1984-2024: 40 Years of Pioneering an Energy Evolution

As OnLocation marks the close of its 40th anniversary year, it is an opportune moment to reflect on the transformative journey of the energy sector and the company’s role in assisting clients in navigating the changes and influencing its evolution. Forty years ago, the energy sector faced challenges that seem almost unimaginable today. The era was defined by turbulence, with the U.S. grappling with the aftermath of the 1973 oil embargo, natural gas shortages, the partial meltdown of the Three Mile Island nuclear facility, and the energy crises that followed. Policymakers and industry leaders were forced to confront vulnerabilities in the nation’s energy infrastructure, including its dependence on imported oil. These challenges sparked an urgent need for innovative solutions and the development of comprehensive, data-driven tools to guide energy policy and decision-making.

As the energy landscape evolved, so too did the tools required to understand it. The crises of the 1970s laid the foundation for a transformation in how energy systems were analyzed, leading to the development of early modeling efforts. By the mid-1980s, the need for more integrated and sophisticated approaches became clear. It was within this dynamic environment that OnLocation emerged, dedicated to helping clients navigate the complexities of energy markets through forward-looking quantitative analysis. The company’s commitment to crafting insightful, actionable solutions has been a constant through decades of change, powering its clients’ abilities to adapt and thrive in an ever-shifting energy landscape.

Prequel: Oil Crisis and Establishing the Requirements for Modeling

The 1973 OPEC oil embargo shocked the nation, exposing the vulnerabilities of heavy reliance on imported oil and creating market turbulence. By January 1974, the price of oil had quadrupled. Gasoline shortages, surging prices, and economic instability underscored the importance of understanding energy markets, supply chains, and consumption patterns. Policymakers, faced with mounting pressure to ensure energy security, realized that ad hoc decision-making and fragmented data were inadequate to navigate such complexities.

The crises of the 1970s gave rise to initiatives like the establishment of the Department of Energy in 1977 and the development of early energy models capable of analyzing the interplay between supply, demand, and technology development. One such model was the Project Independence Evaluation System (PIES); however, those early modeling systems often lacked a comprehensive, integrated approach to evaluating the energy system. By the early 1980s, it became evident that a more integrated, robust modeling system was needed. The U.S. required models that could simulate the behavior of interconnected energy systems, account for policy impacts, and provide insights into long-term consequences. In addition, since the intent was to assess the significant changes to energy policy that would impact how energy was produced, transported, and consumed, the modeling system needed to represent the underlying infrastructure. Unlike trend models, which rely solely on historical data and may overlook critical shifts in policy, markets, or technologies, structural models are essential for capturing the transformative impacts of these changes and provide a robust framework for decision-making.

1984: OnLocation is Formed to Conduct Forward-Looking Analysis

In 1984, OnLocation was established to fill the critical gap in modeling and analysis of the evolving energy markets. Initially, the company focused on developing and contributing to specialized systems designed to address pressing questions of the day. Over time, OnLocation’s expertise expanded significantly, culminating in its instrumental role in assisting the U.S. Energy Information Administration with the development of the National Energy Modeling System (NEMS). This collaboration not only advanced energy modeling capabilities but also established a foundation of expertise that continues to benefit OnLocation’s clients today – through the ongoing application of NEMS.

Testimonial: OnLocation’s Contributions to Energy Policy

A former Department of Energy senior executive provides an excellent summary of OnLocation’s pivotal contributions during these formative years:

Since your inception and for roughly three decades, we worked together to produce quantitative analyses of energy markets, constructing models along the way to provide insight and transparency to important energy issues. Throughout this time, the staff I worked with were dedicated and talented analysts that could quickly come to understand complex energy issues and digest them for dissemination to a wide audience with diverse backgrounds. 

At first, in the 1980s, we worked together to produce financial analyses of the electric power industry to understand the health of the industry and implications of nuclear powerplant construction on electric utilities financial reports. OnLocation staff digested vast quantities of financial data and constructed simple models to analyze the impact that various factors could have on the viability of constructing a nuclear plant. This work culminated in a Senate hearing where EIA testified alongside Governor Mario Cuomo on the impacts of completing the Shoreham Nuclear powerplant.

In the 1990’s, OnLocation was instrumental in helping the DOE formulate policy positions with respect to the deregulation of the electric power industry. Both DOE and OnLocation staff provided numerous briefings and analyses to regulators, lawmakers, and a reluctant electric power industry as to the benefits that deregulation could provide to consumers. Also, during this time OnLocation helped the DOE work alongside the EPA to understand the environmental implications of various proposals to control electric powerplant emission of carbon, sulfur dioxide, nitrogen oxides and mercury. This work was used by OMB to develop policy proposals for the Administration.

Notwithstanding all the individual standalone models and analyses produced by OnLocation for DOE, its most likely greatest contribution to understanding energy markets was in its assistance in developing the National Energy Modeling System and producing various analyses, both for EIA and for other OnLocation clients. OnLocation’s help was multifaceted, combining expert system design and coding, researching new sources of pertinent information, and explaining model outcomes to policy analysts and decision makers.

For more than three decades, I worked alongside OnLocation, which I consider to be the best consulting firm that I have worked with in my government service. I cannot say enough about the staff. The staff are dedicated, and they might not always tell you what you want to hear, but they do tell you what you should know. 

Building on a Legacy: OnLocation’s Forward-Looking Culture

As OnLocation looks ahead, the company brand remains steadfast in its commitment to delivering the expertise and dedication that have defined its legacy. This forward-thinking approach is exemplified by the publication of its inaugural Energy Horizons to 2050 report, leveraging the company’s own enhanced version of NEMS (OL-NEMS). This milestone work addresses some of today’s most pressing energy challenges, including surging electricity demand from data centers, the complexities of achieving a Net Zero future, the role of critical minerals, advancements in energy storage, and the evolving contributions of nuclear power.

By continuing to innovate and adapt to the changing energy landscape, OnLocation demonstrates its unwavering mission to provide actionable insights and modeling solutions. With an eye toward the next forty years, OnLocation is poised to remain a trusted partner in navigating the complexities of energy markets and shaping a sustainable, resilient energy future.