What is Energy Security? Do we really mean Energy Vulnerability?
Mark Hutson, PhD Student, Dept of Economics, George Wasington University mhutson@gwu.edu
Professor Arun Malik Dept of Economics, George Wasington University amalik@gwu.edu (202) 994 5471
Professor Frederick Joutz Dept of Economics, George Wasington University bmark@gwu.edu 202-994-4899
Professor Robert Trost Dept of Economics, George Wasington University trost@gwu.edu 202-994-9011
Overview
The objective of our project is to examine the economics of solar power generation in the U.S. under various scenarios using the
National Energy Modeling System (NEMS). NEMS is the primary model used by the federal government, as well as some nongovernmental entities, to evaluate energy policies and regulations, including proposed cap-and-trade policies for reducing
greenhouse gas emissions. It is the only model that explicitly models the economic decisions involved in the production,
conversion, and consumption of energy products. NEMS generates projections, currently through 2035, for the production,
imports, conversion, consumption, and prices of energy.
Given the reliance that is placed on NEMS to evaluate energy and energy-related policies, including those related to solar energy, a
detailed understanding of the solar component of NEMS is of considerable importance. No less important is a careful assessment
of the accuracy with which NEMS captures the characteristics of solar energy and its potential in the United States.
Methods
We began this project using the 2009 version of NEMS and have since upgraded to the 2010 version of NEMS. We have conducted
preliminary assessments of the effects of larger subsidies for solar energy. Additional assessments will be conducted with the 2010
version of the model, which we now have up and running in the Economics Department of GWU. In the course of working with
NEMS, we have found that some of the primary technological and cost assumptions underlying its solar sub-module should be reevaluated and updated.
The SOLAR sub-module is part of the Renewable Fuels Module (RFM) of the NEMS. The RFM is run in conjunction with the
Electricity Market Model (EMM) and defines the costs and performance characteristics of renewable fuels, such as generating
capacity, fixed operating cost, variable operating cost, capacity factor, heat rate, and construction lead time. These characteristics
are calculated for each electricity generating technology and are passed to the EMM for capacity planning decisions. For example,
it describes the photovoltaic and solar thermal electricity generating system characteristics for each EMM region and forecast year,
and the EMM chooses whether or not each region will add these solar systems as electricity capacity in future years. These regions
are the same as the North American Electric Reliability Council (NERC) regions as modified by the Energy Information
Administration (EIA) for NEMS. Thus we have identified the different assumptions and drivers of solar power and renewable
energy. We consider different scenarios for solar power by adjusting technology factors, economic factors, and public policy
parameters. In a addition, we conduct futher simulations under assumptions about world oil prices, economic growth, and clean
energy policies.
Results (preliminary)
The baseline case for 2009 National Energy Modeling System (NEMS) for renewable energy net summer generating capacity is
compared with two scenarios: capital costs are reduced by 50% and capacity constraints are relaxed from 1000MW per region to
2000MW per region. Generating capacity for solar thermal and solar photovoltaic is calculated in the three cases. One caveat, the
scenarios were run in the stand alone mode of the Renewable Fuels Module of NEMS. This restriction may influence the effective
impact of the solar power components, because the economics of solar generating plants is not able to fully interact in the capacity
planning process for electric utilities.
In the BASE case solar thermal and solar photovoltaic generating capacity rise from 0.4 and 0.3 GW in 2005 to 0.86 and 0.38 GW
respectively. This represents an annualized growth rate of 3.08 percent and 10.63 percent respectively.
Solar thermal net summer generating capacity in 2030 increases by about 35 percent in the two scenarios: 1.17 and 1.15 GW. The
impact on solar photovoltaic in the two scenarios is smaller than solar thermal. The increase is only about 15 percent over the 2030
base generating capacity. The baseline 2030 value is 0.38 GW and the capital cost reduction scenario is 0.45 GW while the
reduction in capacity constraint is 0.44 GW.
In the stand alone mode, the solar photovoltaic is reduced from the baseline case, because the scenario appears to override existing
incentives in the early years. The annualized growth rates in the two scenarios are significantly larger. In the two solar thermal
scenarios the growth rate is 4.3-4.4 percent compared with 3.08 percent in the base case. The solar photovoltaic annualized growth
rates are 15.4-15.47 compared with the base case of 10.63 percent.
Conclusions
References (partial listing)
Nate Blair, Walter Short, Mark Mehos “MODELING THE IMPACT OF STATE AND FEDERAL INCENTIVES ON
CONCENTRATING SOLAR POWER MARKET PENETRATIO,”N Solar Power and Chemical Energy Systems Symposium,
March 4-7 2008, Las Vegas,
Mark B. Lively, “Renewable Electric Power—Too Much of a Good Thing: Looking At ERCOT,” USAEE Dialogue, August 2009,
pp17-27
Model Documentation Renewable Fuels Module of the National Energy Modeling System, September 2008, Prepared by:
Office of Integrated Analysis and Forecasting Coal and Electric Power Division, Energy Information Administration