02 Measuring Energy Václav Šebek Measuring Energy •Literature: –Bhattacharyya, S.C., 2011. Energy Economics: Concepts, Issues, Markets and Governance. Springer London, London. –Chapters 2 and 13 – FROM DATA TO INFORMATION •Measuring energy What is energy? recap •A property of objects meaning capability of doing work or being transferred elsewhere •Most common heat, electricity, motive •Units: –Energy: 1 [Watt hour] = 3.600 [Joule] –Power: 1 [Watt] = 1 [Joule per second] •Power gives you what are you able to do •Energy says what you have done already What is energy? recap •Footnote –Ton of Oil Equivalent [toe] ≈ 42 GJ –Ton of Coal Equivalent [tce] ≈ 29 GJ •Czech lignite at 10 to 20 [GJ.t-1] –British Thermal Unit [BTU] ≈ 1.05 kJ –Quad ≈ 1,055 PJ •US Dep. of Energy meaning quadrillion of BTU •Czech republic TPES 2014 ≈ 1.7 PJ ≈ 1.6 Quads – – • •Heat, light, motive force, chemical transformation etc. •2 thermodynamic laws –Mass and energy cannot vanish but transform –No 100% conversion – losses inevitable •Primary x Secondary energy –Primary – directly from nature (oil, coal, wind, sun, nuclear…) –Secondary – derived from Primaries (electricity, gasoline…) What is energy? recap •Other divisions (boundaries change) –Renewable x Non-Renewable –Commercial x Non-Commercial –Modern x Traditional –Conventional x Non-Conventional What is energy? recap Energy System •Supply – Conversion – Consumption •Extraction à PES à Transport à Final Energy à End use app à Useful energy •Losses •Energy corporations all through the system à wide variety of companies Energy Information •Broadly required data: –Energy use by various economic activities –E production, transformation and delivery to various users –„Field“ technical and operating statistics –Financial and cost information –Macro-economic, social, political information Energy Information •Transform into information about energy… –Pricing –Investment –Research & Development –System Management –Contingency Plan –Long-term Planning Energy Accounting Framework •Comprehensive account of energy flows including losses and any consumption •See table –Production – transformation – consumption – •Accounting units –Commodity (physical, tones, barrels…) –Overall Energy Balance (common unit, eg BTU, GJ, TOE…) – easier comparison – Energy Accounting Framework Supply-side Production (+) Trade (import/export) (+/-) Bunkers (transport costs, e.g. Tankers) (-) Stock change (+/-) Primary energy requirement (PER) Conversion Statistical difference (+/-) Transformation input (-) Energy sectors‘ own use (-) Transmission and Distribution losses (-) Net supply available Net domestic consumption Final energy consumption ↘Agriculture ↘Industry ↘Transport ↘Residential ↘Commercial ↘Non-energy uses •Total energy needed to satisfy country’s demand and transformation requirements •Primary need (shown in TPES) • • •Efficiency indicator • • • •Sectorial situation may be analyzed • Energy Accounting Units - Example Consumer TJ kt GJ/t Share TJ kt ktce ktoe PP Chvaletice 16 631 978 17,00 32% 33% 567 397 Refinery Litvínov 7 072 530 13,35 14% 18% 241 169 HP Otrokovice 4 523 274 16,51 9% 9% 154 108 Paperworks Mondi Štětí 4 358 180 16,70 8% 6% 149 104 HP Strakonice, a.s. 1 754 112 15,66 3% 4% 60 42 HP Třinec 1 698 106 16,00 3% 4% 58 41 HP Poříčí 789 47 16,79 2% 2% 27 19 PP Hodonín 446 27 16,63 1% 1% 15 11 Export 6 640 332 20,00 13% 11% 227 159 Retail 8 360 418 20,00 16% 14% 285 200 Total/mean 52 271 3 004 17,40 100% 100% 1 784 1 248 Tab – A lignite surface mine yearly consumption decomposition All units above are scientific – commercial units (eg TCE) might be not Lignite Surface Mine Useful Ratios •Energy supply mix –Share