WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

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 October 4, 2022

MEMORANDUM FOR: Angelina LaRose

 Assistant Administrator for Energy Analysis

FROM: Jim Diefenderfer

 Director, Office of Long-Term Energy Modeling

SUBJECT: Summary of AEO2023 Buildings Working Group held on

September 7, 2022

This memorandum provides an overview of the presentation given at the first Annual Energy Outlook 

2023 (AEO2023) Buildings Working Group meeting and summarizes the discussion, where we debriefed 

AEO2022 results and highlighted the major modeling and data updates planned for AEO2023. The 

presentation for this meeting is available in a separate document.

Debrief of AEO2022 results

First, we provided an overview of the meeting agenda, then we discussed AEO2022. We briefly 

highlighted the case design for two published Issues in Focus reports that the buildings team coauthored: AEO2022 Alternative Weather Assumptions and AEO2022 Extended and Sunset Tax Credit 

cases. We described how the Alternative Weather Assumptions report focuses on changes in energy

demand, as well as supply and prices, based on varied heating degree day (HDD) and cooling degree day 

(CDD) projections. We discussed the changes in projected energy consumption, energy generation, and 

CO2 emissions as a result of assuming differing HDDs and CDDs relative to the AEO2022 Reference case. 

In the Extended and Sunset Tax Credit cases we found that, in the case of extending tax credits, solar 

generation surpasses hydroelectric and wind generation. We also found that sunsetting tax credits early 

slightly reduced solar generation relative to the AEO2022 Reference case. We noted that modeling 

alternative policy cases gives us a foundation for understanding and modeling the Inflation Reduction 

Act of 2022 (IRA) provisions.

For AEO2022, we updated assumptions of Miscellaneous Electrical Loads (MELs), including technology 

penetration and energy use. We noted that, based on a new contractor report, the number of MELs that 

we explicitly characterize has grown to include technologies such as smart speakers and warehouse 

robots that were less prevalent when the previous report was released in 2013. We noted a sizable 

amount of other residential and other commercial energy consumption that we don't have sufficient 

data to disaggregate. We project that portion of other residential MELs to grow at the same rate as 
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

DO NOT QUOTE OR CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

personal disposable income as reported by the NEMS Macroeconomic Activity Module (MAM). Other 

commercial MELs are growing at the same rate of MAM’s non-manufacturing service sector output.

Finally, we discussed solar photovoltaic (PV) capacity projections in the AEO2022. Solar PV capacity

varies with equipment costs and fuel prices in each of the AEO2022 side cases. We noted that 

participants should keep in mind that our projections will change as we model the IRA because the law 

will affect rebates and tax credits going forward.

AEO2023 model updates, policy updates, and historical updates

First, we discussed the IRA and the Infrastructure Investment and Jobs Act (IIJA). We noted that 

incorporating the IRA provisions will be a multiyear modeling process, where the scope of the work will

expand as programs are developed and more information is made available to the public. For AEO2023, 

we will model the extension and expansion of existing tax credits for distributed generation and 

combined-heat-and-power equipment and high-efficiency end-use equipment.

Our presentation then turned to the IIJA, where we indicated that this law included fewer buildingsspecific programs. The two major subprograms of the bill we are actively researching are the CostEffective Codes Implementation for Efficiency and Resilience and the Broadband Equity, Access, and 

Deployment Program. We will continue to investigate and model new federal energy efficiency 

standards and ENERGY STAR® product specifications as possible.

We then discussed how we’ve incorporated the impacts of COVID-19 into AEO2023. We use historical 

data from our State Energy Data System (SEDS) through 2020 and our Monthly Energy Review (MER) 

through 2021. We also noted that near-term consumption is aligned with our Short-Term Energy 

Outlook (STEO) forecasts. Lastly, we receive updated macroeconomic projections from IHS Market, 

including housing starts and commercial floor space builds.

We announced an upcoming contractor report that will update some of our characterized major enduse technologies for the current and future reports. Specifically, contractors are providing updates to 

lighting, commercial refrigeration, and commercial ventilation technologies, which will be incorporated 

into AEO2023.

Lastly, we talked about the historical updates made for AEO2023. Beyond updates to sectoral energy 

consumption by fuel from SEDS, MERS, and STEO, we also incorporate the National Oceanic and 

Atmospheric Administration’s (NOAA) latest historical HDD and CDD weather data and near-term 

forecasts. We discussed how the team also calibrates new residential space heating equipment shares 

and average household square footage based on U.S. Census Bureau data. We also revise historical 

distributed generation and combined-heat-and-power capacity, costs, and select technology 

characteristics based on the latest available data from various sources. We noted that we are refining 

recent historical and projected impacts of utility energy efficiency incentives in the buildings sectors.

