National Energy Modeling System (NEMS)
Overview
The National Energy Modeling System (NEMS) is a computer-based, energy-economy modeling system of U.S. through 2030. NEMS projects the production, imports, conversion, consumption, and prices of energy, subject to assumptions on macroeconomic and financial factors, world energy markets, resource availability and costs, behavioral and technological choice criteria, cost and performance characteristics of energy technologies, and demographics. NEMS was designed and implemented by the Energy Information Administration (EIA) of the U.S. Department of Energy (DOE).
The National Energy Modeling System: An Overview 2009 provides an overview of the structure and methodology of NEMS and each of its components. This chapter provides a description of the design and objectives of the system, followed by a chapter on the overall modeling structure and solution algorithm. The remainder of the report summarizes the methodology and scope of the component modules of NEMS. The model descriptions are intended for readers familiar with terminology from economic, operations research, and energy modeling. More detailed model documentation reports for all the NEMS modules are also available from EIA (Appendix, “Bibliography”).
Purpose of NEMS
NEMS is used by EIA to project the energy, economic, environmental, and security impacts on the United States of alternative energy policies and different assumptions about energy markets. The projection horizon is approximately 25 years into the future. The projections in Annual Energy Outlook 2009 (AEO2009) are from the present through 2030. This time period is one in which technology, demographics, and economic conditions are sufficiently understood in order to represent energy markets with a reasonable degree of confidence. NEMS provides a consistent framework for representing the complex interactions of the U.S. energy system and its response to a wide variety of alternative assumptions and policies or policy initiatives. As an annual model, NEMS can also be used to examine the impact of new energy programs and policies.
Energy resources and prices, the demand for specific energy services, and other characteristics of energy markets vary widely across the United States. To address these differences, NEMS is a regional model. The regional disaggregation for each module reflects the availability of data, the regional format typically used to analyze trends in the specific area, geology, and other factors, as well as the regions determined to be the most useful for policy analysis. For example, the demand modules (e.g., residential, commercial, industrial and transportation) use the nine Census divisions, the Electricity Market Module uses 15 supply regions based on the North American Electric Reliability Council (NERC) regions, the Oil and Gas Supply Modules use 12 supply regions, including 3 offshore and 3 Alaskan regions, and the Petroleum Market Module uses 5 regions based on the Petroleum Administration for Defense Districts.
Baseline projections are developed with NEMS and published annually in the Annual Energy Outlook (AEO). In accordance with the requirement that EIA remain policy-neutral, the AEO projections are generally based on Federal, State, and local laws and regulations in affect at the time of the projection. The potential impacts of pending or proposed legislation, regulations, and standards¾or of sections of legislation that have been enacted but that require implementing regulations or appropriations of funds that have not been provided or specified in the legislation itself¾are not reflected in NEMS. The first version of NEMS, completed in December 1993, was used to develop the projections presented in the Annual Energy Outlook 1994. This report describes the version of NEMS used for the AEO2009.1
The projections produced by NEMS are not considered to be statements of what will happen but of what might happen, given the assumptions and methodologies used. Assumptions include, for example, the estimated size of the economically recoverable resource base of fossil fuels, and changes in world energy supply and demand. The projections are business-as-usual trend estimates, given known technological and demographic trends.