National Energy Modeling System Overview

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					National Energy Modeling System
        National Energy Modeling System Overview

• NEMS is a large, regional, modularly designed, technology-rich,
  energy-economy model that solves for annual equilibrium in U.S.
  energy markets.
• Consists of:
    – 4 domestic supply modules
          • oil supply, natural gas supply and distribution, coal supply and distribution,
            and renewable resource supply
    – 4 demand modules
          • residential, commercial, transportation, and industrial
    –    Electricity market module
    –    Petroleum market module
    –    Macroeconomic module
    –    International energy module
• Each module represents the operational and planning activities of the
  appropriate economic agent (i.e., households in the residential module,
  power companies and power plants in the electricity module) in that
  area
Electricity Market Module
                    Electricity Market Module

• Linear programming model solving for the minimal cost of meeting
  electricity demand subject to environmental constraints
• 13 electricity supply regions based on NERC regions and subregions
• Each year using adaptive foresight on future electricity demand and
  fuel prices determines the best mix of capacity to add, retire, and
  operate
• 16 new plant types are represented
• Among existing coal plants, 32 different configurations with various
  combinations of SO2, NOx, particulate, and mercury control devices
  are represented
• The electricity module explicitly represents the emission caps imposed
  by multi-pollution statutes and determines the most economical
  compliance options.
• Banking decisions are made endogenously for SO2, they are
  exogenously specified for NOx, and Hg
Electricity Regions
               Electricity Generation by Fuel, 1970-2025
                          (billion kilowatthours)
3,000                      History                    Projections
                Electricity demand
                                       5,252
2,500
                                                      Coal
          1,392

2,000
          1970                        2025                     Natural gas

1,500


1,000
                                                             Nuclear


 500                                                   Renewables


                                                       Petroleum
   0
        1970        1980             1990      2001   2010             2025
     Additions to Electricity Generating Capacity, 1998-2002
                            (gigawatts)
70
                                          Total
60                              Combined cycle
                            Combustion turbine
                                        Renewables
50
                                  Coal and other

40


30


20


10


 0
          1998       1999        2000         2001    2002
Projected Electricity Generation Capacity Additions by Fuel
  Type, Including Combined Heat and Power, 2001-2025
                        (gigawatts)
100
                                     Natural gas

                                           Coal
 80
                                     Renewables


 60


 40


 20



  0
       2001-     2006-      2011-       2016-      2021-
       2005      2010       2015        2020       2025
       Projected Levelized Electricity Generation Costs,
         2010 and 2025 (2001 mills per kilowatthour)
75                                  Transmission
                                    Variable costs, including fuel
                                    Fixed costs
                                    Capital costs
50




25




0
                 2010                                  2025
     Coal      Gas   Wind Nuclear       Coal      Gas   Wind         Nuclear
            combined                           combined
              cycle                              cycle
  Projected Electricity Generation by Fuel, 2001 and 2025
                   (billion kilowatthours)
3,000


2,500

                                            2001
2,000
                                            2025

1,500


1,000


 500


    0
         Coal     Nuclear   Natural gas   Renewables   Oil
Projected Cumulative New Generating Capacity by Type in
           Two Cases, 2001-2025 (gigawatts)
300

                    Turbines
250
                  Combined cycle

                         Coal
200
                               Renewables


150


100


 50


  0
            Reference                       High demand
     Projected Cumulative New Generating Capacity by
    Technology Type in Three Economic Growth Cases,
300               2001-2025 (gigawatts)
                                        Turbines
                                 Combined cycle
250
                                      Coal steam
                                     Renewables
200


150


100


 50


  0
      Low growth         Reference                 High growth
Projected Nonhydroelectric Renewable Electricity Generation
          By Energy Source, 2010, 2020, and 2025
200               (billion kilowatthours)

                                            Geothermal

150
                                           Solar thermal
                                           Photovoltaic
                                              Wind

100


                                              Biomass

 50


                                             MSW
 0
      2001           2010           2020                   2025
Projected Nonhydroelectric Renewable Electricity Generation
           By Energy Source in Two Cases, 2025
  350             (billion kilowatthours)

 300                                         Geothermal
                                             Solar thermal
                                             Photovoltaic
 250


 200                                         Wind


 150


 100
                                             Biomass

  50
                                             MSW
   0
          Reference        High renewables
    Projected Additions of Renewable Generating Capacity,
                     2001-2025 (gigawatts)
8



6
                                                    Unplanned



4                                                   Other planned




2                                                   State mandates




0
     Biomass Geothermal   Landfill   Solar   Wind
                            gas
       Green Power in NEMS
• Defined as “Individual consumers voluntarily
  paying a premium for specified renewables,”
  NEMS does not explicitly represent green power
  in any sector
• Green power markets appear to be (1) too small
  and (2) generally accounted by other EIA/NEMS
  measures, voiding any immediate necessity of
  representing separately.
     Green Power is Implicitly
           Included In -
• Supplemental Adds – Supply Side, Explicit annual
  forecast estimates of known new renewable
  energy capacity and state RPS, mandates, etc.
• Supply Side – “Floor” grid-connected PV builds
• Demand Side – End-User (both assumed and cost
  modeled) PV additions in residential and
  commercial sectors
   Should NEMS Model Green
            Power?
• GP appears to be a very small market
• GP appears generally absorbed in other
  markets already represented
• GP may have been overtaken by more
  potent forces, like state RPS
• If evidence demonstrates GP independently
  adding significant capacity not already
  accounted, EIA would likely reconsider.