[Federal Register Volume 59, Number 167 (Tuesday, August 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21375]


[[Page Unknown]]

[Federal Register: August 30, 1994]


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DEPARTMENT OF ENERGY

 

Inventory of Energy Technologies for Least-Cost Energy Strategy

AGENCY: Department of Energy (DOE) .

ACTION: Notice of Request for Comments on Least Cost Energy Strategy 
Technology Assumptions.

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SUMMARY: The Energy Policy Act of 1992 requires the Secretary of Energy 
to prepare a least-cost energy plan a resource and technology inventory 
of the least-cost energy strategy. The inventory (1) provides a 
description of each current and anticipated primary energy input 
available to the U.S. economy, (2) describes the system for electricity 
generation and distribution, and (3) lists available and anticipated 
energy technologies that are sufficiently defined so as to permit 
measurement or estimation of their cost and effectiveness over the 
period from the present to the year 2015.
    This notice summarizes work in progress and invites public comment 
on the appropriate content for the energy resource and technology 
inventory. We are particularly interested in suggestions for expansion 
of the list of efficient end-use technologies expected to be available 
by the year 2010, and their cost and performance parameters.

DATES: To guarantee consideration, comments must be received by October 
15, 1994.

ADDRESSES: Comments related to the technology and resource inventory 
should be sent in 3 copies to:

Least-Cost Plan/Energy & Technology Inventory, Office of Economic 
Analysis and Competition, U.S. Department of Energy, PO-61, Washington, 
D.C. 20585

FOR FURTHER TECHNOLOGY INFORMATION CONTACT: Dr. Peter Karpoff, Office 
of Economic Analysis and Competition, U.S. Department of Energy, PO-61, 
Washington, D.C. 20585, (202) 586-4767.

FOR MODELING INFORMATION CONTACT: Dr. Phillip Tseng, Office of Economic 
Analysis and Competition, U.S. Department of Energy, PO-61, Washington, 
D.C. 20585, (202) 586-3892.

SUPPLEMENTARY INFORMATION:

I. Background
II. Content of the Energy Resource and Technology Inventory
III. Alternative Least-Cost Concepts
IV. Least-Cost Energy Modeling
V. Next Steps

I. Background

    Section 1602 of the Energy Policy Act of 1992 (EPAct) requires the 
Department to provide a Least-Cost Energy Strategy (LCES) to accompany 
the National Energy Policy Plan (NEPP) it submits pursuant to the 
legislation that established the Department. Implicitly, EPAct 
recognizes that the LCES and the NEPP are distinct, reflecting in part 
the fact that least-cost modeling exercises may fail to account for 
important real-world considerations that may enter into energy policy 
formulation. Notwithstanding this distinction, the LCES can be an 
important source of insights for use in developing energy policy. It 
can also provide important insights into other issues facing the 
Department, such as strategic planning, the identification of research 
and development priorities, long-term climate mitigation policy, and 
sustainable development initiatives, by identifying energy-related 
technologies that have the largest leverage on attainment of social 
objectives related to the nexus of energy and economic growth.
    The least-cost strategy will provide a list of policy options that, 
when implemented, could meet the goals and reflect the priorities 
outlined in Section 1602 of EPAct. The least-cost strategy will call 
upon available and anticipated resources and technologies to satisfy 
final energy demands at minimum long-run cost, subject to these goals 
and priorities. Section 1602(a) lists the following goals:
     Stabilization and eventual reduction in the generation of 
greenhouse gases
     An increase in the efficiency of the Nation's total energy 
use by 30 percent over 1988 levels by 2010
     An increase in the percentage of energy derived from 
renewable resources by 75 percent over 1988 levels by the year 2005
     A reduction in the nation's oil consumption from the 1990 
level of approximately 40 percent of total energy use to 35 percent by 
the year 2005.
     In addition, Section 1602(d) lists the following energy 
production, utilization, and energy conservation priorities:
     Implement standards for more efficient use of fossil 
fuels;
     Increase the energy efficiency of existing technologies;
     Encourage technologies, including clean coal technologies, 
that generate lower levels of greenhouse gases;
     Promote the use of renewable energy resources, including 
solar, geothermal, and sustainable biomass, hydropower, and wind power;
     Affect the development and consumption of energy and 
energy efficiency resources and electricity through tax policy;
     Encourage investment in energy efficient equipment and 
technologies; and
     Encourage the development of energy technologies, such as 
advanced nuclear fission and nuclear fusion, that produce energy 
without greenhouse gases as a byproduct, and encourage the deployment 
of nuclear electric generating capacity.

