WEO Model

Since 1993, the International Energy Agency (IEA) has provided medium to long-term energy projections using the World Energy Model (WEM). The model is a large-scale simulation model designed to replicate how energy markets function and is the principal tool used to generate detailed sector-by-sector and region-by-region projections for the World Energy Outlook (WEO) scenarios. Developed over many years, the model broadly consists of three main sections covering:

  • final energy consumption including residential, services, agriculture, industry, transport and non-energy use
  • energy transformation including power generation and heat, refinery and other transformation and
  • fossil-fuel and bioenergy supply

Outputs from the model include energy flows by fuel, investment needs and costs, CO2 emissions and end-user pricing and is calculated for each of the 25 regions modelled in the WEM. An extensive effort is undertaken each year to incorporate energy and climate-related policies and measures into our modelling and analysis with details and sources provided under Policy Databases.

A detailed description of the World Energy Model and supporting documents covering topics such as energy efficiency, energy subsidies, climate change analysis and power sector analysis may be found in the WEM Methodology. The investment section outlines input assumptions to the WEM for the power generation sector and for end-use energy efficiency.

New features in the World Energy Model 2017

The WEO-2017 uses a scenario approach to examine future energy trends. It presents three scenarios: the New Policies Scenario, the Current Policies Scenario and the Sustainable Development Scenario. The formal base year for this year’s projections is 2015, as this is the last year for which a complete picture of energy demand and supply is in place, but we have used more recent data wherever available, and we include — for the first time — our 2016 estimates for energy production and demand in the annexes of the WEO and tables and discussion in the WEO typically refer to 2016 data.  Some of the changes made to the WEM for the purposes of the WEO-2017 are highlighted below (more listed in Methodology documentation):

End-use Sectors:

  • Overhaul of the industrial heat demand modelling and diffusion of new and renewable heat supply technologies (e.g. solar thermal, geothermal and heat pumps).
  • The industry model now allows for the use of bio-based feedstock, though usually in very limited scale, for various raw chemicals (in particular, ethylene, ammonia and methanol). This feature is used in the new Sustainable Development Scenario only.
  • Additional analyses had been integrated into the modelling of building electricity demand by end-use for the WEM hourly model. Population weighted average sunrise and sunset times were used to enhance the modelling of lighting electricity demand profiles for the 36 typical days used in the WEM hourly model (12 months, Weekdays, Saturdays and Sundays. In addition, for China and the United States, monthly space heating and cooling profiles have been linked to modelling of weighted average heating and cooling degree days.
  • Modelling of services buildings has also been further developed using employment data. For WEO-2017 detailed analysis of the number of employees within services sub-sectors has been used to project the future number of employees and the floor area of services buildings by subsector.
  • Addition of alternative powertrains (electric, plug-in hybrid electric gasoline/diesel) for buses and medium- and heavy-duty trucks.
  • The cost analysis of electric cars in the passenger car module was updated to reflect recent progress in battery costs, and the analysis of the long-term outlook for EV cost reductions was refined.

Energy Access:

  • For the WEO-2017 Energy Access Outlook special report a comprehensive update of the IEA electricity access database and clean cooking access database was undertaken, with historical time series of country-level data presented for the first time on www.iea.org/energyaccess/database/.
  • These new time series as well as an assessment of country-level investments and policies were used to update projection models for electricity and clean cooking access in the New Policies Scenario.
  • With the KTH Royal Institute of Technology, the WEM access module was linked to a geospacial model of electricity demand and resources for sub-Saharan Africa to determine the least-cost evolution of electrification in the New Policies Scenario and to deliver universal electricity access.
  • With Politecnico di Milano, a comprehensive assessment of cookstove costs and performance was undertaken, informing the investment and emissions from the cooking access model.

Power Generation:

  • An improved capacity margin mechanism was included with specific consideration to the role the new additions would play (e.g. baseload, mid-merit or peaking plant).
  • A new, more granular model of the power market with hourly resolution was developed for the special focus on renewable energy, to assess the scope for the integration of variable renewables and the related costs. This allows for a more detailed understanding of the implications of seasonal, daily and hourly variations in the output of certain renewable energy technologies, notably wind and solar, in different markets and the flexibility that is required of other power system components.

Energy Supply:

  • More definition on finding and development costs for different types of conventional and unconventional oil and gas, as well as a revised representation of associated gas production.
  • A new well-level play-by-play models for tight oil and shale gas in the United States incorporating endogenous technology learning for production from individual plays.
  • Modification of the way that trade in natural gas is represented, incorporating the best available information on supply contracts and infrastructure plans, disaggregation by country in North America and more detail on gas imports by the European Union. 
  • Addition of a new oil and gas methane model to estimate emissions levels and abatement opportunities and costs for methane emissions from oil and gas operations globally.

Full details may be found in the WEM Methodology.

