Seeing the value of r&d through energy market modeling

Throughout history, people have yearned to know the future, and the reason is clear. Just as a farmer could greatly benefit from knowing which grains will grow and which will fail, an energy research laboratory like NETL could strategically plan its efforts based on an accurate forecast of which technologies may have the greatest impact on the future energy market.

Shakespeare’s characters must consult the fabled Oracle at Delphi to learn their fate, but NETL relies on science-based energy market models that can accurately predict a myriad of scenarios, including how NETL research and development (R&D) will affect the cost of electricity, carbon emissions reduction, job creations, and many other important factors, far into the future.

“We can start with baseline of no NETL R&D,” NETL’s head of market modeling efforts, Chuck Zelek explained, “and then we forecast out to 2040, and see what the energy market looks like. We see things like what the energy mix will be, how much electricity will cost, and how well we’re meeting regulations. Then, we run the model with NETL R&D. The difference between the two really underscores the importance of our work.”

When current NETL R&D is added to the market models, the true value of the laboratory’s research becomes apparent. Compared to a baseline of no R&D, cost of electricity is reduced, carbon emissions are mitigated, and environmental targets are met. Even more useful, researchers can see how other scenarios might play out. For example, if the Lab increased its carbon capture and storage efforts, the models can project the effects of this change. In this way, NETL can best use its resources to focus on achieving a bright energy future for the nation.


So, what are the models that NETL uses, and how do they work? One of the most widely known models, the National Energy Modeling System (NEMS) was created by the U.S. Department of Energy’s (DOE) Energy Information Administration (EIA). This model is primarily used to develop the Annual Energy Outlook—an essential document used by industry and policy makers that focuses on factors expected to shape U.S. energy markets through 2040. NETL not only uses this model, but also contributes to it based on its expertise in fossil energy research. Code developed at the Lab has been integrated into the model and EIA consults NETL on the expanded capabilities of the model.

MARKAL, a name derived from market and allocation, was developed by the Energy Technology Systems Analysis Programme (ETSAP) of the International Energy Agency. NETL uses this model to find the least expensive combination of technologies to meet a specific goal and calculates resulting environmental emissions, water consumption, and withdrawals.

NEMS, MARKAL, or any of the other various energy market models all work in a similar fashion. Historical data on energy usage patterns, and the current availability and cost of energy sources serve as data for input. NETL R&D directly affects these factors. Assuming that industry will favor the cheapest energy source and economic and regulatory climate persists, the models logically play out possible scenarios with these baseline inputs.

An excellent example of how energy market models can demonstrate the value of NETL R&D can be seen when examining DOE’s Clean Coal Research Program (CCRP) and its potential benefits for consumers. As a fossil energy research laboratory, much of NETL’s work supports the CCRP. Areas like carbon capture, utilization, and storage research and demonstrations; advanced energy systems, and cross-cutting research all contribute to keeping coal a strategic fuel while enhancing environmental protection. When this R&D data is fed into the energy markets, the projected cumulative benefits through 2040 are remarkable based on the current economic picture:

  • $92 billion in total electricity expenditure savings
  • 2.4 million jobs created
  • A Gross Domestic Product of $242 billion
  • 2.9 gigatonnes of CO2 captured
  • 4 billion additional barrels of domestic oil from enhanced oil recovery

“The models we use at NETL validate the large-scale research efforts we undertake daily,” Zelek said. “Our researchers are solving the nation’s toughest energy challenges, and this modeling work ensures that our work is focused on the best and most efficient path toward enhancing the nation’s energy foundation.”