Integrating Climate Impacts into Energy Models
Today’s energy models are behind the curve on incorporating climate impacts into their forecasts. OnLocation took steps to address this shortfall with its January 2024 report for the Natural Resources Defense Council (NRDC). The report identifies climate impacts affecting energy systems that need to be addressed along with a path forward for incorporating them in energy-economy models with a focus on the National Energy Modeling System (NEMS).
OnLocation’s threefold approach was to:
- Identify and prioritize climate variables most relevant to U.S. energy dynamics;
- Review existing literature on climate impacts within energy modeling systems; and
- Determine the best approach to incorporating these variables into NEMS.
Focused on enhancing the NEMS Modeling framework, OnLocation categorized climate impacts by the affected energy sector as follows:
| Sector | Energy Component | Climate Impact | Anticipated Impact Range |
|---|---|---|---|
| Residential, Commercial | Building heating and cooling demands | Higher air temperatures | High |
| Electricity | Deration of capacity/ reduced efficiency | Higher temperatures (ambient air and/or water) | Medium |
| Transmission capacity | Higher air temperatures | High | |
| Hydroelectric capacity and generation | Extended Drought | High | |
| Streamflows | High | ||
| Snowpack | High | ||
| Reserve Margin targets | Planning for extreme temperatures | High | |
| Solar technical potential | Altered solar irradiance | Low | |
| Higher air temperatures | Low | ||
| Wind technical potential | Altered wind speeds | Low | |
| Oil & Gas | Production, storage, pipelines | Extreme weather, sea level rise, water availability, ground thawing | Medium to High |
| Agriculture and Forestry (biomass supply) | Yields and/or damage reducing supplies | Higher CO2 concentrations | Medium |
| Higher air temperatures | High | ||
| Extended Drought | High | ||
| Extreme Precipitation | Medium | ||
| Streamflows | Medium to High | ||
| Snowpack | Medium | ||
| Wildfire | High |
OnLocation designed and modeled a case study to assess the impact of adopting heating and cooling degree day (HDD, CDD) projections from a warming climate scenario. The modeling was conducted using an enhanced version of NEMS previously developed for NRDC called the NRDC-NEMS model, an adaptation of the U.S. Energy Information Administration’s (EIA) NEMS version used to generate projections for the Annual Energy Outlook 2022. The primary modifications of NRDC-NEMS include the Inflation Reduction Act (IRA) energy-related provisions and alternative technology costs in the power, transportation, and industrial sectors. For this analysis, the most relevant projection differences from the AEO 2022 reference case were the deployment of renewable generation in response to IRA tax credits, lower technology costs, and higher electricity demand due to the greater adoption of electric vehicles.
As expected, higher temperatures in the climate scenario led to higher energy use for cooling and lower use for space heating in both residential and commercial buildings with a greater effect in the residential sector. Electricity generation increased, and higher peak demands led to the need for greater capacity in most regions. The impacts were lessened relative to the baseline scenario because the latter, like the AEO2022, assumes a continuation of historical trends in HDD and CDD.
The Climate Impacts Report by OnLocation represents an initial step forward in incorporating climate impacts in energy modeling by identifying the key aspects of climate change to be considered and potential modeling methods. As we face an urgent need for climate-resilient energy policies to meet U.S. net zero emissions by 2050, the enhancements to NEMS proposed in this report offer a blueprint for how models can evolve to enhance representation and prediction of the impact of our changing environment. This work showcases OnLocation’s expertise and leadership in energy analysis and highlights the critical importance of innovative approaches to modeling in our collective effort to combat climate change.