U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov

AEO2019 Electricity Sector Working Group

AEO2018 Results, Policy Assumptions, Key Model Updates 

For

EIA Electricity Working Group

May 9, 2018

By

Electricity Analysis Team

Office of Electricity, Coal, Nuclear, and Renewables Analysis
EIA Electricity Pricing Working Group Participants

AEO2019 Electricity Working Group

May 9, 2019 2

Invited Guests

Steve Frauenheim Edison Electric Institute

Alison Williams Edison Electric Institute

Mark C Bowles Entergy

Yanghe Liu Entergy

Gary Young Entergy

Mikhail Adamantiades Environmental Protection Agency

Erich Eschman Environmental Protection Agency

Thomas Wilson Electric Power Research Institute

Jerry Eyster General Electric

Robert Woodfield General Electric

Mark Strohfus Great River Energy

Jay Ratafia-Brown Leidos

Kenneth Walsh Leidos

Chen-Hao Tsai Midcontinent Independent System Operator

Harsh Desai Nuclear Energy Institute

Charles Zelek National Energy Technology Laboratory

Chris Salmi NJ Clean Air Council

Jorge Reyes NJ Dept of Environmental Protection

Leslie Coleman National Mining Association

Lauren Khair National Rural Electric Cooperative Association

Michael Leitman National Rural Electric Cooperative Association

Madelyn Roche National Rural Electric Cooperative Association

Invited Guests

Wesley Cole National Renewable Energy Laboratory

Sharon Showalter OnLocation, Inc.

Evelyn Wright Sustainable Energy Economics

Whitney Herndon Rhodium Group

Justin Baca Solar Energy Industries Association

Britny Lockridge Southern Company

Lynsey Tibbs Southern Company

Jim Moore Spire Energy

David White Synapse

Youngsun Baek Union of Concerned Scientists

Sandra Sattler Union of Concerned Scientists

Wesley Cole National Renewable Energy Laboratory

Sharon Showalter OnLocation, Inc.

Evelyn Wright Sustainable Energy Economics

Justin Baca Solar Energy Industries Association

Britny Lockridge Southern Company

Lynsey Tibbs Southern Company

Jim Moore Spire Energy

David White Synapse

Youngsun Baek Union of Concerned Scientists

Sandra Sattler Union of Concerned Scientists

Bill Stevens

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
EIA Electricity Pricing Working Group Participants

AEO2019 Electricity Working Group

May 9, 2019 3

EIA/DOE

Greg Adams EIA

Lori Aniti EIA

Jim Diefenderfer EIA

Kenneth Dubin EIA

Thad Huetteman EIA

Jeffrey Jones EIA

Augustine Kwon EIA

Perry Lindstrom EIA

Nilay Manzagol EIA

Laura Martin EIA

Christopher Namovicz EIA

Michael Scott EIA

Paul Donohoo-Vallett Dept Of Energy

Sarah Forbes Dept Of Energy

Robert Schmitt Dept Of Energy

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Overview AEO2019 Electric Sector Working Group: 

1st teleconference

• Review of AEO2018 Results: solicit comments/responses

• Pending AEO2019 modeling- enhancements to NEMS EMM

• Analytic agenda for longer term EMM enhancements

• AEO2019 release schedule

AEO2019 Electricity Working Group

May 9, 2019 4

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
The projected mix of electricity generation technologies varies widely 

across cases as differences in fuel prices result in significant substitution

5 AEO2019 Electricity Working Group

May 9, 2019

0

1,000

2,000

3,000

4,000

5,000

6,000

1990 2000 2010 2020 2030 2040 2050

2017

history projections

AEO2018 Reference vs Alternative Cases 

Electricity generation from selected fuels

billion kilowatthours

natural gas

coal

nuclear

renewables

18%

28%

21%

33%

12%

22%

31%

36%

2020 2050

2017

projections

High Oil and Gas 

Resource and 

Technology

57%

28%

15%

9%

43%

25%

32%

22%

2020 2050

2017

projections

Low Oil and Gas 

Resource and 

Technology

25%

21%

35%

18%

22%

40%

26%

13%

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE

Source: ref2018.1213a, highrt.1213a, lowrt.1213a 
Renewables and natural gas comprise most of the capacity additions 

throughout the projection period in AEO2018 Reference Case

Source: ref2018.1213a

6 AEO2019 Electricity Working Group

May 9, 2019

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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AEO2019 Electricity Working Group

