### CHAPTER 14. UTILITY IMPACT ANALYSIS

TABLE OF CONTENTS

14.1 INTRODUCTION

............................................................................................................ 14-1

14.2 ASSUMPTIONS AND METHODOLOGY

..................................................................... 14-1

14.3 RESULTS

........................................................................................................................ . 14-3

14.3.1 Impacts Related to Commercial Refrigeration Equipment – TSL 1

.................. 14-6

14.3.2 Results for TSL 2 through TSL 5

...................................................................... 14-7

LIST OF TABLES

Table 14.3.1 Reference Case Forecast: Comm ercial Electricity Consumption, Electricity Generation, and Electricity Capacity

............................................... 14-3
Table 14.3.2 TSL 1 Utility Impacts for Commercial Refrigeration Equipment

..................... 14-4
Table 14.3.3 TSL 2 Utility Impacts for Commercial Refrigeration Equipment

..................... 14-4
Table 14.3.4 TSL 3 Utility Impacts for Commercial Refrigeration Equipment

..................... 14-5
Table 14.3.5 TSL 4 Utility Impacts for Commercial Refrigeration Equipment

..................... 14-5
Table 14.3.6 TSL 5 Utility Impacts for Commercial Refrigeration Equipment

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### CHAPTER 14. UTILITY IMPACT ANALYSIS

14.1 INTRODUCTION

The U.S. Department of Energy (DOE) an alyzed the effects of amended energy conservation standards for commercial refrigeration equipment (CRE) on the electric utility industry. DOE conducted the utility impact anal ysis using Energy Information Administration’s (EIA) National Energy Modeling System (NEMS). a 

### NEMS is a public do main, multi-sectoral, partial equilibrium model of the U.S. energy sector. Each year, DOE/EIA uses NEMS to produce a reference energy forecast for th e United States, published in the Annual Energy
Outlook

. 1 

### The Annual Energy Outlook for 2008 ( AEO2008) forecasts energy supply and demand through 2030.

DOE used a variant of this NEMS model, referred to as NEMS-BT, b 

### to account for the impact of amended energy conservation standa rds on the reference energy forecast. The

NEMS-BT reference case was modeled after the AEO2008 reference case. c 

### The utility impact analysis consists of a comparison between model results for the reference case and for the policy cases in which amended energy conservation standards are in place. d



### NEMS-BT has several advantages that have led to its use in the analysis of national energy conservation standards. The model uses a set of assumptions that are well known and fairly transparent because of the exposure and scrutiny each AEO receives. In addition, the comprehensiveness of NEMS-BT permits the mode ling of interactions among the various energy supply and demand sectors, and the economy as a whole, producing a complete picture of the effects of energy conservation standards. Perh aps most importantly, NEMS-BT can be used to estimate marginal effects, which yield a more accu rate estimate of the ac tual impacts of energy conservation standards compared to considering only average effects.

14.2 ASSUMPTIONS AND METHODOLOGY

DOE’s utility impact analysis applies the same basic set of assumptions as the AEO2008

. For example, the operating characteristics (energ y conversion efficiency, emissions rates) of future electricity generating pl ants are as specified in the AEO2008 Reference Case. The utility impact analysis reports the change s in installed capacity and gene ration, by fuel type, that results

a For more information on NEMS, refer to the U.S. Department of Energy, Energy Information Administration documentation. A useful summary is National Energy Modeling Sy stem: An Overview 2003 , DOE/EIA

0581(2003), March 2003. More detailed and more current documentation of various sub-models within NEMS can

be obtained from EIA’s website: http://www.eia.doe.gov /oiaf/forecasting.html

. b DOE/EIA approves the use of NEMS to describe only an official version of the model without any modification to code or data. Because this analysis entails some minor code modifications and the mode l is run under various policy scenarios that are variations of DOE/EIA assumptions, DOE refers to it by the name NEMS-BT (BT is DOE’s Buildings Technologies Program, under whose aegis this work has been performed).

c The NEMS-BT reference case shows very slight differe nces from the AEO reference case. In 2030, total commercial electricity consumption in the NEMS-BT refe rence case was 0.10 percent lower than the 2008 AEO reference case. For total electricity generation and total installed generating capacity, NEMS-BT produced estimates that were 0.08 percent and 0.34 percent lower than the AEO reference case, respectively.

d In the discussion below, the abbreviated term “the reference case” should be understood to refer to the NEMS-BT

r eference case.

