Selecting the Best Scenario to Increase the Government's Foreign Exchange Income in Energy Sector: An Application of System Dynamics Approach

This paper simulates the energy system of Iran, including supply and demand sectors, using system dynamics methodology. Key variables in this system are identified according to expert’s viewpoints, and their relationship is depicted through “cause and effect” and “stock and flow” diagrams. The formulated system is run from 2006 to 2021 using the VENSIM software, and six different scenarios are evaluated regarding the government’s income, considering lifting of subsidies. Results show that executing “Subsidy Reform Plan of Iran” during 8 years instead of 4 years alongside decreasing 20% of energy allocated to the residential/commercial sectors and allocation of this percent to the power plants and industry sectors equally, is the best scenario.