II. Content of the Energy Resources and Technology Inventory

    Section 1602(b) of EPAct requires an inventory of energy resources 
and technology. Conservation technologies, which reduce the amount of 
energy required to provide a given energy service, are considered as 
energy technologies for purposes of this inventory.
    As part of the inventory, known and anticipated primary energy 
inputs will be inventoried. These include coal, oil and gas (both 
domestic and imported), renewable sources (including diverse solar 
forms, biomass, wind and ocean energy, hydro, geothermal, and municipal 
waste methane), nuclear, hydrogen, and synthetic fuels and coal gases.
    The energy technology part of the inventory will include specific 
engineering applications and aggregations of applications (e.g., the 
automobile is a complex aggregation of individual technical elements). 
The technologies in the existing information base are drawn from the 
following areas:

Energy Production

    Oil and gas extraction: Reservoir mapping, Tertiary recovery, 
Advanced drilling techniques;
    Oil refining and gas processing;
    Electricity generation: High efficiency combined cycle turbines, 
Pressurized Fluidized Bed Combustion;
    Fuel cells: Phosphoric, Molten carbonate and Solid oxide designs, 
and Proton Exchange membrane;
    Clean coal technology: Coal gasification, Improved pulverized coal 
methods; Nuclear power, Advanced light water reactor designs Fusion 
power assessment;
    Biomass culture: Biomass waste utilization, Optimized biomass 
culture and harvest;
    Wind Power: Variable speed turbines, Larger capacities, Improved 
control circuitry;
    Hydrogen fuels: Direct use and electricity conversion;
    Other renewable sources: Ethanol technologies, Solar applications, 
Advanced photovoltaics, Geothermal applications, Biomass conversion to 
liquid fuels, MSW gas recovery.

Energy Transportation, Storage and Load Management

    Coal slurry and petroleum pipelines: Pipeline coatings and 
additives;
    LNG transport methods: LNG handling technology, LNG transport;
    Electricity transmission: Transformer redesign, Voltage increases;
    Electricity load management: Selective signaling, Improved load 
forecasting, Price structure innovation;
    Electricity storage systems: Pumped storage, battery, flywheel, and 
compression systems.

Energy Distribution

    Decentralized power generation: Efficient small stations, Fuel 
cells;
    District heating and cogeneration: District heat marketing, Hot 
water/steam utilities, Private power marketing, IPP arrangements.

Energy Utilization

    Automobile efficiency: Smaller vehicles, Smaller engines, Manual 
transmissions, Greater adoption of sophisticated drive train features, 
tires and lubricants, Advanced aerodynamics, Hybrid propulsion systems, 
Diesel-electric motors, Regenerative braking, Electric vehicles, 2-
Stroke engines;
    Light trucks: See autos, above
    Heavy trucks: Efficient tires, aerodynamic designs,
    Off-road vehicles;
    Bus efficiency: Drive train improvements, Flywheel/regenerative 
propulsion and braking, Demand driven dispatch, Efficient pricing and 
fare collection, Route planning;
    Aircraft and operations; Aircraft size, Curtailment of taxiing, 
Airport and Air Traffic Control changes, Ultra high bypass turbofan 
engines;
    Ships and barges: Improved propulsion and hull efficiency (semi-
hydrofoil designs, Reduced operating speeds, Hull coatings;
    Pipelines: Efficient pumps, controls, and motors, Interior 
coatings, Additives;
    Highway, rail and air traffic control design: Reduce congestion by 
information systems and congestion tolls, Ride sharing;
    Building shell efficiency: Insulation, High Performance glazing and 
window films, Building orientation, Smart windows, Shading and 
ventilation
    Manufacturing Process efficiency: Impulse drying, Solar Process 
Heating, Rapid Glass Refiner/Melter, Direct Ironmaking, Chemical 
Welding, High Pressure Heat Exchanger, Chemical Sorbtion Heat Pump, 
Bioprocessing;
    Mining efficiency: In-situ reduction of ores, Chemical ore 
separation
    Agriculture efficiency: Wider use of no-till methods, Natural and 
vacuum crop drying, Organic and compost-fed culture, Hydroponics 
Aquaponic combined culture cycles, Cultivar variety and crop-mix 
changes;
    Retail and service efficiency: Wider adoption of efficient 
lighting, Efficient equipment to reduce cooling loads, Electronic 
interface with suppliers and customers, Direct-ship practices;
    Urban system efficiency: Public transport expansion, Higher Vehicle 
occupancy, Congestion tolls, Reduce trip demand by land use planning;
    Increased Appliance Efficiency: Refrigeration, laundry, dishwashers 
(reluctance motors), water heating, video displays, cooking appliances, 
lighting, heating and cooling;
    Reduced Heating, Cooling and Lighting loads: Shell improvements, 
heat exchanges, parallel hot water piping, ozone laundering, water 
recycling.
    Summaries of cost and performance parameters for specified 
technologies in the existing information base are available upon 
request. This technology information is structured in a format suitable 
for least-cost modeling purposes. For example, an existing electricity 
conversion technology, a coal combined cycle plant fueled with 
bituminous coal, might be described as follows (parameter values are 
illustrative): 

