EPA's Response to IPM v6 Peer Review Report April 2022 Summary of Contents Section 1: Introduction Describes the peer review process (goals, charge, panelists), commendations, and the structure of the rest of the response document in addressing recommendations. Section 2: Addressing Main Recommendations 2.1 Updates to model to improve the model's ability to represent the ongoing evolution of the industry: demand/supply, new technologies, transmission, evolving state and regional policies, and ISO/RTO market rules 2.2 Types of uncertainty that the model handles 2.3 Coal plant turndowns, operating reserves, continued penetration of renewables, dispatch 2.4 Incorporating upstream emissions 2.5 Investment decision-making of utility and merchant power plants and capacity markets 2.6 Gas markets and natural gas pricing 2.7 Alternative load duration curves changes in load shapes from new forms of demand (such as electric vehicles); regional and temporal resolution 2.8 Improving representation of behind-the-meter generation 2.9 Increasing transparency of retail pricing model 2.10 Representation of various policy mechanisms and publishing alternative/side cases 2.11 Documentation improvements Appendix: Table for Detailed Accounting of Peer Review Recommendations and Narrated Responses 1 ------- Response to the Peer Review Report EPA Reference Case Version 6 Using IPM U.S. EPA, Clean Air Markets Division SECTION 1 INTRODUCTION Background on Peer Review Process In May 2018, the U.S. Environmental Protection Agency (EPA) released a new version of EPA's power sector modeling platform (designated Integrated Planning Model (IPM) version 6)1. This new EPA modeling platform incorporated important structural improvements and data updates with respect to EPA's previous version (version 5). EPA published several updates to EPA modeling platform version 6 Reference Case between May 2018 and September 2021. IPM is a multiregional, dynamic, deterministic model of the U.S. power sector that provides projections of least-cost capacity expansion, electricity dispatch and emissions. The EPA uses the platform to project and evaluate the cost and emissions impacts of various policies to limit emissions of sulfur dioxide, nitrogen oxides, particulate matter, mercury, hydrogen chloride, and carbon dioxide. In September 2019, EPA commissioned a peer review of EPA's v6 Reference Case using the Integrated Planning Model (IPM). Industrial Economics Inc., an independent contractor, facilitated the peer review of the EPA Version 6 Reference Case in compliance with EPA's Peer Review Handbook (U.S. EPA, 2006) and produced a report from that peer review.2 Industrial Economics Inc. selected five peer reviewers (Dr. Dallas Burtraw, Dr. Seth Blumsack, Dr. James Bushnell, Dr. Frank Felder, And Frances Wood) who have extensive expertise in energy policy, power sector modeling and economics to review the EPA Version 6 Reference Case and provide feedback. The panel focused on the latest available Reference Case version and its documentation at that time (May 2019 Reference Case). Peer review panel has been asked to: • Evaluate the suitability and scientific basis of the methods (model formulation), model assumptions, model outputs, and conclusions derived from the model; 1 EPA periodically publishes updated projections and their documentation. Documentation, input and output files for the latest EPA v6 Reference Case using IPM and links to the previous versions are located at https://www.epa.gov/airmarkets/power-sector-modeling 2 https://www.epa.gov/airmarkets/ipm-peer-reviews-and-responses 2 ------- Identify specific strengths, weaknesses, limitations, and errors in the model formulation, model assumptions, model outputs, and conclusions derived; • Propose specific options for correcting errors and fixing or mitigating weaknesses and limitations in the model formulation, model assumptions, model outputs, and conclusions derived; • Check the appropriateness of the set of model-scenarios for addressing uncertainty in potential future power-sector trends and of particular relevance to future power sector emissions. The peer reviewers evaluated the adequacy of the framework, assumptions, and supporting data used in the EPA Version 6 Reference Case using IPM, and they suggested potential improvements. Overall, the panel found much to commend EPA; stating that the modeling platform: • lends itself well to EPA analyses of air policy focused on the power sector • includes significant detail related to electricity supply and demand • includes data-rich representation both across different geographic areas and across time • provides a reasonable representation of power sector operations, generating technologies, emissions performance and controls, and markets for fuels used by the power sector • is well suited to assess the costs and emissions impacts • documentation is well written, clearly organized, and detailed in its presentation of most model characteristics The independent peer review panel provided expert feedback on whether the analytical framework, assumptions and applications of data in the Version 6 Reference Case using IPM are sufficient for the EPA's needs in estimating the economic and emissions impacts associated with the power sector due to emissions policy alternatives. The panel made recommendations to improve the model's ability to represent the ongoing evolution of the industry; in particular: • Continued penetration of renewables • Increasing developments in energy storage technologies and markets • Changes in load shapes from new forms of demand, like electric vehicles • Evolving state and regional policies • Evolving ISO/RTO market rules • Increasing need for and advances in modeling capabilities of temporal resolution Executive summary recommendations included: 1. Clarify types of uncertainty that the model is capable of handling 3 ------- 2. Reconsider coal plant turndowns and addition of operating reserves 3. Consider incorporating upstream emissions 4. Distinguish investment decisions between utility and merchant power plants 5. Address the evolving gas markets regionalization and emerging sectors 6. Consider alternatives to the current load duration curves 7. Improve representation of behind-the-meter generation 8. Increase transparency of retail pricing results 9. Consider improvements in the representation of various policy mechanisms 10. More thorough citing of sources and expanded explanations in documentation Body of the Peer Review Report included over 100 recommendations (of which most of them tied back to the Executive Summary Recommendations) and about 50 edits to documentation. For quick and easy reference, all of the Peer Review Report recommendations and EPA's responses to those are tabulated in the Appendix and also referenced to the Section 2 of this document (EPA's response to Peer Review Report) for narrated responses. Section 2 of this document provides a high-level response to the Executive Summary recommendations of the Peer Review Report, where we also grouped, incorporated and addressed many of the recommendations included elsewhere in the Peer Review Report. Before and after Peer Review Panel completed their work, EPA published five updated v6 Reference Cases; namely May 2018, November 2018, May 2019, January 2020, and Summer 2021 Reference Cases. Vast majority of the Peer Review Panel recommendations, both in terms of capability improvements and documentation, have been addressed in the last public release with the Summer 2021 Reference Case (published in September 2021). EPA anticipates that future updates will continue to improve some existing features and will introduce new capabilities, as well as more detailed documentation as needed EPA is also working on publishing a number of side cases with alternative set of assumptions. 4 ------- SECTION 2 ADDRESSING MAIN RECOMMENDATIONS 2.1 Updates to model to improve the model's ability to represent the ongoing evolution of the industry: demand/supply, new technologies, transmission, evolving state and regional policies, and ISO/RTO market rules EPA continuously evaluates and makes updates or improvements to the model capabilities, parametrization heuristics, input data, and assumptions. Some of these are routine updates that are updated with every new reference case (such as the fleet information), some are integrated as new data becomes available (such as demand, generation cost and performance assumptions), and some categories are specifically evaluated as they become more prominent and potentially impacting projections through emerging future power sector dynamics and policy. EPA's reference case reflects on the books state and regional policies, and relevant ISO/RTO market rules. In addition, model has existing and potential capabilities for various possible policy mechanisms. Documentation of these capabilities, are usually not part of the Reference Cases but are routine part of the incremental documentation or Technical Support Documentation that accompanies policy or scenario analysis. Appendix of this document gives a detailed account of such capabilities mentioned in the Peer Review Report. 2.2 Types of uncertainty that the model handles EPA primarily focuses on a central "reference case", which highlights conditions that can be reasonably expected. In order to evaluate how key uncertainties impact model projections, EPA has previously released (incremental to May 2018 Reference Case)3 and plans to release (incremental to Summer 2021 Reference Case) a range of scenarios that outline a representative cone of outcomes. These scenarios will estimate the impact of changing natural gas prices, renewable technology costs, and demand. 2.3 Coal plant turndowns, operating reserves, continued penetration of renewables, dispatch EPA models the turndown rate for coal plants at the unit level. The unit level turndown percentages for coal units were estimated based on a review of recent hourly Air Markets Program Data where most of the coal capacity has a turndown rate between 40% and 60%. EPA believes having unit-specific turndown rate is beneficial to our model projections because it accounts for the variation in performance of coal plants rather than representing it as a single value for the entire fleet, which is the approach employed by many other power sector models. EPA's turndown approach is an aspect of the model that we have revisited regularly and expect 3 https://www.epa.gov/power-sector-modeling/results-using-epas-power-sector-modeling-platform-v6-may-2018 5 ------- to continue to do so in the future, given that load following behavior has recently become more common in the coal-fired fleet. EPA has evaluated the inclusion of operating reserve constraints in IPM through a variety of test runs and determined them to be beneficial for the projections, particularly for scenarios with a high deployment of renewable resources. At this time, EPA does not believe additional reserve products beyond operating reserve are necessary but will continue to evaluate this moving forward. 2.4 Incorporating upstream emissions It is important for EPA to maintain the ability to show emissions from the combustion of the fuel and emissions specifically occurring at the power plant stack. This is central to both air quality modeling efforts and the majority of EPA EGU rulemakings that regulate stack emissions. At the same time, EPA is developing approaches for quantifying upstream methane and C02 emissions associated with the extraction, production, and distribution of coal, oil, and gas used in the power sector. EPA will include and document such data in relevant future applications. 