The National Energy Modeling System (NEMS) developed by the Energy Information Administration (EIA) of the U.S Department of Energy (DOE) is a computer based energy-economy modeling system. The model is used by EIA to project energy supply and demand economics for the next 25 years – the time period for which the technology, demographic profile and economic conditions are fairly well understood to represent the energy market within a reasonable degree of confidence. NEMS models the complex interactions of the producers, consumers, intermediaries, technological advances and energy policies to establish supply-demand equilibrium.
Energy markets are very geography specific; energy resources, price, demand, customer preference and consumption patterns vary widely across the United States. To address these differences, NEMS has come with up with a regional model. Forecasts based on NEMS are updated annually and published in Annual Energy Outlook (AEO). The AEO projections are based on current Federal, State and local legislations in place and do not cover pending, proposed legislations. However, NEMS as a model can be used to do a “what-if” analysis on proposed government laws and regulations on the economics of energy. NEMS covers technology, improvements and their characteristics such as initial capital cost, operating cost, date of availability and efficiency over time.
The NEMS systems has several modules that models the 1) Supply side (Oil & Gas Supply Module, Natural Gas T&D module, Coal Market Module, Renewable Fuels Module), 2) Demand side (Residential Demand Module, Commercial Demand Module, Transportation Demand Module, Industrial Demand Module), 3) Macro-economic activity, 4) International energy price, supply, demand forecasts at the regional or country level ( International Energy Module), 5) Domestic electricity supply, demand and pricing covering areas of generation, transmission and distribution subject to extraneous conditions including tax assumptions, cost of capital, O& M costs, emission rates, transmission constraints etc. 6) Domestic refinery operations and capacity expansion requirements (Petroleum Market Module) and lastly 7) the interaction between the different modules to achieve supply demand equilibrium in a iterative manner (Integration Module).
NEMS is fully documented. The input, output files and source code required to replicate the AEO Outlook with NEMS is available for public domain use. However, NEMS uses proprietary macroeconomic model and optimization modeling libraries that are highly expensive, making the model cost prohibitive for the most.