13A -i

APPENDIX 13A. NEMS-BT EXTENSION MODELING BEYOND 2025

TABLE OF CO NTENTS 13A.1 INTRODUCTI ON

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

LIST OF TABLE S Table 13A.1.1 Summary of Active a nd Inactive NEMS-BT2 Modules

.............. 13A-2

LIST OF F IGURES Figure 13A.1.1 Modified Residential Delivered Na tural Gas Price

................. 13A-313A -1

APPENDIX 13A. NEMS-BT EXTENSION MODELING BEYOND 2025
13A.1 INTRODUC TION To analyze the ef

fects of proposed distribution transformer energ y-eff iciency standa

rd levels on the electric utility industry , DOE used the U.S. DOE/Energy Information Administration (EIA)’s National Ener gy Mode ling System (NEMS). DOE/EI A uses NE MS to produce a baseline energ

y forec ast for the U.S. through 2025, the Annual Energy Outlook 2005 ( AEO2005 ). The Department used a variant known as NEMS-B T to provide key inputs to the analy sis. The current forecast horizon of NEMS-BT is 2025; howeve r, some aspects of the distributi on transf

ormer e nergy -effic iency

standar d rulema king analy sis extend b eyond this da te to the last year of

improved efficiency

equipment shipments, 2038. Past utility analyses and environmental assessments have relied on replica ting 2025 results to the end of the forecast. However, more recent energy

-efficiency

standards tend to have more distant onset year

s, making NEMS-BT inadequate for ca pturing the entire life cy

cle of appliances subject to proposed standards. For example, the first y ear of proposed distribution transformer savings is 2010, only 15 years be fore the NEMS-BT horizon. A three- to five-y ear lead time for power plant construction further reduc es noticeable impacts. Although replicating the 2025 r

esults ha s served

as a simple

and rea sonable a

pproach in the past, it seems

increa singly inadequa te for re cent rul emaking s. To address this concern, the Department has deve loped a limited-form adjunct version of the NEMS model capable of modeling to 2050. The NEMS-BT2 2050 extension model, based on the AEO2004 1 version of NEMS-BT, was developed by OnLocation, I

nc., under a subcontract to the Department. Because extensive code a nd input file changes were require d to allow NEMS-BT2 to run to 2050, it has been impossible to date to extend the AEO2005 2 version of NEMS-BT. Therefore, the Depa rtment uses the AEO2005 version t o conduc t the ana

lys is through 2025 and the AEO2004 NEMS-BT2 2050 extension version for the 2026–2038 period. Also, some

assumption s and adju stments we re requ ired to e ase the t

ransition from y ear 2025 to 2026, com

pensatin g for th e inhere

nt differ ences be tween the se two ve

rsions. The NEMS2-BT extension model to 2050 does not run all modules. Table 13A.1.1 summarizes the active and inactive modules. Because the N EMS-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 electric ity module are nee ded. The renewables module is closely tied to the electric ity module, and so is active for tha t 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 analy sis and were, therefore, not extended. To extend N

EMS-BT2 to 2050 re quired f our ty pes of mod

ifications:

• resizing of the huge data arra y that holds all the annualized variable s,13A -2

• extension of the exogenous inputs,

• extension of the endogenous variables, and

• changes to the algorithms in the source c ode.

Becau se not all m

odules ru n, many endoge nous vari ables we

re modifi ed and tur

ned into fixed var iables. F or example , commer cial floorspace

growth and reti rements a re usual ly calculated in NEMS-BT’s macro module. When this module is turned off in a fore cast to 2025, NEMS-BT uses a previous forecast of commer cial floorspace through 2025, crea ting 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 averag e growth from 2000 to 2025 by building ty

pe by reg ion, and making a simple extrapolation. Similar simple extrapolations have be en made f

or numer ous varia bles, esp ecially

for macroeconomic quant ities. Establishing deviations from EIA’s 20-y ear-ahead estimates and cre ating a 45-y ear-ahead estimate would be d

ifficul, so most of th e inputs th at descr ibe value s that ca

nnot be as sumed to grow—for example, the cost and technology characteristics for distributed gene ration—are extended by flat-lining the 2025 values through 2050. The code chang es, while tedious, are straig ht-forw ard comp ared to e stablishin g input a nd endog enous va

riable c hange s. 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 a

ccurately as possible. This is accomplished by modify ing the critical13A -3 Figure 13A.1.1 Modified Residential Delivered Natural

