Corporate report

BEIS business critical models: 2022

Published 7 July 2022

This was published under the 2019 to 2022 Johnson Conservative government

In October 2012, Sir Bob Kerslake and Sir Jeremy Heywood commissioned a review of the quality assurance of analytical models that inform policy across government. The review was led by Sir Nick Macpherson, Permanent Secretary at the Treasury. He published his Review of quality assurance of government models in March 2013. The Aqua Book published in 2015 provided high level guidance to meet the Macpherson Review.

Recommendations

Recommendation 4 of the review asked departments to make a list of their business critical models publicly available - to encourage good practice in their quality assurance. In 2022 the National Audit Office report Financial Modelling in Government re-emphasised the importance of these lists.

List of BEIS models as of 30 March 2022

2.4% Model Research and Development (R&D)

The 2.4% R&D model is held by UKRI with joint UKRI/BEIS ownership. It is a deterministic policy simulation that estimates the increase in gross public R&D expenditure that might lead to a given level of total UK R&D or ratio to GDP and enables analysis of sensitivity to different assumptions. It is an Excel spreadsheet based on publicly available data and assumptions: historic R&D data from the Office for National Statistics, macroeconomic forecasts by the Office for Budget Responsibility, and analysis by Oxford Economics on the relationship between public and private R&D funding.

Additional Restrictions Grant (ARG)

This model calculates Local Authority grant allocations under the Additional Restrictions Grant (ARG) scheme. The latest live version (March 2022) was used to calculate the new allocation for the 3rd Top Up paid to Local Authorities in January 2022. All payments to businesses were due by 31 March 2022.

Administration Burdens Allocations

This model calculates Local Authority administration burden allocations for delivery and assurance of the LA COVID Business Support Grants. The latest live version (March 2022) calculates allocations for rounds 5 and 7 (payments expected over FY 2022/2023).

Affordability calculator - Renewable Heat Incentive (RHI)

This is a policy simulation model of RHI Deployment and Affordability; The Affordability calculator combines stock data and uptake scenarios for each technology, with tariffs, and appraisal inputs in order to produce profiles of costs and benefits including spend, carbon saved and renewable heat.

Average Prices & Bills Model (APBM)

The Average Price and Bills Model calculates retail price and gas and electricity expenditure for non-domestic users and households. It allows policy simulation, calculates retail prices for EEP and published Green Book appraisal guidance.

BEIS Carbon Price Model

This model uses a fundamentals based approach to project carbon values from 2021 to 2045 in a putative standalone UK Emissions Trading System.  It uses Business As Usual (BAU) emissions projections and UK emissions cap scenarios to project the amount of abatement effort required in the UK traded sector.  It then uses externally commissioned marginal abatement cost curves to calculate a value on the necessary effort to achieve these.

Biomethane Options for Future Funding Cost-benefit analysis model

The model estimates Net Present Values (NPVs) of the Green Gas Support Scheme and future biomethane policies. It also calculates tariffs for the Green Gas Support Scheme.

Business Impact Target (BIT) Assessment Calculator

Spreadsheet model developed in-house to calculate Net Present Values, Equivalent Annual Net Direct Cost to Business (EANDCB) and Business Impact Target (BIT) Score for use in Impact Assessments.

Combined Aerospace Technical Institute (ATI)/ Advanced Propulsion Centre (APC) Model Spreadsheet

This model appraises the Value for Money (VfM) for bids for grants.

Commercial Rents Model

This models represents the costs and benefits of different policy options to resolve rent arrears due to COVID-19 in the UK.

Contracts For Difference (CFD) Exemption Tool

This model calculates the percentage exemption that each meter is eligible for under renewables policies. It also provides management information around the value of the support. Eligibility for support is calculated elsewhere.

Contracts for Difference Strike Price Model

This Policy Simulation model informs setting reserve strike prices in an auction which, in some scenarios, may directly impact strike prices.

Domestic Renewable Heat Incentive (RHI) Degression

This model turns the RHI degression regulation into code and calculations. The outputs are heat and expenditure by technology, which were compared to triggers from the regulations, quarterly, to determine whether a tariff should be reduced according to the RHI degression rules. The output from this model feeds into the domestic Renewable Heat Incentive (RHI) Accruals model.