2.5 Investment decision-making of utility and merchant power plants and capacity markets While new build financing assumptions are not differentiated based on utility/merchant categorization, retrofits do include this differentiation. This in turn results in more realistic retrofit/retirement decisions for the existing fleet. Within a cost minimizing framework assuming differentiated financing for new builds would result in possible over-builds and under-builds as a result of effective differences in levelized costs. Based on prior runs, these builds may be unrealistic in their concentrations. Instead, IPM assumes a weighted average financing charge for all new builds of a given technology type. Based on prior testing we believe the current approach, i.e. differentiated financing for retrofits and weighted average financing for new builds is the most reasonable modeling convention. 2.6 Gas markets and natural gas price Comments in this area tended to focus on two areas: 1) more transparency in documentation, 2) more definition given to under what scenarios EPA would reconstitute its natural gas supply curves. In regard to the former, EPA has supplemented the documentation with additional language regarding the LNG export volume, non-power sector demand assumptions (particularly how it is 6 ------- accounting for significant changes in the petro-chemical industry), and the relationship between GMM and IPM oil price assumptions. This is somewhat similar to the basin-specific discussion included in the coal supply section (except that gas supply curves are national in scope and the gas supply implementation is different from the coal supply implementation) where EPA provides detail on mining techniques, market conditions, and geological factors that are basin specific and experiencing change. The appropriateness of the natural gas demand projected by IPM and the supply curves used in the model are considered throughout scenario production. In each run, EPA evaluates consistency of projected natural gas consumption and production with the basis differentials provided by GMM. EPA will continue to document information concerning the incorporation of GMM outputs in IPM analyses. 2.7 Alternative load duration curves changes in load shapes from new forms of demand (such as electric vehicles); regional and temporal resolution As an input to the model, the impact of alternative load shapes has been tested in a number of scenarios and applications. For example, EPA is working on an analysis to support the evaluation of impacts of warming temperatures on the power sector in the USA using IPM and IPCC scenarios. This side case will demonstrate and quantify incremental impacts relative to the EPA's reference case, taking into consideration impacts on electricity demand, power plant capacity, power plant heat rates, transmission capacity and hydropower impacts, in addition to identifying additional areas and improvements needed for further study. EPA has also completed a number of internal analyses evaluating the impact of electric vehicle charging load, varying both its magnitude and timing. Since the model's input structure allows to modify load (both its shape and magnitude) as needed, we have evaluated various Energy Efficiency cases in the past and will continue to do so. IPM can be configured with varying number of seasons. For example, in v6, a winter shoulder season was added to better capture seasonality in wind generation. The load segments can also be customized to account for time of day to better capture solar generation. The seasonal structure and segmental configuration is reviewed with each update and might need to be revised in the future to capture electric vehicle load. 2.8 Improving representation of behind-the-meter generation To improve the representation of behind-the-meter generation, EPA has recently updated its approach so that non-dispatchable distributed generation affects the shape of the load duration curve, instead of simply reducing the net energy for demand used in the projection. 7 ------- 2.9 Increasing transparency of retail pricing model EPA is improving the documentation for the Retail Price Model by providing further clarification on and discussion of key components of the model. Additional improvements to the documentation will also include an enhanced discussion of the purpose of the model, and explain how that relates to the different methodologies for estimating retail price in competitive and regulated regions. 2.10 Representation the of various policy mechanisms and publishing alternative/side cases EPA has the capability to run a wide array of scenarios in IPM to inform and shed light on important power sector projections. Previous iterations of IPM that have been released have included alternative scenarios, for public dissemination and review. These scenarios have included alternative assumptions for electric demand (high and low), renewable energy costs (high and low), and natural gas price. EPA continues to consider, develop, and perform alternative scenarios to inform its efforts to address pollution from the power sector, and will continue such efforts. Where appropriate, EPA will release and disseminate scenarios to accompany future IPM updates. In addition, EPA will consider such scenarios in other contexts where IPM is being used, such as regulatory development. 2.11 Documentation improvements including results viewer A number of documentation improvements were reflected in the Summer 2021 Reference Case full-fledged documentation providing additional detail and clarity. These are tracked in the Appendix table. Documentation updates will continue with each update as needed in light of both formal reviews and comments received from stakeholder and user community. EPA has refined the Results Viewer to make it more intuitive and easier to use. The controls were modified to automatically match between primary and comparison cases to make use easier. The units displayed above charts were updated to clearly indicate the cases being compared. And finally, the "Read Me" guide was edited and updated for clarity. 8 ------- Appendix: Table for Detailed Accounting of Peer Review Recommendations and Narrated Responses Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.1 ES ii 1 Consider changes to the model formulation that would improve the model's ability to represent the ongoing evolution of the industry represent the ongoing evolution of renewable industry increases in the penetration of renewables 2.1 ES ii 1 Consider changes to the model formulation that would improve the model's ability to represent the ongoing evolution of the industry represent the ongoing evolution of EF adoption changes in load shapes... [from] electric vehicles 2.1 ES ii 1 Consider changes to the model formulation that would improve the model's ability to represent the ongoing evolution of the industry represent the ongoing evolution of storage industry changes in load shapes... [from] energy storage 2.1 ES ii 1 Consider changes to the model formulation that would improve the model's ability to represent the ongoing evolution of the industry represent the ongoing evolution of state and regional policies state and regional policies 9 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.1 ES ii 1 Consider changes to the model formulation that would improve the model's ability to represent the ongoing evolution of the industry represent the ongoing evolution of changes in LDC revising the intra-annual load segments 2.1 ES ii 1 Consider changes to the model formulation that would improve the model's ability to represent the ongoing evolution of the industry represent the ongoing evolution of modeling for the power sector solving the model chronologically 2.1 ES ii 1 Consider changes to the model formulation that would improve the model's ability to represent the ongoing evolution of the industry represent the ongoing evolution of modeling for the power sector solving a companion model that describes chronological demand and system operation using capacity assumptions from IPM 2.1 ES ii 1 Consider changes to the model formulation that would improve the model's ability to represent the ongoing evolution of the industry represent the ongoing evolution of storage industry richer representation of energy storage 10 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.1 ES ii 1 Consider changes to the model formulation that would improve the model's ability to represent the ongoing evolution of the industry represent the ongoing evolution of market rules incorporating changes in capacity market rules into the model (particularly as they relate to variable renewable energy) 2.2 ES ii 2 Clarify the types of uncertainty that EPA's Platform v6 is capable of handling Clarify the types of uncertainty that are not captured by the model documentation should provide guidance to model users that more clearly articulates the types of uncertainties captured and not captured by the model 2.2 ES ii 2 Clarify the types of uncertainty that EPA's Platform v6 is capable of handling Clarify the types of uncertainty and address uncertainty in a broader manner consider evolution in the model structure to address uncertainty in a broader manner 2.3 ES ii 3 Reconsider coal plant turndown constraints and possible addition of operating reserves Reconsider coal plant turndown constraints to determine if it creates bias in coal operations EPA examine the turndown constraints more closely to determine if they create bias in coal plant operations, especially in scenarios with low gas prices or high renewable generation 2.3 ES ii 3 Reconsider coal plant turndown constraints and possible addition of operating reserves Reconsider coal plant turndown constraints and consider operating reserves as an alternative solution consider whether adding explicit operating reserve requirements in the dispatch would provide a better representation of the impact of high levels of renewable generators on the grid 11 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.4 ES iii 1 Consider incorporating upstream emissions in addition to source- level (power plant) emissions consider including upstream emissions consider including upstream emissions in its reference case as a separately- reported item (so upstream and stack emissions are not combined together) 2.5 ES iii 2 Distinguish between investment decision- making of utility and merchant power plants Distinguish between investment decision- making of utility and merchant power plants Distinguish between investment decision-making of utility and merchant power plants 2.5 ES iii 2 Distinguish between investment decision- making of utility and merchant power plants Distinguish between investment decision- making of utility and merchant power plants evaluate whether a weighted average of existing firms within a power region or some other rule is a reasonable representation of which type of firm is more likely to make an incremental investment 2.6 ES iii 3 Address evolving gas markets where Henry Hub is less central to pricing and where emerging petrochemical production has greater influence Address evolving gas market by describing in the documentation the model process for using GMM [Describe in the documentation the model process for] iterating with the Gas Market Model that generates the natural gas supply curves and basis differentials 12 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.6 ES iii 3 Address evolving gas markets where Henry Hub is less central to pricing and where emerging petrochemical production has greater influence Address evolving gas market by tracking emerging petrochemical sector emerging petrochemical sector in the Appalachian production region is likely to affect regional natural gas pricing in ways that may not be well represented in the gas market model that EPA's Platform v6 relies upon 2.7 ES iii 4 Consider alternatives to the current load duration curves (LDCs) Consider alternatives to the LDC to better account for inter- regional trade [How EPA] aggregates time into LDCs in a way that... creates biases related