May 9, 2019

Increasing cost competitiveness of renewables leads to growth in generation 

even with projection for low electricity demand and low natural gas prices

Source: ref2018.1213a, highmacro.1213a, highrt.1213a, lowprice.1213a, ref_cpp.1213a, highprice.1220a, lowmacro.1213a, lowrt.1213a 

7

0

500

1,000

1,500

2,000

2,500

2010 2020 2030 2040 2050

AEO2018 Total renewables generation, including end-use

billion kilowatthours

2017

Low resource & technology

High oil price

High economic growth

Clean Power Plan

Reference

Low oil price

Low economic growth

High resource & technology

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Natural gas prices have a significant impact on nuclear capacity

• High natural gas prices (LRT) leads to only 4 GW 

fewer retirements relative to the Reference case in 

2050 

– While low natural gas prices (HRT) result in roughly 24 

GW of additional retirements

• Increasing nuclear operating and new construction 

costs 20% with low natural gas prices (HRT +20% 

case) leads to an additional 37 GW of retirements in 

2050 

– Decreasing nuclear operating costs by 20% in conjunction with 

high natural gas prices (LRT -20% cost) leads to new nuclear 

builds beginning in 2035

AEO2019 Electricity Working Group

May 9, 2019 8

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Significant changes in costs (20%) lead to modest changes 

in nuclear investment decision under most likely conditions

• Under the reference case assumptions, nuclear power 

declines through 2050 from 99.3 GWe to 79.1 GWe

– Nuclear industry cost reduction goal of 30%

– Nuclear generation capacity declines through 2050 for all 

cases, including reducing operating cost by 20%

– Reducing operating costs 20% reduces retirements by 

less than 4 GW, relative to the Reference case

– Operating cost increases accelerate and increase 

retirements

– Illustrates that only about 4% of the fleet capacity are 

sensitive to cost reductions, while 13% are sensitive to 

cost increases (in terms of early retirement)

AEO2019 Electricity Working Group

May 9, 2019 9

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
In AEO2018 Reference Case coal and nuclear capacity continue to 

retire as they are displaced by natural gas and renewables

Source: ref2018.1213a

10 AEO2019 Electricity Working Group

May 9, 2019

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Source: ref2018.1213a, highmacro.1213a, lowmacro.1213a

After decades of slowing growth, electricity consumption is 

expected to grow steadily through 2050 in AEO2018

11 AEO2019 Electricity Working Group

May 9, 2019

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
AEO2019–Current laws & regulation

• Federal 

– Taxes: 2017 Tax Reform legislation/ 45Q tax credit for CCS

– Solar panel tariffs

– No Clean Power Plan vs. Revised Clean Power Plan (if available) versions 

• State

– Illinois: Future Energy Jobs bill/New York: Clean Energy Standard legislation

– Additional state subsidy programs (NJ)

– Revised RPS

• Regional CO2 programs: AB 398 (California)/ RGGI states

AEO2019 Electricity Working Group

May 9, 2019

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE

12
Pending AEO2019 modeling- enhancements to NEMS EMM

• Impact of 2017 tax reform legislation on electric sector

• Updating methods for projected changes in generation costs (S&L study)

• Treatment of generation-at-risk

• Considering ways to represent of impact of generation diversity

• Changes in modeling renewables/coal/nuclear generation

AEO2019 Electricity Working Group

May 9, 2019 13

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Federal tax: impact of tax reform on electric sector/other tax 

law changes

• Tax Cuts and Jobs Act of 2017

– reviewing broad, macro feedbacks on electricity demand, as well as 

– changes to investment economics from the change in marginal tax rates and the temporary 

provisions for immediate expensing

• Section 45Q tax credit for Carbon Capture and Storage

– Reviewing possible impact on cost treatment in EMM

– revised (from $20) to $50 per metric ton for secure geologic storage

– revised (from $10) to $35 per metric ton for EOR, EGR, or utilization

AEO2019 Electricity Working Group

May 9, 2019 14

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
• Are there predictable patterns of spending 

associated with aging/ plant life extension?

