US-REGEN Documentation

1. Overview of the US-REGEN Model

1.2 Limitations and Assumptions of Energy-Economic Models

EPRI's US-REGEN model and other energy-economic models are necessarily numerical abstractions of the complex economic and energy systems they represent. US-REGEN is designed to show how changes in technology or policy constraints impact economic and energy-system activities relative to a baseline case; the optimization method and assumptions have been chosen and calibrated carefully to best align with this use. Doing so inevitably makes strong assumptions about the function of markets and energy electricity systems. The use of inter-temporal optimization implicitly assumes that actors will behave rationally in a competitive market with perfect information about current and future market conditions, including prices. For example, the model "knows" future gas prices and where and when the wind blows. The model is deterministic; that is, it does not include uncertainty, so that a given set of inputs and assumptions will produce the same outputs. This has the advantage of demonstrating the least-cost deployment mix of generation subject to a scenario-dependent range of technological and policy constraints and specified input assumptions. Apart from the impacts of uncertainty and imperfect information, economic theory suggests that it is reasonable to expect a least-cost outcome from a competitive market, which in some respects the wholesale generation of electric power has become.

These types of limitations and assumptions are common to the field of energy-economic modeling. Other prominent energy-economic models used in similar scenario analyses include the US-REP model developed by the Massachusetts Institute of Technology[1], the ADAGE model used by the Environmental Protection Agency (EPA)[2] and developed by RTI International, and the NEMS model developed by the Energy Information Administration (EIA)[3]. Prominent models similar to the US-REGEN electric sector model include the ReEDS model developed the National Renewable Energy Laboratory (NREL)[4], and the IPM model developed by the U.S. EPA and ICF[5].

  1. https://globalchange.mit.edu/sites/default/files/MITJPSPGC_Rpt194.pdfopen in new window ↩︎

  2. https://cfpub.epa.gov/si/si_public_record_report.cfm?Lab=OAP&dirEntryId=198000open in new window ↩︎

  3. https://www.eia.gov/outlooks/aeo/nems/documentation/open in new window ↩︎

  4. https://www.nrel.gov/analysis/reeds/open in new window ↩︎

  5. https://www.epa.gov/airmarkets/power-sector-modelingopen in new window ↩︎