Energy Supply Analysis and Projections

Energy Planning

Govind R. PokharelAssociate Professor

Energy Planning

Why are we doing planning? For what reason we are doing?Energy security, energy access, climate

change, economic development, etc What to do and what gets priority?

Develop RE, reduce CO2 emission? Replace petroleum? Upscale quality?

Where to start/act? Which level?Bottom up/Top down? Small vs Big? National,

regional, local?

3

Before1800

Global Ecosystem

Today

Economic Subsystem

Global Perspective: We cannot buy another earth

Energy Planning

When Act? Which time scale? Focusing access or sustainability or both,

within 5 years or long term? Wait lower cost or start with available one? Set target?

How to Act? What kind of policy, Mechanism? Model? Approach? Drivers, mandatory, voluntary, Govt led, PPP,

Private sector led,

Criteria/Conditions for New/Future Energy System

Physical and Technical AvailabilityCentralised/decentralised, large/small scale,

energy mix, RPS, technology mix, technology span

Cost-EffectiveWhat cost, external cost, social issues

Social, Ecological and Environmental

Mutually-reinforcing cycles of technology development and market deployment

IEA, 2003

Energy scenarios by level of energy consumption and share of renewable energy

Cost and benefit effects of RE, exemplified for the RE expansion sector

System analytical impacts

Price and allocation impacts

Macro economical impacts

1 2 3

Benefit Cost Discharging Charging Employment GDP, sales

cate

gory

impa

cts

stud

y sc

ope • Avoided externalities

• Differential cost in power and heat sector

• Transaction costs• Additional cost of control and

balancing power• Cost of grid expansion

• Avoided energy imports• Differential cost in the power sector• Transaction cost • Merit-order effect• Taxation of power • Public and private funding• Expansion of heat networks• Special equalisation scheme for

electricity-intensive enterprises

• Employment and sales• Energy price effect on GDP• Energy portfolio effect

Ragwitz et al. (2010)

RE technology is embedded in an enabling environment and Enabling Environment is created thru planning and Policy

10

0.2 0.6 1.2 2

7.7

23

0

5

10

15

20

25

Kg

of O

il E

quiv

alent

/Day

Energy Consumption and Human Civilization

Primitive man Hunting man Primitive agricultural man Advanced Agricultural man Industrial man Technological man

Consumption trend for better livelihood is increasing

Compiled from Jose Goldemburg

11

Poor People are lower at Energy Ladder

THE ENERGY PLANNING GRADUATION IN NEPAL (RE Example)

Time

Scale

BROADER VIEW OF ENERGY

MACRO ECONOMY

INTERMEDIATE

MICRO ECONOMY

Energy Sector

WHOLE ECONOMY- Industry, Agriculture, Energy Sector, etc.

Electricity, Petroleum, Solar, Biomass, etc.

Energy itself is not an end of development but the means for it. Energy is the prime mover of economic development

S.N.

Technology/ Resource Purposes Lighting Cooking/

Heating Transportation

Productive uses (SME use)

1 Mini/Micro/Pico Hydro 2 Solar PV (SHS) 3 Large scale Solar PV 3 Biogas (Dung, solid

waste)

4 Solar Thermal (Heater, Cooker, Dryer)

5 Biomass Based Solutions

6 Bio-fuel Based solutions 7 Wind Energy

RENEWABLE ENERGY AND APPLICATIONS

Chapter 5: Energy Supply Analysis and supply Projection

Energy Resource AssessmentNon-RE domestic resourcesRE Domestic resources, Hydropower supplyBiomass supplies analysis: Forest and non

forest products, analysis of agriculture residue and animal dung

Energy TransformationInternational Supply

Energy Supply Analysis and Projections

Main Objective is to assess a country’s energy supply potential

Finding the gap between demand and Supply Analysis considers:

Entire Fuel cycle Investment requirementOperational costsEnvironment and social impactsAs part of policy of supply, choice and

comparison of resources and technology

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Integrated Model Framework

Policy Goal

Energy Model

Economic Model

KeyEconomic Indicators

Air Quality Modelemissi

ons

expenditures

Wet/DryDeposition

Ambient Concentrations

Health Benefits Model

Health EffectsIncidence and Cost/Benefit

Meteorology Health/ValuationFunction

Regional-ScaleClimate Model

ClimateImpacts Models

Costs,Benefits, Adaptations

due to Climate

Global ClimateModel

JobsGDP

Household Income

Rural energy Database development& managementMacro

Economic data base

Rural electrification

data base Predefined process for input

Technology specifications

Environmental indicators’