to the opportunities for inter-regional trade 2.7 ES iii 4 Consider alternatives to the current load duration curves (LDCs) Consider alternatives to the LDC assess the trade-offs between different approaches to aggregating load into LDCs 2.8 ES iv 1 Improve representation of behind-the-meter generation Improve representation of behind-the-meter generation capture policies that encourage behind- the-meter generation... [beyond] represented as a change in demand 2.9 ES iv 2 Increase transparency of retail pricing results Increase transparency of retail pricing results When EPA uses the RPM, we recommend that the reporting of retail rates be broken into component parts so that the user can understand which elements are endogenous to the model and which are dominated by external sources and assumptions 13 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.10 ES iv 3 Consider improvements in the representation of various policy mechanisms Improve representation of policy mechanisms such as dynamic allocation of emission credits dynamic allocations within various forms of emissions trading programs such as output-based allocation under cap and trade and a clean energy standard 2.10 ES iv 3 Consider improvements in the representation of various policy mechanisms Improve representation of policy mechanisms such as EE expenditures and carbon pricing expenditures on energy efficiency that are linked to revenue from carbon pricing 2.10 ES iv 3 Consider improvements in the representation of various policy mechanisms Improve representation of policy mechanisms such as flexible demand ability to represent flexible demand that may be encouraged at the retail level to promote the integration of variable renewable energy 2.11 ES iv 4 More thorough citing of sources and expanded explanations throughout the EPA Reference Case v6 documentation Update the documentation to include the development of the load segments development of load segments 2.11 ES iv 4 More thorough citing of sources and expanded explanations throughout the EPA Reference Case v6 documentation Update the documentation to include treatment of interregional trade treatment of interregional trading 14 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.11 ES iv 4 More thorough citing of sources and expanded explanations throughout the EPA Reference Case v6 documentation Update the documentation to include aggregation of model plants aggregation of individual plants to model plants 2.11 ES iv 4 More thorough citing of sources and expanded explanations throughout the EPA Reference Case v6 documentation Update the documentation to include more detail for the retail price model retail pricing model 2.1 2 2 3 Uncertainty periodically review the model to determine whether model structure should be modified or complemented with other modeling capabilities EPA should periodically review the model to determine whether EPA's application of IPM model structure should be modified or complemented with other modeling capabilities This is part of routine model development process. 2.1 2 3 3 Chronological modeling restructure IPM as a chronological model restructuring IPM as a chronological model Possibility of making IPM a chronological model is a significant task and may be investigated. However, there is segmental output information that can be used. In addition, a production costing model such as PROMOD can be used in conjunction with IPM when required. 15 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.1 2 3 3 Chronological modeling develop a companion short-run chronological model of system operation develop a companion short-run chronological model of system operation that would enable comparing the outcomes of the model's load duration curves with a more realistic characterization of the temporal nature of demand ICF has run GE MAPS for EPA, while performing analyses in support of the MATS rulemaking, for example. ICF runs PROMOD production costing model routinely and could setup such a framework if so desired by EPA. PROMOD is a chronological model that can be run annually and does not make investment decisions. ICF runs PROMOD either at the interconnect level or at a subset of an interconnect level. 2.1/2.10 2 3 4 Demand response incorporate demand response consider incorporating additional factors into the model's formulation of demand response [including]... changes in total electricity consumption in response to changes in price 2.1/2.10 2 3 4 Demand response incorporate demand alternatives/substitutio ns to electricity consider incorporating additional factors into the model's formulation of demand response [including]... substitution between electricity and other forms of energy consumption This is not done through model formulation. Gas power plants are a form of substitution between electricity and other forms of energy consumption. A similar approach can be evaluated to estimate a kWh to Btu relationship and can be used in IPM. 2.1/2.10 2 3 4 Demand response incorporate changes in the load shapes consider incorporating additional factors into the model's formulation of demand response [including]... changes in the load shapes that will be observed and projected under different scenarios This is not done through model formulation but load shapes are adjusted based on scenarios evaluated. 16 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.1/2.10 2 3 4 Demand response incorporate variations in supply-side short run marginal costs (due to increased VRE) consider incorporating additional factors into the model's formulation of demand response [including]... variations in supply-side short run marginal costs (due to increased penetration of variable renewable energy) In addition to the battery approach, we could also utilize the DSM/EE option functionality. NREL simulates flexible demand/DR with a 100% efficient battery that is time constrained. We can adopt a similar approach in IPM to model DR impacts under changing pricing patterns. 2.1/2.10 2 3 4 Demand response incorporate retail TOD pricing or retail pricing linked to RE/clean energy consider incorporating additional factors into the model's formulation of demand response [including]... potentially demand side retail prices that vary by time of day or are linked to resource availability directly require cross-time-period analysis of electricity demand The endogenous demand response capability allows us to estimate demand response by load segment. In v6, we use TOD based load segments and hence demand response can indeed be linked to TOD. Due to the TOD based load segment structure, the generation from solar units, for example, accounts for TOD. IPM is a wholesale price model, which makes linking to retail pricing very challenging. We can make a simplification and allow demand to move in response to wholesale pricing. 2.7 2 3 5 Climate change considerations periodically evaluate the model with respect to weather normalization of key data inputs recommend that EPA periodically evaluate the model with respect to weather normalization of key data inputs This has been evaluated in the past and we will continue to do so. 2.7 2 3 5 Climate change considerations represent climate change impacts in generation consider a more explicit representation of climate change in the model's specification of generation On-going as scenario study. 17 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.7 2 3 5 Climate change considerations represent climate change impacts in transmission consider a more explicit representation of climate change in the model's specification of... transmission On-going as scenario study 2.7 2 3 5 Climate change considerations represent climate change impacts in load consider a more explicit representation of climate change in the model's specification of... load assumptions On-going as scenario study 2.1 2 4 1 Transmission capacity regularly revisit implementation of transmission regularly revisit and, as appropriate, revise EPA's implementation of transmission outcomes and the assumptions that shape anticipated future transmission siting decisions Transmission assumptions are regularly updated in v6. 2.1 2 4 2 Storage model energy storage, including end-use storage rigorous treatment of energy storage within the formulation of the model, particularly with respect to the opportunity to schedule demand and achieve thermal and battery storage for end-uses Storage assumptions and parametrization are regularly visited and updated as needed in v6. 2.1 2 4 3 Capacity markets represent resource adequacy as they are structured representations of resource adequacy requirements, as opposed to modeling a generation reserve requirement We will continue to monitor relevant market developments and make appropriate changes. The introduction of the operating reserve constraint begins to approximate this constraint. 2.11 2 4 4 Additional operational constraint include operating reserve requirements include operating reserve requirements This is implemented. See Section 3.7 18 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.2 2 5 1 decision-maker uncertainty evaluate model results in an option value framework improve the way they use model results by explicitly considering them in an option value framework EPA has previously released and plans to continue to release a range of scenarios that outline a representative cone of outcomes. These scenarios estimate the impact of changing natural gas prices, renewable technology costs, and demand. 2.11 2 5 2 runtime restrictions publish runtime restriction requirements any runtime restrictions required by the EPA should be made explicit and used to appropriately structure EPA's application of IPM to the task at hand This is a pragmatic preference rather than restrictions. 2.10 3a 6 4 Demand include electricity price response in policy and sensitivity cases where prices vary significantly We view the use of fixed electricity demands without response to electricity prices as problematic in policy and sensitivity cases where prices vary significantly from the Reference Case. We recommend that EPA use this feature when analyzing policy scenarios that have significant price impacts (perhaps roughly greater than 20% variation in wholesale prices). The capacity to perform demand response already exists. EPA has used IPM's demand response functionality while conducting carbon policy analyses in the past. 2.10 3a 6 4 Demand publish in more detail how the elasticity is applied when used recommend that the EPA Reference Case v6 documentation describe in more detail how the elasticity is applied when used When a certain parameter/capability is used, they are always documented in the corresponding side/alternative case or policy case. 19 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.1 3a 7 2 Demand develop better load shapes over time a more systematic way is needed to develop load shapes over time rather than just using a single metric of load factors from ES&D or the AEO to shift the curves Usually, load factors are the only piece of data that is available from AEO and NERC projections. If future year load shapes that underlie AEO or NERC demand projections are available (for the use in side cases possibly), then we can develop a methodology to use those load shapes. 2.7 3a 7 4 Demand evaluate using data for a single year vs. a multi-year average or weather normalization would be more appropriate recommend that EPA consider whether using data for a single year creates any biases and whether a multi-year average or weather normalization would be more appropriate Both approaches could have pros and cons for the various EPA applications (including AQM). Using a multi-year average could result in load shapes that are very different from the original load shapes and is not considered at this time. 2.11 3a 7 4 Overall have consistency among AEO vintages used for data assumptions have consistency among AEO vintages used for data assumptions This is a goal but is hard to implement in practice as not all parameters are available or updated in any given year. AEO or other sources, we strive to incorporate most recent data available with significance with every update. Inevitably, not all data categories will reflect the same calendar year or vintage in any given IPM version. 