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

AEO2021 Electricity-Renewables Analysis Working Group: 

New Economic Context, Policy Assumptions, and Key Model 

Updates 

For

EIA Electricity Working Group

August 6, 2020

By

Electricity Analysis Team

Office of Electricity, Coal, Nuclear, and Renewables Analysis
AEO2021 Electricity-Renewables Working Group: 

overview of first teleconference

• Review of Annual Energy Outlook 2020 (AEO2020) results

• Proposed modeling enhancements for AEO2021

• Changes to laws and regulations

• Considerations for future long term domestic modeling

• Global economic disruption as a result COVID-19 mitigation efforts

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 2

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Review of AEO2020 results

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 3

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020

Source: Source: ref2020.d112119a

Electricity generation from natural gas and renewables increases as a result of lower 

natural gas prices and declining costs of solar and wind renewable capacity

4

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020

Capital cost reduction in AEO2020 resulted in higher capacity 

additions for solar photovoltaic (PV) and onshore wind compared with 

AEO2019

Source: ref2020.d112119a and ref2019.d111618a

5

-20

0

20

40

60

80

100

120

140

160

180

offshore wind

onshore wind

solar 

photovolatic

solar CSP

biomass

municipal 

solid waste

Difference in annual renewable capacity additions by technology (AEO2019-AEO2020)

gigawatts

2019 2025 2030 2035 2040 2045 2050

WORKING GROUP PRESENTATION FOR 

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CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020

High Renewables Cost and Low Renewables Cost cases introduced as 

additional core sensitivity analyses

Source: Capital Cost and Performance Characteristic Estimates for Utility Scale Electric Power Generating Technologies (2020), U.S. Energy 

Information Administration, Annual Energy Outlook 2020

6

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020

Natural gas-fired generation and renewables are direct replacements for each 

other; coal and nuclear generation declines in Low Renewables Cost case

Source: U.S. Energy Information Administration, Annual Energy Outlook 2020

7

0

500

1,000

1,500

2,000

2,500

3,000

Reference High Renewables Cost Low Renewables Cost

renewables

natural gas

coal

nuclear

petroleum

2019 35 50 2019 35 50 2019 35 50

All-sector electricity generation from selected fuel by case, 2019–50

billion kilowatthours

WORKING GROUP PRESENTATION FOR 

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CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Proposed modeling enhancements for 

AEO2021

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 8

WORKING GROUP PRESENTATION FOR 

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CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
AEO2021 modeling enhancements to the National 

Energy Modeling System’s Electricity Market Module

• Planned model developments for generating technologies in 

AEO2021

• Move toward dynamic regional redefinition capability in the Electricity 

Market Module (EMM)

• Change in treatment of distributed generation

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 9

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Planned model developments for renewable technologies in AEO2021

• PV/battery Hybrid - Include solar PV plus storage as an option for capacity 

expansion

• Capacity credit for storage – Determine an approach to decrement storage 

capacity credit at high penetrations (not likely to be implemented for 

AEO2021)

• Long-term resource multiplier for wind – Update to new regions

• Landfill Gas - Implementation of revised landfill gas submodule

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 10

WORKING GROUP PRESENTATION FOR 

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Planned model developments for other technologies in AEO 2021

• High-voltage direct current (HVDC) transmission – Update regional 

cost data

• Small modular reactors (SMR)

– Under active consideration in utility capacity expansion plans

– Sargent & Lundy overnight capital cost estimate $6,191 per kilowatt

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 11

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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• New for AEO2021—regional inputs 

read from SQLite database 

generated by new Python tool

– First step in being able to more easily 

change region definitions for specific 

analyses

• AEO2021 will remain at the same 

region configuration as AEO2020

– Which alternative regional 

configurations should EIA consider as 

regional redefinition capability is 

developed?

Retain AEO2020 region mapping in AEO2021

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020

Moving toward dynamic regional redefinition capability

Source: 

12

WORKING GROUP PRESENTATION FOR 

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Change in treatment of distributed generation (DG)

• Building sectors will no longer subtract own-use generation estimates from their enduse consumption values

• Previous treatment

– Earlier AEOs had already incorporated dispatch of rooftop PV in EMM to better represent time-of-day 

availability and impacts on load shape to EMM, but the end-use reporting still reflected fixed assumptions 

that subtracted the PV generation from various end use consumption values

– Non-PV end-use generation for own use was subtracted from specific end use consumption and EMM did 

not dispatch this capacity

• New treatment: 

– All buildings sector DG will be dispatched within EMM (at capacity factors determined by end use models)

– EMM planning and dispatch models will see demand values that include the total DG generation

– AEO electricity tables will still break out power sector versus end-use generation and report retail sales and 

direct use separately (no changes)

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 13

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Changes to laws and regulations

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 14

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Changes to legislation and regulations

• Extension of safe harboring year for projects that began construction in 2016 

and 2017 (will not affect Renewable Fuels Module)

• Virginia renewable portfolio standard (RPS) update (100% carbon-free by 

2050), tracking other possible updates

• Close monitor of any possible updates to the production tax 

credit/investment tax credit in response to the economic downturn

• Currently no additional state mandates for offshore wind have been 

announced since AEO2020, tracking possible updates

• Battery storage mandates: Virginia 3100 megawatts by 2050

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 15

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
State RPS policies will be finalized toward the end of the 

AEO cycle 

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 16

WA: 100% by 2045 

OR: 50% by 

2040 

(large utilities)

CA: 100% by 

2045

MT: 15% by 

2015

NV: 100% by

2050

AZ: 15% by 

2025

NM: 100% by 2045

HI: 100% by 2045

CO: 30% by 2020

MN:26.5% 

by 2025

MI: 10% by WI: 2015 10% by 

2015

MO:15% by 

2021

IA: 105 MW

IL: 25% 

by 2026

OH: 8.5% 

by 2026

NC: 12.5% by 2021

ME: 100% by 2050

30 States and DC have a 

renewable portfolio standard 

(RPS)

No Change from AEO2020 RPS 

Changes from AEO2020 RPS

DC

TX: 5,880 MW by 2015

NH: 25.2% by 2025

VT: 75% by 2032

MA: 35% by 2030

RI: 38.5% by 2035

CT: 48% by 2030

NY:100% by 

2040

PA: 18% by 2021

NJ: 50% by 2030

DE: 25% by 2026

MD: 50% by 2030

DC: 100% by 2040

VA: 100% 

by 2050

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Other state clean energy programs

• Viability of Zero Emission Credit (ZEC) programs

– Monitor legislative activity to determine what, if any, consequences may occur in light of Ohio 

HB 6

– Track federal response: Federal Energy Regulatory Commission (FERC) Minimum Offer 

Price Rule (MOPR) (next slides)

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 17

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Expansion of Regional Greenhouse Gas Initiative (RGGI)

• New entrant: Virginia Clean Energy Economy Act (Senate Bill 851/House Bill 1526) 

– Virginia Clean Economy Act (Senate Bill 851/House Bill 1526)

• 2021: carbon dioxide (CO2) allowance of 27.16/metric ton (mt)

• Allocation decreases each year by 0.84/mt CO2

• 2030 and beyond: CO2 allowance of 19.6/mt CO2

– Dominion Energy and Appalachian Power required to retire CO2-emitting electric generating units by December 31, 

2045

• Potential entrant: Pennsylvania (legislative roadblock House Bill 2025) 

– Addition of PA generators to RGGI would represent a significant expansion of the RGGI program

– PA would represent: (based on Electric Power Monthly 2019 values)

• 46% of RGGI coal capacity

• 78% of RGGI coal generation

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 18

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Federal response to state differential treatment— FERC MOPR

• To address the potential that state-subsidized units might under-bid in 

capacity auctions, FERC created Minimum Offer Price Rule (MOPR)

• PJM must establish resource-specific MOPRs for new and existing 

resources that receive (or are eligible for) state subsidies, including:

– Existing resources: Renewable energy credits (RECs) (if they have not cleared the capacity 

market), and zero-emission credits (ZECs)

– New resources: RECs, demand response, energy efficiency, storage

• Under the MOPR rule, PJM must establish an auction price floor for

– New resources= Net cost of new entry (CONE)

– Existing resources = Net avoidable cost rate (ACR)

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 19

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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Considering approaches to modeling the impact of MOPR

• EIA has no model for a capacity auction 

• One alternative approach to modeling MOPR

– Assume the impact of the MOPR is that additional affected plants will not clear 

the capacity market

– Model MOPR impact by excluding those units from contributing to the reserve 

margin, by ignoring or overriding the capacity credit

– Compare with case without these assumptions

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 20

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Addressing voluntary commitments to decarbonization

• No change in EIA precedent: current laws and regulations will remain the 

basis for input assumptions to Reference case

• Common question in preceding working groups: how does EIA account for 

utility plans/commitments to de-carbonize?

– EIA has seen Integrated Resource Plans (IRPs) as more aspirational and thus not 

appropriate to model

– The increasing number and specificity of de-carbonization announcements may indicate a 

move toward implementation 

• EIA considers different approaches to if/how to incorporate IRP statements 

into modeling

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 21

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Considerations for future long term 

domestic modeling

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 22

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Long term modeling enhancements

• Revised methodology: Transmission and distribution (T&D) spending 

projections

• Adding coastal wind as designated technology type (currently only 

represented by regional differences in capital cost)

• Enhance coal transportation rate escalation methodology 

– Replace existing econometric approach with an index-based approach adjusted 

for productivity to improve model transparency and address projected stagnantto-declining trends in coal production

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 23

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Global economic disruption as a result of 

COVID-19 mitigation efforts

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 24

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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The new context: Global economic disruption as a result of 

COVID-19 mitigation efforts

• Short term impacts of COVID-19 mitigation efforts have been reflected in ShortTerm Energy Outlook (STEO) forecasts

• Long term impacts of COVID-19 mitigation efforts still under review

– These effects will be largely reflected in inputs from Macroeconomic/End Use models

• AEO2021 Macro/Industrial Working Group meeting: Thursday, September 17, 2020

• EIA will host a series of workshops on the near and long term impacts on the 

energy market (detailed announcement forthcoming in the next few weeks

• A complete schedule of working groups can be found here

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 25

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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AEO2021 Outlook Schedule

• Model development: June-October 2020

• 2nd Working Group Session: September 2020

• Expected AEO release: January 2021

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 26

WORKING GROUP PRESENTATION FOR 

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27

Contact information: Electricity Analysis Team

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

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

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

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

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

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

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

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

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Contact information: Renewable Electricity Analysis Team

• Chris Namovicz, Team Leader Chris.Namovicz@eia.gov (202) 586-7120

• Richard Bowers Richard.Bowers@eia.gov (202) 586-8586

• Michelle Bowman Michelle.Bowman@eia.gov (202) 586-0526

• Vikram Linga Vikram.Linga@eia.gov (202) 586-9224

• Fred Mayes Fred.Mayes@eia.gov (202) 586-1508

• Manussawee Sukunta Manussawee.Sukunta@eia.gov (202) 586-0279

• Ed Thomas Edward.Thomas@eia.gov (202) 586-3704

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 28

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARESUBJECT TO CHANGE
Questions/Comments?

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020 29
Capital costs revised downward for most renewable 

technologies in AEO2020 from prior years

AEO2021 Electricity- Renewables Analysis 

Working Group August 6, 2020

Source: Cost and Performance Characteristics for AEO2020 and AEO2019

30

 AEO2020

(2019$/kW)

Onshore wind – large plant footprint: Great Plains region $1,260 $1,652 -23.70% $1,954 -35.5%

Offshore wind (fixed-bottom) $5,446 $6,656 -18.20% $6,658 -18.2%

Solar photovoltaic, single axis tracking $1,307 $2,004 -34.80% $2,198 -40.5%

Solar thermal $7,191 $4,365 64.70% $4,368 64.6%

$1,383 $1,985 -30.3%

Landfill gas $1,557 NA NA NA NA

Biomass plant $4,104 $3,967 3.50% $3,969 3.4%

AEO2019 

(2019$/kW)

% change 

(AEO2019 

base)

Battery storage, 50 MW 200 MWh $1,603 -13.70%

Technology AEO2019 

(2019$/kW)

Approx. % 

change 

WORKING GROUP PRESENTATION FOR 

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CITE BECAUSE RESULTS ARESUBJECT TO CHANGE