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Summary Table 4. Comparison of NEMS and POEMS Electricity Sector Results for Two Cases, 2000-2015 The difference in transmission and distribution system loss factors can be seen when comparing the total generation values for the two models (Table 5). As shown in Table 5, NEMS projects slightly more electricity generation than POEMS in comparable runs for all years. The difference declines between 2000 and 2010, probably as a result of the assumption in NEMS, based on historical trends, that the percentage losses will decline by approximately 25 percent--about 1.5 percentage points--over the next 20 years. Table 5. Comparison of NEMS and POEMS Results for Electricity Generation by Fuel in Two Cases,
2000-2015 Because of State and FERC actions, some of the price change between the CECA Reference and CECA Competitive cases are already occurring. In the AEO99, because of State actions, five regions were assumed to move to competitive pricing of generation services--the New York, California, New England, Mid-Atlantic, and Mid-America (Illinois/Wisconsin) regions. As a result, the price of electricity in the AEO99 in 2010 falls between the prices estimated in the NEMS CECA Reference and NEMS CECA Competitive cases--61.4 mills per kilowatthour in the AEO99 versus 63.6 in the NEMS CECA Reference case and 55.1 in the NEMS CECA Competitive case. The story in the CECA Competitive cases is similar. NEMS relies a little more on coal in the early years, but by 2010 the shares for most fuels are quite close. By 2015 the only generating fuel with both a large absolute and percentage difference between the NEMS and POEMS CECA Competitive cases is wood steam (biomass). Most of the biomass generation in both models comes from co-firing in coal plants. Studies have shown that most coal plants can burn a small percentage of biomass commingled with coal without major capital expenditures. As a result, in response to the biomass production tax credit and the available RPS credit it was assumed in the CECA Competitive cases that coal plants could burn up to 5 percent biomass if it was economical. In NEMS, however, the 5-percent maximum share is phased in over 5 years, from 1999 to 2004. This is done to represent the time it would take for the biomass supply industry to adjust to supply the needed biomass to coal plants. Because large, economical coal plants play a major role in meeting the demand for electricity in many regions, their owners are cautious about any changes, such as introducing a new fuel source like biomass, that might affect their operation. Before making such a change they would go through an extensive period of testing and evaluation--lining up reliable biomass suppliers, performing test burns in their plant, and making any needed plant modifications. The phase-in of biomass co-firing causes at least part of the difference in biomass generation between NEMS and POEMS in 2000 in the CECA Competitive case. In addition, because coal prices are projected to fall over the entire projection period in this analysis, biomass co-firing becomes relatively less attractive over time, and both models begin to reduce its role in generation by 2015. NEMS finds it economical to begin reducing co-firing earlier than POEMS.NEMS, like POEMS, does not quite reach the 7.5-percent RPS target by 2010, because the renewable credit price exceeds the proposed 1.5 cent per kilowatthour cap. By 2010, qualified renewable generation in both NEMS and POEMS reaches 7.0 percent of sales (Table 6). However, POEMS exceeds the 7.5-percent required share by 2015, while NEMS reaches only 7.1 percent by 2015. The POEMS model goes over the 7.5 percent required because in the Supporting Analysis it was assumed that green power programs--independent of the RPS--would succeed in stimulating nonhydroelectric generation equal to 0.3 percent of total sales. The phase-in of the biomass co-firing share in NEMS (the actual share today is near zero) in the early years prevents the renewable share from growing as fast as it does in POEMS. And, in the later years, NEMS finds it more economical to reduce the co-firing of biomass and resume burning coal because of coal's declining price and the 1.5-cent cap on the renewable credit price. Table 6. Comparison of NEMS and POEMS Results for RPS-Qualifying Renewable Share of Total Electricity Sales in the CECA Competitive Case, 2000-2015As would be expected because of the similarities in generation by fuel in the two models, the amount of capacity by type in the models is also quite close (Table 7). There are some differences, however. In both the CECA Reference and Competitive cases, NEMS relies more heavily on combustion turbines and existing fossil steam, and less on combined-cycle plants, than does POEMS. The NEMS model also builds slightly more capacity than POEMS in most years. The load shape data sources for the two models--power control area data for POEMS and NERC region data for NEMS--are different, and the load curves used in the models are constructed slightly differently. The more peaked the load curve is, the more likely the model is to build simple combustion turbines, whereas a flatter load curve would favor combined-cycle facilities. In both NEMS and POEMS, large numbers of existing oil and gas steam plants are retired, along with older nuclear plants. Slightly more are retired in the CECA Competitive cases than in the Reference cases. The NEMS model finds it economical to use existing fossil steam plants together with new turbines rather than build as many new combined-cycle facilities as POEMS does. Other possible factors are differences in the cost and performance data used for existing plants. NEMS and POEMS use much of the same historical data, but POEMS assigns plant-specific values for annual maintenance capital expenditures while NEMS uses an average value for all plants of the same type. The more disaggregated approach used by POEMS may make it appear more economically attractive to retire more existing oil and gas steam plants ("Other Fossil" in Table 7) and replace them with new combined-cycle plants.No effort was made by EIA to replicate POEMS results with NEMS at either the national or regional level. For comparisons at the regional level, the POEMS results were aggregated to the NEMS level of detail. Here again, the two models produce projections that are similar, especially in terms of the direction and magnitude of changes between the CECA Competitive and CECA Reference cases produced by NEMS and POEMS. Detailed regional results are presented in Appendixes A and B. In most regions, generation by fuel, capacity, and electricity prices in the comparable NEMS and POEMS cases are similar. As in POEMS, by 2010, electricity prices in the NEMS CECA Competitive case are lower than in the NEMS CECA Reference case in nearly all regions when aggregated to the NEMS level of detail. The only region in which prices are slightly higher in the CECA Competitive case produced by NEMS is the Northwest (Table 8). The Northwest has a large number of hydroelectric plants that keep prices low in a regulated average-cost environment. However, in a competitive environment--as in the CECA Competitive case--prices will be based on marginal costs that are higher than the current average costs in that region. The slightly lower price in the Northwest in the POEMS CECA Competitive case relative to the POEMS CECA Reference case may result from the exclusion of generation service sales taxes in the competitive price. NEMS includes approximately 1 mill per kilowatthour of generation sector gross receipts taxes in Northwest competitive prices. Table 8. Comparison of NEMS and POEMS Results for Regional Electricity Prices in Two Cases, 2010 |
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File last modified: September 28, 1999
URL: http://www.eia.doe.gov/oiaf/servicerpt/ceca/comparison.html
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