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Energy Technology Perspectives (ETP)

MARKAL Model

Audrey Lee, Ph.D.Office of Policy & International Affairs

U.S. Department of Energy

June 8, 2010

NPC Demand Task Group Meeting

Thomas AlfstadBrookhaven National Laboratory

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Outline

MARKAL Framework Model Basics Advantages Analytical Capabilities Model Variants Energy Technology Perspectives (ETP) Model

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MARKAL Framework Well established tool for energy systems analysis.

– 30 years of development under the auspices of the International Energy Agency.

– Approximately 100 user institutions in more than 50 countries.

Bottom-up analysis with explicit technology representation.– Includes physical description of energy technologies.

– Allows for “well-to-wheel” comparison of technologies and technological pathways.

– Studies the impact of technological change/progress on energy markets.

– Provides a technology-rich basis for estimating energy dynamics over a multi-period horizon.

For documentation, publications: http://www.etsap.org

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MARKAL Model Basics Utilizes a bottom-up approach to identify an optimal

technology/resource mix to meet demands in an integrated energy market– Includes a description of the physical energy system with individual

technology representation.

– Technologies are nodes in a flow-based representation of the energy system (Reference Energy System).

– Provides a technology-rich basis for estimating energy dynamics over a multi-period horizon.

– Identifies the most cost-effective pattern of resource use and technology deployment over time.

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The MARKAL objective is to minimize the total cost of the system, discounted over the planning horizon. Each year, the total cost includes the following elements: – Annualized investments in technologies

– Fixed and variable annual operation and maintenance (O&M) costs of technologies

– Cost of exogenous energy and material imports and domestic resource production (e.g., mining)

– Revenue from exogenous energy and material exports

– Fuel and material delivery costs

– Welfare loss resulting from reduced end-use demands

– Taxes and subsidies associated with energy sources, technologies, and emissions

MARKAL Model Basics (Cont.)

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The MARKAL energy economy is made up of producers and consumers of energy carriers. – Assumes perfectly competitive markets for energy carriers

– Producers maximize profits and consumers maximize their collective utility.

– MARKAL computes an inter-temporal partial equilibrium on energy markets

– Quantities and prices of the various fuels and other commodities are in equilibrium, i.e. their prices and quantities in each time period are such that at those prices the suppliers produce exactly the quantities demanded by the consumers

– Total surplus is maximized over the whole horizon

MARKAL Model Basics (Cont.)

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Technology Choice in MARKALTechnology Characteristics Energy Sources Used Efficiency Costs (Capital and O&M) Availability

Energy Resources Cost and Availability

Energy Service Demands By Sector/Region

Other Assumptions Long-Term Discount Rate System Reserve Requirements

Other Constraints Max. CO2 Emissions by Time Period

Dynamic LP Optimization

Technology Mix for Each Time Period

That Satisfies Energy Demand Given

Constraints

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MARKAL Building Blocks: The Reference Energy System

BiofuelsProduction

Industry

Residential/commercial

Electricityproduction

Refineries

Transport

HeatingCoolingPower

Movingetc.

GasolineNatural gasElectricity

CokeBiofuels

Heatetc.

Renewables

Fossil fuels

Nuclear

Usefulenergy

Primary energy

Conversion sectors/processes

Finalenergy

Demandsectors/processes

Coke ovens

Heatproduction

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Advantages of MARKAL Framework Flexible and transparent framework

– Methodology is well documented.– Model structure and technologies and fuel pathways can easily be added,

changed or deleted, while remaining consistent with the underlying methodology.

– Model structure can be applied to different levels of geographical coverage (i.e., city/state, national and global models).

Framework allows use of different features depending on modeling needs, – User can run the model myopically or with perfect foresight, with

endogenous learning, elastic demands, etc.– Material flows (i.e., spent reactor fuel or water requirements) can be

modeled.– Uncertainty can be examined

Run times are modest

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Examples of MARKAL Analytical Capabilities Technology evaluation

– Evaluate new technologies and priorities for R&D – Identify least-cost energy systems– Identify necessary characteristics for a technology to penetrate the

marketplace – Perform prospective analysis of long-term energy balances under

different scenarios– Analyze the structure and impacts of establishing a new energy

infrastructure Policy analysis

– Analyze the impacts of a policy on the integrated energy, environmental, economic system: e.g., carbon cap-and-trade system.

