What Can the NEMS Model Do and What Can’t It Do?

(Updated: 03/01/2021)

If you’re looking for proof of the flexibility of the National Energy Modeling System (NEMS), you don’t have to look much further than our current lineup of clients—which includes government, non-profit, and corporate organizations—and the wide range of energy and environmental questions we help them answer. These clients know that a NEMS-based analysis can provide useful and unbiased insights into many different scenarios.

When we talk to potential new clients, we are often asked, “Can the NEMS model be used to analyze X policy or Y technology?” The answer to these questions is often a qualified “yes.” While the model’s structure and scope make it ideal for exploring many questions, there are some limitations to the questions the NEMS model can effectively answer, as is true for any model. We can often work around those limitations, but in many cases, doing so will add time and expense to a project.

The flipside, of course, is that there are many scenarios for which NEMS really “shines.” These are the uses it was built for and they require very little in the way of customization. Here we explore three model limitations and contrast them with examples of scenarios that are ideally suited to NEMS

Three Limitations to the NEMS Model

1. Short-term forecasting

NEMS was built for long-range forecasting of the energy system. The model solves in annual increments to the year 2050. If you’re looking to know what will happen to gasoline prices next fall, or the impact of a power outage that lasts a few hours, it’s not the best tool. But, if you’re interested in the energy system’s response to policies, trends, and other system changes over the next few years and decades, it’s one of the best tools available.

2. Local or Global Impacts

NEMS works well for forecasting regional and national outcomes for the United States. Each module of NEMS, including the demand, supply, and conversion (e.g., electricity and refinery) sectors, reflects the regionality that best suits the data available and issues affecting that sector. NEMS cannot answer questions involving specific cities or towns, and only considers policies affecting other countries to the extent that they may impact energy prices or trade opportunities in the U.S. But regional or national level policies are ideal for analysis with NEMS.

3. Technologies with niche markets

Some of the energy questions we’re often asked to answer involve the long-term impact of certain technologies, such as a type of biofuel or other alternative energy source. For most well-established technologies, this presents no difficulties; they are already built into the model. For newer technologies, we can often modify the model to represent the technology and address the client’s needs. However, the NEMS model may not be able to say anything significant about certain new technologies whose market niche is very small or technologies that are not expected to be widely available until after 2050.

Where the NEMS Model Shines

Here are a few examples of energy policies and technologies for which the model works well without much customization:

• Integrated energy modeling is a core strength of the model. By “integrated” we mean an energy model that analyzes how multiple sectors interact and how actions in one sector might have a direct impact on another. For example, the model can be used to understand how a policy such as the 45Q sequestration tax credits might affect multiple sectors, including changes in fuel and electricity prices, competing power and industrial sources of CO₂ for enhanced oil recovery (EOR), and domestic oil production.
• Regional and national energy policies, such as CO₂ reduction scenarios, renewable tax credits, and vehicle efficiency standards.
• Power sector policies and technologies. The model includes a high level of technology and economic detail, especially in the power sector.
• Buildings sectors can be used to explore questions related to appliance or lighting standards, energy tax credits, and energy-saving technologies such as LED lights and rooftop solar.
• Transportation sector, especially alternative fuel vehicles and policies promoting energy efficiency and greenhouse gas reduction.
• Oil and gas supply. The NEMS model includes a rich level of detail about the plays and reservoirs that can be explored and/or developed, with timelines and production for each.
• Petroleum products and their substitutes. The model’s detailed liquid fuels model includes a range of biofuels and refinery processes that can address issues such as changes in crude types and demands.