1. Gestão de Sistemas Energéticos 2015/2016 Energia e Economia Classe # 2 Prof. Tânia Sousa taniasousa@tecnico.ulisboa.pt

2. Energy Management Class # 9 : Energy Economics A brief history of Humankind … Environment Economy De-growth Smart growth BAU

3. Energy Management Class # 9 : Energy Economics What are the links between Energy and Economics? (Smil) There is a very high correlation between the rate of energy use and the level of economic performance –During the last century the Gross World Economic Product (GWP) has grown almost at the exact same rate (a sixteenfold increase) that the global comercial Total Primary Energy Supply (TPES).TPES –TPES per capita increased from 14 GJ to 60 GJ;TPES per capita –High correlation between per capita averages of GDP (PPP adjusted) and TPES (for 63 countries) for the year 2000 –GJ/capita varies by a factor > 20 –High correlation also for a single country in time Portugal

4. Energy Management Class # 9 : Energy Economics

5. Energy Management Class # 9 : Energy Economics Forms of Energy - Primary energy

6. Energy Management Class # 9 : Energy Economics Per capita energy use kW/capitaGJ/capita Region1990200819902008 USA10.210.0320.5314.0 EU-274.64.7144.9147.0 Middle East2.24.069.9125.2 China1.02.131.867.0 Latin America 1.31.640.651.9 Africa0.80.925.528.1 India0.50.715.922.6 Others*2.92.790.885.9 The World2.22.469.976.6

7. Energy Management Class # 9 : Energy Economics What are the links between Energy and Economics? (Smil) But… –Identical rates of economic development in different countries are supported by different TPES (total primary energy supply)

8. Energy Management Class # 9 : Energy Economics What are the links between Energy and Economics? (Smil) Energy intensity (energy use per unit of GDP): –A measure of the efficiency of a country in using energy –Which (low or high) values correspond to environmental and economic advantages? –EI for the World decreased from 3.3 kWh/US$2012 in 1900 to 1.8 kWh kWh/US$2012 in 2010 Brito & Sousa (2016) KWh/US$2012

9. Energy Management Class # 9 : Energy Economics What are the links between Energy and Economics? (Smil) Energy intensity in time for countries: –EI changes with development stage –EI rises during early stages of industrialization, its peak is sharp and short, and then declines as mature economies use inputs more efficiently

10. Energy Management Class # 9 : Energy Economics What are the links between Energy and Economics? (Smil) Energy intensity for different countries in 1999: –Most countries have EI between 5 and 13 MJ/$ PPP –EI does not depend on the GDP/capita (e.g., India and Australia have similar EI)

11. Energy Management Class # 9 : Energy Economics What are the links between Energy and Economics? (Smil) Factors that control EI?

12. Energy Management Class # 9 : Energy Economics What are the links between Energy and Economics? (Smil) Factors that control EI: –Degree of energy self-sufficiency –Composition on primary energy supply –Differences in industrial structure –Country size –Climate

13. Energy Management Class # 9 : Energy Economics What are the links between Energy and Economics? (Smil) Factors that control EI: –Degree of energy self-sufficiency –Composition on primary energy supply –Differences in industrial structure –Country size –Climate Problems with EI: –It is misleading if it counts only with commercial forms of energy – animate labor and biomass were the most important forms of energy for most of humankind until middle of the 20th century –Treatment of Primary Electricity (e.g. Sweden vs. Denmark) – the method of partial substitution will inflate all large-scale producers of electricity

14. Energy Management Class # 9 : Energy Economics Primary Energy used for Electricity What is the primary energy associated with 1 kWh of (different types) of primary renewable electricity? MethodsWind Electricity PhotovoltaicHydro Electricity Geothermal Electricity “electricity produced”Electricity (1 kWh)

15. Energy Management Class # 9 : Energy Economics Primary Energy used for Electricity What is the primary energy associated with 1 kWh of (different types) of primary renewable electricity? What would be the method if we were using the concept of Primary Energy? MethodsWind Electricity PhotovoltaicHydro Electricity Geothermal Electricity “electricity produced”Electricity (1 kWh) “measure of fossil energy” 00000000

16. Energy Management Class # 9 : Energy Economics Primary Energy used for Electricity What is the primary energy associated with 1 kWh of (different types) of primary renewable electricity? MethodsWind Electricity PhotovoltaicHydro Electricity Geothermal Electricity “as it is found in nature” Kinetic energyRadiationPotential EnergyHeat “electricity produced”Electricity (1 kWh) “measure of fossil energy” 00000000

17. Energy Management Class # 9 : Energy Economics Physical Content Method (IEA) “The primary energy is the 1st energy form downstream for which multiple energy uses are pratical” Heat (nuclear, geothermal and solar thermal) –Conversion from heat to electricity in geothermal is 10% and in nuclear is 30% Electricity for wind, tide/wave/ocean and solar photovoltaic (100%)

18. Energy Management Class # 9 : Energy Economics Primary Energy used for Electricity What is the primary energy associated with 1 kWh of (different types) of primary renewable electricity? –Physical Content Method: primary energy is the first form of comercial energy available (IEA) MethodsWind Electricity PhotovoltaicHydro Electricity Geothermal Electricity “as it is found in nature” Kinetic energyRadiationPotential EnergyHeat “electricity produced”Electricity (1 kWh) “measure of fossil energy” 00000000 Physical Content Method Electricity (1 kWh) Heat (1/0.1 kWh)

19. Energy Management Class # 9 : Energy Economics Partial Substitution Method (EIA) The amount of energy that would be necessary to generate and identical amount of electricity in conventional thermal power plants –Uses an average generating efficiency (40%) to convert electricity to primary energy

20. Energy Management Class # 9 : Energy Economics Primary Energy used for Electricity What is the primary energy associated with 1 kWh of (different types) of primary renewable electricity? –Partial Substitution Method: primary energy is the amount of conventional energy that would have to be used (EIA) MethodsWind Electricity PhotovoltaicHydro Electricity Geothermal Electricity “as it is found in nature” Kinetic energyRadiationPotential EnergyHeat “electricity produced”Electricity (1 kWh) “measure of fossil energy” 00000000 Physical Content Method Electricity (1 kWh) Heat (1/0.1 kWh) Partial Substitution Method Fuel (1/0.4 kWh)

21. Energy Management Class # 9 : Energy Economics Comparison of Methods Neither the Physical Content Method nor the Partial Substitution Methods are a measure of primary fossil energy Growth of wind, hydro or solar to produce electricity leads to primary energy savings with the Physical Content Method

22. Energy Management Class # 9 : Energy Economics Comparison of Methods What happens to energy intensity if a country that only uses electricity (produced with coal) as final energy replaces all thermoelectric power plants with dams? –With the partial substitution method? –With the physical content method?