The IEA’s World Energy Model (WEM) is the underlying tool for the World Energy Outlook analysis. The WEM is a partial equilibrium model designed to replicate how energy markets function and provides medium to long-term energy projections. Documentation describing the overall approach and features of WEM may be found in the WEM Methodology. Complementing the WEM documentation, further details describing in-depth aspects of WEM are outlined below.

Climate change and environmental analysis

Scenarios:

  • The Sustainable Development Scenario
    This new scenario was developed for WEO-2017 and outlines an integrated approach to achieving internationally agreed objectives on climate change, air quality and universal access to modern energy.
  • The 4-for-2 Scenario
    This new scenario was developed with a view on short-term climate mitigation options until 2020. The short-term measures considered in this scenario go beyond policies already adopted and entail measures that require either significant further strengthening and wider adoption, or that are currently not high on the policy agenda, even though the measures required to implement the relevant policies are known and their adoption could make a significant additional difference.
  • 450 Scenario
    In this scenario, policies are adopted that put the world on a pathway that is consistent with having around a 50% chance of limiting the global increase in average temperature to 2°C in the long term, compared with pre-industrial levels. This document describes the policy framework underlying the scenario.
  • Emissions of Air Pollutants for the WEO-2012 Energy Scenarios
    This report prepared by IIASA examines global emissions of major air pollutants (SO2, NOx, PM2.5resulting from energy scenarios developed for the WEO-2012, which have been estimated using the IIASA GAINS model. Please note that in the report the Scenario labelled High Energy Efficiency Scenario corresponds to the Efficient World Scenario in WEO-2012.
  • Emissions of Air Pollutants in India for the WEO-2015 Energy Scenarios
    This report prepared by IIASA examines emissions of major air pollutants (SO2, NOx, PM2.5for India resulting from energy scenarios developed for the WEO-2015, which have been estimated using the IIASA GAINS model.

Energy efficiency:

  • Efficient World Scenario
    In this scenario, all energy-efficiency investments that are economically viable are made and all necessary policies to eliminate market barriers to energy efficiency are adopted. This document describes the policy framework underlying the scenario.
  • Drivers of change in energy demand and CO2 emissions
    Various drivers determine the demand for energy and CO2 emissions, including a change in the demand for energy services, a change in efficiency or a change in the set of technologies satisfying an energy service. This document outlines the decomposition analysis used to quantify the impact of those drivers.

Macro-economic impacts:

Power sector analysis:

Energy subsidies and support:

  • Fossil-fuels
    Fossil-fuel subsidies are most often wasteful, inefficient and costly and this document outlines the approach undertaken to calculate these subsidies in WEO-2012.
  • Renewables
    Renewable energy sources are used in several sectors. In many cases they are still not competitive and require subsidies to enhance and accelerate their deployment. Subsidies for renewable-based electricity generation and biofuels for transport have been estimated in WEO-2012 and this document outlines the approach taken.

Water-energy nexus:

  • Water-WEO-Methodology
    Outlines the methodology used for the water-energy analysis in WEO-2016. Includes projections of the water requirements for energy production, expressed as withdrawal and consumption and projections on the energy used for a range of different processes in the water industry, such as wastewater treatment distribution and desalination, by scenario, region and energy source over the period 2014-2040.

Energy access analysis:

Investment Costs

Power generation

Unit investment costs, power plant efficiencies and other operational parameters in the power generation sector are based on a review of the latest country data available. Investment costs represent over-night costs for all technologies. For renewable energy technologies and for power plants fitted with Carbon, Capture and Storage (CCS), the projected investment costs are based on assumed technology learning rates and the level of deployment in each scenario.  

Energy efficiency in end-uses

A comprehensive review of the costs of reducing energy consumption for various technology options in transport, buildings and industry was conducted for the World Energy Investment Outlook 2014. Datasets for the different end-use sectors were peer-reviewed by reviewers from industry and the scientific community. The analysis was updated accordingly in order to reflect the most recent state of research. For the purpose of the World Energy Investment Outlook 2014, energy efficiency investment is defined as the additional expenditure made to improve the performance of the energy-using equipment above the average efficiency level in 2012

POLICY DATABASES

In order to underpin scenario analysis of the World Energy Outlook, an extensive effort is made to update and expand the list of energy and climate-related policies and measures that feed into our modelling. Assumptions about government policies are critical to this analysis and over 3 000 policies and measures in OECD and non-OECD countries have been considered during the WEO preparation. A summary of some of the key policy targets and measures for different sectors by selected countries and regions for WEO-2017 can be found in Annex B of the WEO-2017.

The core databases that feed into the WEO analysis are:

Although all care has been taken to ensure accuracy, completeness and clarity of content in these databases, they may not be a complete listing of all energy related policies in the region or country covered. For various reasons information can be difficult to find or confirm, and some translated information is subject to the translator's discretion. If you have more up-to-date information, please help us improve the quality of this service by contacting the IEA at weo@iea.org.

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