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Electricity Market Module - NEMS Documentation

September 6, 2022


The National Energy Modeling System (NEMS) was developed to provide 20- to 25-year projections and analyses of energy-related activities. NEMS uses a central database to store and pass inputs and outputs between the various components. The NEMS Electricity Market Module (EMM) provides a major link in the NEMS framework (Figure 1). In each model year, EMM receives electricity demand projections from the NEMS demand modules, fuel prices from the NEMS fuel supply modules, expectations from the NEMS system module, and macroeconomic parameters from the NEMS macroeconomic module. EMM estimates the actions taken by electricity producers (electric utilities and nonutilities) to meet demand in the most economical manner. EMM then outputs electricity prices to the demand modules, fuel consumption to the fuel supply modules, emissions to the Integrating Module, and capital requirements to the macroeconomic module. The model iterates until a solution is reached for each projection year.

EMM represents:

  • Capacity planning, generation, transmission, and pricing of electricity (subject to delivered prices for coal, petroleum products, natural gas, and biomass)
  • Cost of centralized generation facilities
  • Macroeconomic variables for costs of capital and domestic investment
  • Electricity load shapes and demand

The submodules consist of capacity planning, fuel dispatching, finance and pricing, and electricity load and demand (Figure 2). In addition, the fuel dispatching and capacity planning submodules represent nonutility supply and electricity trade. NEMS demand and fuel supply modules represent nonutility generation from cogenerators and other facilities, whose primary business is not electricity generation, is represented. EMM represents all other nonutility generation. The generation of electricity is accounted for in 25 supply regions (Figure 3). EMM does not explicitly model Alaska and Hawaii, but it estimates generation and consumption projections for those states for reporting national totals.

Operating (dispatch) decisions are made by choosing the mix of plants that minimizes fuel, variable operating and maintenance (O&M), and environmental costs, subject to meeting electricity demand and environmental constraints. Capacity expansion is determined by the least-cost mix of all costs, including capital, O&M, and fuel. Electricity demand is represented by load curves, which vary by region, season, and time of day.

EMM also represents distributed generation that belongs to electricity suppliers. The end-use demand modules of NEMS determine consumer-owned distributed generation, and the demand for the power sector is typically provided net of any onsite generation. However, because the end-use models cannot accurately reflect how each distributed generation contributes to changing total load in each time slice, EMM represents distributed generation while it tries to satisfy the total end-use demand. To address this modeling requirement, EMM receives total end-use demands without removing onsite distributed generation and then dispatches both power sector and distributed generation capacity, including rooftop PV, using detailed solar resource profiles. This process allows distributed generation capacity, including the end-use PV, to affect the net load requirements at the proper times, sending more accurate signals to EMM regarding generation and capacity requirements at peak load times. The overall generation requirement for EMM is unchanged, and demand and generation reports still reflect the end-use distributed generation in the appropriate end-use sector. EMM considers construction, operating, and avoided transmission and distribution costs associated with utility-owned distributed generation to evaluate these options as an alternative to central-station capacity.

The solution to the EMM submodules is simultaneous in that, directly or indirectly, the solution for each submodule depends on the solution to every other submodule. A solution sequence through the submodules can be summarized as follows:

  • The Electricity Load and Demand Submodule processes electricity demand to construct load curves.
  • The Electricity Capacity Planning Submodule projects the construction of new generating plants, the retirement (if appropriate) of existing plants, the level of firm power trades, and the addition of scrubbers and other equipment for environmental compliance.
  • The Electricity Fuel Dispatch Submodule dispatches the available generating units, allowing surplus capacity in selected regions to be dispatched for another region's needs (economy trade).
  • The Electricity Finance and Pricing Submodule calculates electricity prices, based on both average and marginal costs.

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