IPM Overview

Elliot LiebermanU.S. Environmental Protection Agency

Washington, D.C. 20460

Documentation on Web

www.epa.gov/airmarkets/epa-ipm

What is IPM?

The Integrated Planning Model (IPM) is a tool developed by ICF Consulting and used by EPA for policy analysis.

IPM is a long-term capacity expansion and production costing model for analyzing the electric power sector.

It is a multi-regional, deterministic, dynamic linear programming model.

IPM finds the least-cost solution to meeting electricity demand subject to environmental, transmission, fuel, reserve margin, and other system operating constraints.

Linear Program Advantages

Finds optimal solution

Comprehensive, integrated approach

Bottom-up detail

– Allows fine grain parameter variations

– Analysis based on detailed disaggregate information

Typical IPM Constraints and Variables

Electricity Demand Constraints Reserve Margin Constraints Environmental Constraints Transmission Constraints Fuel Constraints Other Operational Constraints

Model plants– Existing Units– Planned/Committed Units– Potential Units

Retrofit options Repowerings and

retirements

140,225 Constraints 1,980,251 Variables

(x load segments x coal or fuel types x run years x seasons)

Model Regions

Reserve Margin Assumptions

Reserve margin is a measure of the system’s generating capability above the amount required to meet peak load requirements.

Planning Reserve Margins

Generating Resources

Existing units Planned/committed units New potential units that the model can build Repowerings, relicensings, and retirements

Categories represented

Potential Units

Pulverized Coal Integrated Gasification

Combined Cycle Combined Cycle Combustion Turbine Nuclear

Biomass Gasification Combined Cycle

Wind Solar Geothermal Landfill gas Fuel cells

Emission Control Technologies

SO2 Scrubbers– Limestone Forced Oxidation (LSFO)– Magnesium Enhanced Lime (MEL)– Lime Spray Dryer (LSD)

NOx Post-Combustion Controls

– Selective Catalytic Reduction (SCR)– Selective Non-catalytic Reduction (SNCR)– Gas Reburn

Mercury Removal– Activated Carbon Injection (ACI)– By-product of SO2, NOx, and particulate

controls

Other– Combustion Optimization– Biomass cofiring

First Stage Retrofit Assignment Scheme in EPA Base Case 2000

Run Year Mapping in EPA Base Case 2000

Model Plant Aggregation

Categories Used in Aggregation Scheme Model Region Unit Technology Type Fuel Demand Region Environmental Regulations

– NOx SIP Call Participation– State Specific Regulations in CT, MO and TX

State– Texas– Connecticut– Missouri

Unit Configuration– Boiler Type– Firing Type– SO2 Pollution Control

– NOx Pollution Control– Particulate Matter Control

Heat Rate– Low Efficiency Group– Mid Efficiency Groups– High Efficiency Group

Size– Coal Steam Units

» Less than 25 MW» From 25 MW to less than 100 MW» 100 MW or greater

– Non-coal fossil units and other non-coal emitting units» Less 25 MW» 25 MW or greater

Unit ID Capacity(MW)

Heat Rate(Btu/kWh)

NOx Rate(lbs/Mmbtu)

SO2 Rate(lbs/MMBtu)

Hg EMFBit

Hg EMFSub Bit

ExistingControls

Model Plant 11091_B_2 300 10475 0.46 0.84 0.6 0.85 Cold-side ESP

7343_B_4 624 10108 0.46 0.83 0.6 0.85 Cold-side ESP

Model Plant 22442_B_4 740 9661 0.46 0.47 0.05 0.3 Fabric Filter + Wet

Scrubber2442_B_5 740 9661 0.68 0.47 0.05 0.3 Fabric Filter + Wet

Scrubber

Model Plant 36082_B_1 675 9188 0.42 0.58 0.05 0.05 Cold-side ESP +

SCR + WetScrubber

Typical Model Plants

Financial Assumptions

Financial Assumptions

Discount Rate– Represents the time value of money– Allows for inter-temporal analysis

Capital Charge Rate– Allows annualized capital payments to be

calculated for an investment

Discount Rate

Capital structure Pre-tax debt rate Post-tax equity rate

Key parameters considered:

Capital Charge Rate

Capital structure Pre-tax debt rate (or interest cost) Debt life Post-tax return on equity Taxes and insurance Depreciation schedule Book life

Key parameters considered:

Factors Affecting the FinancingOf Different Technologies

Risk profile– Medium risk– High risk

Financing scheme– Project financing– Corporate financing

Capital Charge Rates and Discount Rates

Investment Technology

CapitalChargeRate*

DiscountRate

FinancingScheme

RiskProfile

Environmental Retrofits 12.0% 5.34% Corporate

MediumRepowering of Existing Units 12.9% 6.14%

Project

Coal (including IGCC) 12.9% 6.14%Combined Cycle 12.9% 6.14%Combustion Turbine 13.4% 6.74%

HighRenewable GenerationTechnologies 13.4% 6.74%

Advanced Nuclear 13.4% 6.74%*30-year book life assumed

Capital Charge Rates and Discount Rates

Investment Technology

CapitalChargeRate*

DiscountRate

FinancingScheme

RiskProfile

Environmental Retrofits 12.0% 5.34% Corporate

MediumRepowering of Existing Units 12.9% 6.14%

Project

Coal (including IGCC) 12.9% 6.14%Combined Cycle 12.9% 6.14%Combustion Turbine 13.4% 6.74%

HighRenewable GenerationTechnologies 13.4% 6.74%

Advanced Nuclear 13.4% 6.74%*30-year book life assumed