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### from each trial standard level (T SL) as well as changes in electricity sales to the commercial

sector.

The utility analysis uses the AEO2008 Reference Case as the base case and treats the energy conservation standards on co mmercial refrigeration equipmen t as variations in policy. The effect of the policy is calculated as the di fference in the reference case and the proposed energy conservation standards case. Because the implementation of energy conservation standards for commercial refrigeration equipm ent reduces the electricity demand by less than one-tenth of 1 percent (in th e range of 0.01 to 0.06 percent in 2025, depending on the TSL) in any given year, its effect is difficult to adequately measure in the NEMS simulations. Therefore, larger reductions in demand are modeled, and resu lts for the TSLs are interpolated. The effects

are assumed to be linear within the range of interpolation.

In its analysis of energy conservation standa rds for commercial refrigeration equipment, DOE adjusted the annual end-use energy consumpti on for refrigeration that was predicted within

the commercial sector module of NEMS-BT. Th ese decrements in the annual consumption were made for each census division using the method for computing energy savings developed in the national impact analysis (see Chapter 11). The ch anges in annual consumption were translated into changes in hourly system load as part of the normal NEMS m odeling process using the

NEMS’ standard commercial build ing refrigeration shapes.

As mentioned above, the magnitude of the en ergy decrement that would be required for NEMS-BT to produce stable results, outside the range of numerical noise , is larger than the highest energy conservation st andard under consideration. e 

### Therefore, DOE estimated results corresponding to the TSL using interpolation. It implemented reductions to both the commercial refrigeration end use at multiples of the proposed standards, and linearly interpolated actual changes in generation and capacity due to the standard from these outputs. Compared to the total savings for all commercial refrigeration equipm ent under Trial Standard Level 4, the multipliers used in this analysis were 2.8, 5.7, and 8.5. Appe ndix K provides details of the interpolation method and how the multiples were selected.

The terminal year of the NEMS-BT model is 2030. Impacts beyond 2030 were extrapolated based on the pattern of electricit y savings (in kWh) expected for a particular standard. The extrapolation was based on a comp arison of the change in the NEMS-BT variable (e.g., coal-fired generation) to the change in electricity savings over the period 2025 to 2030. As a first step to implement the method, the change s in electricity savings over three periods—2030 to 2035, 2035 to 2040, and 2040 to 2042—were expressed as ratios to the change in electricity savings over the period 2025 to 2030. The changes in a utility-sector variable were then multiplied by these ratios to estimate the changes in the periods after 2030.

To illustrate the approach, the NEMS-BT re sults for TSL 3 indicate a reduction in installed generating capacity for coal plants (relative to the NEMS-BT reference case) of 0.204 gigawatts (GW) in 2025 and 0.300 GW in 2030. The reduction of coal-fired generation between these two years is 0.097 GW (rounded from the ex act difference). From the National Energy

e The numerical noise stems, in part, from the fact that a precise balancing between the demand and supply sides of NEMS is not always achieved, given the iterative nature of the solution process.

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### Savings Model (NES) (described in Chapter 11 of the TSD), the change in electricity savings from the CRE conservation standards from 2030 to 2035 is about 89 percent of that for 2025 to 2030. Thus, the change in coal generation betw een 2030 and 2035 is calculated to be (0.89) x (0.097) GW or 0.086 GW. Accordingly, the extr apolated value of the reduction in coal generating capacity compared to the referen ce case for 2035 is (0.300 + 0.086), or 0.386 GW.

14.3 RESULTS

The results from the reference case are s hown in Table 14.3.1. Results for the various TSLs are presented in Table 14.3.2 through Tabl e 14.3.6. Each table shows forecasts using interpolated results, as descri bed in section 14.2, for commercial sector energy sales, total U.S. electricity generation, a nd installed capacity.