of various sources on primary supply •Self-reliance –What portion of energy is of domestic origin •Share of renewables •Power generation mix •Efficiency –Electricity production –Refining –Overall •Per capita consumption (primary and final) •Energy intensity • • Some energy data issues •Availability –lags, various sources, imprecision, confidentiality •Quality –Different standards and methodologies, deliberate changes, trade and balance discrepancies •Cross border comparison –Traditional fuels, terminologies, sectors definition, accounting •Common measurment •Conversion factors AT WHAT PRICE? •Measuring energy Price - recap •Price x value •Price –Objective measurable figure –Result of supply/demand –Denotes relative scarcity of a good •Value –Subjective, individual, not measurable –Depends on time, place and people •Value of price is priceless • Energy Pricing a)Self-sufficient country •Price set domestically between export and import parity price Q P S D Q P S D p* = pm Max domestic production below world price p* Realized consumption Import + = domestic consumption b)Importing country •Import (world) price pm q* q’ q* px Energy Pricing Q P S D Max domestic consumption Export + = Total domestic production c)Net exporter •Domestic demand satisfied below world price •Equilibrium price should be that of world price •In reality domestic prices of oil exporters significantly lower due subsidies • p* = px Peak and Off-Peak Pricing [MW] Daytime Peak and Off-Peak Pricing [MW] Daytime Nuclear (yellow) – Renewables (green) – Coal (brown) – Peak gas (blue) Peak and Off-Peak Pricing [Kč/KWh] D Price Renewables and Electricity Pricing [Kč/KWh] Demand Price Renewables and Electricity Pricing [Kč/KWh] Demand Price > Renewables and Electricity Pricing [Kč/KWh] Demand Price > 50 0 100 10/2010 10/2012 10/2011 10/2013 10/2014 €/MWh 170 € daily mean, 250 € daily max 10.2.2012 0 € daily mean, -450 € daily min 25.12.2012 Zdroj: https://www.epexspot.com/ Daily electricity price at European Power Exchange Leipzig Merit order application - Oil See: http://www.economist.com/blogs/graphicdetail/2016/01/daily-chart-6 Price is vital piece of information HOW TO REGULATE? •Measuring energy Allowances v Taxes •Government aims to decrease CO2 emissions •Two ways of achieving that: –Tax – payment for each ton of CO2 emitted –Tradable allowances – permission to emit particular volume of CO2 •Different parameters –Tax – maximum price for decarbonisation is set –Allowances – maximum volume is set Example 1 •Two types of PP in a Country – A and B •Both emit 40t CO2 per year = total 80t/y •Different emission reduction costs per 10t –A = $2,000; B = $4,000 •Government’ objective is 60t CO2 per year –Regulation –Tax –Allowances • Example 1 1.Regulation –Each PP must decrease emissions by 10t/y –Costs = 2,000 + 4,000 = $6,000 2.Allowances –60t allowances issued, both A and B get 30t –B buys 10t allowances from A and emits 40t –A emit 20t … total emissions 60t –Costs = 2 * 2,000 = $4,000 –Price of allowance between $2k and $4k 3.Taxation –T < $2k … no emission reduction & C+T = $0 + $0…16k –$2k < T < $4k … 40t of A reduced & C+T = $8k + $8k…16k –$4k < T … all emissions reduced & C+T = $16k + $0 Example 2 Company Emissions [t] Costs reducing 1 t A 70 20 B 80 25 C 50 10 Total 200 •Government objective: 120 t •Method: Allowances •Who will sell at what price? •What will be final cost of reducing emissions? Example 2 Company Emissions [t] Costs reducing 1 t A 70 $20 B 80 $25 C 50 $10 Total 200 (120 allowances issued) S D •C sells 40t allowances to B at price of $20 •Total costs = $1,100 •A reduces 30t at $20 •B doesn’t reduce •C reduces 50 at $10 •Costs w/o trade •$1,700