Rural energy data Base

Forestry Data base

Agriculture Data Base

Household Survey

Data Preparation

Processing of Data for out put

Data Presentation

Project Evaluation

Policy Analysis Plan formulation

DECISIONS


Supply analysis involves Characterization of country’s energy supply

system with its fuel mixes Assessment of domestic resources and

technologies Identification of supply gaps at various stages of

transformation Study the availability and prices of imports Evaluation of resource alternatives and

technology options Analysis the impacts of supplies on the energy

and economic sector

Energy Supply System

.Primary Energy

Conversion processing

Secondary Energy

Distribution Transmission

StorageFinal EnergyEnd-use

Devices

Useful Energy

LossLoss

Loss

T

T

T

T

Energy Supply System

Primary Energy: Crude Oil, Natural gas, Coal, Hydropower, Solar heat and Fuelwood. But coal and fuelwood could be the final energy

Secondary Energy: Petroleum products, charcoal, biogas, electricity

Supplied or Final energy: delivered and transported to the users

Useful energy: Energy services, work, heat and light – energy to the users after end-use devices

Energy Supply Analysis

Data Requirement (reference energy system a helpful tool) IEP requires more than just energy data. It needs data of

technology side ( energy supply system with respect to economics of technologies and impacts) and

resource side (reserves-in case of non-renewable, resources- in case of renewable) and their availability, accessibility, costs involved in fuel cycles and impacts i.e. GHG emissions, etc

Resources side deals with total reserves, addition and production rate, extraction cost

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Four stage representation of an energy system

Industry, e.g.-Process steam-Motive power

Services, e.g.-Cooling-Lighting

Households, e.g.-Space heat-Refrigeration

Agriculture, e.g.-Water supply

Transport, e.g.-Person-km

Demand for Energy Service

Industry, e.g.-Steam boilers-Machinery

Services, e.g.-Air conditioners-Light bulbs

Households, e.g.-Space heaters-Refrigerators

Agriculture, e.g.-Irrigation pumps

Transport, e.g.-Gasoline Car-Fuel Cell Bus

End-UseTechnologies

ProcessTechnologies

Primary Energy Supply

Fuel processing Plants e.g.-Oil refineries-Hydrogen prod.-Ethanol prod.

Power plants e.g.-Conventional Fossil Fueled -Solar-Wind-Nuclear-CCGT-Fuel Cells-Combined Heat and Power

Renewables e.g. -Biomass-Hydro

Mining e.g.-Crude oil-Natural gas-Coal

Imports e.g.-crude oil -oil products

Exports e.g.-oil products-coal

Stock changes

(Final Energy) (Useful Energy)

Data

Engineering data :to determine the size and extent of

Economic data: Cost of technology, investment

Social and environmental data will help on decision making

Climate Change related data


Resource Assessment: Determine energy resources available to a country

Non-renewable (fossil) energy is assessed by geological methods. Resources, identified resources, undiscovered resources, reserves

Factors used: exploration, production rates, economics of production,

Renewable energy is assessed based on how economically it can be exploited or captured.

Factors used: production rates, economics of production


Resource Assessment Evaluation of international energy resources

as they are part of a country’s resource base. International energy resources are important

from the perspective of price, availability, required infrastructure and other political uncertainties


Technology evaluationIt deals with various extraction, transportation,

transmission, storage, distribution, conversion, transformation processes

It also deals with availability of technology, economic aspects of technology and their impacts on socio-ecological and economic sector.

Divided into three: non-renewable energy based technologies. Renewable energy technologies and electric system technologies


Resource assessment Resource available (total) and accessible

resources (like renewable hydro. Forest etc.) Within assessment scope, domestic non-

renewable, renewable, international Information required for an assessment: Total

energy resources available annually, rate of addition to resources, possible production rate, extraction cost and time period of availability

A planner need to be specific for any information Supply analysis is not only geological or

engineering studies but also equally focuses on economic viability

Energy Supply: Domestic Non-renewable

Fundamental issues: Classification of Resources, identified

reserves, undiscovered resources, reserves (recoverable material),

Exploration of non-renewable resources is needed to determine how long energy supply can be made and cost of fuel supplied and added reserves and cost per units reserve

Production rate depends on market, technology

Resource and Reserve

ResourcesResources

ReserveReserve

Energy Resources Classification

Identified resources Undiscovered resources

Increasing degree of economic feasibility

Measured Indicated Inferred Hypothetical speculativeEconomically

Feasible Reserves Inferred reserves

Marginally Economic Marginal Reserves

Inferredmarginal

reserves

Subeconomic Demonstrated subeconomic resources

Inferred subeconomic reserves

Increasing degree of geological uncertainty


Planners must know the physical features of production: technology, technical limitation, environment impacts, life of resources

Economics of production: marginal cost of production

Holding production, price fluctuation and future demand and price factor

Assessment of petroleum product, coal and Natural gas


RenewableFundamental issues Definition of resource base (e.g. solar resource,

wind 59.3%) Production rate (e.g. biomass) Economics of production (MCP)