         Bituminous Coal Combined Cycle Electricity Generation          
Fuel conversion efficiency....................  41.6%                   
Availability/Utilization......................  60%                     
Cost of capacity (real $).....................  $1569 MM/Gigawatt       
Fixed O&M cost................................  $47.4 MM/Gigawatt       
Variable O&M cost.............................  $0.37 MM/Petajoule input
Delivered fuel cost...........................  $0.64 MM/Petajoule      
Peak availability.............................  100%                    
Life span.....................................  40 yrs.                 
Installed capacity (current)..................  1.0 Gw                  
Commercial availability.......................  Currently available     
                                                                        

    Some technologies included in the inventory, such as the power 
plant example presented above, are cohesive single engineering 
processes. In other cases, a technology in the inventory will reflect 
an aggregation of engineering innovations, reflecting our inability to 
separately model each individual device. For example, a future vehicle 
technology might embody several innovations such as ultra light-weight 
construction, low rolling resistance tires, hybrid propulsion with 
automatic engine shut-off, and regenerative braking.
    Suggestions and comments are invited on both the addition of 
categories for the Energy Resource and Technology Inventory and for the 
nomination of specific technologies to be included. To be considered 
for inclusion, a technology must be sufficiently concrete that 
parameters for its cost, performance and applicability to the U.S. 
economy are discernible.
    Respondents are invited to suggest either single technologies or 
logical aggregates of technologies, as in the examples above, so long 
as the performance parameters can be described in terms similar to 
those in the example provided above. Respondents are requested to 
provide performance parameters in a standard format (Appendix A) for 
technologies that they nominate for the technology inventory, but may 
supplement this minimum requirement with additional information.

Appendix A

Standard Format for Providing Technology Information For LCES 
Technology Inventory

Technology name and description:---------------------------------------

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Primary Fuel:----------------------------------------------------------

Fuel conversion efficiency:--------------------------------------------

Availability/Utilization:----------------------------------------------

Cost of capacity (real$)-----------------------------------------------

Fixed O&M cost---------------------------------------------------------

Variable O&M cost------------------------------------------------------

Delivered cost---------------------------------------------------------

Peak availability %----------------------------------------------------

Life span (yrs.)-------------------------------------------------------

Installed capacity (current)-------------------------------------------

Year of Comm'l. Availability:------------------------------------------
Maximum capacity potential:
  in initial year of availability--------------------------------------
  5 years after initial availability-----------------------------------

III. Least-Cost Concepts

    The term ``least-cost'' is open to various interpretations. 
Depending on how the term is defined, a wide variety of energy 
strategies might be categorized as meeting a least-cost criterion. It 
is our intent to explore strategies consistent with a variety of 
``least-cost'' concepts reflecting alternative treatments of issues 
including, but not limited to, private versus social cost minimization, 
environmental impacts, and the role of non-modeled attributes and 
institutional factors.

