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World Energy Outlook

World Energy 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 costs 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 2016

The WEO-2016 uses a scenario approach to examine future energy trends. It presents three scenarios: the New Policies Scenario, the Current Policies Scenario and the 450 Scenario. Comprehensive historical data through to 2014 are presented and used in the modelling, although wherever possible preliminary 2015 data are also included. Some of the changes made to the WEM for the purposes of the WEO-2016 are highlighted below:

End-use sectors:

  • An industrial electric motor model was created as part of an analysis on industrial electric motors including the representation of several steps to control efficiencies of three separate modules, using a stock-modelling approach.
  • The modelling of direct renewable heat options (i.e. solar thermal and geothermal) was extended to the chemical and non-energy-intensive industry sectors, and extended within the buildings sector, for the special focus on renewable energy.
  • The representation of heat pumps deployment was extended to two additional sectors: the chemical and paper industries, two energy-intensive sectors with the highest potentials beyond the non-energy-intensive sectors.
  • The modelling of non-feedstock non-energy uses of oil was refined, including detailed drivers for petroleum coke (linked to the aluminium industry), lubricants (linked to on-road and marine transport, as well as overall industrial activity) and bitumen (linked to infrastructure development, both buildings and roadways) products.
  • The maritime freight module was updated: fuel consumption for is now assessed by considering inter-regional trade of the main commodities for several types of ships.
  • 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.
  • A new bottom-up approach was developed to assess the overall hourly electricity load curve for each sector and end-use for 36 typical days (12 months, Weekdays, Saturdays and Sundays). This more detailed analysis of the load curve of each end-use enables to have a better understanding of the current and future potential of Demand-Side Response.

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 was made, as well as a revised representation of associated gas production and new well-level play-by-play models for tight oil and shale gas in the United States.
  • Modification of the way that trade in natural gas is represented.
  • A new model was created to assess the energy requirements for the water sector and project future requirements, and improvements to the water-for-energy model were made.

Full details may be found in the WEM Methodology