Climate change is a phenomenon directly linked to man-made increases in greenhouse gases emissions. We as a society must take action and develop means to mitigate climate change and its effects. The energy sector is one of the top emitters of greenhouse gases worldwide. Electricity systems are a relevant portion of the energy sector. One way to mitigate climate change is to transition to low-carbon electricity mixes through the increase of renewables and decline of fossil-fuel electricity generation. Such solution is being attempted by both developed (e.g. EU countries) and developing countries. This article focuses on energy transitions towards low-carbon electricity systems in developing countries using mixes of policies. We aim to further analyze the effects of financial constraints of such developing countries on transition processes, as well as to analyze the effects of policy interactions in such context. From a methodological standpoint we start from Ostrom’s Institutional Analysis Development (IAD) Framework. The IAD framework focuses on the interactions and outcomes of agents in a situation that is bounded by multiple rules. Such interactions occur in a computational simulation named Technology, Finance and Energy model (TeFE), i.e., we use an agent based model to simulate interactions between agents. Such simulated agents are: technology producers, responsible for producing electricity generation assets; energy providers, that acquire such assets in order to produce electricity; an energy policy maker, responsible for the auction mechanism; a technology policy maker, responsible for giving incentives to technology producers; and a development bank, responsible for financing the acquisition of electricity generation assets by energy producers with subsidized interest rates. Agents in the IAD framework are also able to evaluate outcomes and adapt. In our analysis, agents follow Simon’s satisficing heuristic. Interactions occur in a context in which path dependence, sunk costs and innovation are present, which highlights the relevance of technology adoption. In non-central economies, combination of policies through policy mixes produce non-trivial effects regarding both the level and speed of energy transitions
The results from model show that a policy mix in which multiple policies are combined leads to energy transitions that are understood as better by both policy makers and private entities, i.e., energy transitions that yield higher profits and better achieve policy goals. Moreover, policy mixes with multiple policies achieve such status faster than scenarios with just one policy in place.