Private and Social Cost Minimization

    It is widely accepted that private and social costs may fail to 
coincide unless all markets are perfectly competitive. Energy-related 
markets provide many instances where the assumption of competition may 
be called into question. For example, pricing in electricity markets, 
which are generally subject to economic regulation at the state level, 
are based on average, not marginal, costs. Least-cost decisions based 
on the prices actually paid by electricity users may differ from least-
cost decisions based on marginal costs. Capital markets provide another 
example of possible departures from perfect competition. Capital costs 
may differ significantly from the social opportunity cost of 
investment, and vary widely across and within groups of decisionmakers. 
Projects that minimize costs using social discount rates may fail to do 
so at discount rates reflecting the opportunity cost of capital faced 
by decisionmakers in the market.
    DOE plans to consider a wide range of cases that reflect the 
differences between social and private cost minimization, and consider 
how each affects least-cost choices.

Environmental Impacts

    Environmental impacts can also enter into the definition of a 
``least cost'' energy strategy. For example, in a case where two 
technologies that differ widely in energy efficiency can be used to 
provide the same energy service, purchasers will often ignore the 
social costs of environmental impacts that may be associated with 
higher levels of energy use. Theory and regulatory practice in some 
states suggests that this issue can be addressed by incorporating a 
``shadow price'' for environmental impacts in the least-cost objective 
function. The least-cost strategy will consider alternative approaches 
to addressing the impact of recognizing environmental costs on least-
cost choices.

Role of Non-Modeled Attributes and Institutional Factors

    No model can adequately capture the full detail of all influences 
on energy-related decisions. For example, decisions regarding personal 
transportation technologies may involve issues such as safety, 
performance, and room, as well as tradeoffs between acquisition cost 
and fuel cost. Institutional factors, such as the divorce between 
ownership and tenancy in many commercial buildings, can also have an 
important influence on energy-related decisions. Ignoring the range of 
attributes that enter into consumer decisions or institutional factors 
could lead to ``apples to oranges'' cost comparisons that do not 
compare alternative approaches to providing the same service. On the 
other hand, adoption of a pure ``revealed preference'' approach, in 
which the fact that a particular technology is used in the market is 
prima facie evidence of its least-cost nature, is both tautological and 
inconsistent with the spirit of the least-cost strategy exercise. Given 
the unsuitability of the two extremes, we intend to explore a range of 
intermediate cases.
    The public is invited to comment on these issues, as well as others 
that may bear on the interpretation or definition of the ``least-cost'' 
concept.

IV. Least-Cost Modeling

    The methods selected for developing the least cost energy plan 
include use of the optimization model known as MARKAL-MACRO described 
in ``MARKAL-MACRO: A linked model for energy-economy analysis,'' BNL-
47161, Brookhaven National Laboratory, February 1992. Copies of this 
report are available by request from the Office of Economic Analysis 
and Competition (202) 586-4767.
    MARKAL-MACRO links the MARKAL model that is used to determine 
least-cost provision of fixed end-use energy service demands with the 
substitution opportunities between energy services and other productive 
inputs in MACRO. MARKAL is an optimization model that minimizes the 
cost of providing its target level of energy services drawing on the 
available set technology and resources. Information from the energy 
resource and technology inventory is directly reflected in the MARKAL 
data structure, so that changes in the parameters for technologies 
already represented or the inclusion of new technologies may 
significantly influence the modeling results.
    In MACRO the inputs of capital, labor and energy services are 
substitutes for each other under an assumption of diminishing marginal 
returns. With the link between MARKAL and MACRO, rising energy costs 
can change the composition of energy supply, of energy technologies and 
of energy investments (through MARKAL), and may also change the balance 
among energy services, labor and capital input decisions, and affect 
future output levels (via the MACRO link).

IV. Next Steps

    The LCES report required by Section 1602 of EPAct is scheduled for 
completion in early 1995. It will be available to the public for review 
and comment prior to its submission to Congress.

    Issued in Washington, D.C., on August 23, 1994.
Abraham E. Haspel,
Deputy Assistant Secretary for Economic and Environmental Policy, 
Office of Policy.
[FR Doc. 94-21375 Filed 8-29-94; 8:45 am]
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