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

AEO2020 Electricity Sector Working Group:

AEO2019 Response, Policy Assumptions, Key Model Updates 

For

EIA Electricity Working Group

April 10, 2019

By

Electricity Analysis Team

Office of Electricity, Coal, Nuclear, and Renewables Analysis
Overview AEO2020 Electric Sector Working Group 

First teleconference

• Overview/feedback on AEO2019

– FAQs from AEO2019 release

• Emerging factors for analysis in AEO2020 

– Current laws and regulations

• EPA revisions to existing rules

• Federal tax law

• State programs affecting the electric sector

• Proposed modeling enhancements for AEO2020

• Considerations for future long-term domestic modeling

AEO2020 Electricity Working Group

April 10, 2019 2

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Overview/feedback on AEO2019: FAQs

Q1. Coal generation is projected to decline somewhat and then level off to 2050, 

so why don’t coal retirements occur then, as many will reach 60 years of age?

Q2. Why do electricity prices continue to rise while gas prices are flat or grow at 

lower rates?

Q3. Why does the cost of new advanced combined-cycle technology decline 

significantly in AEO2019?

Q4. Why have average emissions/kWh declined relative to AEO2018 levels?

AEO2020 Electricity Working Group

April 10, 2019 3

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
A1a. Coal-fired generating capacity retires at a faster pace than generation 

in Reference case as capacity factors for coal units improve over time 

AEO2020 Electricity Working Group

April 10, 2019 4

0

1

2

3

4

0

50

100

150

200

250

300

350

2000 2010 2020 2030 2040 2050

2018

history projections

Low Oil and Gas Resource

and Technology

Reference

High Oil and Gas Resource

and Technology

Electric generating capacity Total electricity generation

gigawatts trillion kilowatthours

coal capacity

coal generation 

0%

20%

40%

60%

80%

100%

2000 2010 2020 2030 2040 2050

2018

history projections

Capacity utilization rate for coal-fired generation

percent

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
A1b. The abundance of natural gas supports its growth in the electric generation 

fuel mix, but the results are sensitive to resource and price assumptions

AEO2020 Electricity Working Group

April 10, 2019 5

0

500

1,000

1,500

2,000

2,500

3,000

1990 2000 2010 2020 2030 2040 2050

2018

history projections

Reference

Electricity generation from selected fuels

billion kilowatthours

natural gas

coal

nuclear

renewables

0

500

1,000

1,500

2,000

2,500

3,000

2015 2050

2018

projections

High Oil and Gas 

Resource and 

Technology

0

500

1,000

1,500

2,000

2,500

3,000

2015 2050

2018

projections

Low Oil and Gas 

Resource and 

Technology

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
6.38 5.92 5.57 5.37 5.40

1.32 1.34 1.46 1.56 1.55

2.85 2.97 3.41 3.58 3.54

0

2

4

6

8

10

12

2018 2020 2030 2040 2050

Electricity prices by service category: Reference case

2018 cents per kilowatthours

distribution

transmission

generation

A2. Electricity prices decline slightly as decreasing generation costs 

offset increasing transmission and distribution costs

AEO2020 Electricity Working Group

April 10, 2019 6

• Generation costs, which account for the 

largest share of the price of electricity, 

decrease 15% from 2018 to 2050.

– Fuel and operating costs are projected to remain 

flat as more efficient generators and renewable 

sources offset long-term increases in fuel prices.

• Transmission and distribution costs 

increase by 18% and 24%, respectively, 

as a result of replacing aging infrastructure 

and upgrading the grid to integrate wind 

and solar capacity.

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
• New, larger CC designs result in substantial 

economies of scale for this technology. 

• According to the April 2018 PJM Report, PJM 

Cost of New Entry, PJM’s next generating 

capacity auction cost per unit of installed 

capacity for the advanced CC design will be 

25% to 30% lower compared with older CC 

units. 

• Through 2050, 235 gigawatts of advanced 

CC technology will be installed.

A3. Lower operating costs and higher efficiencies result in advanced 

natural gas-fired combined-cycle capacity factors of 80% by 2030

AEO2020 Electricity Working Group

April 10, 2019 7

0%

20%

40%

60%

80%

100%

2010 2020 2030 2040 2050

Utilization of fossil-fired capacity (Reference case)

percent

coal

advanced 

combined 

cycle

conventional 

combined 

cycle 

oil and natural 

gas steam

combustion

turbine

2018

history projections

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
• Generation mix projections have 

shifted more to natural 

gas/renewables and away from 

coal.

• In the absence of additional federal 

regulations, CO2 emissions remain 

relatively unchanged in the 

Reference case from 2018 to 2050, 

despite a 30% increase in 

generation during the projection 

period.

A4a. Why have average emissions/kWh declined relative to AEO2018 

levels?