Table 14.3.1 Reference Case Forecast: Commercial Electricity Consumption, Electricity Generation, and Electricity Capacity

NEMS-BT Results:

2005 * 2010 2015 2020 2025 2030

Commercial Sector Electricity Consumption **
Electricity Sales (TWh) 1,275 1,386 1,521 1,661 1,802 1,939

Total U.S. Electricity Generation †
Coal (TWh) Petroleum (TWh) Gas (TWh) Nuclear (TWh) Renewables (TWh) Total (TWh)

Installed Generating Capacity ‡
Fossil Steam (GW) Combined Cycle (GW) Combustion Turbines (GW) Nuclear (GW) Renewables (GW) Total (GW)

* 2,014

122

761

782

372 4,050

430.9
169.3

130.3

100.2
114.9
945.6 2,056

56

912

797

474 4,294

434.4
190.0

137.4
100.9

133.4
996.0 2,180

56

911

807

530 4,483

416.9
192.2
129.4

102.1
139.8
980.4 2,359 2,573 2,808

60 65 66

835 773 755

868 910 928

601 651 674 4,723 4,972 5,231

434.8 464.6 494.2
196.8 205.8 210.6

131.4 143.0 164.4
110.9 115.6 116.1

148.1 155.2 163.3 1,022.0 1,084.2 1,148.4 Values for 2005 are reported by NEMS-BT, but are very close to the historical values shown in various tables in EIA's Annual Energy Review 2006

** Comparable to panel in Table A8 of AEO 2008, Electricity Supply, Dispositio n, Prices, and Emissions, that displays electricity sales by sector

† Comparable to Table A8 of AEO2008 El ectricity Supply, Dispositi on, Prices, and Emissions. Includes generation from
electricity -only, combined heat and power, and end-use generators

‡ Comparable to Table A9 of AEO2008: El ectricity Generating Capacity. Fossil St eam includes coal st eam and other fossil fuel steam plants

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### Table 14.3.2 TSL 1 Utility Impacts for Co mmercial Refrigeration Equipment

NEMS-BT Results: Difference from Reference Case Extrapolation

2015 2020 2025 2030 2035 2040 2042 Commercial Sector Electricity Consumption Electricity Sales (TWh) -0.198 -0.414 -0.595 -0.741 -0.871 -1.038 -1.117

Total U.S. Electricity Generation Coal (TWh) -0.129 -0.283 -0.349 -0.294 -0.245 -0.183 -0.153 Petroleum (TWh) -0.002 -0.005 -0.004 -0.001 0.003 0.007 0.008 Gas (TWh) -0.060 -0.132 -0.162 -0.137 -0.114 -0.085 -0.071 Nuclear (TWh) 0.000 0.000 -0.012 -0.091 -0.161 -0.252 -0.294 Renewables (TWh) 0.005 -0.017 -0.083 -0.186 -0.278 -0.396 -0.451 Total (TWh) -0.186 -0.436 -0.611 -0.709 -0.796 -0.909 -0.962

Installed Generating Capacity Fossil Steam (GW) -0.007 -0.020 -0.034 -0.050 -0.065 -0.083 -0.092 Combined Cycle (GW) -0.002 -0.005 -0.008 -0.011 -0.013 -0.016 -0.018 Combustion Turbines (GW) 0.005 0.012 0.018 0.023 0.027 0.033 0.035 Nuclear (GW) 0.001 0.001 -0.003 -0.010 -0.016 -0.023 -0.027 Renewables (GW) 0.000 -0.001 -0.004 -0.008 -0.012 -0.017 -0.019 Total (GW) -0.003 -0.014 -0.031 -0.057 -0.079 -0.107 -0.121



### Table 14.3.3 TSL 2 Utility Impacts for Co mmercial Refrigeration Equipment

NEMS-BT Results: Difference from Reference Case Extrapolation

2015 2020 2025 2030 2035 2040 2042 Commercial Sector Electricity Consumption Electricity Sales (TWh) -0.760 -1.590 -2.287 -2.849 -3.348 -3.991 -4.294

