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At least 235 records · Page 13

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DOE OSTI2014

Maturation of biomass‐to‐biofuels conversion technology pathways for rapid expansion of biofuels production: a system dynamics perspective

Abstract The Biomass Scenario Model ( BSM ) is a system‐dynamics simulation model intended to explore the potential for rapid expansion of the biofuels industry. The model is not predictive — it uses scenario assumptions based on various types of data to simulate industry development, emphasizing how incentives and technological learning‐by‐doing might accelerate industry growth. The BSM simulates major sectors of the biofuels industry, including feedstock production and logistics, conversion, distribution, and end uses, as well as interactions among sectors. The model represents conversion of biomass to biofuels as a set of technology pathways, each of which has allowable feedstocks, capital and operating costs, allowable products, and other defined characteristics. This study and the BSM address bioenergy modeling analytic needs that were identified in recent literature reviews. Simulations indicate that investments are most effective at expanding biofuels production through learning‐by‐doing when they are coordinated with respect to timing, pathway, and target sector within the biofuels industry. Effectiveness metrics include timing and magnitude of increased production, incentive cost and cost effectiveness, and avoidance of windfall profits. Investment costs and optimal investment targets have inherent risks and uncertainties, such as the relative value of investment in more‐mature versus less mature pathways. These can be explored through scenarios, but cannot be precisely predicted. Dynamic competition, including competition for cellulosic feedstocks and ethanol market shares, intensifies during times of rapid growth. Ethanol production increases rapidly, even up to Renewable Fuel Standards‐targeted volumes of biofuel, in simulations that allow higher blending proportions of ethanol in gasoline‐fueled vehicles. Published 2014. This article is a U.S. Government work and is in the public domain in the USA. Biofuels, Bioproducts, Biorefining published by John Wiley & Sons, Ltd on behalf of Society of Chemical Industry.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗

DOE OSTI2024

Algae to HEFA : Economics and potential deployment in the United States

Abstract To reach the goals set by the US Department of Energy's Sustainable Aviation Fuel (SAF) Grand Challenge, currently available feedstocks may be insufficient. Giving priority to developing, prototyping and reducing the cost of algal feedstock before investing and lining up locations is important. As the production of algal feedstocks advances, a simplified conversion approach using more mature technologies can help reduce the investment risk for algae‐based fuels. Reducing process complexity to the steps described here [namely, conversion of lipids to HEFA (hydroprocessed esters and fatty acids) fuels and relegating the remainder of the biomass to anaerobic digestion or food/feed production] enables the near‐term production of algal SAF but presents challenging economics depending on achievable cultivation costs and compositional quality. However, these economics can be improved by present‐day policy incentives. With these incentives, the modeled algae‐to‐HEFA pathway could reach a minimum fuel selling price as low as $4.7 per gasoline gallon equivalent depending on the carbon intensity reduction that can be achieved compared with petroleum. Uncertainty about algal feedstock production maturity in the current state of technology and the future will play a large role in determining the economic feasibility of building algae‐to‐HEFA facilities. For example, if immaturity increases the feedstock price by even 10%, SAF production in 2050 is about 58% of the production which could have been achieved with mature feedstock. Additionally, growth in this conversion pathway can be notably boosted through the inclusion of subsidies, and also through higher‐value coproducts or higher lipid yields beyond the scope of the process considered here.

09 BIOMASS FUELS↗

DOE OSTI2026

Simulating competition in the US bioeconomy to produce hard‐to‐electrify transportation fuels using limited biomass resources

