01 Energy Planning

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Energy Planning

Energy Resources and Utilization


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Energy Planning

Energy planning seeks to guarantee supply through the following:

1. Managing the natural energy sources and energy reserves in a

short, medium and long-term evaluation

2. Defining an energy import (or exporting) policy and its import

dependence or effects of the exportable resources

3. By influencing the demand through pricing (and Taxation)

policy and incentives for rationale use of energy

4. Certain functions like the production (Cobbs-Douglas

production function) and cost functions support these process.


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Energy Planning-overview

Energy planning must take into account all the political aspectsincluding economic, social and environmental considerationsdepending on available energy resources and the acceptance by thesociety.

Definition

An energy policy is that part of national (or international)

policy that is concerned with the production and supply of

energy, its conversion, storage, distribution and utilization and with

formulation of measures of meeting energy demand with thepresumed available energy sources


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Basic Energy concepts

Primary energy:- Energy which has not beensubjected to a conversion or transformationprocess

Secondary or derived energy:- energy which hasbeen produced by the conversion ortransformation of primary or another secondaryenergy

Final energy:- is energy made available to the

consumer before its final utilizationUseful energy:- is energy made available to the

consumer after its final utilization


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Basic Energy concepts

Energy Economy:- That part of energy applied

to energy problems. Its components include

energy supply, energy demand, and

implementation means for coverage at local &

international levels.

Gross National Product (GNP) is the total

production of goods and services by itscitizens both at home & abroad


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Integrated Energy planning

Integrated energy planning involves estimatinghow much energy all the different consumers(e.g. industry or households) will need in thefuture to deliver certain services; and then

identifying a mix of appropriate sources andforms of energy to meet these energy serviceneeds in the most efficient and socially beneficialmanner

The inclusion of all energy service needs andsupply side options, including energy savings andefficiency interventions


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The inclusion of all costs and benefits (economic,social and environmental), including long-termbenefits and costs and macro-economic impacts

(e.g. economic competitiveness in 20 years) indescribing possible futures (scenarios) for theentire energy sector

Setting goals for the future, based on a

description of the most desirable situation at theend of the planning horizon, that embrace thewhole energy system and its impacts


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I.E.P has 3 main phases

Phase 1: Reference Energy System and how it

evolved

Phase 2: Energy forecasting and scenarios

Phase 3: Planning


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Phase 1: Reference Energy System and

how it evolved

The foundation for energy planning is acomprehensive description of the whole energysystem for the country (or city, or region), as itexists at present. This is known as the reference

energy system (RES)

The core of the RES in an energy balance

Energy balance is a table used for energyplanning or for understanding the energyeconomy. Three types exist


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Types of Energy balance

Purely physical balance:- The different energy forms areadded in a supply or demand approach with relevantequivalence coefficients to give the total quantity in aparticular unit (e.g. tons of coal equivalent)

Economic balance:- The different energy forms are added interms of their monetary value not physical value. Thebalance considers also currency exchange rates, taxes,subsidies, & price aspects

Substitution balance:- Balance investigates how one unit ofan energy form (oil, hydro, geothermal, solar etc) can bereplaced by a certain amount of another energy form. Thesubstitution approach is important for evaluating a futureenergy policy.


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Purpose of the energy balance

Show in one table the overall picture of energyproduction, conversion and consumption for each fuelutilized in the country

Provide background information to the countries

energy planning - Give a good picture of the countriesenergy situation - Show changes over time.

Basis for emission calculations

Basis for calculations of value figures for energy in theNational Accounts.

Energy research and basis for preparing energyindicators

Public information to media etc.


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Energy balance-2

Energy balance records in a standard energy unit

(or some other unit) all the:

primary energy supply (e.g. oil, coal, hydro; including

imports and exports) transformation to secondary energy (electricity

generation, oil refining, coal to gas and liquid fuel etc)

transport and distribution (including a reflection of

system losses) and

final consumption per sector (e.g. iron & steel, mining

and quarrying, rail transport, residential)


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Phase 2: Energy forecasting and

scenarios Energy forecasting involves using the snapshot and video

taken in phase 1 to map possible evolutions of the energysystem

The first step is to choose a time horizon for the planningexercise. The energy forecast must then describe theevolution of the reference energy system from the baseyear to the horizon year

