[Report#:DOE/EIA-0581(2000)]
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The residential demand module (RDM) forecasts energy consumption by Census division for seven marketed energy sources plus solar and geothermal energy. RDM is a structural model and its forecasts are built up from projections of the residential housing stock and of the energy-consuming equipment contained therein. The components of RDM and its interactions with the NEMS system are shown in Figure 5. NEMS provides forecasts of residential energy prices, population, and housing starts, which are used by RDM to develop forecasts of energy consumption by fuel and Census division. Figure 5. Residential Demand Module Structure RDM incorporates the effects of four broadly-defined determinants of energy consumption: economic and demographic effects, structural effects, technology turnover and advancement effects, and energy market effects. Economic and demographic effects include the number, dwelling type (single-family, multi-family or mobile homes), occupants per household, and location of housing units. Structural effects include increasing average dwelling size and changes in the mix of desired end-use services provided by energy (new end uses and/or increasing penetration of current end uses, such as the increasing popularity of electronic equipment and computers). Technology effects include changes in the stock of installed equipment caused by normal turnover of old, worn out equipment with newer versions which tend to be more energy efficient, the integrated effects of equipment and building shell (insulation level) in new construction, and in the projected availability of even more energy-efficient equipment in the future. Energy market effects include the short-run effects of energy prices on energy demands, the longer-run effects of energy prices on the efficiency of purchased equipment and the efficiency of building shells, and limitations on minimum levels of efficiency imposed by legislated efficiency standards. Housing Stock Submodule The base housing stock by Census division and dwelling type is derived from EIA’s 1997 Residential Energy Consumption Survey (RECS). Each element of the base stock is retired on the basis of a constant rate of decay for each dwelling type. RDM receives as an input from the macroeconomic activity module forecasts of housing additions by type and Census division. RDM supplements the surviving stocks from the previous year with the forecast additions by dwelling type and Census division. The average square footage of new construction is based on recent upward trends developed from the 1997 RECS. Appliance Stock Submodule The installed stock of appliances is also taken from the 1997 RECS. The efficiency of the appliance stock is derived from historical shipments by efficiency level over a many-year interval for the following equipment: heat pumps, gas furnaces, central air conditioners, room air conditioners, water heaters, refrigerators, freezers, stoves, dishwashers, clothes washers, and clothes dryers. A linear retirement function with both minimum and maximum equipment lives is used to retire equipment in surviving housing units. For equipment where shipment data are available, the efficiency of the retiring equipment varies over the projection. In early years, the retiring efficiency tends to be lower as the older, less efficient equipment in the stock turns over first. Also, as housing units retire, the associated appliances are removed from the base appliance stock as well. Additions to the base stock are tracked separately for housing units existing in 1997 and for cumulative new construction. As appliances are removed from the stock, they are replaced by new appliances with generally higher efficiencies due to technology improvements, equipment standards, and market forces. Appliances added into new construction are accumulated and retired parallel to appliances in the existing stock. Appliance stocks are maintained by fuel, end use, and technology as shown in residential box. Residential
Demand Module Table
Technology Choice Submodule
Fuel-specific equipment choices are made for both new construction and
replacement purchases. For new construction, initial heating system shares
(provided by the most recently available Census Bureau survey data covering
new construction, currently 1997) are adjusted based on relative life cycle
costs for all competing technology and fuel combinations. Once new home
heating system shares are established, the fuel choices for other services,
such as water heating and cooking, are determined based on the fuel chosen
for space heating. For replacement purchases, fuel switching is allowed
for an assumed percentage of all replacements but is dependent on the estimated
costs of fuel-switching (switching from electricity to gas heating is assumed
to involve the costs of running a new gas line).