Rs

Time


Renewable Resource Assessment Life cycle costing (renewable has high initial

capital cost, almost negligible fuel cost) Present Value is calculated Technical factor in different resources

Biomass Solar Wind Geothermal hydro


Internal Energy supplyImported energy : petroleum, gas, coal and

electricityConsiderations: available resources and security

of supplyEconomic aspects (e.g. cost) and long term

agreements (spot, future), inflationInfrastructure required (e.g. for hydrogen, gas)


Policy consideration and recommendations Objective analysis (clear, not deliberated, link

with economic system) Multidisciplinary approach (technical,

economics, etc) Definition or terms (sector, technology,

resources) Time horizon uncertainties

Questions regarding energy resource assessment

Total resources currently available (quantity and annual production capacity)

Rate of addition to the resources (exploration programme, technological development and construction of import facility)

Possible production rates of resourcesThe extraction cost


Supply analysis mainly deals with: characterizing energy supply system and fuel mixes, assessment of domestic supplying resources and raw

materials and technologies, identification of supply gaps, study the availability and

price of energy imports, evaluation resources alternatives and technology

options Analysis of impacts due to increased supply on

economy, environment and energy and other sector

Supply Side Technology Interventions

Heat

BIOMASS

Mechanical Energy Electrical Energy

Heat

Illumination

Heat

WOOD CHIPPER

CHARCOAL KILN

COW-DUNG

AGRI. RESIDUES

GASIFICATION

ANAEROBIC DIGESTION

COMBUSTION

IC ENGINE

BOILER, COOK STOVES,

FURNACESHeat

Energy Supply Models

Energy Supply Models

These models either stand alone (e.g., MARKAL, WASP) or serve as a module of a energy system model (e.g., electricity market module, coal market module in US NEMS model)

Demand forecasts, energy resources and technologies characteristics, costs are the key driving variables

Can accommodate any policy instruments or constraints such as emission constraints

Methodologies for Energy Supply Planning

Optimization

Ensure cost minimization meeting all constraints such as resource availability, system reliability, environmental quality (if desired)

More appropriate when a large number of supply alternatives are available

Example: MARKAL, EFOM, WASP

Simulation

Simulates behavior of energy consumers and producers under various signals (e.g. price, income levels)

Forecasts can be sensitive to starting conditions and behavioral parameters

Energy Supply Model: MARKAL

MARKAL is a “bottom-up” model with detailed representation of energy resources and production technologies

It follows the principal of reference energy system and finds a least cost set of technologies to satisfy end-use energy service demands and user-specified constraints

MARKAL is found extensively used for both academic and consulting studies

The MARKAL Energy PerspectiveThe MARKAL Energy Perspective

Industry, e.g.-Process steam-Motive power

Services, e.g.-Cooling-Lighting

Households, e.g.-Space heat-Refrigeration

Agriculture, e.g.-Water supply

Transport, e.g.-Person-km

Demand for Energy Service

Industry, e.g.-Steam boilers-Machinery

Services, e.g.-Air conditioners-Light bulbs

Households, e.g.-Space heaters-Refrigerators

Agriculture, e.g.-Irrigation pumps

Transport, e.g.-Gasoline Car-Fuel Cell Bus

End-UseTechnologies

ConversionTechnologies

Primary Energy Supply

Fuel processingPlants e.g.-Oil refineries-Hydrogen prod.-Ethanol prod.

Power plants e.g.-ConventionalFossil Fueled

-Solar-Wind-Nuclear-CCGT-Fuel Cells-Combined Heat

and Power

Renewables e.g. -Biomass-Hydro

Mining e.g.-Crude oil-Natural gas-Coal

Imports e.g.-crude oil -oil products

Exports e.g.-oil products-coal

Stock changes

(Final Energy) (Useful Energy)

MARKAL: MARKet ALlocation)

Developed under the Energy Technology Systems Analysis Program of IEA

Linear programming type optimization ; based on Reference Energy System

Detailed modeling of energy resources and supply chains

Includes electricity generation and transmission planning

Energy Supply Model: MARKAL

Electricity Supply Model: WASP

WASP stands for Wien Automatic System Planning

It was originally developed by the Tennessee Valley Authority and Oak Ridge National Laboratory of the US for International Association of Atomic Energy

It is the most well-known and widely used optimization model for examining medium- to long-term expansion options for electrical generating systems

The software is distributed for use by electric utilities and regulation agencies in over 90 countries, as well as to 12 international organizations including The World Bank

Rural energy Demand supply Balancing

Input Data Requirements

Demand side Data

Supply side Data

Analytical Task

Energy consuming

Sector

Energy supply Sector

Coping with future

uncertainties

Scenario Development& Policy

Formulation

Energy Supply Analysis and Projections

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