www.eia.gov

Electricity Analysis Team

Office of Electricity, Coal, Nuclear, and Renewables Analysis

Office of Energy Analysis

Annual Energy Outlook 2014: 

Electricity Working Group Meeting

July 24, 2013
Annual Energy Outlook 2014 Reference Case:

Key Changes

2 Electricity Analysis Team, July 24th, 2013

• Environmental Rules

– Updates to NEMS modeling of MATS

– RGGI cap tightened to reflect February 2013 MOU

• Enhancements

– Reserve margins and capacity payments

– Spinning and operating reserves

– Operations and maintenance cost updates

– Municipal utility pricing data updates

– Carbon transportation, utilization, and storage updates

• Reflects 10-year plans reported to EIA for:

– Generating unit retirements

– New generating unit installations
Environmental Rules

• Updates to the modeling of MATS in NEMS

• RGGI cap tightened to reflect February 2013 MOU

• Emerging environmental issues

3 Electricity Analysis Team, July 24th, 2013
MATS Modeling Update to NEMS

4 Electricity Analysis Team, July 24th, 2013

• AEO 2013 approach

• All units with an FGD are in compliance with the acid gas 

and particulate requirements

• All units without an FGD are required to add a FGD 

scrubber or dry sorbent injection (DSI) system with a fabric 

filter 

• AEO 2014 proposed approach

• Incorporate upgrades to electrostatic precipitators (ESP) to 

units identified by EPA as being potentially eligible for an 

ESP upgrade 

• List of applicable units can be found in Appendix 5-6 

of the Documentation Supplement for EPA Base Case 

v.4.10_MATS – Updates for Final Mercury and Air Toxics 

Standards (MATS) Rule*

• Require plants with dry scrubbers to include fabric filter to 

meet particulate requirements

• Updated retrofit costs for DSI and fabric filters
Proposed MATS Compliance Strategies in 

AEO 2014

5

Electricity Analysis Team, July 24th, 2013

Notes:

- Units must have applicable 

Particulate control (ESP, FF, or 

Wet Scrubber) and adequate 

Acid Gas controls (Wet FGD, 

Dry FGD, or Dry Sorbent 

Injection (DSI))

- DSI Can only be used if a fabric 

filter (FF) is in place

- ESPs may be upgraded for Acid 

Gas Controls ; generally most 

cost effective method

Existing SOx Controls

Wet FGD Dry FGD No Controls

Existing 

Particulate 

Controls

Fabric 

Filter 

(FF)

Complies Complies

Add DSI 

OR 

FGD

ESP * Upgrade 

ESP

Upgrade 

ESP

Upgrade ESP

and either

DSI + FF OR FGD

No 

Controls Complies Add FF

Add FGD

OR 

DSI + FF 
Average Cost of Environmental Retrofits 

(2011 $’s)

6 Electricity Analysis Team, July 24th, 2013

Flue Gas Desulfurization

MW

Capital 

($/kW)

FOM 

($/kW-yr)

VOM 

($/MWh)

<100 $803.66 $35.65 $1.76

100-299 $592.12 $16.64 $1.39

300-499 $450.69 $9.06 $1.18

500-699 $399.81 $8.04 $1.07

>700 $357.19 $6.43 $1.19

Fabric Filter

MW

Capital 

($/kW)

FOM 

($/kW-yr)

VOM 

($/MWh)

<100 $254.68 $3.30 $0.12

100-299 $187.32 $1.59 $0.12

300-499 $155.11 $0.98 $0.12

500-699 $140.94 $0.81 $0.12

>700 $129.76 $0.70 $0.12

Selective Catalytic Reduction

MW

Capital 

($/kW)

FOM 

($/kW-yr)

VOM 

($/MWh)

<100 $391.72 $1.60 $2.60

100-299 $252.28 $0.89 $1.67

300-499 $198.94 $0.66 $1.19

500-699 $182.60 $0.61 $1.17

>700 $168.95 $0.58 $1.20

Dry Sorbent Injection 

MW

Capital 

($/kW)

FOM 

($/kW-yr)

VOM 

($/MWh)

<100 $108.02 $2.37 $5.78

100-299 $70.34 $1.39 $5.35

300-499 $60.13 $1.17 $5.69

500-699 $60.67 $1.14 $5.72

>700 $54.10 $1.01 $5.39
Regional Greenhouse Gas Initiative (RGGI) 

Updates

7 Electricity Analysis Team, July 24th, 2013
Emerging Environmental Issues

• GHG New Source Performance Standards

– New Power Plants

– Existing Plants

• Clean Water Act 316(b): Cooling Water Intake Structures

• Coal Combustion Residuals (CCRs)

• Regional Haze Rule

• Clean Air Act Settlements – validation with Form EIA-860 

reporting

8 Electricity Analysis Team, July 24th, 2013
Model Enhancements

• Reserve margins/Capacity payments

• Spinning/Operating reserves

• O&M cost updates

• Municipal utility pricing data updates

• Carbon transport utilization and storage (CTUS)

9 Electricity Analysis Team, July 24th, 2013
Reserve Margins and Capacity Payments

• Previous algorithm 

– Reliability charge computed based on the expected level of unserved energy and the value 

of unserved energy

– Reserve margin targets set to equilibrate reliability charge and cost of new capacity, based 

on reliability charge in final year

– Sometimes resulted in unstable reliability charges and inconsistent results when under 

surplus

• New algorithm

– Fixed input reserve margins by region, set based on NERC/ISO requirements

– Capacity payment in $/kW calculated based on the levelized cost of a combustion turbine 

and the reduced cost of the reserve margin constraint in the electricity model 

– Total pool of dollars that must be recovered represents the capacity payment multiplied by 

the total capacity committed to meeting demand or reserve

– Costs are allocated to sectors and divided by the sales of each sector to get the new price 

adder for reliability purposes

– On average, the new price adder is likely to be higher than for previous method, but will be 

more stable and non-zero, even in periods of surplus

10 Electricity Analysis Team, July 24th, 2013
11 Electricity Analysis Team, July 24th, 2013

Operating/Spinning Reserves

• Current electricity modeling does not explicitly represent operating reserves

• In scenarios with high intermittent penetration, this may overstate the ability 

to meet load due to the uncertainty of the availability of intermittent 

generating resources

• Proposed change to include explicit constraints requiring set levels of 

spinning reserves (capacity operating, but able to provide additional output) 

and operating reserves (spinning reserves plus quick start technologies)

• Reserve requirements for each load slice will depend on the mix of 

generating technologies used to meet peak demand, by region

• Will result in additional costs on the system which will be passed to both 

competitive and regulated prices
Updated Power Plant O&M Costs

• FERC Form 1 and RUS Financial and Operating Report 

Electric Power Supply

– Reported costs for major utilities and rural cooperatives

– Costs are reported at the owner – plant – capacity - type level

• Data Matching and Modeling 2008 – 2011

– Matched owner-reported costs to the associated capacity across four years

– Used boosted regression to model matched costs into O&M estimates

– After weighting four-year averages of estimates, EIA used quartile normalization 

of the averages to generate O&M estimates for input to the model

– Used SAIC updates for renewable technology averages in quartile 

normalization

12 Electricity Analysis Team, July 24th, 2013
Fixed O&M Update Comparison

13 Electricity Analysis Team, July 24th, 2013

0

20

40

60

80

100

120

140

160

Comparison of AEO 2013 and AEO 2014 Fixed O&M 

Weighted Averages by Technology Type

AEO 2013 AEO 2014

$2012/kW-yr
Variable O&M Update Comparison

14 Electricity Analysis Team, July 24th, 2013

0

2

4

6

8

10

12

14

16

Comparison of AEO 2013 and AEO 2014 Variable O&M 

Weighted Averages by Technology Type

AEO 2013 AEO 2014

$2012/MW
Collecting Municipal Financial Data for 

Electricity Pricing and Finance Module

Utility financial data is used to develop cost-of-service electricity prices in: 

– regulated regions; and for 

– all transmission and distribution price calculations

• EIA has not collected financial data for municipal and other government-owned 

and operated utilities since 2003 (formerly collected on Form EIA-412). 

• Missing data has an impact, particularly for the smaller EMM regions. To 

compensate, analysts have used regression analysis to develop estimates for 

the missing data.

• Project currently underway to assemble roughly 40 key financial variables from 

municipal utility financial reports for input to the model.

15 Electricity Analysis Team, July 24th, 2013
16 Electricity Analysis Team, July 24th, 2013

Percent of Muni Revenue, Sales, and 

Regulated Load in Regions Most Affected by 

Missing Data

EMM Region

% Muni 

and Other 

Gvt Owned 

Utility 

Revenue

% Muni 

and Other 

Gvt 

Owned 

Utility 

Sales

% 

Regulated 

Load in 

Region

Northeast Power Coordinating Council/Long Island 100% 100% 0%

SERC Reliability Corporation/Central (TVA) 54% 55% 100%

Western Electricity Coordinating Council/Northwest 25% 32% 97%

Western Electricity Coordinating Council/Southwest 29% 31% 95%

Midwest Reliability Council/West 26% 28% 93%

Western Electricity Coordinating Council/California 21% 22% 93%

Midwest Reliability Council/East 20% 20% 99%

Florida Reliability Coordinating Council 18% 16% 100%

Western Electricity Coordinating Council/Rockies 15% 16% 100%

U.S. 48 15% 16% 65%
CO2 Capture, Transport, Utilization, and 

Storage – Integration in NEMS

• EOR added to previous representation of saline

• CO2 control policy is no longer the only driver for CO2 capture

• Oil and Gas Supply Module (OGSM): EOR operations now 

“see” a location and availability-dependent price of CO2 from 

power plants and CTL facilities 

• Electricity Market Module (EMM): “sees” the opportunity from 

EOR operations for utilizing the CO2 produced at power plants 

with CCS and provides quantities and prices for captured CO2 

• Liquid Fuels Market Module (LFMM): “sees” the CO2

opportunity from EOR operations and provides a location and 

availability dependent price of CO2 from CTL facilities (pending)

17 Electricity Analysis Team, July 24th, 2013
EIA Data Updates

• Planned Coal Plant Retirements

• Report Environmental Retrofits

• Planned Capacity Additions

• Nuclear Power Assumptions

18 Electricity Analysis Team, July 24th, 2013
Reported Coal Retirements By Year 

19 Electricity Analysis Team, July 24th, 2013

0

2

4

6

8

10

12

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

AEO 2013 (2011 Form EIA-860 data)

AEO 2014 (ER 2012 Form EIA-860)

Early 

Release 

2012 Data 

gigawatts

AEO 2013: 27 GW’s 

AEO 2014: 30 GW’s 

Total Reported Coal Capacity Retirements 
Reported Environmental Retrofits

20 Electricity Analysis Team, July 24th, 2013

gigawatts

FGD

FGD

DSI

DSI

0 2 4 6 8 10 12

2016

2015

2014

2013

2012

AEO 2013

AEO 2014

Early 

Release 

2012 Data 

Total Reported Planned Retrofit

Capacity (gigawatts)

FGD DSI

AEO 2013 25 1.3

AEO 2014 20 2.4
Planned New Plant Capacity Additions

21 Electricity Analysis Team, July 24th, 2013

gigawatts

Early 

Release 

2012 Data 

0

5

10

15

20

25

30

2012 2013 2014 2015 2016 2017 2018 2019

AEO 2013

Coal Natural Gas Nuclear Wind Solar Biomass Hydro-Electric

0

5

10

15

20

25

30

2012 2013 2014 2015 2016 2017 2018 2019

AEO 2014 Planned Capacity Additions gigawatts (2012-2019)

AEO 2014 AEO 2013

Coal 6.06 6.06

Natural Gas 21.60 16.73

Nuclear 5.52 5.52

Wind 14.35 12.91

Solar 6.85 4.73

Biomass 1.07 0.74

Hydro-Electric 0.84 0.83
Nuclear Power Assumptions

• New Plants – 5,500 MW

– Watts Bar (2015)

– Summer 2 & 3 (2017 & 2018)

– Vogtle 3 & 4 (2016 & 2017)

• Retirements – 4,190 MW

– Kewaunee (2013)

– San Onofre 2 & 3 (2013)

– Crystal River (2013)

– Oyster Creek (2019)

• Uprates (Potential of ~7,000 MW)

22 Electricity Analysis Team, July 24th, 2013
Nuclear Uprate Potential Map

23 Electricity Analysis Team, July 24th, 2013

megawatts of uprate potential
Feedback from the Working Group

• Issues with Prior AEO Studies

– Assumptions

– Results

• Suggestions for AEO2014 Analyses

– Input Assumptions

– Scenarios/Sensitivity Analyses

24 Electricity Analysis Team, July 24th, 2013
Contacts

• J. Alan Beamon, Director, Office of Electricity, Coal, Nuclear, 

and Renewables Analysis; (202) 586-2025; 

joseph.beamon@eia.gov

• Jim Diefenderfer, Team Leader, Electricity Analysis Team, 

Office of Electricity, Coal, Nuclear, and Renewables Analysis; 

(202) 586-2432; jim.diefenderfer@eia.gov

• Team Members:

– Jeff Jones (202) 586-2038

– Laura Martin (202) 586-1494

– Lori Aniti (202) 586-2867

– Mike Leff (202) 586-1297

– Marie Rinkoski Spangler (202) 586-2446

– Carrie Milton (202) 586-1130

25 Electricity Analysis Team, July 24th, 2013