For both replacement equipment and new construction, a “second-stage” of
the equipment choice decision requires selecting from several projected
available efficiency levels. The projected efficiency range of available
equipment represents a “menu” of efficiency levels and installed cost combinations
projected to be available at the time the choice is being made. Costs and
efficiencies for selected appliances are shown in the table on page 27,
derived from the report Assumptions to the Annual Energy Outlook 2000.16
At the low end of the efficiency range are the minimum levels required
by legislated standards. In any given year, higher efficiency levels are
associated with higher installed costs. Thus, purchasing higher than the
minimum efficiency involves a trade-off between higher installation costs
and future savings in energy expenditures. In RDM, these trade-offs are
calibrated to recent shipment, cost, and efficiency data. Changes in projected
purchases by efficiency level are based on changes in either the installed
capital costs or changes in the first-year operating costs across the available
efficiency levels. As energy prices increase, the incentive of greater
energy expenditures savings will promote increased purchases of higher-efficiency
equipment. In some cases, due to government programs or general projections
of technology improvements, projected increases in efficiency or decreases
in the installed costs of higher-efficiency equipment will also promote
purchases of higher-efficiency equipment.
Shell Integrity Submodule
Shell integrity is also tracked separately for the existing housing stock
and the stock of cumulative new construction. Shell integrity for existing
construction is assumed to respond to increases in real energy prices by
becoming more efficient. There is no change in existing shell integrity
when real energy prices decline. New shell efficiencies are projected to
increase, based on recent trends in shell efficiency measures and building
codes. All shell efficiencies are subject to a maximum shell efficiency
based on studies of currently available residential construction methods.
Distributed Generation Submodule
Distributed generation equipment with explicit technology characterizations
is also modeled for residential customers. Currently, two technologies
are characterized, photovoltaics and fuel cells. The submodule incorporates
historical estimates of photovoltaics (residential-sized fuel cells are
not expected to be commercialized until after 2001) from its technology
characterization and exogenous penetration input file. Program-based photovoltaic
estimates for the Department of Energy’s Million Solar Roofs program are
also input to the submodule from the exogenous penetration portion of the
input file. Endogenous, economic purchases are based on a penetration
function driven by a cash flow model which simulates the costs and benefits
of distributed generation purchases. The cash flow calculations are developed
from NEMS projected energy prices coupled with the technology characterizations
provided from the input file.
Potential economic purchases are modeled by Census division and technology
for all years subsequent to the base year. The cash flow model develops
a 30-year cost-benefit horizon for each potential investment. It includes
considerations of annual costs (down payments, loan payments, maintenance
costs and, for fuel cells, gas costs) and annual benefits (interest tax
deductions, any applicable tax credits, electricity cost savings, and water
heating savings for fuel cells) over the entire 30-year period. Penetration
for a potential investment in either photovoltaics or fuel cells is a function
of whether it achieves a cumulative positive cash flow, and if so, how
many years it takes to achieve it.
Once the cumulative stock of distributed equipment is projected, reduced
residential purchases of electricity are provided to NEMS. For fuel cells,
increased residential natural gas consumption is also provided to NEMS
based on the calculated energy input requirements of the fuel cells, partially
offset by natural gas water heating savings from the use of waste heat
from the fuel cell.
Fuel Consumption Submodule
The fuel consumption submodule modifies base year energy consumption intensities
in each forecast year. Base year energy consumption for each end use is
derived from energy intensity estimates from the 1997 RECS. The base year
energy intensities are modified for the following effects: (1) increases
in efficiency, based on a comparison of the projected appliance stock serving
this end use relative to the base year stock, (2) changes in shell integrity
for space heating and cooling end uses, (3) changes in real fuel prices—short-run
price elasticity effects, (4) changes in square footage, (5) changes in
the number of occupants per household, (6) changes in weather relative
to the base year, (7) adjustments in utilization rates caused by efficiency
increases (efficiency “rebound” effects), and (8) reductions in purchased
electricity and increases in natural gas consumption from distributed generation.
Once these modifications are made, total energy use is computed across
end uses and housing types and then summed by fuel for each Census division.
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