2.3 3a 8 3 Dispatch allow steam plants to shut down for lowest load time segments when they run at full capacity during the peak segment it appears that steam plants would not be able to shut down for any time segments (such as segments with lowest load) if they are expected to run at full capacity during the peak segment. Our turndown approach is an aspect of the model that we have revisited regularly and expect to continue to do so in the future. Turndown constraints can be reconfigured to allow coal plants to shut down at time of lowest load. However, this change should be considered with care as to disallow overoptimization through cycling. 20 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.3 3a 8 3 Dispatch, turndown rate publish information on dispatch by time segment output files from EPA's Platform v6 do not include information on dispatch by time segment Dispatch by time segment is not available to either the public or EPA 2.3 3a 8 4 Dispatch, turndown rate develop turndown rates based on technical operational considerations rather than historical economic circumstances the turndown constraints vary considerably by unit, and some are as high as 80% with most of them between 40% and 60%. Because these values are based on historical operations rather than current or projected engineering considerations, they may reflect historical economic circumstances that may not apply in the future The turndown assumptions can be updated based on current data to reflect the current operating behavior of coal plants. Our turndown approach is an aspect of the model that we have revisited regularly and expect to continue to do so in the future. In addition, if the low gas price environment persists, then the assumptions could also be relaxed (turndown targets lowered) to reflect increased cycling. 2.3 3a 8 5 Dispatch, turndown rate examine the turndown constraints for bias in coal scenarios with low gas prices or high renewables recommend that EPA examine the turndown constraints more closely to determine if they create bias in coal plant operations, especially in scenarios with low gas prices or high renewable generation. We are currently working on this. 2.1 3a 9 1 Dispatch add operating reserve requirements consider whether adding explicit operating reserve requirements in the dispatch would provide a better representation of the impact of high levels of variable renewable energy This feature is implemented in the current platform. See Section 3.7 21 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.1? 3a 9 2 Dispatch analyze historical generation versus the model patterns by time period for hydro consider analyzing historical generation patterns versus the model patterns by time period to assess whether EPA's application of IPM is significantly overoptimizing hydro generation The concern about overoptimization is primarily related to run-of-river hydro units that do not have storage. In the current update, we have aggregated run- of-river hydro units separately and then model their generation through a generation profile based on recent history. See Section 3.5.2 2.1 3a 9 4 Transmission update transmission loss assumptions The application of a 2.4% transmission loss to each interregional transfer strikes us as high for the Eastern Interconnect, especially given the size of the model regions and hence relatively short distances for many of these transfers. For example, in NEMS a 2% loss factor is assumed for transfers between regions and there are fewer regions. We are currently evaluating this recommendation and can easily update/implement. 2.1 3a 9 5 Transmission perform sensitivity cases where transmission capacity is added performing sensitivity cases in which additional transmission capacity is added exogenously The recommendation is to perform sensitivity analyses where we exogenously add transmission capacity. We have incorporated endogenous transmission builds, this sensitivity analysis may be unnecessary. 22 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.3 3a 10 3 Capacity Expansion - Setting the Capacity Targets add reserve ramping constraint application of IPM may need to be modified to reflect other capacity requirements beyond a simple reserve requirement and declining capacity values for variable renewable capacity. For example, it may be appropriate to add an additional reserve constraint requiring a percentage of capacity is capable of meeting a certain ramping capability We monitor the electricity markets continuously and make updates to the model to be consistent with changes in the markets. As the resource mix changes and requirements like California's or other mechanisms become more common, the model will be updated accordingly to account for the changing dynamics. A step in the direction is the incorporation of the operating reserves constraints in v6. We do not believe additional reserve products are necessary for the scenarios we are currently pursuing but will continue to evaluate this moving forward. 2.3 3a 11 2 Capacity Expansion - Setting the Capacity Targets modify the short-term supply cost adders for capacity expansion The cost adders to capacity expansion costs when expansion is rapid... are quite steep with roughly a 45% cost penalty on the second step. It might be better to have smaller initial steps with smaller cost penalties for the second step. These constraints are applied to all new plants for the 2021-2035 run years. However, they usually get activated for solar and wind builds in runs having stringent RPS/CES standards. In EPA v6, the short-term capital cost adders step widths are from AEO. However, the approaches differ from AEO in the sense that in IPM we are not updating the step widths to account for the IPM builds. 2.3 3a 12 2 Capacity Expansion - Rating the Capacity of Alternative Resources update the solar capacity credits to latest AEO if the solar capacity credits are still benchmarked to those of the AEO2017, as indicated in the documentation, this should be revisited because the AEO methodology and resulting credits for solar have changed considerably since the AEO2017 was published Solar capacity credits are no longer being benchmarked with the AEO version. See Section 4.4.5 23 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.5 3a 12 2 Capacity Expansion - Rating the Capacity of Alternative Resources examine capacity market rules and consider the implications of non- performance risk we recommend that EPA examine the capacity credit methodology as system operators change their capacity market rules and consider the implications of non-performance risk This is standard practice, although there is a balance between chasing today's rules versus the 'true' value, as understood by the model. We will continue to monitor the changing rules. 2.5 3a 12 3 Capacity Expansion - Rating the Capacity of Alternative Resources account for demand response and energy efficiency in capacity markets worth noting that demand response and energy efficiency are providing non- trivial shares of total capacity and even larger shares of new capacity in many capacity markets We are continuing to plan for how to incorporate these resources into our modeling projections. 2.1 3b 13 1 Storage incorporate additional storage technologies into the model recommends that EPA consider incorporating additional storage technologies into the model Work is ongoing. 2.1 3b 13 1 Storage regularly revisit energy storage cost, performance, and market assumptions because the technologies, cost structure, performance, operating strategies, market rules, and regulations related to storage are rapidly changing, EPA may need to regularly revisit the model's representation of storage Ongoing work. We routinely consider this for all technologies including storage. 2.1 3b 13 2 Storage update energy storage technologies, costs, and operational assumptions regionally consider regional variations in energy storage technology, costs, and operations In the current version our implementation has regional variations of cost and capacity credit. See section 4.4.5 24 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.1 3b 13 3 Nuclear consider more flexible nuclear dispatch consider more flexible nuclear dispatch in EPA's application of IPM Nuclear dispatch is already flexible and is not hardwired. The reviewers appear to suggest that we model nuclear O&M costs as a function of the level of dispatch. EPA is participating in inter-agency workgroups to research and implement updates in modeling as needed. 2.1 3b 13 4 Heat Rates vary heat rates by season and over time recommend that the heat rates of generating units in EPA's application of IPM vary by season and perhaps over time Heat rates are less impacted than capacity by change in temperature. This issue is less important as compared with the impact on capacity. We considered this in the past but have not found value for our applications so far. It might be interesting to consider grid reliability / reserves in light of units that might not be able to get the cooling water they need and therefore have to limit generation. But that would be either more episodic and hard to reflect in a long term capacity expansion model or would be considered as a side case evaluating warming impacts. 2.1 3b 14 2 Heat Rates vary the available capacity of a given unit by season recommend that EPA's application of IPM vary the generation capacity of a given unit by season, or add text to the documentation explaining why seasonal variation is not necessary This primarily impacts CT and CC units. The primary impact is we might be underestimating generation potential in the winter season. We will evaluate the LOE required to implement this feature in IPM. 2.7 3b 14 3 Generation Assumptions update generation over time to account for climate change consider adjusting the EPA's Reference Case generation assumptions over time to account for climate change This is a scenario case. 25 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.1 3b 14 4 Generation Assumptions vary generation assumptions by market/regulatory environment consider varying some generation assumptions by market/regulatory environment For existing units, EPA uses unit specific heat rates, emission rates, and technology assumptions. In addition, where possible, unit and state level emission regulations are also modeled in detail. Some of the other assumptions such as unit level availabilities can be used if such data is available. 2.4 3c 15 1 Assignment and Scope of Emissions Factors document upstream air emissions in fuels prices or in generator marginal costs consider documenting how upstream air emissions are reflected in fuels prices or in generator marginal costs within its Power Sector Modeling Platform Upstream air emissions can be estimated through post processing. However, the challenge will be in defining the scope of what constitutes upstream and then developing the associated emission factors. 2.11 3c 15 3 Emission Control Options periodically review the technology options for emissions control suggest that EPA periodically review the technology options for emissions control in EPA's application of IPM to determine if this portion of the model could be made simpler with the reduction of emissions control technologies from which modeled plants can choose This is always considered with major updates. 