Dynamic Dispatch Model (DDM)

The Dynamic Dispatch Model (DDM) is a comprehensive fully integrated power market model covering the GB power market over the medium to long term. It is used to model power sector policy impacts and for BEIS published Energy and Emissions Projections.

Energy Company Obligation (ECO 4) scenarios within National Household model (NHM)

These are bespoke scenarios run on the National Household Model (NHM) in order to simulate delivery of the Energy Company Obligation 4.

Energy Demand Model (EDM), used for the Energy and Emissions Projections

The Energy Demand Model is used to produce the BEIS Energy and Emissions Projections publication and associated annexes. The Energy Demand Model (EDM) projects demand for energy sources including electricity and renewable fuels.

Electricity Distribution Networks model

The Electricity Distribution Network Model models voltage and capacity breaches on electricity distribution networks due to changes in peak demand and distribution generation, storage, Demand Side Response (DSR). It then tries to solve these breaches by investing in smart and conventional reinforcements. The model outputs distribution network costs.

Emissions Trading Scheme (ETS) Carbon Price Support mechanism (CPS) Compensation Model

The model calculates the quarterly financial compensation due to successful applicants of the Energy Intensive Industries (EII) compensation scheme.

Euratom Research & Training (ERT) and International Thermonuclear Experimental Reactor (ITER) Models

The output of the ERT and ITER models are combined to provide economic appraisal of the potential membership scenarios following the UK’s exit from the EU.

Feed In Tariff (FIT) and Renewable Obligation (RO) Energy Intensive Industries Compensation

The model calculates the exemption amounts for each eligible company, for the scheme providing these compensation for some of their electricity costs. .

Finance - Enterprise Performance Management (EPM)

BEIS Finance uses EPM to provide Actual spend and Non Trial Balance information for Financial Accounts, including the published Accounts for the BEIS Group. EPM covers intra-Group and inter-Departmental Eliminations and Management Accounts to provide Actual, Forecast, and Budget both internally and for the MFO Report to Treasury and figures for External Reporting. Hosted by UK Shared Business Services Limited (UKSBS), the EPM collects data from Partner Organisations and from BEIS General Ledgers.

Fossil fuel price assumptions: Coal

This model generates a high, central and low series of coal price assumptions which are published by the department in the annual Fossil Fuel Price Assumptions. It is an Excel model with short-run and long-run components. The short-run model uses futures prices combined with options implied volatility data to create three price series. The long-run component combines demand estimates from the International Energy Agency (IEA) against supply curves produced by Rystad Energy to generate prices in our long-run anchor year (2035). Prices between the short and long-run are interpolated. These assumptions play a key role in determining the costs associated with energy and climate change policies and feed into the projections of carbon prices, generation costs, emissions and price and bill impacts of policies.

Fossil fuel price assumptions: Gas

This model generates a high, central and low series of gas price assumptions which are published by the department in the annual Fossil Fuel Price Assumptions. It is an Excel model with short-run and long-run components. The short-run model uses futures prices combined with options implied volatility data to create three price series. The long-run component combines demand estimates from the International Energy Agency (IEA) against supply curves produced by Rystad Energy to generate prices in our long-run anchor year (2035). Prices between the short and long-run are interpolated. These assumptions play a key role in determining the costs associated with energy and climate change policies and feed into the projections of carbon prices, generation costs, emissions and price and bill impacts of policies.

Fossil fuel price assumptions: Oil

This model generates a high, central and low series of oil price assumptions which are published by the department in the annual Fossil Fuel Price Assumptions. It is an Excel model with short-run and long-run components. The short-run model uses futures prices combined with options implied volatility data to create three price series. The long-run component combines demand estimates from the International Energy Agency (IEA) against supply curves produced by Rystad Energy to generate prices in our long-run anchor year (2035). Prices between the short and long-run are interpolated. These assumptions play a key role in determining the costs associated with energy and climate change policies and feed into the projections of carbon prices, generation costs, emissions and price and bill impacts of policies.

Global Carbon Finance Model (GLOCAF)

GLOCAF is a scenario modelling tool based on Business As Usual (BAU) emissions and Marginal Abatement Cost (MAC) curves for different regions and sectors providing global economy-wide coverage. It models an idealised global carbon market and is used to investigate international carbon and finance flows, the costs of meeting mitigation targets and to identify the most cost-effective sectors for abatement in a market.

