Methodology for Estimating Prospective Benefits of Energy R&D Programs (2004) / Chapter Skim
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Contents of Letter Report
Contents of Letter Report
Pages 1-13
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At the request of the Congress, the NRC formed the Committee on Prospective Benefits of DOE's Energy Efficiency and Fossil Energy R&D Programs ("the committee"; see the roster in Appendix A) , which is currently developing a methodology for the prospective evaluation of 1 This amount includes only those funds under the jurisdiction of the U.S.
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Completed in 2001, the retrospective study conducted by the NRC reported that, in the aggregate, the benefits of federal energy R&D exceeded the costs, but it observed that the DOE portfolio included both striking successes and expensive failures. As important, the NRC study noted that the methodologies by which DOE had calculated the benefits of its programs varied considerably, thus making comparisons of program benefits difficult.
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The statement of task assigned to the committee for Phase 1 is as follows: Adapt the results of the previous committee with an aim to develop a methodology and matrix for evaluating prospective benefits of DOE's energy efficiency and fossil energy programs. In addition, the committee will apply its newly developed methodology to evaluate energy efficiency and fossil energy programs.
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The advanced lighting program is managed by the Office of Energy Efficiency and Renewable Energy, and the carbon sequestration program by the Office of Fossil Energy; each office has a fuel cell program. These programs also involve the full range of benefits and likely future scenarios (i.e., future states of the world)
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The "Knowledge" column recognized lessons learned from the study that will advance future understanding of related science and technology. Each of the nine cells in the retrospective benefits matrix thus becomes an easily distinguished (and mutually exclusive)
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Prospective Analysis The current study has a conceptual structure similar to that described above -- a benefits framework adapted to the needs of prospective benefits estimation and a more technical, but still consistent, methodology for creating the information required by the matrix. Compared with retrospective analysis, prospective evaluation is complicated by uncertainty about how the future will unfold.
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The benefits framework that the committee has developed for prospective evaluation builds on the methodology used in the NRC's retrospective study. The prospective matrix is shown in Figure 2.
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Thus, columns identified in this prospective study instead expand the "options benefits" category employed earlier, as the programs are intended to yield benefits that vary with the future state of the world -- indeed, sometimes different possible future scenarios drive different programs. The proposed benefits methodology for the prospective evaluations is under development at the time of writing of this letter report.
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The Phase 1 final report will contain the following: • A description of the prospective benefits matrix, which the committee expects will be similar to the outline provided in this letter report; • Detailed guidance on the methodology for completing the matrix; • An outline of the process for applying the methodology, including the use of expert panels; • A summary of the reports prepared by the expert panels for the three test programs -- advanced solid state lighting, carbon sequestration, and fuel cells -- that were selected for evaluation; and • Recommendations for key issues to be resolved in the Phase 2 study, as well as suggestions to DOE on ways to improve its prospective benefits evaluations. In its work to date, the committee has benefited greatly from the input and support of the DOE staff.
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Terry Surles Paul A DeCotis Vice President Director of Energy Analysis Electricity Innovation Institute New York State Energy Research and Development Authority (NYSERDA)
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The Probability of Market Acceptance category addresses the likelihood that the technical accomplishments of a program will be used commercially. For this evaluation, it is assumed that the program technical goal is met sufficiently to allow the technology to move into commercial use.
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Market Scenarios Three scenarios appear to incorporate futures that are relevant to a wide range of energy programs: a reference case, a world with substantially higher oil and/or gas prices, and a world in which carbon emissions are deemed a significant environmental hazard in need of regulatory response. These scenarios are meant to refer to actual states of the world and not different policy regimes.
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economy under normal conditions…. The total market value can be increased as a result of technologies because a technology may reduce the cost of producing a given output or allow additional valuable outputs to be produced by the economy.
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