This study presents a novel bioeconomy optimization framework, BiOpt, designed to address critical questions regarding the strategic use of limited US biomass resources for biofuel production. By integrating detailed techno-economic analyses, life cycle assessments, and resource assessment data, BiOpt optimizes resource distributions across competing technologies to maximize economic performance and/or minimize greenhouse gas emissions. Using feedstock scenarios from the 2023 Billion Ton Study, the analysis explores optimal biomass allocations across sustainable aviation fuel, diesel, and marine biofuel conversion pathways given varying production targets and policy incentives. Results demonstrate distinct feedstock preferences and pathway utilizations when prioritizing economic returns vs. emissions reductions. For instance, fats, oils, and greases were highly favored in cost-optimized scenarios, while low-carbon feedstocks such as wet waste dominated greenhouse gas-minimized strategies. The findings underscore the pivotal role of policy incentives and technological advances in shaping biofuel supply chains and provide actionable insights for scaling sustainable biofuel production to decarbonize hard-to-electrify sectors. This framework offers a robust tool for policymakers and stakeholders to evaluate biofuel strategies that balance energy output, economic viability, and environmental impact.

09 BIOMASS FUELS↗

DOE OSTI2020

China’s Booming Plug-in Electric Vehicle Market—How Will It Continue?

The plug-in electric vehicle (PEV) is recognized as a pivotal component in transportation energy security and technology innovation in China. With government incentives and substantial capital investments, the Chinese PEV market has become one of the largest in the world. However, is this market boom ephemeral or will it be continuing? This chapter provides a general review of the Chinese PEV market mainly from the consumer per-spective, by summarizing the characteristics of the vehicle policies and consumer concerns in the PEV market in recent years. Moreover, it intro-duces detailed examples on how the policies, technologies, and infrastruc-ture shape the market. In addition to employing large amounts of reliable data from the China Automotive Technology and Research Center for the review, the authors also adopted a quantitative analysis tool—the New Energy and Oil Consumption Credits model—to project the potential in-dustrial impacts of the government policies in multiple scenarios. Based on the findings, it seems that the prosperity of the PEV market, incentivized by the government, will continue in the short run. The direct subsidies to PEV from the government will gradually phase out, and the supply-side push policies such as the dual-credit policy and other charging infrastruc-ture incentives will work as the invisible hand to force the automakers to invest more in the PEV segment. However, in the long run, innovation in PEV technology and business models, together with consumer acceptance will be the major factors that can sustain further market growth.

Ou, Shawn↗

DOE OSTI2018

A Platform for Innovation and Standards Evaluation: a Case Study from the OpenMRS Open-Source Radiology Information System

Open-source development can provide a platform for innovation by seeking feedback from community members as well as providing tools and infrastructure to test new standards. Vendors of proprietary systems may delay adoption of new standards until there are sufficient incentives such as legal mandates or financial incentives to encourage/mandate adoption. Moreover, open-source systems in healthcare have been widely adopted in low- and middle-income countries and can be used to bridge gaps that exist in global health radiology. Since 2011, the authors, along with a community of open-source contributors, have worked on developing an open-source radiology information system (RIS) across two communities—OpenMRS and LibreHealth. The main purpose of the RIS is to implement core radiology workflows, on which others can build and test new radiology standards. This work has resulted in three major releases of the system, with current architectural changes driven by changing technology, development of new standards in health and imaging informatics, and changing user needs. At their core, both these communities are focused on building general-purpose EHR systems, but based on user contributions from the fringes, we have been able to create an innovative system that has been used by hospitals and clinics in four different countries. We provide an overview of the history of the LibreHealth RIS, the architecture of the system, overview of standards integration, describe challenges of developing an open-source product, and future directions. Our goal is to attract more participation and involvement to further develop the LibreHealth RIS into an Enterprise Imaging System that can be used in other clinical imaging including pathology and dermatology.