26 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.11 3c 15 4 Emission Control Costs publish the raw engineering data used to develop the unit cost values Chapter 5 of the EPA platform v6 documentation includes unit cost estimates derived from the Sargent and Lundy study but does not provide a formal citation for the study or the raw engineering data used to develop the unit cost values. Publication of these data would make the cost figures used by EPA's Platform v6 more transparent than they are currently. We recommend that EPA consider the costs and benefits of this additional data transparency as weighed against the benefits of being able to access and use proprietary data, which in some cases may be more granular or up-to-date than data existing in the public domain. As of 2022, we are working with S&L and in the process of updating reports. 2.11 3c 16 1 Emission Control Costs periodically compare emissions control cost data with publicly available data EPA should also periodically compare its emissions control cost data with relevant information that exists in the public domain, such as the Integrated Environmental Control Model (IECM) developed by Carnegie-Mellon University. We will consider this. 27 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.11 3c 16 2 Emission Control Costs include natural gas combined cycle plants with carbon capture as a capacity option the option to choose natural gas combined cycle plants with carbon capture appears to be turned off within the model... we recommend that EPA restore this technology option under relevant analyses. These options are currently back in v6. 2.11 3c 16 3 Emission Control Costs document interactions between IPM and GeoCAT recommend that EPA incorporate additional specificity... in the documentation... [relating to] any interactions between IPM and GeoCAT. IPM and GeoCAT are never iterated together, nor there are any interactions between the two tools. Updated documentation provides additional detail. Please see Section 6.2 2.11 3c 16 4 Emission Control Costs re-evaluate the oil price assumption related to EOR and the C02 storage cost curves should re-evaluate the oil price assumption related to EOR... [and] re- evaluate the C02 storage cost curves On-going work, we update oil prices regularly. 2.11 3c 16 5 Emission Control Costs remove C02 transport pipeline economies of scale and document model approach Some elements of the C02 transport model are also not clear, particularly related to the economies of scale in pipeline transportation. The method described in Section 6.3 of the documentation appears to assume that C02 sources that are transporting C02 over longer distances for long-term geologic sequestration are taking advantage of some undescribed scale economies in the form of capacity sharing in C02 pipelines. In the latest reference case, EPA is no longer accounting for scale economies while estimating the cost of C02 transportation. Please see Section 6.3 28 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.5 3d 17 5 Power Sector Finances and Economics add equation and reference for the capital charge rate The description of the calculation of the capital charge rate would be made substantially more clear with an equation. In particular, whether EPA's Platform v6 uses the common "short cut" version of the capital charge rate (Stauffer, 2006) could be made more clear The reviewers indicated a desire to have more information on the capital charge rate and to ensure that the concerns of Stauffer (2006) are not affecting the capital charge rate. Stauffer, a founder of ICF, indicates that there could be confusion between real and nominal capital charge rates and input parameters, which is not a problem. He may have indicated other concerns, but we have not reviewed his 2006 article in detail. We could review the article and determine next steps, if any. 2.5 3d 17 6 Power Sector Finances and Economics describe the debt life versus the asset life recommend an explicit statement in the documentation describing the debt life versus the asset life. In general, the debt life is shorter than the book life. This is based on the tenure of debt, especially in the IPP sector. See Section 10.10.2 2.5 3d 17 7 Power Sector Finances and Economics update assumptions on debt-to-equity ratios and the cost of merchant debt assumptions on debt-to-equity ratios and the cost of merchant debt, which in the market environment at the time of this writing may be high. EPA's Platform v6 uses a value of 7.2%, but one of the stated data sources for debt-to-equity ratios currently suggests that the cost of debt may be substantially lower.This is a data point that we suggest be updated in future revisions of EPA's Platform Financial assumptions are regularly updated, and D:E ratios are one of the metrics we closely track. 29 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) 2.5 3d 18 2 Power Sector Finances and Economics use a different WACC formula with a constant leverage ratio [Consider using a different WACC formula other than Hamada] Brealy and Myers (2011) point out that a constant leverage ratio is a more realistic assumption The Hamada equation is used to adjust for differences in the reported debt to equity structure and the targeted structure. The reviewers point to a source that they assert favors a constant leverage assumption. In the case of IPPs, there has been very high debt shares, large amounts of financial distress, especially in some periods. Accordingly, we believe this unusual situation warranted adjustments to more sustainable debt levels. 30 ------- Power Sector Finances and Economics account for differentiated risk appetite of utility versus merchant investment costs of capital consider addressing this differentiated risk appetite [of utility versus merchant investment costs of capital] in future versions of EPA's modeling platform. One possibility would be to introduce different hurdle rates for different investor decision-makers and effectively split investment decisions within EPA's application of IPM. While new build financing assumptions are not differentiated based on utility/merchant categorization, retrofits do include this differentiation. This in turn results in more realistic retrofit/retirement decisions for the existing fleet. Within a cost minimizing framework assuming differentiated financing for new builds would result in possible over-builds and under-builds because of effective differences in levelized costs. Based on prior runs, these builds may be unrealistic in their concentrations. Instead, IPM assumes a weighted average financing charge for all new builds of a given technology type. In the peer review, the issue that was identified as the most important is the use of a weighted average cost of capital of regulated utilities and merchant powerplants. In nominal terms, the WACCs of utilities are 4.9% versus 6.7% for IPPs; the weighted average is 5.6%. The latest modeling bases its financial assumptions on a 60:40 utility: merchant weighting. The 60:40 weighting approximately equals the 2015-2019 average for renewable and thermal additions in the US. The concern is that the use of the average may not adequately characterize the financing costs. The peer review suggests designating some regions as regulated utility and others as merchant IPP. The decision to use an average was based in part on the uncertainty about the structure in the long term. The approach 31 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) also reflects the concern that there could be an unrealistic skewing of regional results. Namely, low capital cost regions would disproportionately make capital investments including disproportionately investing for export to high capital cost regions. 32 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.11 3d 19 4 Power Sector Finances and Economics update documentation on tax credits for wind energy The documentation could also explain more clearly how tax credits for wind energy are treated. The tax credits for both PTC and ITC are modeled as a reduction in the levelized capital costs of those resources. We provided better documentation. 2.11 3e 20 7 Coal update documentation on coal mine closures there is not enough information provided in the documentation to discern whether coal mine closures are exogenous or endogenous within the model and the degree to which closures in the model reflect recent changes in regional fuel supplies 2.11 3e 21 2 Coal evaluate differences between ElA's and EPA's coal prices/supply to ensure consistence across other sector demands Because the AEO2017 view of coal prices and supplies reflected in export and non-electric sector demand may not match EPA's view of coal prices and supply, the projections of other sector demands and exports may be inconsistent with power plant demand. We acknowledge that there may be inconsistencies in our current approach. There will always be seams between IPM and AEO, we will continue to investigate to limit them and their impact. 2.11 3e 21 2 Coal keep the base projections for coal up to date consider keeping the base projections up to date (using AEO2018 (or AE02020 if an update is done) versus AEO2017) This is always considered and usually implemented at every update. 33 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.6 3e 21 4 Natural Gas run the GMM and IPM iteratively when necessary One disadvantage of this static curve approach is that it treats prices in different years as independent in EPA's Platform v6 context, rather than as a function of cumulative production that may vary by EPA scenario, even though the underlying curves were developed with that consideration by GMM. This can be addressed by re-estimating the curves by running the models iteratively, as in the Reference Case set- up, when it seems necessary due to significant changes in gas demand. While IPM's endogenous gas model can address this issue, an alternate approach is to regenerate the gas supply curves whenever there is significant divergence in the gas demand relative to that in the reference case. An initial Ref Case is set up by iterating between GMM and IPM. But we do check when/if the static curves are no longer appropriate for a given case. 34 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.6 3e 21 4 Natural Gas publish methodology for deriving gas supply curves recommend that EPA publish more information about the methodology for deriving the curves The slopes of the gas supply curves are derived based on ICF's assessment of change in natural gas prices historically based on several parameters like rig count, production, etc. and certain assumptions of the natural gas resource base moving forward to determine the short-term and long-term supply elasticity that feed into the supply curves. The way the supply curves are built is that they are more elastic over time compared to the short-term elasticity as the resource base can respond to price changes. In other words, the short-term elasticity is higher than the long-term elasticity. More elaborate documentation is provided. See Section 8.2.1 2.6 3e 22 1 Natural Gas describe how LNG exports are determined It is also not clear the degree to which LNG exports, both export capacity expansion and utilization, are determined endogenously versus predetermined. ICF assumption of LNG exports for EPA base case is exogenous; however, GMM has the capability to change the LNG exports over time in response to change in natural gas prices. More elaborate documentation is provided. See Section 8.3.5 35 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.6 3e 22 2 Natural Gas update seasonal gas price differentials across scenarios The GMM also serves as the basis for seasonal price differentials that capture the difference between the Henry Hub price and gas prices in model regions. While these differentials are endogenously projected by GMM with variable costs as a function of pipeline throughput and pipeline capacity expansions, they are fixed in a given scenario context. Under scenarios with major changes in natural gas demand regionally, the change in basis can be captured by GMM based on the pipeline infrastructure build-out necessary to support the demand growth under that particular scenario. However, this requires iterations between GMM and IPM. 2.6 3e 22 3 Natural Gas include petrochemical sector demand in the GMM Within the GMM, econometric equations project other sectoral regional gas demands. The elasticity of these demands presumably impacts the overall supply elasticity of gas to the power sector. We note, however, that an emerging petrochemical sector in the Appalachian production region is likely to affect regional natural gas pricing in ways that may not be well represented in the gas market model. GMM base case forecast for EPA base case projects significant growth in natural gas production from the Marcellus and Utica region from 2019 through 2050 (about 25 Billion Cubic Feet per Day) which does account for growth in NGL demand and exports from the Appalachia region exogenously. 