In addition to future forecasts, energy forecasting alsoconsiders suppressed demand (needs that are notexpressed through purchasing power)

In addition to future forecasts, energy forecasting alsoconsiders suppressed demand (needs that are notexpressed through purchasing power)


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Phase 2: Energy forecasting and

scenarios

To undertake these forecasting and

suppressed demand a number of methods

and tools like models are used to develop

scenarios

Scenarios then examine the conditions under

which future energy demand can be met in

ways that are most beneficial socially,economically and environmentally


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Terminologies used in the Energy field

Primary energy sources are those like; Solid

fuels, liquid fuels, gaseous fuels, hydropower,

nuclear energy, solar energy, biomass energy,

wind energy, ocean energy, and geothermalenergy

The main secondary energies are: Electrical

energy, Heat or thermal energy and lastlymechanical energy


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Terminologies used in the Energy field

Resourcesare the occurrences of energy sourcesin recognizable form (WEC). While provenreserves are generally taken to be thosequantities that geological and engineering

information indicates with reasonable certaintycan be recovered in the future from knownreservoirs under existing economic and operatingconditions" (BP, 1999).

Other terms like probable reserves, indicatedreserves, inferred reserves and undiscoveredresourcescan also be understood


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Energy resource classification


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Static or dynamic view of resources

Geologisttend to treat resources as innate

component of the physical world (static view)

Economistview what exists in the Earth's crust

as neutral stuff that becomes a resource only

if there is a market demand for it (dynamic

view)


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Energy Investment Planning

Investment planning in energy economics is notany different from practices in other sectors ofthe economy. Investments can be classified asfollows: Must investments:- These are investments that must

continue under all circumstances. For instance forpublic services utility has an obligation to supplyenergy. Such utilities include those of gas, electricity,petroleum, and district heating

Can investments:-Investments that can be postponedunder particular circumstances due to lack ofprofitability


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Energy Investment Planning

A number of procedures are used forinvestment calculations. They are essentiallyinterest calculation methods.

The discount cash flow method (Discountedpresent value method)

The Annuity methods

The Internal interest method

the Critical value procedure


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Energy Planning- Variables and

parameters-1

The variables, parameters and other

determinants for energy planning include:

Definition (System external and system

relevant values)


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Energy Planning- Variables and

parameters-2

Definition (Goal or objective oriented values)


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System Analysis

System analysis becomes important when one

is considering the use of simulation models

System analysis is a procedure for incorporating

the elements (the energy supply and/or demandsystem or concept) to be studied in a broader view

of the economy by investigating the major

components if not all.

Two approaches occur in system analysis


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System Analysis

The recognition of the system in itsconsistency, its dynamic behavior and itsevolutionfrom the past

Generally after obtaining a detailedknowledge of the system, one tries toinfluence and restructure it in a possiblefuture evolution

This leads to a differentiation betweencognitiveand decision making system analysis


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Cognitive System Analysis

This analysis approach is founded on the assumptionthat a system exist in and of itself, regardless of theperson doing the investigation, consequently there is aproblem of identification

Identification is the determination of the interactionswithin a system seen from the perspective of theelement to be observed or studied

The cognitive system can function globally-which parts

interacting in a sort of chemical synthesis or it can havea theological behavior i.e. its end or purposeguarantees its integrity over time


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Decision making system analysis

In this approach the system will be created by theperson analyzing it and not only through identification.The analyst decision will be particular based on thegeographical and institutional framework.

As contrasted to cognitive approach, this approachallows the possibility to grasp system dynamics andconsequently better orientation.

In summary cognitive system analysis tries to considerthe system as it is to identify its different structural and

functional elements. Decision making system analysistries to introduce in a given system modifying andevolution aspect


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Qualitative evaluation for energy

planning methods The deviation between forecast value and effective or real

value can only be registered many years after modelapplication.

This deviation is between the effective and forecast curvesis captured by a so called relevance indicators

The relevance indicator is a relative summary tool to give aqualitative indicator as to the difference of the twotangents or curves. It is useful and measurable only inparticular cases

Another approach is the use of qualitative and quantitativeanalysis

A causal analysis can also be used in the evaluation andassessment


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01 Energy Planning

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