61 RADIATION PROTECTION AND DOSIMETRY↗

DOE OSTI2021

Increasing the Number of Installed Residential Heat Pump Water Heaters in the USA Through Improved Technology and Utility Programs

Heat pump water heaters (HPWHs) offer an efficient alternative to electric resistance water heaters, but they suffer from limited market penetration. This paper reviews the current state of HPWHs in the USA, focusing on technology developments and programs to increase adoption. What technological improvements are needed to make HPWHs a good fit in more homes? Additionally, what are the best ways of promoting HPWHs to consumers? Improved communication and controls will allow HPWHs to provide demand response and follow dynamic utility rates. To enable fuel-switching, HPWHs are being developed that only need a standard 120V outlet. Split HPWHs can alleviate the cooling and noise that limit the use of HPWHs in small homes, multifamily buildings, and cold climates. Additionally, new utility programs aim to train installers and provide incentives to distributors to increase the number of HPWHs installed. Some utilities offer novel incentive programs that have led to increased customer uptake. Those advances, coupled with improved controls for load shifting and new products such as split HPWHs and HPWHs that can run on 120V power, may finally move the market forward.

32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATI↗

DOE OSTI2020

Technologies and policies to decarbonize global industry: Review and assessment of mitigation drivers through 2070

Fully decarbonizing global industry is essential to achieving climate stabilization, and reaching net zero greenhouse gas emissions by 2050–2070 is necessary to limit global warming to 2 °C. This paper assembles and evaluates technical and policy interventions, both on the supply side and on the demand side. It identifies measures that, employed together, can achieve net zero industrial emissions in the required timeframe. Key supply-side technologies include energy efficiency (especially at the system level), carbon capture, electrification, and zero-carbon hydrogen as a heat source and chemical feedstock. There are also promising technologies specific to each of the three top-emitting industries: cement, iron & steel, and chemicals & plastics. These include cement admixtures and alternative chemistries, several technological routes for zero-carbon steelmaking, and novel chemical catalysts and separation technologies. Crucial demand-side approaches include material-efficient design, reductions in material waste, substituting low-carbon for high-carbon materials, and circular economy interventions (such as improving product longevity, reusability, ease of refurbishment, and recyclability). Strategic, well-designed policy can accelerate innovation and provide incentives for technology deployment. High-value policies include carbon pricing with border adjustments or other price signals; robust government support for research, development, and deployment; and energy efficiency or emissions standards. These core policies should be supported by labeling and government procurement of low-carbon products, data collection and disclosure requirements, and recycling incentives. In implementing these policies, care must be taken to ensure a just transition for displaced workers and affected communities. Similarly, decarbonization must complement the human and economic development of low- and middle-income countries.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗

DOE OSTI2025

Soft costs and EVSE – Knowledge gaps as a barrier to successful projects

There has been a recent push to increase access to electric vehicle (EV) charging infrastructure. The National Electric Vehicle Infrastructure (NEVI) program, part of the Bipartisan Infrastructure Law (BIL) has made significant funding available for major charging infrastructure projects along state thruways, and many state and local incentives exist for EV owners to install chargers in their homes. However, deployment of these chargers has not kept up with demand, primarily due to issues in project planning, permitting processes, and unforeseen delays. This paper serves as a review of the current understanding of these and other non-hardware costs in EV charging infrastructure projects (collectively known as “soft costs”). We found that soft costs in EV charging infrastructure projects are not well understood. Specifically, there is little agreement on how soft costs should be categorized and tracked, and less agreement still on best practices for controlling these costs and lowering barriers to infrastructure deployment. A broader review of EV charging infrastructure cost analyses shows that these costs can have significant impacts on project outcomes. EV charging infrastructure projects may be able to examine the success of the solar industry in lowering soft costs, and a similar effort may lower project costs significantly. Further work on standardizing and collecting data on EV charging infrastructure costs is required to begin addressing and controlling these costs.

32 - ENERGY CONSERVATION, CONSUMPTION, AND UTILIZA↗

DOE OSTI2014

Spheres of public conversation: Experiences in strategic environmental assessment

