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National Energy Modeling System (NEMS) Documentation Archive

Electricity Market Module - NEMS Documentation

July 21, 2020


The National Energy Modeling System (NEMS) was developed to provide 20- to 25-year forecasts 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 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 forecast year.

EMM represents the capacity planning, generation, transmission, and pricing of electricity, subject to delivered prices for coal, petroleum products, natural gas, and biomass; the cost of centralized generation facilities; macroeconomic variables for costs of capital and domestic investment; and 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, nonutility supply and electricity trade are represented in the fuel dispatching and capacity planning submodules. Nonutility generation from cogenerators and other facilities, whose primary business is not electricity generation, is represented in the NEMS demand and fuel supply modules. All other nonutility generation is represented in EMM. The generation of electricity is accounted for in 25 supply regions (Figure 3). Alaska and Hawaii are not modeled explicitly in EMM, but generation and consumption projections for those states are estimated 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 is owned by electricity suppliers. Consumer-owned distributed generation has been determined in the end-use demand modules of NEMS, and the demand for the power sector is typically provided net of any onsite generation. However, because the end-use models provide only an annual net demand, they cannot accurately reflect when rooftop solar photovoltaic (PV) generation occurs. To address this issue, EMM receives total end-use demands without removing rooftop PV generation and then dispatches both power sector and end-use PV capacity using detailed solar resource profiles. This process allows 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 PV in the appropriate end-use sector.

EMM considers construction, operating, and avoided transmission and distribution costs associated with 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:

  1. The Electricity Load and Demand Submodule processes electricity demand to construct load curves.
  2. 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.
  3. 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).
  4. The Electricity Finance and Pricing Submodule calculates electricity prices, based on both average and marginal costs.

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