Extending energy system models to assess technology sourcing and resilience

Abstract

This study presents a novel energy system optimization framework that endogenizes technology-sourcing decisions—manufacturing, remanufacturing, or imports—into cost-optimal system design under the Net-Zero Industry Act. Applying the framework to the European energy sector, we examine 243 scenarios that cover key uncertainties, including learning rates, scrap prices, and recycling dynamics for solar photovoltaics (PV), wind, and grid-scale batteries. Results show that total capacity requirements are robust across sourcing pathways, but sourcing strategies diverge sharply on the basis of technology. Sourcing strategies tend to polarize toward either manufacturing-dominated or remanufacturing-dominated approaches, a split that reflects structural cost sensitivities. We find limited evidence for “no-regret” domestic supply capacities that effectively combine both strategies. Contrary to concerns, domestic sourcing delays modestly but does not jeopardize the liquefied natural gas (LNG) phaseout, with median LNG demand rising only 18% by 2040. The framework provides a scalable basis for integrating industrial policy constraints into energy system models and for exploring circular, resilient pathways toward a net-zero energy transition.