This paper draws on earlier research, a national review of Scottish SEA practice and a survey of practitioners and stakeholders engaged in SEA and spatial planning in one Scottish city-region, to explore claims being made in the academic literature for Strategic Environmental Assessment (SEA) as a tool for deliberative plan-making. We consider whether there is evidence that Scottish SEA practice is helping create more inclusive plan-making processes in light of recent legislative changes, thereby fulfilling one of the expectations of Scottish Government. The macro analysis found that although there are opportunities for stakeholders to engage in the Scottish SEA process the level in practice is extremely low, a finding which mirrors experience in England and elsewhere. The more detailed micro analysis reveals a more nuanced picture within the spatial planning system, however, suggesting the existence of two distinct spheres of public conversations, one characterised by active dialogue about the environmental effects of alternative strategies amongst public sector stakeholders and the other involving non-governmental stakeholders and community groups in a much more limited way. The paper concludes with a discussion of possible explanations for this outcome, concerning asymmetric incentive structures and the application of power, and a consideration of the implications in relation to the competing discourses of SEA. -- Highlights: • We examine the extent to which Scottish SEA is helping promote inclusive plan-making. • Low levels of stakeholder engagement generally in Scottish SEA. • Stronger SEA dialogue amongst public agencies than with the wider community. • Importance of incentive structures and power capture in framing SEA public conversations.

54 ENVIRONMENTAL SCIENCES↗

DOE OSTI2025

Energy-efficient multimodal mobility networks in transportation digital twins: Strategies and optimization

The study proposes a comprehensive Transportation Mobility (TransitMo) framework covering conceptual design, model formulation, optimization, simulation, and impact analysis of the transportation mobility system. TransitMo is composed of a transportation digital twin developed in Simulation of Urban MObility (SUMO) and an Intelligent Traffic Management and Control Center (ITMCC) that identifies the best ways to improve the movement of people within urban areas using various modes of transportation. This study encompasses advanced modeling techniques, algorithms, and strategic testing to optimize energy efficiency and mobility in a multimodal shared mobility network. TransitMo’s practical applications are exemplified through a city-scaled simulation network in Chattanooga, TN, employing demographic data to analyze historical traffic patterns and forecast future demands. Central to this methodology are three models: the User Preference Model (UP), the Energy Consumption Model (EC), and the System Optimization Model (SO). These models work in concert to iteratively devise the optimal travel incentives and minimize the total system cost in a real-time manner. In conclusion, test results verified that the proposed adaptive incentive program and optimized bus scheduling can improve network performance by increasing public transit ridership.

42 ENGINEERING↗

DOE OSTI2018

Residual value analysis of plug-in vehicles in the United States

Knowledge about the value of used plug-in electric vehicles (PEVs), known as residual value, is critical for potential PEV purchasers, corporations, and governments who wish to consider the lifetime cost effectiveness of PEVs. In this study, we investigate the residual values of PEVs and compare them with those of other vehicle powertrain technologies using the “true market value” data from Edmunds.com, and considering U.S. federal incentives. We define the adjusted retention rate as the ratio between resale value and the manufacturer’s suggested retail price, subtracting incentives. We develop statistical models to quantify the effects of powertrain technologies on residual value while controlling key factors, including vehicle size, brand, and market segments. We find that the long-range high-performance Tesla Model S holds value significantly better than any other vehicle type evaluated, including internal combustion engine vehicles. Hybrid electric vehicles and plugin hybrid electric vehicles are comparable to one another. They hold slightly less value than internal combustion engine vehicles, but significantly more than short-range (<125 miles) battery electric vehicles. However, short-range battery electric vehicles have a faster improvement in 3-year adjusted retention rate than any other powertrain technology from model year 2013–2014. Finally, the other factor that significantly influences adjusted retention rate is the home country of the vehicle manufacturer (e.g., United States, Japan, or Germany).