Total U.S. Electricity Generation Coal (TWh) -0.497 -1.088 -1.341 -1.131 -0.944 -0.703 -0.590 Petroleum (TWh) -0.009 -0.018 -0.016 -0.002 0.010 0.025 0.032 Gas (TWh) -0.231 -0.506 -0.624 -0.526 -0.439 -0.327 -0.274 Nuclear (TWh) 0.000 0.000 -0.047 -0.351 -0.621 -0.968 -1.132 Renewables (TWh) 0.020 -0.066 -0.320 -0.716 -1.068 -1.521 -1.735 Total (TWh) -0.717 -1.678 -2.348 -2.726 -3.061 -3.494 -3.697

Installed Generating Capacity Fossil Steam (GW) -0.026 -0.075 -0.132 -0.194 -0.250 -0.321 -0.355 Combined Cycle (GW) -0.008 -0.021 -0.032 -0.042 -0.051 -0.063 -0.068 Combustion Turbines (GW) 0.018 0.046 0.069 0.088 0.104 0.126 0.136 Nuclear (GW) 0.004 0.003 -0.011 -0.037 -0.060 -0.089 -0.103 Renewables (GW) 0.000 -0.005 -0.015 -0.032 -0.047 -0.065 -0.074 Total (GW) -0.011 -0.052 -0.121 -0.217 -0.303 -0.413 -0.465

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### Table 14.3.4 TSL 3 Utility Impacts for Co mmercial Refrigeration Equipment

NEMS-BT Results: Difference from Reference Case Extrapolation

2015 2020 2025 2030 2035 2040 2042 Commercial Sector Electricity Consumption Electricity Sales (TWh) -1.177 -2.462 -3.540 -4.410 -5.184 -6.179 -6.648

Total U.S. Electricity Generation Coal (TWh) -0.769 -1.685 -2.076 -1.750 -1.461 -1.089 -0.913 Petroleum (TWh) -0.014 -0.027 -0.024 -0.003 0.015 0.039 0.050 Gas (TWh) -0.358 -0.784 -0.966 -0.814 -0.679 -0.505 -0.424 Nuclear (TWh) 0.000 0.000 -0.073 -0.543 -0.961 -1.498 -1.752 Renewables (TWh) 0.031 -0.102 -0.495 -1.109 -1.654 -2.355 -2.686 Total (TWh) -1.110 -2.598 -3.635 -4.220 -4.740 -5.409 -5.724

Installed Generating Capacity Fossil Steam (GW) -0.040 -0.117 -0.204 -0.300 -0.386 -0.497 -0.549 Combined Cycle (GW) -0.012 -0.032 -0.050 -0.066 -0.080 -0.098 -0.106 Combustion Turbines (GW) 0.028 0.071 0.107 0.136 0.162 0.195 0.210 Nuclear (GW) 0.007 0.004 -0.017 -0.057 -0.093 -0.138 -0.160 Renewables (GW) 0.000 -0.008 -0.024 -0.049 -0.072 -0.101 -0.115 Total (GW) -0.018 -0.081 -0.187 -0.337 -0.469 -0.640 -0.720



### Table 14.3.5 TSL 4 Utility Impacts for Co mmercial Refrigeration Equipment

NEMS-BT Results: Difference from Reference Case

Extrapolation

2015 2020 2025 2030 2035 2040 2042 Commercial Sector Electricity Consumption Electricity Sales (TWh) -1.221 -2.553 -3.671 -4.573 -5.375 -6.407 -6.893

Total U.S. Electricity Generation Coal (TWh) -0.797 -1.747 -2.153 -1.815 -1.515 -1.129 -0.947 Petroleum (TWh) -0.015 -0.028 -0.025 -0.004 0.016 0.040 0.052 Gas (TWh) -0.371 -0.813 -1.001 -0.844 -0.704 -0.524 -0.439 Nuclear (TWh) 0.000 0.000 -0.076 -0.563 -0.997 -1.554 -1.816 Renewables (TWh) 0.032 -0.106 -0.513 -1.150 -1.715 -2.442 -2.785 Total (TWh) -1.151 -2.694 -3.769 -4.376 -4.915 -5.609 -5.936