Gas Price residential delivered natural gas pric e. This gas price foreca st is assumed in other parts of the distribution transformer rulemaking analy sis to be the AEO2005 with an extension beyond 2025, based on the growth rate

from 2015 to 2025; so, for cons istency , this same

price tr ajector y is also assumed in the NEMS-BT2 2050 extension. AEO2005 forecasted higher natura l gas prices than AEO2004 , so modifications were made to increase the natura l gas prices in the 2004 NEMS-BT2 2050 extension model to match. Figure 13A.1.1 shows the modified residential natural g as price with and without the AEO2005 price increase. The AEO2004 price (green triangle line) represents the lower ga s prices in the 2004 NEMS-BT2 2050 extension model before the forced inc rease. The AEO2005 (blue circle) line represents the 2005 NEMS-B T forecast extended to 2050, assuming the continued 2015–2025 growth rate mentioned above. The a ctual extension model price is shown as the red square line. This change is particularly important for the distribution transformer analysis beca

use standards can influence the overa ll natural gas price, which can in turn have a significant effect on the ge neration fuel mix.

As previo usly mentione d, the De

partmen t applied some techniques to

produce a smooth and believable transition from y ear 2025 to ye ar 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 for ecasts lower ove

rall insta lled ge neratin g capa city yet highe r electricity

demand than the AEO2004 . To address this discrepancy , DOE applied a simple adder to all yea

rs 2026–2050, that represents the 2025 difference be tween the two models. It applied this adder to all results in the utility analysis and environme

ntal assessment.13A -4

Additionally, to be consistent with the AEO2005 typical meteorolog ical yea r (TMY) Syst em Lo ad Refe

rence C ase, all AEO2004 2050 extension runs substitute the NEMS system load shapes with the TMY system load sha pe. The NEMS-BT2 2050 extension model is not modified to run the High and Low Economic Growth sensitivity case s, so DOE interpolated extensions to these cases from the Reference Case results. The Depa rtment ran the High and L ow Economic Growth sensitivities for the 2 005 NEMS Re ferenc e Case wi th TMY Sy

stem L oad runs f

or Trial Standard Leve ls 1through 6, yie lding results for the 2005 interpolated 2025 forecast per iod. However, bey

ond 2025, it derived High and Low Economic Growth Case results using fixed adders to the 2026–2050 results, representing the 2025 economic g rowth rate above or below the Refere nce Case. For the Hig

h (Low) Grow

th Cases, t

he fixed a dder re present s an 11 pe

rcent increase (decrease) over the Refe

rence Case results for total electricity consumption, generation, and capacity . This adder represents the 2025 growth ra te difference between the Hig h and Low Growth Ca ses rela

tive to the Refere nce Case . To estima

te the Hig h and L ow Growt

h results, DOE reported impacts as the differenc e from the Reference Case, and a ssumed them to be five percent higher or lower than the corresponding Reference Case results for each trial standard level. It determined this adjustment using profe ssional judgment based on previous analyses using the Economic

Growth se

nsitivity cases. T he Depa rtment ap plied all a djustments

it made to derive the results during the 2026–2050 period both to the utility analysis results and to the corres ponding environm ental as sessment i mpacts.13A -5 REFEREN CES
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/EI A-0383( 2005). <

http://www .eia.doe .gov/oia f/aeo/in dex.html>