32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATI↗

DOE OSTI2025

Solar cities: A case study analysis of city-level enablers of expanded solar energy access

Rooftop solar photovoltaic (PV) adoption can benefit households by reducing electricity bills and enhancing energy resiliency. Low and moderate-income (LMI) households have been less likely to adopt PV and experience these benefits in the United States than higher-income households. Adopter income trends are often explored through quantitative analysis with limited explanatory power. Our quantitative analysis only explains around one-third of city-level variation in LMI adoption trends through socioeconomic factors such as median home values and income inequality and PV market factors such as cumulative adoption and incentives. We implement semi-structured interviews in three case studies of cities with relatively high rates of LMI PV adoption to better understand the factors that explain PV adopter income trends. The case studies partly reiterate findings from quantitative analysis, such as the role of PV incentives. The case studies reveal a broader set of LMI adoption drivers that are missed in quantitative analyses. The case studies show how city contexts can affect LMI adoption, such as the role of supportive city governments. The case studies also reveal the importance of partnerships, such as partnerships between city governments and state LMI PV program implementers. Finally, interviewees emphasized the importance of building trust among prospective LMI PV adopters. Interviewees suggested that partnerships, outreach, and consumer protection measures were crucial to building trust in PV installers among LMI households.

Adoption↗

DOE OSTI2023

Economic and operational investigation of CO 2 sequestration through enhanced oil recovery in unconventional reservoirs in Colorado, USA

The ongoing CCUS commercial projects are highly relied on the support of government incentives due to massive capital investment. Here, this study analyzes the economics of carbon capture utilization and sequestration (CCUS) projects, shows a state-wide CCUS deployment exercise, followed by simulation results of enhanced oil recovery (EOR) based CO 2 storage in unconventional reservoirs. The comprehensive economic analysis of capture, transportation, sequestration costs, enhanced 45Q tax credits, and EOR revenue implies the practicality of CO 2 -EOR to offset the high CCUS costs. With the economics understanding, we study the top CO 2 sources, existing CO 2 pipelines, and sequestration sinks in the state of Colorado, USA. This paper next presents results from EOR simulation in one section of the unconventional Denver-Julesburg (DJ) Basin Niobrara and Codell reservoirs. The simulation model is based on a geological static model, incorporated with hydraulic fracture stimulation, history matched to production, and calibrated to the microseismic and time-lapse surface seismic data. The CO 2 -EOR simulation results show that oil production can be increased and more CO 2 stored with: a longer primary production period; the presence of a shut-in period; higher injection rates; and multi-well injectors. The modeling results show that about 7–10 Mscf of CO 2 will be stored when recovering 1 stb of EOR oil. By adding the enhanced oil revenue and the carbon credits together, it is estimated that the most economic case can generate $\$13$ MM when oil price is assumed to be $\$80$/stb, and the EOR oil revenue is 3.4 times greater than that generated from 45Q incentives. It corresponds to the scenario that a five-year primary production is followed by CO 2 injection into four wells with the sequence of injection (4 MMscf/day for 6 months), shut-in (6 months) and production (12 months). The best practices in this study will provide valuable insights for similar CCUS projects in other unconventional fields. Furthermore, this study defines a term named “Carbon Neutrality Index (CNI)” by comparing the amount of CO 2 stored with that burned by EOR oil. The CNI value of 0 indicates the enhanced oil is carbon neutral; a negative CNI value implies there is a net reduction in carbon emission. The 4-year huff-n-puff (HnP) simulation leads to a positive CNI value, indicating that the EOR oil generated in this process is not carbon neutral yet.

03 NATURAL GAS↗

DOE OSTI2019

Characteristics of human-climate feedbacks differ at different radiative forcing levels

The human and Earth systems are intricately linked: climate influences agricultural production, renewable energy potential, and water availability, for example, while anthropogenic emissions from industry and land use change alter temperature and precipitation. Such feedbacks have the potential to significantly alter future climate change. These feedbacks may also exert significant changes on 21st-century energy, agriculture, land use and carbon cycle projections, but little is known about their possible magnitudes, or about regional and sector dynamics under different forcing scenarios. Here we use an integrated Earth System Model (ESM) featuring bidirectional information exchange between an economically-oriented integrated assessment model and the ESM to examine how human-natural feedbacks operate under high and medium radiative forcing (RF) scenarios. Specifically, we examine the effect of changing land productivity on human systems, and the effect of changing land use/land cover and CO2 emissions on the Earth system. We find that the effect of coupling differs across radiative forcing levels and across regions, due to differences in the climate signal, human responses to those signals, and regional characteristics. In particular, we find reductions in cropland area due to feedbacks in both the medium and high RF scenarios. In the medium RF scenario, these reductions result in increased area for bioenergy and afforestation and reduced energy system CO2 emissions, as the carbon price in this scenario incentivizes low carbon energy sources and terrestrial carbon storage; these incentives are absent in the high RF scenario. These differences are key to understanding the possible future evolution pathways of the integrated Earth system in response to 21st century climate change. Additional models and hypothesis testing are needed to determine exactly when and how bidirectional feedbacks between human and Earth systems should be considered in future assessments.