36 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.6 3e 22 5 Other Fuels ensure consistency across oil price assumptions between IPM and GMM oil prices are treated inconsistently across EPA's Platform v6 and ICF's GMM platforms. While oil prices for power generation are based on the AEO2017, diesel fuel prices used in developing rail rates for coal are from the AEO2016. At the same time, oil prices used in the GMM, which are used to determine fuel switching in the industrial sector, are quite different from those from the AEO that are used in the rest of EPA's Platform v6 In the future reference cases, DFO and RFO fuel prices will be made consistent with the crude oil price projections used in the GMM. 2.1 3e 23 4 Renewable Resources apply generic transmission costs to all units including wind and solar It would seem more consistent for the generic transmission network costs to be applied to all units rather than exempting wind and solar. Otherwise this provides a bias towards wind and solar PV development These costs are currently applied in the v6. Documentation incorporated better explanation of distance to transmission vs. generic transmission network costs, aligning NRELand AEO approach as much as possible. Please see Section 4.4.2 2.7 3f 24 5 Regional and Temporal Resolution evaluate differences in peak load and peak net-load Load aggregation can dilute outcomes that are concentrated into a small number of hours... EPA's Platform v6 addresses this well by specifying a very high peak load segment, representing only 1% of all hours. However, key transient outcomes in the system may not be limited to only peak hours, particularly with extensive adoption of renewable energy resources. We will investigate this in the near future. 37 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.7 3f 24 6 Regional and Temporal Resolution evaluate load aggregation implications regarding inter-regional trade Load aggregation necessitates difficult modeling choices regarding inter- regional trade... diagnose the full impacts of this implementation. Our intuition is that it constitutes a hidden penalty on trade between regions; in order to export during hours in which trade is beneficial, the model may be forcing additional trade in hours in which trade is not beneficial. If true, this means the model will bias downward trade between regions. The intuition is correct. There could be hours when power might be exported during hours when it might not be needed. Additional analysis is not required to confirm this assessment. 2.7 3f 26 4 Regional and Temporal Resolution document interregional trade One additional comment on this point is that the documentation does not describe this aspect of interregional trade.A description with an accompanying example would help promote understanding of this feature of the model 2.7 3f 26 5 Regional and Temporal Resolution evaluate aggregating load over a larger geography Geographic aggregation involves trade- offs between accuracy over time vs. space... One way to reduce the problems identified above [related to inter-regional trade] is to aggregate over larger geography. We will investigate this in the near future. 38 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.7 3f 27 1 Regional and Temporal Resolution evaluate the model's ability to represent regulations focused on peak or episodic emissions Load aggregation limits modeling of inter-temporal constraints... For regulations that concern total output or emissions from a power plant during a season or year, the aggregation is likely relatively benign. However, for the purposes of assessing any environmental regulations focused on peak emissions, episodic emissions, or emissions intensity, the aggregation could be more problematic. This will be considered in the future if such policy design is necessary. 2.7 3f 27 4 Regional and Temporal Resolution Publish model outputs by load-segment Publish more output details: Currently model outputs are not broken out by load-segment. This additional output detail may allow stakeholders to better judge the relative impacts of the various aggregation assumptions in a given policy context Dispatch by time segment is not available to either the public or EPA. Duplicate with row 55 2.7 3f 27 5 Regional and Temporal Resolution evaluate tradeoffs between regional and temporal aggregations Investigate the Time vs. Geography Trade-off: It is possible that the goals of the model may be better implemented with more temporal resolution and that this could be aided by less geographic resolution 2.7 3f 28 2 Regional and Temporal Resolution evaluate grouping hours first by time of day and then by load segment Consider grouping hours first by time of day and then by load segment, instead of the other way around. The current approach was implemented for simplicity. The alternate approach can also be implemented. Such an approach will eliminate the possibility of load segments having zero hours. 39 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.7 3f 28 3 Regional and Temporal Resolution evaluate grouping hours first by load segment for a whole interconnection and then by region Investigate the implications of grouping hours first by load segment for a whole interconnection and then by region... group hours by their interconnection- wide load level and then subdivide into regions. For example, the top 37 summer hours would be chosen from the hours with the highest total load across the WECC. We will investigate this in the near future. 2.7 3f 28 4 Regional and Temporal Resolution evaluate grouping hours into time-of-day blocks (e.g., 4 hours) and model them sequentially Represent time as a sequence of "model hours" or "model days." ... One alternative would be to group hours into time-of-day blocks (e.g., 4 hours) and model them sequentially, allowing for better representation of some inter- temporal constraints, inter-regional trade, and probably renewable energy and storage output. One such "model week" per season could capture a peak day and other important load characteristics. A sequential hour approach may not work in models that are based on a load duration curve. Needs further evaluation. 2.7 3f 28 5 Regional and Temporal Resolution evaluate grouping hours into time-of-day blocks for typical weekdays and weekend days with a preservation of peak loads through a peak- day or other method Represent time as a sequence of "model hours" or "model days." ... Another alternative would be to group hours into time-of-day blocks for typical weekdays and weekend days with a preservation of peak loads through a peak-day or other method. IPM has the capability to separate load segments based on weekday and weekend days in addition to TOD. We have performed some test runs. This functionality can double the number of load segments. 2.7 3f 28 6 Regional and Temporal Resolution link the model results with a dispatch model Run the output of a model scenario through a more detailed dispatch model. 40 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.7 3f 29 2 Regional and Temporal Resolution model fewer future years to compensate for more detail within a given model year Model fewer future years. One way to compensate for more detail within a given model year would be to run fewer model years. Seven, instead of eight, explicit model years would reduce the number of demand segments (region + hours). Outputs serve multiple purposes of EPA applications and we do consider output years carefully. The future run years in five-year increments are also important due to significant reductions in new unit costs and the start of several state level clean energy standards. 2.5 3f 29 3 Regional and Temporal Resolution evaluate using a higher discount rate in the objective function Consider the impact of the discount rate in the objective function... An even higher discount rate may be appropriate to minimize the impact of out-year decision making on model outcomes We use discount rates based on our financial analyses. Further thought needs to be given in regards to use of discount rates whose primary function is to reduce the impact of out years on model outcomes. Previously we used a post- processing tool to change policy cost NPV with different discount rate, not in the objective function, but it is a tool for evaluation. 2.10 3g 29 5 emerging policy and industry issues to consider model dynamic allocation of emissions allowances in cap and trade programs Although trading programs are represented well in EPA's Platform v6, the documentation indicates that the model does not include any explicit assumptions on the allocation of emission allowances among model plants under any of the programs. An element of cap and trade that may be challenging to model is dynamic allocation of emissions allowances that maintains the emissions cap. IPM has the capability to model output- based allowance allocations methods and has performed such analyses in the past. However, there may not be an immediate need for this functionality. The cap and trade programs promulgated by EPA do not account for this policy lever; it is not one of the central policy parameters under discussion, and is not utilized anywhere at the moment (including RGGI). 41 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.10 3g 30 2 emerging policy and industry issues to consider model clean energy standards with effective emissions targets that adjust over time in response to the quantity of production challenges arise in representing clean energy standards, which are emissions intensity standards with effective emissions targets that adjust over time in response to the quantity of production. These constraints can be approximately modeled through a set of two constraints in IPM. Constraint 1 can model the emission intensity standards through Ibs/MWh constraints and Constraint 2 can model the effective emissions targets through cap based constraints. We are currently exploring issues related to CES policy design. 