WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

January7, 2016

MEMORANDUM FOR: John Conti

Assistant Administrator for Energy Analysis

Jim Diefenderfer

Director,

Office of Electricity, Coal, Nuclear, and Renewables Analysis

Paul Holtberg

Team Leader

Analysis Integration Team

Office of Integrated and International Energy Analysis

FROM: Chris Namovicz

Team Leader for Electricity Analysis (acting)

And

Thad Huetteman, Electricity Analysis Team

SUBJECT: Summary of AEO2016 Electricity Working Group 

Meeting held on December 8, 2015

Presenters: Chris Namovicz, Thad Huetteman, Jeff Jones

Topics included AEO2016 model and data updates, key regulatory developments affecting the AEO2016 

electricity outlook, and a brief overview of planned changes for the AEO2016. Data updates included

required modeling development efforts to include the final Clean Power Plan rule, as well as generating 

technology capital cost updates, compliance deadline update for mercury and air toxics (MATS) 

retrofits/or retirements and RPS developments. Additional regulatory issues under consideration cover 

proposed EPA regulations affecting coal ash handling, cooling water intake, and effluent guidelines. 

Model changes in other areas include preliminary macro-economic updates, lower near-term natural gas

costs, and a possible slow-down in demand growth. 

Participants Present: (alpha by outside organization)

Goggin, Michael AWEA

Hensley, John AWEA

Hunt, Hannah AWEA

McGuiness, Meghan Bipartisan Policy Center

Fisher, Emily Edison Electric Institute

Obenshain, Karen Edison Electric Institute
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

Holm, Aaron SEIA

Donohoo-Vallett, Paul DOE, Office of Energy Efficiency and Renewable Energy

Adams, Greg EIA

Boedecker, Erin EIA

Bowman, Michelle EIA

Diefenderfer, Jim EIA

Hodge, Tyler EIA

Huetteman, Thad EIA

Jarzomski, Kevin EIA

Jell, Scott EIA

Jones, Jeff EIA

Kwon, Augustine EIA

Lowenthal-Savy, Danielle EIA

Manzagol, Nilay EIA

Martin, Laura EIA

Mayes, Fred EIA

Mellish, Michael EIA

Moses, Carolyn EIA

Neff, Shirley EIA

White, Carol EIA

Participants Via Webex: (alpha by outside organization)

Nowak, Steve American Council for an Energy Efficient Economy

Katofsky, Ryan Advanced Energy Economy

Van Brunt, Michael Covanta

Young, David EPRI

Eyster, Jerry GE Capital

Whitaker, Everett GE Capital

Neimeyer, Michael GE Capital

Reilly, Michalene Hoosier Energy

Erpenbeck, Donald MWH Global

Coleman, Leslie National Mining Association

Roche, Madelyn NRECA

Wood, Frances OnLocation

Wright, Evelyn Sustainable Energy Economics

Luckow, Patrick Synapse Energy

Biewald, Bruce Synapse Energy

Wright, David Synapse Energy

Sattler, Sandra Union of Concerned Scientists

Gulen, Gurcan University of Texas

Tsai, Chenhao University of Texas
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

Lopez, Robert Wisconsin, State of

Rollison, Eric DOE, Office of Electricity Delivery and Energy Reliability

Brown, Austin Executive Office of the President- OSTP

Erwin, Noah Executive Office of the President- OSTP

Gospodarczyk, Marta EIA

Holtberg, Paul EIA

Johnson, Elias EIA

Marcy, Cara EIA

Napolitano, Sam EIA

Slater-Thompson, Nancy EIA

Hagen, Ronald DOE, Office of Nuclear Energy

Haskell, Russell Nuclear Regulatory Commission

Stevens, William U.S. EPA

Kayin, Serpil U.S. EPA

Gerdes, Kristin DOE, National Energy Technology Laboratory

Benitez, Jose DOE, National Energy Technology Laboratory

Zelek, Charles DOE, National Energy Technology Laboratory

Issues Discussed

 Compliance with Clean Power Plan (CPP)-flexibility mechanisms (slide 9 EWG handout): A 

participant inquired as to whether trading under the Clean Power Plan would be modeled at the 

national or interconnect level. Response: EIA acknowledged that no final decision had been 

made with respect to trading for modeling the final Clean Power Plan (CPP) for AEO 2016. For 

the analysis of the proposed CPP rule, trading was modeled at both the national and EMMregional level.