Calvin, Katherine V.↗

DOE OSTI2025

Modeling distributed energy resource aggregations in security constrained unit commitment and economic dispatch

The Federal Energy Regulatory Commission (FERC) recently issued Order 2222, which requires all wholesale electricity markets in the US to allow distributed energy resources (DERs) to participate in the market as aggregated resources. These DER aggregations may be composed of many individual resources that are offered and dispatched by the market as a single entity. We present here a model of a distributed energy resource aggregator (DERA) that is scheduled by a market operator’s security constrained unit commitment (SCUC) and security constrained economic dispatch (SCED). The DERA model includes constraints for battery energy storage systems (BESSs), demand response resources (DRRs), and a simple distributed energy resource (DER). This paper describes a model for each resource type and presents two methods for the DERA to generate market offer curves: a profit-maximizing optimization to compute cost curves and a direct cost algorithm to determine dispatch costs for each resource and combine into cost curves. Once all participating DERAs are scheduled in SCUC/SCED, the model is then modified to dispatch individual DERs to maximize profit or minimize schedule deviation of the DERAs. A simulation of a representative day illustrates the DERA offers, the scheduled generation, and the DERA dispatch. Findings show the potential for unavoidable schedule deviations due to internal DER constraints and due to economic incentives to deviate from the SCUC/SCED schedules. This highlights the importance of DERA offer construction on market efficiency and system reliability. Novel aspects of our approach include: (1) We consider the asymmetry of price incentives impacting DERAs from the wholesale market compared to those impacting consumers from the retail market, as imposed by current regulations and laws. (2) We model aggregate consumer response through statistically parameterizable utility functions rather than a potentially impractical approach of modeling each individual consumer. (3) We show how to use the DERA operational dispatch model to create offers into the wholesale electricity market. (4) We show how DERAs may fail to meet their scheduled dispatch because the market offer format may not permit them to fully express their operational features such as intertemporal costs and constraints to the market.

aggregations↗

DOE OSTI2019

Quantifying adoption rates and energy savings over time for advanced energy-efficient manufacturing technologies

Energy-efficient manufacturing technologies can reduce energy consumption and lower operating costs for manufacturing facilities, but up-front costs and increased process complexity frequently lead to manufacturers being reluctant to adopt such technologies. To avoid overestimating the benefits of advanced energy-efficient manufacturing technologies, it is necessary to account for how quickly and how widely the technology will be adopted by manufacturers. This work develops a method for estimating manufacturing technology adoption rates using quantitative technology characteristics including energetic, economic, and technical criteria that capture both incentives (such as energy and cost savings) and disincentives (such as increased process complexity) for technology adoption. This method is unique in that it can be applied before or after a technology reaches the market; other adoption rate estimation methods require sales data and can only be applied post-market. Eleven technology characteristics are considered, with each characteristic weighted to reflect its impact on the overall technology adoption rate. Technology characteristic data is used to estimate model parameters for the Bass diffusion curve, which quantifies the change in the number of new technology adopters in a population over time. Finally, energy savings at the sector level are calculated over time by multiplying the number of new technology adopters at each time step with the technology’s facility-level energy savings. The proposed method is demonstrated with an application to glass industry manufacturing technologies using technology data obtained from the U.S. Department of Energy's 2017 bandwidth study. The potential energy savings for each technology and the rate at which each technology is adopted in the sector are quantified and used to identify the technologies which offer the greatest cumulative sector-level energy savings over a period of 20 years.

