Shaping Sustainable Energy Systems

Lecture 1: Sustainable Energy Systems & Economics

Masters in Renewable Energy Technology

UWI St. Augustine, Trinidad 2014

Prof. Dr. Bernd Mller

Energy and Environmental Management
Developing Countries
 Solar energy and world commercial energy
consumption

Global ecosystem
Sun Non renewable
resources
Solar energy Human energy use
~ 5.6*106 EJ/a Economic ~ 500 EJ/a
Renewable Subsystem
biological Recycling
resources
Emissions

Damages

Low temperature heat

 Shaping Sustainable Energy Systems
What is a sustainable energy system?
One that does not compromise future
generations access to wealth and welfare?
One that does not contribute to climate change?
One that entirely runs on renewable energy?
How have we ended in here in the first
place?
Access to immensely cheap fossil fuels
without paying their costs
Growth imperative
Industrialisation paradigms
 Restructuring energy systems
1. By substantially reducing end-use energy
demand and improving energy services
2. By making energy conversion from fuel to
useful energy more efficient
3. By replacing fossil fuel input with renewable
energy sources
 End-use
Think of energy services, not kWh
Integrate efficiency in all services
Do not compromise the ability to have
economic growth
Use economic tools to progressively punish
waste of energy.
 Conversion
Achieve higher efficiencies in:
Power plants
Air-conditioning
Vehicles
Transmission and distribution systems
 Particularities of renewable energy
sources
Market prices do not include externalities:
higher unit costs compared to current market
fossil fuel sources
High investment to operation cost ratio: only
feasible if discount rate is low
Variability of renewable sources requires
increased flexibility in demand and supply
 Policy design
Make a long-term energy strategy
Internalise externalities: e.g. tax on fossil fuels
Create feed-in tariffs
Promote widespread, local ownership
Make system flexibility a market commodity
 Balance investments
End-use efficiency vs. generation capacities
Variable sources vs. system flexibility and
storage
Techno-economic vs. environmental and social
cost
Local vs. non-local ownership
 Social costs of energy systems
There is hardly an energy form without social
costs or other negative externalities!
Energy costs are socially sensitive
How to deal with inequality?
How to create local jobs and improve
governments ability to act?
How to generate income and improve the
balance of trade?
 Transition to sustainability
We need substantial, radical changes in about
all sectors of our energy systems
Guiding principles must be thermodynamic
efficiency and renewable sources
Economic efficiency, equity and fairness are
equally important
 Thermodynamics

First law of thermodynamics:

In closed systems the quantity of energy remains constant.
Only transformation of energy is possible.

Second law of thermodynamics:

In closed systems all forms of energy tend to be
transformed into less valuable forms of energy

high value: mechanical energy / electricity

low value: low temperature heat
Efficient energy systems
Incorporating renewable energy
 Energy and economics

Why should economics look at energy?

Useful energy is a scarce resource and the provision

of energy induces costs. Therefore, energy is a
subject of economics.

Is there anything special about energy as an input to the production

process?
Energy is an essential input to production, which can
not be totally replaced by other production factors.
 Energy economics
Energy economics is a broad field of study, which studies human
utilization of scarce energy resources and energy commodities and
includes:

The allocation of energy sources to competing uses

Market structures and regulatory structures
Environmental consequences and the sustainable use
of energy
External costs of the use of energy
Economically efficient use of energy

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 Energy Outlook 2012

No country is an energy island and the interactions

between different fuels, markets and prices are intensifying
This is the current situation economy largely dependent
on fossil fuel
No more than one-third of proven reserves of fossil fuels
can be consumed prior to 2050 if the world is to achieve
the 2 C goal
Water is growing in importance as a criterion for assessing
the viability of energy projects, as population and economic
growth intensify competition for water resources (IEA,
2012)
Energy imposes fundamental constraints on economic
growth and development
Evolution of Primary Energy 1850-2008

Source: International Institute for Applied Systems Analysis 2012

Final Energy (GJ) per Capita versus cumulative
Population for 11 World Regions

Source: International Institute for Applied Systems Analysis 2012

Share of various Energy Sources in World
Primary Energy Consumption

Earthscan, 2004
OECD/IEA 2011
Increases from 2000 of the Global Installed
Nuclear, Wind and Solar Capacity

The World Nuclear Industry Status Report 2012

Global Electricity Production from Nuclear and
Selected Renewables

The World Nuclear Industry Status Report 2012

Origins of climate-changing greenhouse gases:
total emissions by type and source, anthropogenic

The largest contributor is CO2 from fossil fuels used for

ultimately satisfying energy end use demands.
Source: IPCC Fourth Assessment Report, Climate Change 2007 (AR4)
Economic mitigation potentials by sector in 2030
estimated from bottom-up studies

Source: IPCC Fourth Assessment Report, Climate Change 2007 (AR4)

 GDP, energy and CO2 in Denmark
180

160

140

120

100

80

60
1980 '85 '90 '95 '00 '05

GDP, 2000 Prices Gross Energy Consumption, adjusted CO2-production, adjusted

Source: computed from Energy statistics 2005, Danish Energy Agency

 Decoupling in the USA

This demonstrates that observed improvements in GDP/energy use ratios

in the USA can be explained by using higher quality fuels rather than by
technology improvements.

Source: Ockwell D.G., Energy and economic growth: Grounding our understanding in physical reality.
Energy Policy 36 (2008) 46004604
An integrated energy system
 Sustainable energy systems: the core
of understanding in this course

Sustainable energy solutions often are the

second-best choice under the current socio-
economic and political systems and the
current markets
These systems and markets should not be
considered fixed and balanced.
They can and need to be changed.
 Energy Systems Analysis
Scenario building and analysis

Quantitative basis for the evaluation of

different alternatives for the development of
energy systems

What if?: type of change is known,

outcomes need to be quantified

How?: the outcomes are defined, the type

change needs to be specified How do we
get there?
 Energy Systems Analysis Models
Computer models are built to simulate the real world based
on the objectives of the analysis

Simplifying assumptions are taken to facilitate the analysis,

E.g.:
Limiting the included technologies or grouping them
Isolating certain geographic areas or treating external connections as
boundary condition; e.g. open and closed systems

Level of detail depends on the objectives of the analysis:

more detailed models usually have longer simulation times, but
potentially better accuracy and robustness
less detailed models have shorter simulation times comparison of
more alternatives is possible
Energy Systems Analysis Models

Connolly 2009

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 Energy Systems Analysis Models Parameters #1

Typical/feasible regions considered

e.g. single project; regional, national, international etc.
EnergyPLAN National/regional

Duration and Time step:

Duration: length of time the model can simulate
Time step is the steps used duration split into units
EnergyPLAN 1 hour time step over a 1 year
duration
 Energy Systems Analysis Models Parameters #2

Technologies considered
System sectors, generation technologies, renewable
energy technologies, storage and conversion
technologies, transport technologies, one particular
technology, grid dynamics
Renewable Energy
Ability to simulate 100% RES
% of RE penetration to date (in electricity, heat and
transport)
9 out of 38 models able to simulate 100% RES