The Use of System Dynamics Approach for Assessing the Impacts of Policy Measures and Strategies on Wood Energy Market Development in Latvia

The concept of system dynamics was first introduced in the end of Sixties by Jay W. Forrester (Massachusetts Institute of Technology). Since that already a number of researchers have approved the suitability of the system dynamics theory for simulating the behavior of complex systems in dynamic environment. In this paper a dynamic model of energy market in Latvia is presented and impacts of three policy measures, which were introduced into the model to facilitate the use of wood fuel in Latvia, are analyzed. The model has been elaborated using the simulation software Powersim Constructor 2.5. The aim of the study is to simulate the behavior of energy market in Latvia and to develop strategies for moving the existing energy system on more sustainable way, i.e., by using locally available renewable wood fuel instead of currently used natural gas