Review of MEDs Current Modelling System

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Review of MEDs Current Modelling System

• Presentation to
• Workshop on Future Directions for MED's Energy
  Modelling Efforts
• 8 June 2005
• By
• Ralph Samuelson
• Energy the Environment group
• Resources and Networks Branch

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Outline of Presentation

• Role of MEDs Modelling Efforts
• Overview of the Current Model
• Background
• Equilibrium Approach
• Electricity Supply
• Gas Supply
• Demands
• Greenhouse Gases

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Role of MEDs Modelling Efforts
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Objectives of MEDs Modelling Efforts

• Inform the development of New Zealand's energy
  and environmental policies
• Meet New Zealand's reporting obligations under
  the United Nations Framework Convention on
  Climate Change (UNFCCC)
• Support decision-making in the private sector

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Modelling Team Outputs

• Energy Outlook
• Last one published October 2003
• Next one planned for early 2006
• National Communications to the UNFCCC
• 4th National Communication due 1 January 2006
• Special analyses as requested by Ministers
• Research on specific model assumptions

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How Do We Meet These Requirements?

• Consistency requires us to use a single modelling
  framework
• This modelling framework provides a comprehensive
  picture of New Zealand energy
• All fuels and electric power
• All consuming sectors and industries
• Special topics may require special models
• A long-term view is appropriate given focus on
  policy and infrastructure decisions
• Currently model five year periods going out 25
  years

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New Zealands Two Parallel Energy Systems

• Oil and oil products Used almost exclusively by
  vehicles (transport, agriculture, construction)
• 48.8 of consumer energy in 2003
• Everything else, including electric power Used
  almost exclusively in stationary applications
• 51.2 of consumer energy in 2003
• Historically, our modelling emphasis has been on
  everything else
• Key policy issues were here, including electric
  power supply and market issues, gas depletion,
  renewables
• Is this emphasis still appropriate?
• Increasing policy interest in oil supply,
  greenhouse gases, and transport issues

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Overview of the Current Model
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The SADEM Model

• Current model is known as the Supply and Demand
  Equilibrium Model or SADEM
• Originated in early 90s
• NZIER (John Culy, Stephen Gale, Tracy Mears) and
  Grant Reed involved
• Historically has suffered from some periods of
  neglect
• Originally implemented in spreadsheets with C
  electric power model

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The Big Picture

• SADEM A collection of models
• Supply of electricity and various fuels
• Demands by sector/industry
• Most models quite simple
• Big exception electric power and renewables
  supply

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The Big Unifier Equilibrium Solution
Forestry Basic Metals Petrochemicals Demand
Other Industrial And Commercial Demand
Residential Demand
Transport Demand
Electric Power and Renewables
(Prices Flow Up, Demand Flows Down)
Oil Product Supply
Coal Supply
Gas Supply
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Equilibrium Solution Algorithm
Find Gas Year of Exhaustion
Find Electric Power Prices
Find Generation Plant Expansion
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Electric Power and Renewables The Only
Complicated Model
Winter Spring Summer Autumn
550 Times

• Move through the seasons of the year
  successively, but keep repeating the same year
• For each iteration, draw a hydro inflow from the
  triangular distribution

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Triangular Inflow Distribution

Seasonal Hydro Inflows in TWH
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Required End of Season Reservoir Levels Based on
Most Expensive Plant Type Used That Season
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Demand within a Season Represented With Load
Duration Curve
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Generation Dispatch
MWs
Storable Hydro
Gas Combined Cycle
Coal
Renewables o/t Storable Hydro Co-Gen
1 2 3 4 5 6 Load Duration
Curve Segment
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Impact of Inflows on Dispatch
Wet Year
Dry Year
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Calculation of Electricity Prices
Variable Cost (/kwh)
Percent x Variable Cost
Percent on Margin
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Example Plant Expansion Profitability Calculation
for Coal Plant
Variable Cost (/kwh)
Percent x Variable Cost
Percent on Margin

• Assume fixed costs of new coal plant would be
  .01/available hour
• Then Profit per Available Hour for Coal Plant
• .0386 Savings 30 x .10 Variable Cost
  .01 Fixed Costs
• (.0014)
• Plant would not be profitable.

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Gas Prices Based on Year of Exhaustion
Potential Production
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Gas Price Calculation
Price
LNG Price
Assumed 2007 Price
2007
Year of Exhaustion
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Residential Demand Step 1

• Residential demand is estimated econometrically
  in two steps
• Step 1 - Estimate total residential energy demand
• Demand is a function of
• Average priceprice per unit of useful energy
• GDP
• Degree days
• Prior year effective demand
• Demand and price are weighted by useful energy
  delivered100 of electricity 80 of gas 60 of
  oil 30 of coal.

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Residential Demand Step 2

• Step 2 - Estimate shares for effective energy use
  of each fuel type
• This will be function of
• Price
• Prior year share

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Industrial and Commercial Demand

• Projected electric power and fuel demand for
  major heavy industries (aluminium, steel, urea,
  methanol, and refineries) is input directly,
  generally based on the advice of the companies
  involved
• Projected forestry demand for grid electricity,
  gas, coal, oil and self-supplied electricity is
  based on MAF projections of timber harvest and
  pulp paper processed, along with some constant
  multipliers
• Demands for the residual Other Industrial and
  Commercial category are obtained in a two step
  process, very similar to residential demand

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Transport Demand

• All transport demand models are simple
  econometric models
• Petrol and road diesel demand is function of
  price, GDP, and prior year demand
• Additional dummy variable makes road diesel
  demand grow more quickly after 1993
• Domestic jet fuel and international jet fuel
  demand are straight line trend extrapolations
• Domestic sea heavy fuel oil, international sea
  heavy fuel oil, domestic sea diesel, and
  international sea diesel are straight line trend
  extrapolations
• Rail diesel is assumed to remain constant

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Greenhouse Gas Emissions

• CO2 emissions are based on emission factors for
  each fuel type
• Non-CO2 greenhouse gas emissions are not
  currently in the model, but we are planning to
  add them in the next few weeks
• These will be based on emission factors for
  combinations of specific fuels and types of demand

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Recent and Planned Model Enhancements

• Presentation to
• Workshop on Future Directions for MED's Energy
  Modelling Efforts
• 8 June 2005
• By
• Ralph Samuelson
• Energy the Environment group
• Resources and Networks Branch

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Software

• Done
• Software extensively rewritten and cleaned-up
• Solution process completely automated
• Covec and Infometrics Model Review
• In Progress
• Non-CO2 greenhouse gas outputs
• Under Consideration
• Implement Covec recommendations
• Transport fleet model
• Technical advisory committee

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Data

• Done
• Data updated and cleaned-up
• New East Harbour renewables cost study
• NIWA hydro inflows study
• In Progress
• Covec heavy industry demand study
• Emerging supply side energy technologies study
• Gas and coal resource assumptions review
• World oil price assumptions review
• Under Consideration
• Emerging demand side energy technologies study

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Transparency and Stakeholder Involvement

• Done
• Improved MED Energy Projections website
• Covec stakeholder review
• This workshop
• In Process
• Comprehensive model documentation
• Under Consideration
• Further workshops to review model results