice. Then we come to your question - if all assets have zero output of the commodity in a time slice, what do we do? I think we would need to break that down into a few cases, (1) where all of the available assets (including all possible new assets) have an upper bound of output in that time slice of zero, then price should be infinite because there's simply no way to get that commodity in that time slice, and (2) where there are available assets that could produce the commodity in that time slice (but aren't doing so yet), it perhaps should the LCOE or marginal cost of the cheapest one (though this is debateable - actual price will depend on which asset is actually chosen). Anyway, it seems like this price issue is not the one you're dealing with in relation to this bug - rather you are looking at the asset investment - and have found a serious issue there. Should a new issue be raised for this price calculation problem?
Originally posted by @ahawkes in #246 (comment)