Energy futures for the United States depend critically on the electric power system.

Reaching the goals of energy security and cleaner energy sources for industrial, commercial, residential, and transportation uses depends in great part on investment in the future power system.

A simulation tool that optimizes investment in generation, transmission, and demand-side management is needed because the electric power industry faces stringent environmental imperatives, renewable portfolio standards, potentially disruptive new technologies, potentially large increased demand from plug-in hybrids, and integration of a smart grid that allows for demand response. These challenges need to be met while maintaining reliability.

Also, it is not clear that current market incentives induce sufficient investment in transmission, and bid caps for generators (in areas with markets) defeat a free market solution for new investment in generation. FERC Order 1000 requires system operators and other transmission owners to improve their regional planning, but current tools are not adequate [1].

Thus, both reliability and investment require planning. With support from the Department of Energy CERTS program as well as the Power Systems Energy Research Center, Cornell and Arizona State Universities and Resources for the Future have developed the Engineering, Economic, and Environmental Electricity Simulation Tool (E4ST), an integrated engineering, economic and environmental modeling framework for the electric power system that has now been extended to the entire contiguous United States and most of Canada.

No model of the North American electric power system exists that includes a sufficiently detailed specification of the electricity network, the power generators, and air pollution transport, to calculate optimal investment and retirement in response to incentives or regulations while maintaining reliability. The E4 Simulation Tool is intended to supply such a national model as well as provide open source software that can be applied to any electric power system for planning and policy analysis.

[1] Larson, Doug (executive director of Western Interstate Electricity Board). Remarks at the 2012 National Electricity Forum, Washington, DC, February 8, 2012.