Installed Generating Capacity Fossil Steam (GW) -0.041 -0.121 -0.211 -0.312 -0.401 -0.515 -0.569 Combined Cycle (GW) -0.013 -0.033 -0.052 -0.068 -0.083 -0.101 -0.110 Combustion Turbines (GW) 0.029 0.074 0.111 0.141 0.168 0.202 0.218 Nuclear (GW) 0.007 0.005 -0.017 -0.059 -0.096 -0.144 -0.166 Renewables (GW) 0.000 -0.008 -0.025 -0.051 -0.075 -0.105 -0.119 Total (GW) -0.018 -0.084 -0.194 -0.349 -0.486 -0.663 -0.747

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### Table 14.3.6 TSL 5 Utility Impacts for Co mmercial Refrigeration Equipment

NEMS-BT Results: Difference from Reference Case Extrapolation

2015 2020 2025 2030 2035 2040 2042 Commercial Sector Electricity Consumption Electricity Sales (TWh) -1.531 -3.202 -4.604 -5.735 -6.741 -8.035 -8.645

Total U.S. Electricity Generation Coal (TWh) -1.000 -2.191 -2.700 -2.276 -1.900 -1.416 -1.187 Petroleum (TWh) -0.019 -0.035 -0.032 -0.004 0.020 0.051 0.065 Gas (TWh) -0.465 -1.019 -1.256 -1.058 -0.883 -0.657 -0.551 Nuclear (TWh) 0.000 0.000 -0.095 -0.707 -1.250 -1.949 -2.278 Renewables (TWh) 0.041 -0.133 -0.644 -1.442 -2.151 -3.063 -3.493 Total (TWh) -1.443 -3.378 -4.727 -5.488 -6.164 -7.034 -7.444

Installed Generating Capacity Fossil Steam (GW) -0.052 -0.152 -0.265 -0.391 -0.502 -0.646 -0.714 Combined Cycle (GW) -0.016 -0.042 -0.065 -0.085 -0.104 -0.127 -0.138 Combustion Turbines (GW) 0.037 0.092 0.139 0.177 0.210 0.253 0.273 Nuclear (GW) 0.009 0.006 -0.022 -0.074 -0.120 -0.180 -0.208 Renewables (GW) 0.000 -0.010 -0.031 -0.064 -0.094 -0.132 -0.150 Total (GW) -0.023 -0.105 -0.244 -0.438 -0.610 -0.832 -0.936



### 14.3.1 Impacts Related to Commercial Refrigeration Equipment – TSL 1

Table 14.3.2 shows the impacts for all commer cial refrigeration equipment under TSL 1. The top line of Table 14.3.2 shows that under TSL 1, total commercial electri city use in terawatt hours (TWh) declines by 0.20 TWh in 2015 and by 0.74 TWh in 2030.

The reductions in total commercial electricity generation (shown as the last line in the second panel of the table) are slig htly different than the reductions in commercial electricity use (shown in the first line of the table). These diffe rences are to due to the net impact of various factors at the energy system level. The NEMS model suggests that electr icity prices generally decline slightly following the implementation of th e standard. These price changes lead to very small increases in demand for all major end-use sectors (residential, industrial, and commercial f 

### ). An offsetting factor at the system level, however, is that some changes in generation also reflect

transmission and distribution losses that res pond to higher or lower sa les to end users.

As expected, total generation falls in a near ly continuous fashion with respect to the lower electricity demand prompted by the energy conservation standard. However, for the individual generation technologies by fuel type, the responses are much more varied. In the long

term (e.g., by 2030), the NEMS-BT model suggests th at there may be si gnificant changes, compared to the reference case , between plants serving primarily base load uses (principally coal and nuclear) and plants using other fuels. The CRE energy conservation standards generally

f Specifically, in the NEMS-BT commercial sector model, the response to high er electricity prices is modeled in two ways. First, the selection of more efficient equipmen t is prompted when new buildin gs are constructed or when equipment is replaced in existing buildings. Second, a general behavioral response to higher prices is modeled via a price elasticity in which a percentage increase in prices (x) is reflected by a different percentage reduction in consumption (y). For most commercial end uses, this price elasticity (y/x) is approximately -0.15.

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### reduce base load (and thus off-p eak) electricity demand. This change in the load profile reduces the attractiveness of coal and, to a lesser extent, nuc lear plants.

In the near term (through 2020), the NEMS -BT model suggests slightly different behavior. Electricity generation from natural ga s plants is somewhat lower than that in the reference case. Nuclear genera tion is relatively unchanged, refl ecting the inability of that segment of the industry to adjust quickly to chan ges in demand. In general, because there is less opportunity over the next decade (through 2020) to bu ild new plants and optimize the electricity supply system to meet the altered character of the load, other institutio nal and economic factors may be more relevant in how various generating facilities are dispatched.

The bottom panel of results in Table 14.3.2 shows the impacts on generating capacity by type of generation technology. Total generati on capacity is lower by about 0.06 gigawatts (GW) in 2030, roughly a 0.005 percent declin e from the reference case.

The components of total cap acity are distinguished by t ype of generation technology rather than strictly by fuel type. Fossil fuel steam plants are primarily coal fired, but also include some petroleum use. High efficiency, combined -cycle plants and combustion turbines both use natural gas.

Because coal plants are primarily used to meet base loads, the capacity of this type of plant shows a relatively large de cline over the next two decades. Compared to the reference case, the total generation capacity of coal plan ts declines (relative to the reference case) throughout the forecast period and is lower by about 0.05 GW by 2030. Nuclear plants, which are also used to meet base loads, are projected to see a capacity declin e of 0.01 GW by the same

date.

As opposed to combined cycle power plant capacity, combustion turbine capacity is higher than the reference case. Because the ove rall load profile shows a higher proportion of weather-related electricity cons umption, combustion turbine capacity in 2030 is about 0.02 GW higher than the reference case. Combined cycle plants witness a declin e in capacity of 0.01 GW as they tend to be slightly less weather-related than combustion turbin es. Generation capacity from renewables slightly declines by 0.008 GW. g



### 14.3.2 Results for TSL 2 through TSL 5

Table 14.3.3 through Table 14.3.6 show the estimated impacts for TSLs 2 through 5. Table 14.3.4, corresponding to TSL 3, shows the impacts associated with energy conservation standards selected to match minimum life-cycle cost levels for each type of refrigeration equipment. As shown in this table, compared to the reference case, total generation in 2030 would decline by about 4 TWh. The major reductions in generation occur at coal, nuclear, gas,

g Any comparison between the generation and capacity imp acts shown in the table is co mplicated by the fact that various types of generating plants operate for different numbers of hours during the year. Base load plants, such as fossil fuel steam and nuclear, are relativ ely comparable as they op erate for roughly the same number of hours during the year. Because renewables comprise a number of technol ogies with various operating hours, it is not surprising to see a divergence between the behavior of ge neration and capacity at this aggregate level.

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### and renewable energy facilities. Total genera tion capacity falls by 0.34 GW relative to the reference case or about 0.03 percent.

Table 14.3.5 shows impacts under TSL 4 for all CRE products considered in this rulemaking. TSL 4 corresponds to a case in which fo r the majority of products the standards are set at the maximum (technologically feasible) level. For five produc ts (as cited in Chapter 9), the levels are set at the minimum life-cycle cost level identical to those in TSL 3. In this mixed case, the 2030 impact on total generation is nearly 4 percent greater than that for TSL 3. Total capacity is lower about 0.35 GW co mpared to the reference case.

In TSL 5, the standards for all products are set to the maxi mum (technologically feasible) level. The impacts from this case are shown in Table 14.3.6. In this case, the 2030 impact on total generation is 30 percent greater than that of TSL 3, or 5.4 TWh. Total capacity is lower by about 0.44 GW, compared to the reference case.

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### REFERENCES

1. U.S. Department of Energy/Energy In formation Administration (DOE/EIA), Annual Energy
Outlook 2008 , June 2008. Washington, D.C. DOE/EIA-0383(2008).

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