Estimating Benefits of Publicly Funded Energy Technology Research: U.S. GPRA Benefits Analysis

1. Estimating Benefits of Publicly Funded Energy Technology Research: U.S. GPRA Benefits Analysis Brian Unruh, U.S. DOE Chip Friley, BNL Frances Wood, OnLocation, Inc. Mary Beth Zimmerman, Formerly U.S. DOE November 25, 2004

2. Why Benefits Analysis? • Portfolio management • Select a mix of R&D, deployment that achieves desired results • Keep R&D portfolio aligned with evolving needs • Congress wants to buy benefits, not technologies or activities • Public health, national defense, a clean environment • It’s required • 1992 Government Performance & Results Act (GPRA) • 2001 President’s Management Agenda (PMA)

3. The Ground Rules • Benefit estimates based on stated program output goals that are achievable with current funding levels. • For the budget, benefits are counted for only future program activities. • One baseline for all Programs • Energy prices, demographics, GDP, industrial output • Demands for energy services • Improvements in competing technologies • Assesses value of realizing Program goals • Benefits = difference between how energy system evolves with and without realizing the program goal. • No new policies

4. The GPRA Simple “logic chain” If you give me some $$, Budget, resources, inputs I’ll do something with it, Key activities making some progress each year Targets, milestones until I produce a product Program performance Outputs, program goals, end points which will provide the benefits you want Portfolio benefits Outcomes, impacts, Benefits

5. Program Plans Benefits Estimation Final Interim Final Inputs Activities Milestones Outputs Outcomes Outcomes • Increased Federal Research and knowledge New and existing Market funding Development • Research technologies with introduction • Basic advances improved cost and penetration Partner Final • Prototypes • Applied and/or of advanced funding Program Economic, • Demonstrations performance technology outputs environment, Employees Information become security, and Performance Paths Transforming disseminated starting knowledge market Contractors Informed public point for (realized & Enhanced conditions Partnerships benefits options) market Partners formed estimation penetration of Audits conducted Weatherization advanced Facilities Rulemaking technologies or State & local New codes & notices, public practices grants Knowledge standards hearings, analysis External Factors • Economic trends • Demographic trends • Energy trends • Government regulations and policies • Industry economic performance • Cost/performance of competing technologies • Energy prices • Commodity prices EERE GPRA Benefits Logic Chain • The GPRA process uses the outputs developed by the Program Offices to project technology adoption rates and resulting benefits. Source: John Mortensen

6. Modeling Tools • Technology and sector specific models • Buildings Energy Analysis Modeling System (BEAMS) • Powertrain Systems Analysis Toolkit (PSAT) • Green Power Market Model (GPMM) • Integrated energy economic models • National Energy Modeling System (NEMS) for mid-term benefits estimates (to 2025) • Market Allocation Model (MARKAL) for long-term benefits estimates (to 2050) • Integrated models provide a consistent economic framework for assessing all of EERE’s Program portfolio and for performing scenario and sensitivity analyses • Important to capture interactions where technologies target similar markets and to include price feedback effects

7. NAS/NRC Benefits Framework

8. The Current Metrics • Economic • Energy expenditure savings (mid-term) • Total energy system savings (long-term) • Environment • Primary non-renewable energy savings • Carbon emission reductions • Security/Reliability • Oil savings • Natural gas savings • Reductions in conventional, central power capacity additions

9. Sample GPRA MetricsFY2005 Budget Request The full documentation of the GPRA benefits estimates for the FY2005 budget request can be found at http://www.eere.energy.gov/office_eere/gpra_estimates_fy05.html

10. Proposed Metrics and Areas for Improvement • Proposed metrics for development • Power reliability • Local air quality and heath impacts • Areas for improvement • Develop alternative scenarios for option column • Develop methodology to incorporate risk • Improve model representation of market features that matter significantly to resulting market share • Regional variation • Niche markets • Consumer preferences

11. Estimating Benefits of Publicly Funded Energy Technology Research: U.S. GPRA Benefits Analysis Brian Unruh, U.S. DOE Chip Friley, BNL Frances Wood, OnLocation, Inc. Mary Beth Zimmerman (Formerly U.S. DOE) November 25, 2004

12. Extra Slides

13. EERE Reorganization Streamlined (re)organization facilitates performance management • TD: Clearly defined programs provide basis for measuring program performance. • BA: Integrated planning & budget formulation provide basis for linking budget decisions to corporate results. EERE BA TD Solar Wind Geo DEER Ind Wx Program Execution Information & Management Systems Planning Budget & Analysis Hydrogen Vehicles Bio FEMP Bldgs