• What other variables are critical determinants 

of spending patterns?

• Is regulatory status a significant factor in 

spending?

• Is there sufficient historical data on non-hydro 

renewable generation to determine impacts of 

aging?

Variables Affecting Annual Changes in Real Spending per kW Key Issues Addressed in Study

AEO2019 Electricity Working Group

May 9, 2019

Updating methods for projecting changes in generation 

costs (Sargent & Lundy study- forthcoming)

15

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE

Generating Capacity Capital

Expenditures O&M Spending

Coal Steam Age (for units with 

FGD)

-

Gas/Oil Steam Capacity -

Gas/Oil Combined-Cycle Operating Hours -

Gas/Oil Combustion Turbines Starts -

Conventional Hydropower - Age

Pumped Storage – Hydraulic 

Turbine Reversible - -

Solar Thermal – Central 

Tower - -

Solar Photovoltaic – SingleAxis Tracking - -

Geothermal - -

Wind Capacity Age
• How does varying current NEMS-EMM 

treatment (3+ unprofitable periods) influence 

projected retirements?

• How does use of energy only vs. inclusion of 

capacity payments influence retirements?

• Is there a generally-accepted industry 

definition of generation-at-risk?

AEO2018 Reference Case- Coal Generators Key issues under consideration

AEO2019 Electricity Working Group

May 9, 2019

Evaluating alternative measures of generation at-risk: 

share of cost recovery

16

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Alternative generation at-risk criteria

• PJM Coal (2011)

– Physical Screen1: Older than 40 years old; less than 400 MW are “most at risk”

– Economic Screen: “At risk” level measured by costs relative to replacement capacity costs Net Cost of New Entry (Net 

CONE 

• PJM Nuclear and Coal (2017)

– More stringent criteria2: units that have not recovered 100% avoidable costs from total market (energy, ancillary and 

capacity market) revenues

– Relaxed criteria

• Coal: units that have recovered <90% of total market revenues

• Nuclear: units that have not recovered 100% of avoidable costs based on forward price

AEO2019 Electricity Working Group

May 9, 2019 17

WORKING GROUP PREN FOR 

DISCUSSION PURPOSES. SENTATIODO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE

1Coal Capacity at Risk for Retirement in PJM: Potential Impacts of the Finalized EPA Cross State Air Pollution Rule and Proposed National Emissions 

Standards for Hazardous Air Pollutants 

22017 State of the Market Report for PJM: Volume 2: Detailed Analysis
• What other attributes ought to be considered? 

Which could be eliminated, or represented 

differently? 

• How do these reliability attributes contribute to 

grid resilience?

• Should these attributes be weighted equally, or 

are some more critical than others?

• What is the best way to represent these factors 

in the model?

PJM rating of generation types by reliability attributes Key issues under consideration

AEO2019 Electricity Working Group

May 9, 2019

Evaluating alternative means of representing impact of 

generation diversity

Source:

http://www.pjm.com/~/media/library/reports-notices/special-reports/20170330-pjms-evolving-resource-mix-and-system-reliability.ashx pg. 16

18

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Other electric power sector updates for AEO2019

• Renewables- Completed or Likely Completed for AEO2019

– Integrate a new renewables/energy storage mini-dispatch model (REStore) 

– Model weighted-average capacity value algorithm for solar/wind 

– Update renewable-related input assumptions for the spinning reserves requirement 

• Renewables-Possible Model Updates for AEO2019

– Include second solar/wind technology to capture performance/cost tradeoffs 

– Change the solar thermal technology profiles to one with storage 

– Assess retail price structure impacts of distributed PV 

• Coal/Nuclear-Possible Model Updates for AEO2019

– Re-evaluate CT/CC costs

– Nuclear risk assessment

– Reconsider nuclear uprate potential

AEO2019 Electricity Working Group

May 9, 2019 19

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Analytic agenda for longer term EMM enhancements