2.10 3g 30 3 emerging policy and industry issues to consider model dynamic allocation of emissions allowances in cap and trade programs Other challenging elements in representing power sector environmental policies include dynamic adjustments to emissions budgets based on the prevailing price in an auction, as illustrated by the emissions containment reserve in the Regional Greenhouse Gas Initiative 2.10 3g 30 5 emerging policy and industry issues to consider document the interactions between electricity sales/transmission and renewable energy credit markets there is an interaction between electricity sales and transmission, and renewable energy credit markets. Although we understand that this interaction is embodied in the model, we have not seen it represented in previous exercises of the model or described in the documentation IPM solves for the power, fuels, and environmental markets simultaneously. The interaction among these markets and within these markets are modeled endogenously in an integrated manner. We provided further detail in documentation. Please see Section 2.3.10 42 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.10 3g 31 1 emerging policy and industry issues to consider evaluate leakage risk between RPS policies and carbon pricing policies Policies such as carbon pricing that promote an increase in renewable generation in one region could precipitate a decrease in renewable generation in another region if renewable energy credits become available in the region introducing carbon pricing that can be used for compliance with renewable portfolio standards in other jurisdictions. Such an analysis may only be relevant when EPA is designing or promulgating any of these policies. When necessary, leakage issues will be addressed in policy contexts in new analyses or rulemakings where this is relevant. 2.10 3g 31 2 emerging policy and industry issues to consider evaluate impact of the New Source Review in constraining existing generation and limiting new investments Some prescriptive policies such as New Source Review constrain the utilization of an existing generating unit and limit investments in new units in a geographic area. The Agency should pay special attention to this in evaluating its modeling As part of the flat file generation process, emissions from new units are not assigned to areas which are non-compliant. This approach can work in instances where only a subset of an IPM region is affected by these requirements. However, if an entire region is affected by these restrictions, then we may need to disallow the build of such units in those regions. 2.10 3g 31 3 emerging policy and industry issues to consider model state level policies that encourage behind-the-meter generation The model seems to capture policies that affect the bulk power system - but does not seem to capture state level policies that encourage behind-the- meter generation except represented as a change in demand. The model could be developed and enhanced to do this kind of analyses, however this is not our priority currently. We can address this in other ways using a more simplified approach. This is something we would model separately and provide it as an input into IPM. 43 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.10 3g 31 4 emerging policy and industry issues to consider account for MOPR rules impact on nuclear and capacity market compliance if EPA models nuclear generation incentives from state-level zero- emission-credit (ZEC) policies, it would also need to evaluate whether those nuclear plans should count towards satisfying a regional capacity constraint. Under final MOPR rules, which are as of yet to be determined, such nuclear capacity may not be part of capacity market compliance Once the final rules are known, such units can be provided with zero capacity credit. 2.10 3g 32 2 emerging policy and industry issues to consider improve the representation of the C02 emissions rate for imports to California one last finding pertains to the representation of the C02 emissions rate for imports to California, at 0.428 MT/MWh... A careful solution to this could be found through iteration, solving the model twice varying the level of demand in California in order to identify the marginal resource providing power to the state and region, but this may require additional Agency resources. The approach implemented was a tradeoff to minimize complexity. Potential approaches can be investigated to better represent AB 32. One potential solution is to focus more on the recent CA clean energy and RE requirements. However, it's not clear to identify a good path towards modeling imports into CA. We will continue to work on the methods for how to improve upon our current approach. 2.9 3h 33 1 Retail price estimates document the purpose of the NUG adder in RPM While it is not obvious that the capital costs of a merchant NUG would be directly passed on to retail rates, we assume the NUG adder is included because these costs are captured in long-term contracts between the generator and the local load-serving entity (but this is not explained in the documentation) We will include this in the documentation. 44 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.9 3h 35 1 Retail price estimates document the purpose of the NUG adder in RPM The general structure of the generation pricing formulas seems appropriate, but the purpose and magnitude of elements, such as the NUG adder, should be better explained. We will provide better documentation 2.9 3h 35 2 Retail price estimates define the difference between competitive vs. regulated regions The logic behind the definition of competitive vs. regulated regions is unclear. There are many possible definitions of "regulated" and "competitive" and the RPM utilizes definitions from ElA's Annual Energy Outlook for its assignments of regions to these categories. This may not be the best definition for this application. We will provide better documentation 2.9 3h 35 4 Retail price estimates publish more of RPM results and their components Based on the above comments, we recommend that EPA improve transparency of the RPM results and their components... One suggestion would either be a table or stacked bar chart detailing not just the total rate (or change in rate) but also the components that make up that total. Most of these details are available but take considerable effort to put together. We consider RPM as a first order price generation tool. It is also used more for estimating the change in prices rather the absolute level of prices. Providing retail price components might be confusing and a digression. Provided better documentation and disaggregated impacts. 2.9 3h 73 1 Retail price estimates define the difference between competitive vs. regulated regions EPA should evaluate and articulate the purpose of distinguishing between competitive and regulated regions 45 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.9 3h 37 2 Retail price estimates consider regression analysis for estimating the retail rate Consider a simpler retail price formula based upon regression analysis of the relationship between generation costs and retail rates over time. The purpose of the RPM is to measure the impact of a policy on prices. 2.2 4 38 4 non-parametric uncertainty show how behavior may change or may depart from expected net present value maximization in the presence of uncertainty one limitation of the focus on parametric uncertainty is that sensitivity analysis does not show how behavior may change or may depart from expected net present value maximization in the presence of uncertainty Investment decisions can be impacted under uncertainty. If the intent is to create a strategy that is robust across a range of futures, then we can evaluate an approach such as a stochastic LP that can generate robust results under a range of scenarios. Additionally, this does not have to be analyzed through IPM development but a conceptual or weight-of-evidence response. We have been evaluating this for retirements. 2.2 4 39 1 non-parametric uncertainty adjust the hurdle rate for investment and retirement options to account for option theory option theory suggests rational decision makers will delay irreversible investments (and retirements) in the face of uncertainty to gain more information about the uncertain aspects of the scenario. This behavior will not be evident in an inter-temporal optimization linear program such as IPM. However, this element of decision- making under uncertainty might be represented by adjusting the hurdle rate for investment and retirement options, perhaps implemented as a shadow cost of capital for investments that would be vulnerable to specific parametric uncertainty. This does not have to be evaluated through IPM development but a conceptual or weight-of-evidence response. 46 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.2 4 39 3 parametric uncertainty publish which parameters or combinations of parameters most heavily influence model outputs Beyond the scenario runs made public by EPA, it is not clear what sensitivity analyses EPA conducts to determine which parameters are the most important in determining variation in model outputs. EPA's application of IPM is so complex that it may be the case that no single parameter is driving the model outputs all by itself. Some attempt at investigating and publishing which parameters or combinations of parameters most heavily influence model outputs in the Reference Case would be very useful. Having methodical and documented sensitivity runs when we go through the development phase would be a very costly and time-consuming undertaking. We do this on an ad-hoc basis (dozens of sensitivities are run/tested); and many times we do not obtain the full outputs of test runs (as they are not necessarily fully QA'd) but assess what the results directionally suggest. Also, not all of those sensitivities can be planned beforehand but as the need emerges (in conjunction to other updates being made). Best method would be to envisage/group these runs retrospectively after we have arrived at a reference case. This would still render significant additional effort but it would be a more concise and targeted work serving documentation purposes and justifying various assumptions/updates made. We will consider this when we have resources. 2.2 4 40 1 parametric uncertainty, loadshapes model scenario that includes changes in the shape of the LDC from vehicle electrification Changes in the shape of the load duration curve: (1) vehicle electrification This is ongoing work. 2.2 4 40 1 parametric uncertainty, loadshapes model scenario that includes changes in the shape of the LDC from TOD pricing Changes in the shape of the load duration curve: (2) time-varying retail rates that encourage load shifting and peak-time demand response, 47 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.2 4 40 1 parametric uncertainty, loadshapes model scenario that includes changes in the shape of the LDC from demand response Changes in the shape of the load duration curve: (3) wholesale (aggregated or individual customer) demand response that is generally dispatched during summer peaks to ameliorate very high market clearing prices or reduce peak system loadings for reliability reasons Ongoing work. In the past we added demand response in for meeting capacity markets. 2.2 4 40 1 parametric uncertainty, loadshapes model scenario that includes changes in the shape of the LDC from behind-the-meter generation and energy storage Changes in the shape of the load duration curve: (4) the penetration of behind-the-meter generation and energy storage. We made adjustments to the LDC for distributed solar PV and implemented. When there is an EPA outlook/expectation we can consider this for other distributed technologies. 2.2 4 40 3 parametric uncertainty, loadshapes model scenario with negative demand growth from EE Even without changing the load duration curve, we also suggest including a scenario in EPA's Platform, along with the Reference Case, that involves negative demand growth arising through greater energy efficiency measures for buildings and appliances We can execute a first order estimate run, assuming the load shape doesn't change overtime. However, a more realistic approach would require more work. 48 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.2/2.10 4 41 1 parametric uncertainty, fuel supply model scenario involving negative shocks to fuel supplies encourage EPA to publish scenarios alongside the Reference Case involving negative shocks to fuel supplies, particularly in the northeastern U.S. where resistance to additional fuel delivery infrastructure has been high. These negative shocks could be modeled as outages or de-rates to certain types of generating units in certain regions within EPA's application of IPM, or (perhaps preferably) using high fuel prices to indicate shortage (see an example for natural gas in Bent, et al., 2018). These can be modelled either by changing fuel prices exogenously or through a full- scale iteration with GMM. 2.2/2.10 4 41 3 multiple parametric changes model combo scenarios that interact shifts in LDC with existing parametric scenarios (such as low/high gas prices and renewable costs) Scenarios that interact shifts in load duration curves with existing parametric scenarios (such as low/high gas prices and renewable energy costs) We can do this if needed, deemed valuable and priority. LDC runs could be tested when we have resources. 