advanced manufacturing↗

DOE OSTI2019

Automated electrical demand peak leveling in a manufacturing facility with short term energy storage for smart grid participation

Demand side management of energy is a vital function in the smart grid that allows for greater integration of renewable energy resources, and is facilitated with economic incentives in energy and demand pricing schedules. Manufacturing systems can take advantage of these incentives to reduce their energy costs through active energy management. This paper is a simulation analysis on the implementation of a novel algorithm that levelizes the maximum power load of an industrial bakery that operates under an on-peak demand price structure. The algorithm takes advantage of an untapped thermal energy storage resource in the facility, a chilled glycol buffer tank, to level the short intra-day power oscillations that the facility experiences. One of the key advantages of the algorithm is that it does not require precise demand forecasting or complex control algorithms, such as model predictive control. Even with substantial error in peak power estimates (5%), the algorithm is expected to result in at least a 2% peak reduction. Under ideal prediction, the algorithm reduces the on-peak facility power maximum by 7.3% of the possible 9.0% reduction the storage can provide. Further, the algorithm uses very few facility specific inputs, and can readily be adapted for any facility with short intra-day oscillatory power profiles and untapped storage capacity. The key insight of the paper is the employment of a novel algorithm to leverage untapped energy storage in manufacturing facilities to transform them into smart grid participants with no major capital investment.

24 POWER TRANSMISSION AND DISTRIBUTION↗

DOE OSTI2023

Reserve and energy scarcity pricing in United States power markets: A comparative review of principles and practices

Here, errors in forecasting load and renewable-based generation in restructured power systems mean that independent system operators (ISOs) must procure sufficient operating reserves to keep the real-time operation of the system reliable and secure. But when procured reserves turn out to be insufficient in real-time due to the lack of resource capacity or ramp capability, operators often set higher prices for reserves and energy to encourage more supply, and to motivate consumers to decrease usage or shift it to other times. This procedure, which is called scarcity or shortage pricing, is a core feature of U.S. electricity markets. It is receiving increased attention from market designers and stakeholders because scarcity will become more important for spot price formation in the future with the increased penetration of zero-marginal cost renewables, and the shrinking role of fuel costs in setting prices. Scarcity pricing is implemented in various ways by different ISOs. These differences have practical implications for the level of prices and incentives for investment, operations, and demand modification. In this paper, general approaches and specific calculation procedures for reserve and energy scarcity pricing practices and calculations across the seven ISO-based U.S. power markets are reviewed and compared. A consistent terminology is used to facilitate the comparison. Current scarcity pricing practices are grouped into three approaches: (1) imposing an adder after the spot market is run; (2) including stepwise demand curves within market clearing procedures for non-contingency reserve products (e.g., the novel flexiramp product), which tends to yield longer right tails for energy scarcity premium curves; and (3) having stepwise demand curves for traditional contingency reserve products only, which results in shorter right tails in energy scarcity curves. A generic numerical example is presented to highlight the large practical differences among the reserve scarcity pricing approaches and specific implementations. To further investigate factors that contribute the most to demand curves differences among ISOs, a sensitivity analysis is performed. This analysis shows that the largest source of differences among the curves is the scarcity prices assumed in the case of severe scarcity, while the number of steps used and whether flexiramp is considered also yields important differences in scarcity prices. As renewable penetration increases, it will become increasingly crucial to employ administrative demand curves so that spot prices more effectively motivate supply and demand adjustments exactly when and where they are needed. This study shows that the different assumptions yield very different scarcity premiums for reserves and energy, and are likely to provide divergent incentives for resources to respond to shortages. It is concluded that to promote market efficiency, a reserve shortage demand curve should have at least three features: inclusion of the marginal value of reserve products at each shortage level, consideration of the magnitude and probability of supply contingencies, and avoidance of abrupt price discontinuities that can cause excessively volatile market outcomes.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