– Identify selected pathways to achieve a policy goal, such as reduced dependence on foreign oil

– Evaluate the effects of regulations, taxes and subsidies

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Examples of Analytical Capabilities (cont.) Environmental Planning

– Identify cost-effective responses to restrictions on emissions– Project inventories of greenhouse gas emissions

Regional Analysis– Estimate the value of regional cooperation

» Local energy planning (NYC, European and Asian cities)» Multi-state planning (NESCAUM, census region MARKAL)» National (50+ countries, 120 institutions)» Global (ETP, SAGE)» Examine energy flows between regions

Material Flows– Inter-connection of energy use and water availability– Complete nuclear fuel cycle– Solid waste– Industrial materials flows

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Variants of MARKAL The MARKAL code is flexible and allows the user to run the

model with many different combinations of features. The user can select one primary variant and different combinations of the secondary variants.

Primary Variants: Standard MARKAL: Linear program with demands defined

exogenously. MARKAL-MACRO: Standard MARKAL linked to a macro-

economic growth model with demands determined endogenously.

MARKAL Elastic Demand (MED): Demand is price responsive and determined endogenously.

TIMES: New generation MARKAL type model with additional features such as flexible time periods.

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Variants of MARKAL (Cont.)Secondary Variants: Endogenous Technology Learning (ETL): Technology costs

change with cumulative experience. Multi Region: Allows solution of multi-region models Stochastic MARKAL: Expected outcome is generated as a

result of assumed “states of nature”, defined by the analyst. MARKAL-EV: Environmental damage estimates included in

the MARKAL objective function. SAGE: Time-stepped, period by period solving of MARKAL or

MARKAL Elastic Demand (MED). MARKAL-GP: Goal programming formulation used to examine

the impacts of weighting environmental vs. economic goals.

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Energy Technology Perspectives (ETP) Model

Global Analysis of Energy Technologies Captures global energy trade flows and manufacturing

constraints. Example: global biofuels production, trade, and consumption

ETP Overview Based on the MARKAL framework Global technology database State-of-the-art energy technology information Covers the period 2000-2050 15 linked world regions Region-specific technology constraints and costs.

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ETP MARKAL Model – 15 Regions

IEA regions• U.S. • Canada• Japan• New Zealand,

Australia• IEA-Europe• South Korea

Non-IEA regions•E. Europe•FSU•China•India•Rest of Asia •Latin America•Mexico•Africa •Middle East

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Diesel

ETP MARKAL Technology DetailExample: LDV Transport Demand

ICE Car

Advanced ICE Car

Diesel Hybrid

Gasoline Hybrid

Diesel ICE Car

Plug-in Hybrid

H2 Fuel Cell Vehicle

LDV transport demand [vehicle miles]

Ups

trea

m f

uel

proc

essi

ng

Gasoline

ElectricityGasoline

Hydrogen

Note: List is for illustrative purposes. The full ETP and US MARKAL models contain a wider range of vehicles

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Also used to help develop:• IEA World Energy Outlook• Mobility 2030: Meeting the Challenges of Sustainability

• (World Business Council for Sustainable Development, 2004)• Transport, Energy and CO2: Moving towards sustainability

• Horizon 2050, all energy sources• Builds and expands the work done on ETP

Publications Based on the ETP Model

Prospects for Hydrogen and Fuel Cells (IEA, 2005) Energy Technology Perspectives 2008

Prospects for CO2 Capture and Storage (IEA, 2004)

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Thank you!

Audrey Lee, Ph.D.

Office of Policy and International Affairs

U.S. Department of Energy

202 586 7039

audrey.lee@hq.doe.gov

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Ten Region U.S. MARKAL Model

Key Regional Differences– Fossil fuel and renewable resource availability– Economic and population growth rates– End-use demand patterns and levels of energy intensity– Energy infrastructure and transportation options and costs– Policies and regulations

Calibrated to Energy Information Administration’s Annual Energy Outlook

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AZ

CA

Pacific

California

Mountain

Mountain

West North Central

West South Central

East South Central

South Atlantic

Middle Atlantic

New EnglandEast North Central

Ten Region U.S. MARKAL Model

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U.S. MARKAL Model: Data

Reference Case: EIA Data – Annual Energy Outlook (AEO)– Annual Energy Review (AER)

Region Specific Data in the Ten Region U.S. Model Fossil fuel resource costs, availability (same data used by

EIA for NEMS) Wind and solar potential (NREL) Biomass supply curves (EIA, Marie Walsh, Univ. of Tenn.) Carbon sequestration potential (EEA/ICF) Electricity infrastructure (FERC, EIA) Taxes, policies (EIA, other analyses)

DOE Technology Goals– Program Offices, National Labs– GPRA analysis