2.10 4 41 4 multiple parametric changes model combo scenarios involving very low gas prices and low renewables costs Scenarios involving very low gas prices and rapidly declining capital costs for renewable power generation We can do this if needed and if deemed valuable and priority. We are posting two alternative reference case runs. 49 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.10 4 41 5 multiple parametric changes model combo scenarios involving fuel supply shocks and low renewable costs Scenarios involving fuel supply shocks and low capital costs for renewable power generation (implying a larger dependence on renewable energy during supply shocks, and the response of the system to that known dependence) We can do this if needed, deemed valuable and priority. We are posting two alternative reference case runs. 2.10 4 41 6 parametric uncertainty, unexpected events model parametric surprise events we observe that EPA's Platform v6 as currently configured is ill-equipped to handle unexpected events that might arise over the multi-decadal time frame that it models... however, we do see a straightforward way for EPA to be able to model specific scenarios that involve parametric surprise events, and encourage EPA to publish the results of such scenarios alongside the Reference Case EPA has performed such analyses in the past. We can do this if needed, deemed valuable and priority. 2.10 5 43 4 policy analysis model policies or technologies that endogenously shift load across time policies or technologies that endogenously shift load across time would introduce challenges and may not be achievable given the current model configuration, as we understand it, except through an iteration procedure. 50 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.10 5 44 1 policy analysis model energy efficiency and improve demand representation Because of the various federal proposals to promote energy efficiency, EPA may need to revisit its representation of demand in order to be useful to analysis of these policies. Energy efficiency can be modeled explicitly in IPM and has been done in the past. The level of detail can be at the measure level. 2.10 5 44 2 policy analysis model state policies governing retail tariffs, including payments for DG, electrification, and shifting demand to align with VREs One of the largest challenges for EPA going forward may be the representation of policies at the state level governing retail tariffs, including payments for distributed generation, and incentives to promote electrification that may intentionally align demand growth with the availability of variable renewable energy resources Demand side policy representation will have to follow an updated approach to representing demand that doesn't rely solely on EIA data. This would be a phase two of any demand work we would execute. We are developing in-house capabilities to run NEMS. 2.10 5 44 3 policy analysis model retail TOD prices or retail RE prices a possibly important policy mechanism in the next decade is the determination of retail prices that are differentiated by time or type of electricity use 51 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.10 5 44 3 policy analysis model time varying prices applied to new sources of electrification However, potentially more important are time varying prices applied to new sources of electricity demand such as electric vehicles, water heating, and building heating that embody technologies with inherent storage capability. These types of electricity uses do not require all the attributes of typical "instant on" electricity use. Consequently, they may not be priced at the same level and they may not be burdened with the sunk costs associated with the reliability aspects of the existing grid, and retail prices may be adjusted accordingly Managed charging essentially addresses this as we have been working on. For a more comprehensive approach, we would need to develop an EPA approach to modeling demand before we can start modeling cases like this in IPM. 2.10 5 44 4 policy analysis model time-varying prices including cross- time-period elasticities of electricity use and a demand side model To represent the meaningful aspects of time-varying prices requires cross-time- period elasticities of electricity use within a fully functioning demand side model. IPM's DSM/EE modeling capability can be exercised to model some of the demand- side optionalities available in the market. However, we do not plan to have a fully functional demand-side model in the near-term. 2.10 5 44 5 policy analysis account for the effects of uncertainty on economic behavior Another potentially important limitation of EPA's policy analyses (that we also raise in the context of EPA's Platform v6 representation of baseline uncertainty) is the model's ability to account for the effects of uncertainty on economic behavior We have been doing analytical work on retirements outside of IPM to address this. 52 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.11 6 46 3 model documentation update documentation on developing load segments Development of load segments: The process used for developing load segments as described in the documentation is unclear. The documentation is already clear. 2.11 6 46 4 model documentation update documentation on treatment of interregional trading Treatment of interregional trading: The documentation's description of inter- regional trade, especially related to the load segments, is not very clear. The documentation indicates that trade is modeled on a seasonal basis, yet it is our understanding after discussions with EPA that trade is modeled by load segment. 2.11 6 46 5 model documentation update documentation on aggregation of model plants Aggregation of model plants: The documentation's description of the aggregation of model plants also requires clarification..., it is our understanding that fossil units are aggregated no further than at the plant level Section 4.2.6 documentation is already clear. 2.11 6 46 6 model documentation improve the publication of data tables on the EPA website Publication of data tables on the EPA website: The use of tables uploaded directly to the web is understandably necessary given the large size of many of the data inputs. However, a few improvements are suggested. The list of tables posted separately are listed at the end of each chapter. 53 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.11 6 47 2 model documentation include in the documentation a more complete description of which AEO case for what Guide to EPA's Platform v6 Output Files: It would be helpful to include a reference in section 2.5.2 of the documentation to the output file guide that is on EPA's website. In addition, when ElA's AEO cases are used to set up alternative sensitivity cases, a more complete description of which AEO case is being used and what inputs are being used from the case would be helpful. So Far EPA has always used AEO reference cases. If and when a different AEO case or alternative demand cases are used, these will be appropriately documented. 2.11 6 47 5 results viewer insert a few clarifications in the READ ME instructions for the Results Viewer To avoid user confusion, we would recommend that EPA insert a few clarifications in the READ ME instructions. Addressed. 2.11 6 47 6 results viewer update Results Viewer's distinction between "plant type" and "plant category" We found the Results Viewer's distinction between "plant type" and "plant category" confusing. For example, it is unclear what a user should choose for nuclear plant type. The readme tab indicates that plant type and plant category may be merged in the future, and we agree this would be clearer. Revised. 54 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.11 6 47 7 results viewer update Results Viewer so that the displayed results indicate the cases being compared The displayed results should indicate the cases being compared (i.e., the difference between what to what) and the units of measure reflected in the results. The readme tab indicates that the results represent "changes from the comparison model," but it would be helpful to include this on the graphics page accompanying the map. Addressed. 2.11 6 47 8 results viewer Make more intuitive the "comparison case" for other metrics, such as capacity factors and emissions rates The use of the "comparison case" for other metrics, such as capacity factors and emissions rates, is clever but not very intuitive. Already limited the dropdowns to be active when absolutely necessary and to automatically match the Primary Case selections where it makes sense to do so. The Results Viewer is squeezed for screen real estate, so the popup box seems like the best way to give users a handy cheat sheet (rather than permanently displaying it) 2.11 6 48 2 results viewer allow map sheet to display two sets of absolute values In the map sheet, the comparison functionality is confusing and only works for displaying differences, rather than two sets of absolute values. While the display could be altered to show this, the challenge is that displaying two numbers per state would become illegible (either too small a font or overlapping values). The whisker chart is an alternate graphing method that can fill a user's need. 55 ------- Response Document Section where addressed PR Sect. # PR Page # PR Para. # PR Recommendation Section/Category PR Recommendation Summary Detailed Recommendation Text Additional EPA Response Notes (detailed narratives start after Executive Summary rows) EPA's IPM Summer 2021 Reference Case Documentation is available here 2.9 6 48 4 retail price model documentation update the discussion of utility depreciation costs In the discussion of utility depreciation costs, the units are mills/kWh but these are not defined by year. In addition, the "directly from" is not explained sufficiently as to whether the reader can find these in a published document or table or whether this was provided by EIA This will be addressed when an updated RPM documentation published. 2.9 6 48 5 retail price model documentation update documentation with additional detail on the NUG adder and the regional tax rates The documentation would benefit from additional detail for the non-utility generators (NUG) adder and the regional tax rates used in the RPM. This will be addressed when an updated RPM documentation published. 2.9 6 48 6 retail price model documentation define regional tax dollars Also related to regional tax rates, it is not clear what is included in "regional tax dollars" referenced in the documentation. This will be addressed when an updated RPM documentation published. 2.9 6 48 7 retail price model documentation describe how the percentage of each region that is deregulated or regulated were derived Attachment 1 of the documentation includes a table showing the percentage of each region that is deregulated or regulated. We recommend that EPA describe how the percentages were derived, rather than simply citing the AEO. This will be addressed when an updated RPM documentation published. 56 ------- |