AEO2020 Electricity Working Group

April 10, 2019 8

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
AEO2020 Electricity Working Group

April 10, 2019 9

0

500

1,000

1,500

2,000

2,500

1990 2000 2010 2020 2030 2040 2050

Net U.S. electricity generation

billion kilowatthours

2018

history projections

AEO2019 _____ 

AEO2018_ _ _ _

natural gas

coal

nuclear

renewables

0

1,000

2,000

3,000

4,000

5,000

6,000

0

500

1,000

1,500

2,000

2,500

3,000

2000 2010 2020 2030 2040 2050

2018

history projections

Electric sector emissions electric sector generation

million metric tons CO2 billion kilowatthours

AEO2019 _____ 

AEO2018_ _ _ _

A4b. Why have average emissions/kWh declined relative to AEO2018 

levels?

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Legislation and Regulations: AEO2019 Assumptions 

and Outlook for AEO2020

AEO2020 Electricity Working Group

April 10, 2019 10

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
AEO2020–current laws and regulation—addressing EPA 

revisions to existing rules

• Affordable Clean Energy (ACE) Rule 

• New Source Performance Standards (NSPS) for greenhouse gases 

from electric generators

• Mercury and Air Toxics Standards (MATS) in all AEO2019 cases

• Cross State Air Pollution Rule (CSAPR)

AEO2020 Electricity Working Group

April 10, 2019 11

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Addressing EPA revisions to existing rules: Affordable 

Clean Energy (ACE) Rule 

• EPA proposed ACE rule to replace the Clean Power Plan

– Revises EPA’s BSER (best system of emission reduction) finding for GHG emissions from 

existing power plants to include only heat-rate efficiency improvements 

– Rather than setting specific technology-based standards, it gives states a list of candidate 

technologies they use to establish performance standards in state plans

• Status: ACE rule was not final and not included in AEO2019 Reference case 

– Proposed in August 2018

– Final rule expected in spring of 2019

– Will be included in AEO2020 if the rule is finalized in 2019 in time

AEO2020 Electricity Working Group

April 10, 2019 12

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Proposed approach to implementation of ACE rule in EMM

• By 2025, offer existing coal units the choice to either upgrade to the HRI option identified in 

EIA’s CPP study or retire them 

• Relies on 2015 EIA study of heat rate improvement (HRI) potential and costs for existing coal 

units (see next slide for detail)

AEO2020 Electricity Working Group

April 10, 2019

Addressing EPA revisions to existing rules: Affordable Clean Energy 

(ACE) Rule 

13

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Heat rate improvement (HRI) potential and cost

(capital, fixed O&M) by plant type and quartile

Coal unit classification by type of pollution controls

AEO2020 Electricity Working Group

April 10, 2019

Addressing EPA revisions to existing rules: Proposed approach to 

modeling Affordable Clean Energy (ACE) Rule 

Key: ESP: electrostatic precipitator FGD: flue gas desulfurization (scrubber) 

SCR: selective catalytic reduction FF: fabric filter

14

https://www.eia.gov/analysis/studies/powerplants/heatrate/

Plant Type Code Coal Unit Classificataion

SO2 NOx Other

B1 Bag house NA Any NA

B3 Bag house Wet FGD - NA

B5 Bag house Wet FGD SCR NA

B7 Bag house Dry FGD - NA

C1 Cold side ESP NA - NA

C4 Cold side ESP Wet FGD - NA

C7 Cold side ESP Wet FGD SCR NA

C8 Cold side ESP Wet FGD SCR FF

CX Cold side ESP Dry FGD - NA

CY Cold side ESP Dry FGD - FF

H1 Hot Side ESP/Other/None NA - NA

H4 Hot Side ESP/Other/None Wet FGD - NA

H5 Hot Side ESP/Other/None Wet FGD - FF

H7 Hot Side ESP/Other/None Wet FGD SCR NA

H8 Hot Side ESP/Other/None Wet FGD SCR FF

HA Hot Side ESP/Other/None Dry FGD - NA

Type of Controls

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
• All AEO2019 cases include EPA’s 

NSPS limiting CO2 from new plants

– Proposed revisions would:

• Eliminate the CCS requirement

• Specify CO2 emission limits for large units 

(super-critical), small units (sub-critical), and 

new coal refuse-fired units

• Change applicability of rules to modified units

– Included in AEO2020 if the rule is 

finalized in 2019 in time

– Study underway to update cost and 

performance for coal units in AEO2020

– AEO2020 will continue to apply a 3% 

adder to the cost of capital for new coal 

with less than 90% carbon capture

Addressing EPA revisions to existing rules: Revised New 

Source Performance Standards NSPS for GHG from EGUs

AEO2020 Electricity Working Group

April 10, 2019 15

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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EPA Proposed EPA seeking comment 

on alternative range

Large units 

(super-critical) 2,000 1,700 - 1,900

Small units

(sub-critical) 1,900 1,800 - 2,000

New coal refusefired units 2,200 2,000 - 2,200

Source:

NSPS CO2 emission standard

lbs/CO2/mmBtu (gross energy output)

EPA Proposal: NSPS for GHG Emissions from New, 

Modified, and Reconstructed EGUs; pg. 146

https://www.epa.gov/stationary-sources-air-pollution/proposalnsps-ghg-emissions-new-modified-and-reconstructed-egus
AEO2020–current laws and regulation—addressing EPA 

revisions to existing rules

• Mercury and Air Toxics Standards (MATS) are included in all AEO2019 

cases

– “EPA issued a proposed revised Supplemental Cost Finding for the Mercury and Air Toxics 

Standards, as well as the Clean Air Act required ‘risk and technology review.’...and 

proposes to determine that it is not ‘appropriate and necessary’ to regulate HAP emissions 

from power plants under Section 112 of the Clean Air Act. The emission standards and 

other requirements of the MATS rule, first promulgated in 2012, would remain in place, 

however, since EPA is not proposing to remove coal- and oil-fired power plants from the list 

of sources that are regulated under Section 112 of the Act.” (quoted from EPA website; 

emphasis added).

– MATS will be included in all AEO2020 cases, unless further guidance is issued to the 

contrary

• EPA’s Cross State Air Pollution Rule (CSAPR) is included in all AEO2019 

cases and will be maintained in all AEO2020 cases

AEO2020 Electricity Working Group

April 10, 2019 16

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
• Section 45Q tax credit for Carbon Capture and Storage is not 

reflected in AEO2019

– Revised (from $20) to $50 per metric ton for secure geologic storage, and (from 

$10) to $35 per metric ton for Enhanced Oil or Gas Recovery (EOR/EGR) or 

utilization

– Changes in tax code will be incorporated into AEO2020, with possible indirect 

implications for coal disposition

– Modeling of CCS and 45Q occurs in the Electricity Market Module (EMM) and 

the Oil and Gas Supply Module (OGSM) 

AEO2020 Electricity Working Group

April 10, 2019 17

AEO2020–current laws and regulation—federal tax law: Section 

45Q tax credit for Carbon Capture and Storage 

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
AEO2020–current laws and regulation—state/regional programs • Twelve states are actively considering relatively strict carbon emission policies

– New Mexico enacted legislation in March 2019 calling for IOUs and co-ops to get at least 50% of their fuel 

source from renewables by 2030 and 80% by 2040; 100% carbon-free mandate by 2045 for utilities and by 

2055 for co-ops

– Other states are considering similar options with targets of 50% to 100% carbon-free electricity 

generation targets, including: AZ, FL, IL, MD, ME, MN, NC, NV, WA, WI

– California regulations included in AEO2019

• AB 398 Global Warming Solutions Act requires statewide greenhouse gas emissions to return to the 1990 

level by 2020 and be 40% lower than the 1990 level by 2030 (Cap-and-trade program under AB 32)

• SB-1368 prohibits CA utilities from entering into long-term financial commitments for base load 

generation, unless in compliance with the CO2 emissions performance standard of 1,100 lbs/MWh

• Regional Greenhouse Gas Initiative (RGGI) program

– New Jersey and Virginia recently opted in and may be included in AEO2020

• Renewable Portfolio Standard (RPS)/ Zero Emission Credit (ZEC) programs

AEO2020 Electricity Working Group

April 10, 2019 18

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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Pending AEO2020 modeling—enhancements to NEMS 

EMM

• Regional redefinition 

• Update capital cost and performance characteristics for new 

generation

• Addition of short-term wholesale market price projections

AEO2020 Electricity Working Group

April 10, 2019 19

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Proposed new regional mapping: AEO2020 EMM regions

AEO2020 Electricity Working Group

April 10, 2019 20

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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Current EMM regional mapping Proposed new regional mapping
• PJM split into four regions East/West/Dominion/ComEd

• Expanded MISO region split into 4 pricing zones

• Expanded SPP region split into 3 pricing zones

• SERC reduced to 3 regions 

• California split into North/South regions

• WECC region split into 6 regions

• Unchanged: ISO-New England, Florida, Texas

AEO2020 Electricity Working Group

April 10, 2019

Current EMM regional mapping: summary of regional 

changes

21

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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Generating technologies proposed for updated capital cost 

and performance characteristics for AEO2020

AEO2020 Electricity Working Group

April 10, 2019 22

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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Long-term modeling enhancements

• Dynamic regional definition modeling capability

• Revised methodology: T&D spending projections 

• International coal supply curves

AEO2020 Electricity Working Group

April 10, 2019 23

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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AEO2020 Schedule

• Model development: Jun-Oct 2019

• Second Working Group Session: Sep/Oct 2019

• Expected AEO release: Jan 2020

AEO2020 Electricity Working Group

April 10, 2019 24

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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25

Contact info for EIA Electricity Team

Team Leader – Electricity Team

• Thad Huetteman 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

AEO2020 Electricity Working Group

April 10, 2019

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE