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

Annual Energy Outlook 2023 (AEO2023)

Working Group for Electricity, Coal, and Renewables Analysis:

Model Development and Current Status

For

EIA Joint Working Group for Electricity, Coal, and Renewables

September 8, 2022

By

Office of Long-Term Modeling – Electricity, Coal, and Renewables Modeling
Overview of working group

• Review of Annual Energy Outlook 2022 (AEO2022) results

• Current efforts for Annual Energy Outlook 2023 (AEO2023)

• Baseline model development with respect to the Inflation Reduction Act of 

2022 (IRA)

• Review of additional current laws and regulations

• Long-term modeling plans

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 2

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Review of AEO2022 results

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 3

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Generation mix – AEO2022

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables

Source: U.S. Energy Information Administration, Annual Energy Outlook 2022

4

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Capacity additions – AEO2022

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables

Source: U.S. Energy Information Administration, Annual Energy Outlook 2022

5

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Demand growth and natural gas prices – AEO2022

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables

Source: U.S. Energy Information Administration, Annual Energy Outlook 2022

6

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Net summer coal-fired generating capacity in the electric power sector 

declines disproportionately by region in the AEO2022 Reference case

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables

Source: U.S. Energy Information Administration, Annual Energy Outlook 2022

7

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Coal production decreases throughout as a result of retiring 

coal-fired electric generating capacity

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables

Source: U.S. Energy Information Administration, Annual Energy Outlook 2022

8

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Current efforts for AEO2023

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 9

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Current model development efforts

• Cost-of-capital adder of 3% to natural gas combined-cycle 

• Improvements to photovoltaic-battery (PV-battery) hybrid representation 

including dispatch and capacity credits

• Improvements to the market-sharing algorithm 

• Adjustments to technology-learning levels

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 10

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Capital cost adder for natural gas combined-cycle

• Since AEO2009, we have added 3 percentage points to the weighted 

average cost of capital for coal plants with less than 90% carbon capture.

• This was intended to capture observed market behavior reflecting reluctance 

to finance coal plants.

• Recent evidence suggests a similar dynamic is at play in the market 

affecting CC and possibly CT plants.

• ECRM is extending the 3 percentage point adder to CC investments in the 

power sector.

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 11

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
• Combined-cycle gas turbine (CCGT) generating fleet rated 

at close to 280,000-MW by start of 2022

• About 12,500-MW of new CCGT capacity under construction 

for opening in 2022 – 2024

• Another 11,600-MW of CCGT capacity in planning stages 

through 2026, but has not begun construction

• Number of new projects much lower after 2023, and 

essentially goes to zero by 2027

• About half of existing CCGT fleet is 20-years old having 

opened during 2000-2005 period

• Increasing number of states have zero-carbon generation 

targets

Source: EIA 860 and subject matter expert analysis

Evidence that developers are turning away from combinedcycle gas turbines

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 12

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Dispatchable PV-battery hybrid

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables

Source: ref2023_final\d081722a

13

-50

0

50

100

150

200

250

300

1 4 7 10 13 16 19 22

load

curtailment 

battery storage 

pumped storage

solar 

solar hybrid

wind

hydroelectric 

natural gas combinedcycle

natural gas and oil 

peakers

nuclear 

coal

solar hybrid charging

(hatched) -50

0

50

100

150

200

250

300

1 5 9 13 17 21

Hybrid is fixed output, load

doesn’t vary across 

cases

Hybrid battery 

component 

charge/discharge is 

optimized

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

Hourly U.S. electricity generation and load by fuel for 

reference case before dispatch PV hybrid, 2050

Billion kilowatthours

Hourly U.S. electricity generation and load by fuel for 

reference case after dispatch PV hybrid, 2050

Billion kilowatthours
Updates to the market-sharing algorithm

• Market sharing allows for a more nuanced representation of capacity 

expansion beyond the winner-take-all tendency of optimizing algorithms

– Technologies that are close to the economically optimal solution are awarded some market 

share

• Although we have used this approach for many years, the old approach 

could allow undesirable substitutions

– For example, allowing non-renewables to substitute for a renewable being built to satisfy an 

renewable portfolio standard constraint or an intermittent substituting for capacity primarily 

serving reliability markets

• The new approach allows us to limit technology substitution to those cases 

that make both policy and technical sense

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 14

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Maximum capital cost learning

• The Electricity Market Model (EMM) has long-implemented endogenous 

learning-by-doing to reflect the tendency of capital costs to decline with 

increasing market share

• We had previously limited cost declines to be 50% of initial capital cost for 

new technologies

• Market experience, such as cost declines in PV over the past decade, have 

shown this to be unnecessarily constraining

• We will remove this limit to better capture observed cost decline potential for 

emerging technologies

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 15

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Inflation Reduction Act of 2022

• Tax credit provisions

– Production Tax Credit (PTC)/Investment Tax Credit (ITC) extension for all zero-emission technologies 

– ITC for standalone storage

– PTC for existing conventional nuclear generators

– PTC/ITC for advanced nuclear generators 

– Carbon capture and sequestration (CCS) tax credit

– Investigating prevailing wage and domestic manufacturing credit

• Credit for advanced manufacturing as it relates to capital cost impacts

• Credit extension beyond 2032

• Possible side cases

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 16

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Preliminary IRA impacts – renewables

(incomplete model specification)

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables

Source: Inflation Reduction Act - newcred/d082422a No Inflation Reduction Act - ef2023\d082922b

17

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

Solar capacity Wind capacity Storage capacity

gigawatts (GW) gigawatts (GW) gigawatts (GW)

Inflation Reduction Act Credits

No Credits

Assumes compliance 

w/prevailing wage, no bonus 

for domestic content or energy 

community provisions

Inflation Reduction Act Credits

No Credits

Inflation Reduction Act Credits

No Credits
Preliminary IRA Impacts – nuclear, coal, natural gas

(incomplete model specification)

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables

Source: Inflation Reduction Act - newcred/d082422a No Inflation Reduction Act - ef2023\d082922b

18

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

Nuclear capacity Coal capacity Natural gas capacity

gigawatts (GW) gigawatts (GW) gigawatts (GW)

Inflation Reduction Act Credits

No Credits

Nuclear Production Tax Credit 

(45U) credit not specifically 

modeled, assumed to prevent 

nuclear retirements through 2032

Inflation Reduction Act Credits

No Credits

Inflation Reduction Act Credits

No Credits
Other legislative and regulation updates

• Updates to clean energy standards

– Updated Clean Energy Standards for five states (Illinois, Maryland, North Carolina, 

Nebraska, Rhode Island)

– Included executive orders for clean energy not previously included (Colorado, Connecticut, 

Louisiana, Massachusetts, Michigan, New Jersey, Wisconsin)

– Moving forward we are considering a broader approach to Clean Energy Standards (CES) 

and carbon reduction goals

• Updates to state mandates for offshore wind and battery storage

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 19

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Long-term modeling plans

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 20

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Potential topics to address in future AEOs

• New coal regionalization

• Incorporate insight from high-resolution production-cost modeling to inform 

long-term modeling

• Hydrogen modeling both within the power sector and across the broader 

economy

• Load shape and price feedback to accommodate changes to demand 

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 21

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Contact information for EIA Electricity, Coal, and 

Renewables Modeling Team

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

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

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

• David Fritsch David.Fritsch@eia.gov (202) 287-6538

• Kien Chau Kien.Chau@eia.gov (202) 586-4280

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

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

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

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

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

• Singfoong Cheah Singfoong.Cheah@eia.gov (202) 586-0465

• Nina Vincent Nina.Vincent@eia.gov (202) 586-8501

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 22

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
For more information

U.S. Energy Information Administration homepage | www.eia.gov

Annual Energy Outlook | www.eia.gov/aeo

Short-Term Energy Outlook | www.eia.gov/steo

International Energy Outlook | www.eia.gov/ieo

Monthly Energy Review | www.eia.gov/mer

Today in Energy | www.eia.gov/todayinenergy

State Energy Profiles | www.eia.gov/state

Coal Data Browser | www.eia.gov/coal/data/browser

U.S. Energy Mapping System | www.eia.gov/state/maps.php?v=Coal

International Energy Portal | www.eia.gov/beta/international/?src=home-b1

Annual Energy Outlook 2023 (AEO2023) Working 

Group for Electricity, Coal, and Renewables 23

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.