• Regional redefinition 

• T&D spending projections 

• Plant-life-extension costs/retirements

• Relationship between capital and O&M costs and generator 

performance for existing units

• New technologies

• Changing policies- revised regulations

• Update capital cost estimates for new generating technologies and 

performance

AEO2019 Electricity Working Group

May 9, 2019 20

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Cost data for new technologies are periodically reviewed

AEO2019 Electricity Working Group

May 9, 2019 21

WORKING GROUP PRESENTATION FOR 

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Current technologies modeled in EMM and vintage of cost input

Unless noted otherwise, costs are from the EIA contractor capital cost studies available online. If baseline costs were not updated in a 

particular cycle, they were adjusted to reflect learning.

AEO2018 AEO2017 AEO2016 Earlier vintage Available (not 

modeled)

Battery storage Coal with 90% CCS Coal with 30% CCS Gas CC with 90% CCS Coal without CCS

Hydroelectric (partial 

update for non-powered

dams: source ORNL)

Gas combined cycle 

(conv and adv) Fuel Cells Internal combustion engine

Solar PV – fixed tilt 

(source LBNL)

Gas combustion 

turbine (conv and 

adv)

Hydro (new sites, upgrades 

of existing dams: source 

INEEL)

Solar PV - alternative 

size installations

Nuclear - AP1000 Biomass Onshore wind – low 

wind speed

Solar PV - tracking Geothermal (source NREL)

Onshore Wind MSW

Solar thermal

Offshore wind
AEO2019 Outlook Schedule

• Model development: Jun-Oct 2018

• 2nd Working Group Session: Jul-Aug 2018

• Expected AEO release: Jan 2019

AEO2019 Electricity Working Group

May 9, 2019 22

WORKING GROUP PRESENTATION FOR 

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23

Contact info for EIA Electricity Team

• Thad Huetteman Team Leader - Electricity Team Thaddeus.Huetteman@eia.gov (202) 586-7238

• Jeff Jones Jeffrey.Jones@eia.gov (202) 586-2038

• Laura Martin Laura.Martin@eia.gov (202) 586-1494

• Tyler Hodge Tyler.Hodge@eia.gov (202) 586-0442

• Lori Aniti Lori.Aniti@eia.gov (202) 586-2867

• Augustine Kwon Augustine.Kwon@eia.gov (202) 586-3645

• Scott Jell Scott.Jell@eia.gov (202) 586-5196

• Nilay Manzagol Nilay.Manzagol@eia.gov (202) 586-3704

• Kenneth Dubin Kenneth.Dubin@eia.gov (202) 586-0477

AEO2019 Electricity Working Group

May 9, 2019

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Supplemental Slides

AEO2019 Electricity Working Group

May 9, 2019 24

WORKING GROUP PRESENTATION FOR 

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Generation at-risk criteria • PJM Coal1 (2011)

– Physical Screen: Older than 40 years old; less than 400 MW are “most at risk”

• Less efficient\run less frequently

• Lower CF leads to decline in revenues

• No economies of scale for retrofit costs 

– Economic Screen: “At risk” level measured by costs relative to replacement capacity costs

• Capacity requiring capital expenditures (CAPEX) needed for plant to keep running, with costs greater than the 

Net Cost of New Entry (Net CONE), are “most at risk”

• Capacity requiring CAPEX between 0.5 Net Cone and Net Cone are “at some risk”

• Capacity requiring CAPEX less than 0.5 Net Cone “not at risk” 

• PJM Nuclear and Coal2 (2017)

– More stringent criteria: units that have not recovered 100% avoidable costs from total market (energy, ancillary and 

capacity market) revenues

– Relaxed criteria

• Coal: units that have recovered <90% of total market revenues

• Nuclear: units that have not recovered 100% of avoidable costs based on forward prices

AEO2019 Electricity Working Group

May 9, 2019 25

WORKING GROUP PREN FOR 

DISCUSSION PURPOSES. SENTATIODO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE

1Coal Capacity at Risk for Retirement in PJM: Potential Impacts of the Finalized EPA Cross State Air Pollution Rule and Proposed National Emissions Standards for 

Hazardous Air Pollutants 

22017 State of the Market Report for PJM: Volume 2: Detailed Analysis