Other items

We shared the latest information about the availability of buildings characteristics tables from the 2018 

Commercial Buildings Energy Consumption Survey (CBECS) and the 2020 Residential Energy Consumption 

Survey (RECS). We demonstrated how attendees could access AEO data online, including interactive 

graphs and Microsoft Excel files containing Reference and side cases.
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Finally, we then articulated three main areas of active research for future AEO reports. First, we’ll 

update cost and characteristics for space heating and cooling, water heating, cooking, and residential 

appliances. Second, we’ll undertake the task of investigating how to model storage technologies for 

buildings, such as battery storage. Lastly, we’ll actively work towards identifying ways in which we can 

use the residential and commercial models to analyze various types of buildings-related electrification.

We ended this future work section noting that these projects will not make their way into AEO2023, but 

we will continue to investigate these as we look to future AEOs.

Discussion 

Regarding the IRA’s 26 U.S. Code § 25C Nonbusiness energy property extensions, a participant asked 

whether the same equipment credits will be expanded, or if we will be updating the efficiency level 

qualification for the credit. We explained that we are unsure exactly how the new credits will be 

implemented because, while we do know that there are different levels at which all equipment and 

technologies meet the new IRA credit assumptions, we have not yet determined how all of these credits 

will play out. In addition, the participant asked whether we plan to adjust shell retrofit efficiency 

improvements to reflect applicable IRA provisions. We responded by explaining that there are tax

credits for new building shells and equipment, and we are currently developing assumptions to reflect 

how these programs are expected to be implemented. It will take us some more time to incorporate the 

IRA impacts on existing building shells and retrofits, such as insulation and air sealing improvements, 

into our models.

A participant asked if the additional equipment characteristics data mentioned earlier in the 

presentation will cover all modeled technologies, or if there will be technologies that still require data 

updates in 2023 and 2024. We explained that AEO2023 will include lighting, as well as commercial 

ventilation and refrigeration technologies. The contract to update space cooling and heating and other 

major end uses is only just now starting, so data is very unlikely to make it into AEO2023; it is more likely 

to be incorporated in AEO2024. The data will be published to our website once available so that anyone 

who is interested can view it, and our assumptions for AEO2023 will be posted so that it is clear what 

has and has not been incorporated.

A participant asked about the impact of high inflation and the price increases in the oil and natural gas 

industries, which are expected to cause changes in consumption behavior. The participant asked about

plans to update price elasticity of demand with respect to natural gas, oil, and electricity prices. We 

responded by explaining that this topic may be explored in core side cases where we will look at 

different supply and cost assumptions. In addition, we have high and low economic growth cases that 

can show how inflation may affect drivers for commercial and residential consumption. We do revise 

elasticities every few years based on historical data; the most recent elasticity report was released last 

year. As we gather more historical data, we can revise our assumptions, but we currently have no 

specific plans to revise elasticities during this AEO cycle.

A participant asked how residential and commercial EV chargers are represented in NEMS. We directed

them to the upcoming Transportation Working Group meeting to learn more about how energy use 

from EV charging is accounted for in NEMS. We clarified that vehicle charging is not modeled at all on 

the buildings side of NEMS, and they are not explicitly characterized in transportation modeling. Instead, 

the transportation sector uses an electricity price in combination with data regarding the size and 

specific characteristics of EVs to model EV adoption and energy use.
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

DO NOT QUOTE OR CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

Attendees

Name Affiliation

John Agan U.S. Department of Energy

Youngsun Baek Union of Concerned Scientists

Beth Conlin U.S. Environmental Protection Agency

Colin Cunliff U.S. Department of Energy

Hao Deng OnLocation, Inc.

Chioke Harris National Renewable Energy Laboratory

Bob Hershey Robert L. Hershey, P.E.

Peter Kobylarek Leidos

Cara Marcy U.S. Environmental Protection Agency

Jack Mayernik National Renewable Energy Laboratory

Grace McGinnis U.S. Department of Energy

Francesco Memoli Tenova

John Meyer Leidos

Marina Sofos U.S. Department of Energy

Frances Wood OnLocation, Inc.

EIA staff attendees

Tuncay Alparslan

Stacy Angel

James Berry

Erin Boedecker

Francisco Cifuentes Villarroel

Grace Deng

Jim Diefenderfer

Rosalie Dubberke

Travis Freidman

Carolyn Hronis

Kevin Jarzomski

Angelina LaRose

Chrishelle Lawrence

Tom Leckey

Mary Lewis

Laura Martin

William McNary

Joelle Michaels

Kevin Nakolan

Nicholas Skarzynski

Manussawee Sukunta

Courtney Sourmehi

Edward Thomas

Stephanie Tsao