 Compliance with CPP-generation technology options: A participant asked whether in light of 

EPA’s Section 111(b) proposal new generation technology would be revised to include coal with 

partial carbon capture. Response: EIA sought revisions to generation technology costs for the 

2016 cycle which did not currently include partial carbon capture, but is seeking comment on 

how best to model 111(b)-compliant technologies (e.g., IGCC co-fired with natural gas, 

pulverized coal co-firing natural gas at higher --40-60%-- rates.).

 Compliance with Cross State Air Pollution rule (CSAPR): A participant asked if EIA planned to 

model scenarios for the CSAPR rule, specifically mentioning the EPA’s recent CSAPR Update rule, 

accounting for the 2008 Ozone national ambient air quality standards. Response: EIA is 

modeling the CSAPR rule budgets as reinstated by the Court, and incorporating any timely 

changes (NOTE: the CSAPR Update rule was released on Nov 15th.) Specifically, the Court 
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

remanded the CSAPR SO2 budgets for four states (AL, GA, SC, and TX) and CSAPR seasonal NOx 

budgets for eleven states (FL, MD, NJ, NY, NC, OH, PA, SC, TX, VA, and WV) and since those 

revised budgets have yet to be released they will not be included in the AEO 2016 Reference 

Case.

 Compliance with Mercury and Air Toxics Standards (MATS) rule- compliance year (slide 11

EWG handout): A participant queried what criteria were used to determine generating unit 

retirements in NEMS, whether attributable to the MATS rule or other factors. Response: NEMS 

retires a unit the costs of continuing operation (including environmental) exceed revenues and 

replacing the unit with new capacity is a more economic option over a 30 year forecast interval. 

NOTE: Slide 11 has been revised in the posted version of the Electricity Working Group hand-out 

to switch the basis of the compliance determination from reported date of compliance to 

reported technology in place.

 Tighter RPS targets (slide 14 EWG handout): A participant raised the issue of whether NEMS 

automatically built back-up capacity when new renewable capacity was added. Response: In the 

capacity planning module NEMS assesses the need for capacity and the contribution to capacity 

reserves by type (peaking, intermediate, baseload, and intermittent) and will add the 

appropriate capacity type to ensure modeled planning reserve requirements are met.

 Achievement of RPS targets (slide 14 EWG handout): A questioner asked if EIA’s Reference 

Case assumed full achievement of state RPS standards. Response: EIA models regional 

aggregations of state RPS policies, not state-specific policies. Where possible EIA evaluates 

results to ensure that known limits to state policies are not violated, EIA cannot endogenously 

represent most state-specific “off-ramps” for RPS compliance. However, EIA generally finds that 

regional RPS targets are not binding (that is, the model tends to build renewable resources in 

excess of regional requirements). In specific cases:

- 100% RPS in Vermont: a participant asked how the fact that Vermont imports a 

significant amount of Canadian hydro would ease its ability to achieve a 100% RPS 

standard. EIA is aware of the current renewable generation situation in Vermont and 

will try to account for it as it aggregates targets for the New England region;

- Western RPS: another participant recommended a DOE Argonne National Lab study of 

pumped storage in the west.

 Intermittent generation: The question was raised whether NEMS modeled energy storage. 

Response: There is no capacity expansion option for storage in the current version of the 

model, but EIA is examining adding this capability in future versions of the model (after AEO 

2016).
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

 Generation technology capital cost update (slide 16 EWG handout): the specific questions 

regarding updated generation technology costs included:

- Solar PV Costs: A participant wondered how the proposed capital costs for fixed-tilt PV 

systems could cost more than single-axis tracking systems. Response: The effective 

cost-equivalence between fixed-tilt and tracking PV systems results from deliberate 

design decisions by developers to optimize the output of each type of system. The 

fixed-tilt system characterized by Leidos has a higher inverter loading ratio than the 

tracking system, thus more DC solar panels are used per unit of AC capacity, but annual 

capacity factors and diurnal energy production is improved relative to systems with 

lower inverter loading ratios.

- Cost basis: A participant asked if the updated costs included fuel and transmission costs. 

Response: The reported costs are overnight capital costs.