ENERGY 2020 Model Overview
Model Overview
The ENERGY 2020 model is an integrated multi-region energy model that provides complete and detailed, all-fuel demand and supply sector simulations. These simulations can additionally include macroeconomic interactions to determine the benefits or costs to the local economy of new facilities or changing energy prices. The electricity sector of the model can be used in regulated as well as deregulated and transitioning environments. All relevant pollutants (Criteria Air Contaminants and Greenhouse Gases) and pollution costs, including allowances and trading, are endogenously determined, thereby allowing policy analysis of direct impacts, economic costs, assessment of environmental risk and co-benefit impacts.
ENERGY 2020 is a policy planning model. It contains hundreds of “standard” policy options and literally thousands of policy variables to create new policies. For climate change efforts some generic policy categories include tax incentives/disincentives, exogenous additions to delivered energy prices, new regulations/market structures, grants and rebates, efficiency standards, consumer awareness, permit trading and consumer behaviors and their responsiveness to various options.
The model is
descriptive. It simulates the physical
and economic flows of energy users and suppliers. It simulates how they make decisions and how
those decisions causally translate to energy-use and emissions. In ENERGY 2020, those decisions include
process/shell efficiency and costs decisions, device efficiency and cost
decisions, new investment market-share decisions, and utilization
decisions. Weather and economic
conditions affect utilization as much as the energy price conditions. The actual impacts of the climate change
itself can be tested. The model
accumulates both process (facility) and device capital stocks, and simulates
their retirements. It calculates both
the marginal and average costs and efficiencies. Process efficiency (how much energy service
the household or factory needs to produce its output) determines the useful
energy that must come out of the energy devices like furnaces, hot water
heaters, refrigerators, lights, etc. The
operation of these devices determines the primary energy required for each
sector.
The simulation covers
all energy used by consumers (residential, commercial, government, industrial,
mining, and transportation) and suppliers of energy. Within each enduse
sector the model simulates various enduses, fuels,
technologies, housing types, building types, industries, and transportation
modes.
Process costs
(endogenously based on energy decisions) and device costs (the marginal costs
of using energy from the device) determine the energy choices. These choices
maximize the utility of using the energy as determined with the Qualitative
Choice Theory (QCT). One important
aspect of QCT is that it considers both price and preferences. It includes the
extent to which market participants know of or have access to the choice. For
example, some people only want large safe cars and efficiency is secondary.
Some people live in rural areas and do not have access to natural gas. There
may be a new heat pump technology that works well in northern climates but if
it is not fully marketed/advertised, few know to select it. All the decisions (their components and
information flows) that are relevant to consumer energy choice are endogenously
simulated.
Additionally each demand
sector has a self-generation sub-sector. These sectors can simulate
cogeneration and distributed generation including fuel cells and
micro-turbines. Lastly, each demand
sector includes a demand for energy feedstocks (solvents, reactants,
lubricants, asphalt, etc.)
For the electricity
supply sector, each major department and business unit is fully simulated. The model endogenously determines regulatory
rate-making or deregulation market-price setting depending on the regulatory
regime. Generation is detailed by each
generation unit for each energy supplier with full accounting of transmission
constraints. Demand and supply “occupy”
transmission “nodes” and prices can be by node.
The end-use demands (for each industry and consumer class) are used to
build up seasonal load duration curves.
Representative hours from those curves are “dispatched” and integrated
to produce season supply and primary energy demands for the utilities. The end-use aspect of the load captures
noticeable changes in electric utility operations due to policies that affect
one end-use (or industry) more than others.
The electric system is simulated as the inter-area/international network
it actually is. Thus, all trade is accurately and dynamically captured. The electricity sector simulates capacity
expansion, generation, fuel use and costs, emissions, operation and maintenance
costs and electricity prices.
Other energy supply sectors (oil mining, natural gas production, coal mining, and ethanol production) are simulated, as needed, depending on the significance of these industries to the area being simulated. These sectors simulate production capacity, production, emissions, emission taxes, energy costs, and energy prices.