WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

DO NOT QUOTE OR CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

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 Annual Energy Outlook 2023 (AEO2023) Working Group for

Electricity, Coal, and Renewables held on September 8, 2022

The working group presentation summarized the preliminary results from the Annual Energy Outlook 

2023 (AEO2023) for electricity, coal, and renewables. These updates are included in the presentation 

materials, which are posted on our website.

Overview

AEO2023 will include the eight core side cases (High and Low Economic Growth, High and Low Oil Price, 

High and Low Oil and Gas Supply, and High and Low Renewables Cost), along with the Reference case.

We are considering topics for additional side cases around the Inflation Reduction Act of 2022 (IRA).

The working group meeting is an opportunity for stakeholders to comment and provide feedback on the 

model development work performed up to that point for AEO2023, as well as to comment on 

preliminary AEO2023 results.

Model updates

At the beginning of the meeting, we summarized the results from Annual Energy Outlook 2022

(AEO2022), outlined the model updates and enhancements planned and completed for AEO2023, and 

presented the general preliminary results for AEO2023. We explained the current modeling efforts that 

will be a part of AEO2023:

• The adoption of a 3% cost-of-capital adder for natural gas combined-cycle generating plant 

additions

• Improvements to the representation of photovoltaic-battery (PV-battery) hybrid technology,

including dispatch profile and capacity credits

• Improvements to the market sharing algorithm 

• Adjustments to technology learning levels
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

DO NOT QUOTE OR CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

• Inclusion of numerous provisions from the Inflation Reduction Act of 2022 (IRA)

• An update to current laws and regulations with regard to state renewable portfolio standards 

and clean energy standards

Our presentation portion of the meeting wrapped up with us discussing preliminary results for AEO2023 

with respect to the IRA, which included: 

 Modeling of the production tax credit (PTC) and investment tax credit (ITC) extensions for all 

zero-emission technologies through 2050, assuming only the base credit value and the 

prevailing wage five-times credit multiplier

 Providing for the ITC for standalone storage

 Assuming existing nuclear generators receive a modified version of the PTC

We also noted that we are still investigating the advanced manufacturing credit and the domestic 

manufacturing credit as they relate to zero-emission technologies. 

We reminded participants that the results are still preliminary and that the final AEO2023 will be 

released in early 2023, but no date has been finalized.

In addition, we noted that we are modeling several state-level updates to renewable portfolio and clean 

energy standards, including state executive orders.

The presentation then opened up for questions and comments regarding updates for AEO2023 and 

beyond.

Discussion

The discussion following the presentation included a number of questions regarding our IRA modeling 

efforts.

Several participants asked us to clarify which PTC and ITC bonus credits we assumed eligible 

technologies would have access to under the IRA. Specifically, they asked whether projects were 

assumed to take advantage of the prevailing wage, domestic manufacturing, and energy community 

bonus credits and whether we assume that technologies differ in their access to these bonus credits. 

We responded that as of the working group meeting, the current assumption was that all technologies 

that can receive the PTC or ITC under the IRA will receive either of the credits. Currently, only the 

prevailing wage bonus credit is assumed accessible by technologies taking the PTC or ITC, but we are

evaluating scenarios in which the domestic manufacturing and energy community credits could also be 

accessible to qualifying technologies. 

Following up on this question, a participant asked whether we were allowing solar technologies to 

endogenously take either the PTC or ITC. Although current modeling work is exogenously assuming that 

solar photovoltaic will opt to receive the PTC, we are examining circumstances that may change that 

assumption. In addition, EIA’s Commercial Buildings and Manufacturing Demand Team pointed out that 

small-scale photovoltaic solar is being modeled to continue to take the ITC in AEO2023.

On the topic of exogenous versus endogenous assumptions for AEO2023, a participant asked whether 

we are treating the emission-based phase-out of the tax credits in the IRA endogenously. 
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

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

We are currently not endogenously phasing out the tax credits, and given the timeline of implementing 

the IRA, we are not anticipating adopting such a model framework for AEO2023. We also pointed out 

that although we have not run every side case, we expect that phasing out the tax credits from hitting 

the reduction in emissions will occur in the Reference case and many side cases, but it may need to be 

re-examined for cases that have additional drivers toward renewable or carbon-free energy.

A participant asked if the appearance of wind builds leveling-off around 2032 in the preliminary results 

was the result of a modeled cap on wind resources. We indicated that the results likely show a tradeoff 

between solar photovoltaic and wind. In other words, some regions may have limited wind resources or 

they might find it more economical to use more solar for certain hours of the day.

A participant asked whether fuel prices for our preliminary results were dynamic. We responded that we 

use dynamic fuel prices for our modeling. 

A participant inquired further about the release schedule and the possibility of having an additional 

working group to review preliminary results. We reiterated that schedule is still in flux but that the 

AEO2023 release would likely be delayed, so we have enough time to account for provisions of the IRA.

We will consider an additional working group meeting, but it will depend on future schedule and 

resource considerations.

Attendees

The working group meeting, hosted by EIA, was held entirely online and was attended by 49 people, 

including EIA staff and external participants.

Guests

Name Affiliation 

Youngsun Baek Union of Concerned Scientists

Andrew Baxter American Petroleum Institute 

Ann Benson Great River Energy

Bruce Biewald Synapse Energy

Jason Burwen American Clean Power Association

Thomas Dandres Environment and Climate Change Canada

Naveen Dasari Rhodium Group

Dominique Davis Midcontinent Independent System Operator

Paul Donohoo-Vallett U.S. Department of Energy

Tyler Fitch Synapse Energy

Andrew Foss U.S. Department of Energy

Steve Frauenheim Edison Electric Institute 

Michael Gaffney Rhodium Group

John Hensley American Clean Power Association

Serpil Kayin U.S. Environmental Protection Agency

Britny Kelley Southern Company

Hannah Kolus Rhodium Group

Cara Marcy U.S. Environmental Protection Agency

Megan Pamperin Midcontinent Independent System Operator

Logan Pollander Midcontinent Independent System Operator
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

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

Dan Robicheaux Midcontinent Independent System Operator

Nicole Ryan U.S. Department of Energy

Selma Sharaf Synapse Energy

Sharon Showalter OnLocation

Patricio Silva Synapse Energy

Quintin Thompson Midcontinent Independent System Operator

Anna van Brummen Rhodium Group

Ken Walsh Leidos

Glenn Weinreb Manhattan Project 2

Ryan Wiser Lawrence Berkley National Laboratory, U.S. Department of Energy

Frances Wood OnLocation

EIA staff attendees

Name

Erin Boedecker

Richard Bowers

Kien Chau

Michael Cole

Jim Diefenderfer

Mindi Farber-DeAnda

David Fritsch

Kevin Jarzomski

Augustine Kwon

Angelina LaRose

Vikram Linga

Laura Martin

Chris Namovicz

James Preciado

Sauleh Siddiqui

Edward Thomas

Stephanie Tsao