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APPENDIX 13A. NEMS-BT EXTENSION MODELING BEYOND 2025

TABLE OF CONTENTS

13A.1 INTRODUCTION .................................................. 13A-1

LIST OF TABLES

Table 13A.1.1 Summary of Active and Inactive NEMS-BT2 Modules .............. 13A-2

LIST OF FIGURES

Figure 13A.1.1 Modified Residential Delivered Natural Gas Price ................. 13A-3
13A-1

APPENDIX 13A. NEMS-BT EXTENSION MODELING BEYOND 2025

13A.1 INTRODUCTION

To analyze the effects of proposed distribution transformer energy-efficiency standard

levels on the electric utility industry, DOE used the U.S. DOE/Energy Information

Administration (EIA)’s National Energy Modeling System (NEMS). DOE/EIA uses NEMS to

produce a baseline energy forecast for the U.S. through 2025, the Annual Energy Outlook 2005

(AEO2005). The Department used a variant known as NEMS-BT to provide key inputs to the

analysis. The current forecast horizon of NEMS-BT is 2025; however, some aspects of the

distribution transformer energy-efficiency standard rulemaking analysis extend beyond this date

to the last year of improved efficiency equipment shipments, 2038.

Past utility analyses and environmental assessments have relied on replicating 2025

results to the end of the forecast. However, more recent energy-efficiency standards tend to have

more distant onset years, making NEMS-BT inadequate for capturing the entire life cycle of

appliances subject to proposed standards. For example, the first year of proposed distribution

transformer savings is 2010, only 15 years before the NEMS-BT horizon. A three- to five-year

lead time for power plant construction further reduces noticeable impacts. Although replicating

the 2025 results has served as a simple and reasonable approach in the past, it seems increasingly

inadequate for recent rulemakings.

To address this concern, the Department has developed a limited-form adjunct version of

the NEMS model capable of modeling to 2050. The NEMS-BT2 2050 extension model, based

on the AEO20041 version of NEMS-BT, was developed by OnLocation, Inc., under a subcontract

to the Department. Because extensive code and input file changes were required to allow

NEMS-BT2 to run to 2050, it has been impossible to date to extend the AEO20052 version of

NEMS-BT. Therefore, the Department uses the AEO2005 version to conduct the analysis

through 2025 and the AEO2004 NEMS-BT2 2050 extension version for the 2026–2038 period. 

Also, some assumptions and adjustments were required to ease the transition from year 2025 to

2026, compensating for the inherent differences between these two versions.

The NEMS2-BT extension model to 2050 does not run all modules. Table 13A.1.1

summarizes the active and inactive modules. Because the NEMS-BT2 2050 extension model

was developed for the primary purpose of modeling energy-efficiency standards, the residential

and commercial demand modules as well as the electricity module are needed. The renewables

module is closely tied to the electricity module, and so is active for that reason, while the coal

module is active because it was extended in a previous project. Many of the other modules are

much less relevant to the distribution transformer analysis and were, therefore, not extended. 

To extend NEMS-BT2 to 2050 required four types of modifications:

• resizing of the huge data array that holds all the annualized variables, 
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• extension of the exogenous inputs, 

• extension of the endogenous variables, and

• changes to the algorithms in the source code.

Because not all modules run, many endogenous variables were modified and turned into

fixed variables. For example, commercial floorspace growth and retirements are usually

calculated in NEMS-BT’s macro module. When this module is turned off in a forecast to 2025,

NEMS-BT uses a previous forecast of commercial floorspace through 2025, creating a new

forecast to 2050. However, since there is no previous forecast to 2050 from which to borrow,

fixed inputs from 2026 to 2050 are created by calculating the average growth from 2000 to 2025

by building type by region, and making a simple extrapolation. Similar simple extrapolations

have been made for numerous variables, especially for macroeconomic quantities.

Establishing deviations from EIA’s 20-year-ahead estimates and creating a 45-year-ahead

estimate would be difficul, so most of the inputs that describe values that cannot be assumed to

grow—for example, the cost and technology characteristics for distributed generation—are

extended by flat-lining the 2025 values through 2050. The code changes, while tedious, are

straight-forward compared to establishing input and endogenous variable changes.

Table 13A.1.1 Summary of Active and Inactive NEMS-BT2 Modules

The NEMS-BT2 2050 extension model is intended to project the NEMS-BT 2005 version

results beyond 2025 as accurately as possible. This is accomplished by modifying the critical
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Figure 13A.1.1 Modified Residential Delivered Natural

Gas Price

residential delivered natural gas price. This gas price forecast is assumed in other parts of the

distribution transformer rulemaking analysis to be the AEO2005 with an extension beyond 2025,

based on the growth rate from 2015 to 2025; so, for consistency, this same price trajectory is also

assumed in the NEMS-BT2 2050 extension. AEO2005 forecasted higher natural gas prices than

AEO2004, so modifications were made to increase the natural gas prices in the 2004 NEMS-BT2

2050 extension model to match. 

Figure 13A.1.1 shows the modified residential natural gas price with and without the

AEO2005 price increase. The AEO2004 price (green triangle line) represents the lower gas

prices in the 2004 NEMS-BT2 2050 extension model before the forced increase. The AEO2005

(blue circle) line represents the 2005 NEMS-BT forecast extended to 2050, assuming the

continued 2015–2025 growth rate mentioned above. The actual extension model price is shown

as the red square line. This change is particularly important for the distribution transformer

analysis because standards can influence the overall natural gas price, which can in turn have a

significant effect on the generation fuel mix. 

As previously mentioned, the Department applied some techniques to produce a smooth

and believable transition from year 2025 to year 2026 results when using the 2005 version of

NEMS-BT forecast to 2025, followed by results from the 2004 NEMS-BT2 2050 extension

model. For example, the AEO2005 model forecasts lower overall installed generating capacity

yet higher electricity demand than the AEO2004. To address this discrepancy, DOE applied a

simple adder to all years 2026–2050, that represents the 2025 difference between the two models. 

It applied this adder to all results in the utility analysis and environmental assessment. 
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Additionally, to be consistent with the AEO2005 typical meteorological year (TMY)

System Load Reference Case, all AEO2004 2050 extension runs substitute the NEMS system

load shapes with the TMY system load shape.

The NEMS-BT2 2050 extension model is not modified to run the High and Low

Economic Growth sensitivity cases, so DOE interpolated extensions to these cases from the

Reference Case results. The Department ran the High and Low Economic Growth sensitivities

for the 2005 NEMS Reference Case with TMY System Load runs for Trial Standard Levels

1through 6, yielding results for the 2005 interpolated 2025 forecast period. However, beyond

2025, it derived High and Low Economic Growth Case results using fixed adders to the

2026–2050 results, representing the 2025 economic growth rate above or below the Reference

Case. For the High (Low) Growth Cases, the fixed adder represents an 11 percent increase

(decrease) over the Reference Case results for total electricity consumption, generation, and

capacity. This adder represents the 2025 growth rate difference between the High and Low

Growth Cases relative to the Reference Case. To estimate the High and Low Growth results,

DOE reported impacts as the difference from the Reference Case, and assumed them to be five

percent higher or lower than the corresponding Reference Case results for each trial standard

level. It determined this adjustment using professional judgment based on previous analyses

using the Economic Growth sensitivity cases. The Department applied all adjustments it made to

derive the results during the 2026–2050 period both to the utility analysis results and to the

corresponding environmental assessment impacts.
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REFERENCES

1. U.S. Department of Energy - Energy Information Administration. Annual Energy Outlook

2004: With Projections Through 2025. January, 2004. Washington, DC. Report No.

DOE/EIA-0383(2004). <http://www.eia.doe.gov/oiaf/aeo>

2. U.S. Department of Energy - Energy Information Administration. Annual Energy Outlook

2005: With Projections Through 2025. January, 2005. Washington, DC. Report No.

DOE/EIA-0383(2005). <http://www.eia.doe.gov/oiaf/aeo/index.html>