Greenhouse Gas (GHG) Inventory model; part of the National Atmospheric Emissions Inventory (NAEI)

The model collates a collection of over 200 models. The majority of these are in spreadsheets (Excel) and databases (Access), with specialist software, such as ArcGIS, that are used for some specific pre- and post-processing models. The models estimate annual UK territorial greenhouse gas emissions for international submissions, domestic targets and National Statistics publications, and are also used to estimate air pollutant emissions for Defra.

Green Heat Network Fund

This Excel model is a Cost Benefit Analysis for a £328 million fund to invest in low carbon heat network generation. It was used to assess value for money and set initial benefits and smart objectives targets for the scheme’s business case.

Heat Network Zoning Impact Assessment (IA) Model

This Cost Benefit Analysis Model appraises the Heat Network Zoning (HNZ) Policy, to inform the HNZ IAs.

Horizon Europe Model

This Excel spreadsheet model provides the economic appraisal of associating with the European Union (EU) Research and Development (R&D) programme, Horizon Europe, and domestic alternatives should the UK not associate.

Hydrogen Infrastructure Tool

This model is spatially explicit, representing 57 regions, enabling the Heat Strategy team to explore different hydrogen transition scenarios. It is a least cost optimisation model to meet specified hydrogen demand.

Hydrogen Production Funding Model

The model can be used to test different business model subsidy approaches to hydrogen production, as well as calculating the costs and benefits of different deployment scenarios.

IETF (Industrial Energy Transformation Fund) Model

This model uses energy efficiency and deep decarbonisation assumptions to calculate a ratio of costs and benefits per £m of capital spent. This is applied to the expected capital spend of Phase 2 of the IETF to estimate the Operating Expense costs, energy/carbon benefits and social benefits.

Industry Pathways model (IPM)

The IPM makes costs and emissions forecasts from technologies at sector, scenario and technology levels.

Launch Investment Management System (LIMS) model

Launch Investment Management System (LIMS) model Spreadsheet (including VBA macros) developed in house to record Actual in-year income and expenditure amounts, to calculate the change in Repayable Launch Investment portfolio value.

National Comprehensive Assessment (NCA) Model for Heat Networks

The NCA for Heat Networks model identifies areas of heating and cooling demand in the UK. It includes sources of low carbon and waste heat in the UK and map locations; forecasts heating/cooling demand for the next 30 years; calculates ‘technical potential’ for unlocking heat through heat networks using physical constraints and ‘economic potential’ for unlocking heat through heat networks based on economic factors and scenarios. It presents outcomes clearly, in headline tables and charts, and a map of the UK.

National Minimum Wage (NMW) Cost model

This Excel Spreadsheet model estimates the cost and coverage of the NMW and National Living Wage (NLW) annual uprating. Used on an annual basis according to the NMW and NLW cycles.

Net Zero calculator - Carbon Capture Usage and Storage (CCUS)

This model provides estimates of the number of jobs and amount of Gross Value Added (GVA) supported from CCUS technology up to 2050.

Net Zero Industrial Pathway Model (NZIP)

NZIP provides the most cost effective pathways to decarbonise industry through fuel switching. It includes hydrogen, electrification and biomass, but no CCUS. The newer NZIP model gives a better understanding of industry pathways to net zero, as it includes CCUS and more recent data and assumptions.

National Buildings Model (NBM) Core

The NBM simulates building energy use, costs and emissions under policy incentives. The core model is a generic simulation engine, accepting a building population and user-defined policy assumptions. Building physics calculations are performed using the Building Research Establishment’s Domestic Energy Model (BREDEM) and Standard Assessment Procedure (SAP) energy models. The domestic building population is represented using a sample of dwellings from the English Housing Survey (EHS) and Scottish Housing Survey (SHCS).

Non-CO2 projections

This model projects non-CO2 greenhouse gas emissions in the UK, excluding those related to stationary combustion and Land Use, Land Use Change and Forestry (LULUCF) which are projected in other models.

Non-Domestic Renewable Heat Incentive (RHI) Degression

The Model translates the RHI degression regulation into code and calculations. Output is heat and expenditure by technology, which were compared to triggers from the regulations, quarterly, to determine whether a tariff should be reduced per RHI degression rules. The output from this model feeds into the non-domestic and biomethane Renewable Heat Incentive (RHI) Accruals models.

Non-Domestic Buildings-Level Policy Model

This model covers the Building Energy Efficiency Survey (BEES) building population at the level of individual buildings, for the purposes of modelling new building regulation and other policies in the non-domestic sector. It also replicates the functionality of the BEES Abatement Models developed by Verco as part of the BEES project. This model is now a (distinct) component of the National Buildings Model.

Omicron Hospitality and Leisure Grant (OHLG)

This model calculates Local Authority grant allocations under the OHLG scheme, to support businesses affected by the Omicron variant. The model and approach were agreed and assured for allocations announced in December 2021, which were paid to Local Authorities in January 2202. All payments to businesses were due by 31 March 2022.

Partial Equilibrium Model

The model provides guidance and direction for trade policy decisions, both as we leave the EU and as we begin to negotiate trade deals with partner countries following EU Exit. The model uses scenario modelling of changes in tariff and non-tariff barriers and estimates the impact of these changes on sectoral output, exports, imports and welfare results. 

Private Rented Sector Minimum Energy Efficiency Standards model

This model estimates the installations of measures required to meet the Private Rented Sector Minimum Energy Efficiency Standards. The policy is modelled within the National Household Model, with a set of measures chosen for each dwelling in scope of the regulations based on a set of measure decision criteria and constraints. The costs and energy savings associated with the measure installations are monetised following Green Book methodology.

Products Policy

This models the effects of changing Minimum Energy Performance Standards (MEPS) for 25 product areas with over 50 sub models. It uses stock and sales of energy-using products as well as energy use, cost and lifespan assumptions to underpin UK policy development for energy labelling and eco-design measures.

Rapid Local Economic Impact Assessment Tool

This model is a framework to provide context for macro shocks and their effects on local areas.

Repayable Launch Investment Valuation Model

Spreadsheet (including @risk) developed in house to value the Department’s ‘Repayable Launch Investment’ contracts with aerospace companies.

Renewable Heat Incentive (RHI) Accruals

This comprises 3 models: domestic, non-domestic and biomethane accruals: The accrual models (an appendage of the degression model) calculates the accrued and actual spend each month for accounting and forecasting purposes.

Renewable Heat Incentive (RHI) Biomethane Ramp-Up Model (BRUM)

BRUM models the department’s RHI payment liability for biomethane production. This is modelled separately from non-domestic heat production as its payment pattern is very different to a heating payment cycle. BRUM replaced the Biomethane Forecasting Tool.

Road Fuel shortages 2021 V1.4 (updated supply-demand base)

This model forecasts the impact of road fuel shortages and responses.

SAS Forecourts Model

This model processes and summarises stock and flow information from a daily sample of GB forecourts to assess fuel availability.

Science Large Portfolio Model

This model appraises the value of a large, well-diversified and nationally representative portfolio of Research, Development and Innovation.

Services Gravity Model

This model developed by the Department for International Trade simulates the trade flow impacts of services Free Trade Agreement provisions.

Sizewell C Financial Model

This models the flow of financial costs for Sizewell C for briefing notes.

Smart Meters Cost Benefit Analysis (2017 Redevelopment)

This model is a Policy Simulation.

UK TIMES model (UKTM)

The model is a long term whole energy system optimisation model used to explore potential pathways to net zero. A particular advantage of the UKTM is that it identifies the least-cost technology pathway for a given set of assumptions, taking account of interactions across energy supply and end-use sectors over time. The model is therefore useful for identifying which technologies could be essential or important in the long run for achieving a low cost, net zero consistent energy system. It also helps identify the appropriate sequencing of abatement opportunities.

Warm Home Discount (WHD) - Winners & Losers Model

The Warm Home Discount Winners & Losers model simulates the likely distribution of rebates allocated under the WHD scheme for a given year. The model is used to measure the likely impacts of changes to the WHD eligibility criteria, such as the fuel poverty targeting and the numbers of households who would receive the rebate vs lose out from changes to the eligibility criteria. The model also performs a Cost Benefit Analysis of different policy options.