EPF 3

Constraints of Energy Policy and Finance

Scarcity

• Definition: Scarcity implies that human needs and wants will always exceed the ability to procure them from available resources.

• Stakeholder Bargaining: Various stakeholders negotiate within the constraints of global resource scarcity to meet perceived needs.

• Allocation Decisions:

  • Scarcity forces individuals to make allocation decisions with their limited resources.

  • Generally, resources are allocated based on perceived relative benefits; priorities are given to highest benefits first.

  • This determination includes both desirability and associated costs.

Supply Constraints

• Constraints include physical volumes of energy and economic limits.

• John Holdren - Evaluating social constraints and specific examples of scarcity:

  • Conventional Oil and Gas: Insufficient physical and economically available resources.

  • Coal, Tar Sands, Oil Shale: Inadequate atmospheric sinks for carbon implications.

  • Biofuels: Limited land to produce significant energy volumes.

  • Renewable Energy Sources:

    • Wind and Hydropower: Not enough acceptable sites.

    • Solar Photovoltaics: High costs prevent widespread adoption.

    • Ocean Energy: High capital requirements and ecological disruptions.

Capital and Infrastructure Constraints

• Energy supply requires transformation processes before delivery as energy services.

• Infrastructure is essential for transforming energy into useful forms.

• Limited energy infrastructure may constrain behavior unless capital is available for investment.

• Expected return on investment impacts the decision to invest in additional infrastructure.

Output/Demand Constraints

• The energy supply chain directs toward consumer energy services, impacted by consumer willingness and ability to pay.

• Demand Scarcity:

  • Example: Ability to procure fuel affects driving habits, not just availability.

  • Strategies to increase energy service value or reduce costs are essential to alleviate demand constraints.

Innovation vs. Depletion

• Innovation: Represents changes in supply, efficiency, demand, cost, and benefit, driven by human ingenuity.

• Depletion: A process that raises costs and threatens welfare if resource bases are exhausted without innovating alternatives.

• Sustainability seeks a balance between these competing forces.

Energy Intensity and Productivity

• Energy Intensity (E/GDP):

  • Amount of energy needed per unit of GDP.

  • Average energy intensity has generally decreased on a global scale, but not universally.

  • Rapid industrialization may lead to increased energy intensity in specific countries (e.g., Japan, China).

• Energy Productivity: Inverse of energy intensity, offering comparative measures across economies, but may mislead due to varying economic structures and energy resource availability.

IPAT Framework

• Formula: IPAT (Impact = Population x Affluence x Technology)

• evaluates the environmental impact of industrial choices.

• Energy limitations affect affluence if technology doesn't improve energy efficiency and conversion.

Components of the Energy System

Energy Supply Chain

• Represents total energy in the human-industrial system from supply to consumption.

• Includes the delivery infrastructure that moves and transforms energy.

Integration with Economy

• The energy system is interconnected with the economy.

• Economic factors regulate initial resource allocation, investments, and consumption, influencing energy system behavior.

Role of Ecosystem

• Energy systems rest within broader ecosystems that provide resources and absorb waste.

Systems Thinking

• Open Systems: Influenced by external factors; must consider interactions with surrounding systems.

• Closed Systems: Isolated from external influences.

Circular vs. Directional Systems

• Circular Systems: Interrelated elements can maintain balance; difficult to identify beginnings and ends.

  • Example :

• Directional Systems: Clear input-output transitions without significant recycling, as exemplified by the energy supply chain.

  • Example - Electricity Generation

• Comparison: While circular systems promote sustainability through resource recycling, directional systems focus on efficiency and linear progression. In practice, this means that circular systems can enhance ecological resilience, whereas directional systems may be better suited for industries requiring rapid production cycles and predictable outcomes.

Types of Energy

Four Fundamental Forces

• Gravity: Attracts objects toward one another.

• Electromagnetism: Interaction between charged particles.

• Weak Nuclear Force: Causes radioactive decay.

• Strong Nuclear Force: Binds protons and neutrons within the nucleus.

Kinetic and Potential Energy

• Kinetic Energy: Energy of motion.

• Potential Energy: Stored energy based on position or configuration.

Primary Sources of Energy

• Common sources:

  • Fossil Fuels, Biomass, Nuclear, Hydropower, Wind, Tidal, Solar, Geothermal.

Renewable vs. Non-renewable Sources

• Renewable: Constantly replenished by nature.

• Non-renewable: Take millions of years to regenerate.

Prime Movers

• Machines that convert primary energy into mechanical work; evolved from initial steam engines.

Secondary Energy (Energy Carriers)

• Forms of energy not found in primary forms, including electricity, refined fuels, hydrogen, and synthetic fuels.

Total Primary Energy Supply (TPES)

• The total of all primary energy production across all energy types;

• growing and diversifying over time.

Energy Consumption per Capita

• Formula : Energy Consumption per capita = E/P

• Measures disparity in energy consumption across different regions.

• MAHIR SCHEME

  • Full Form - Mission on Advanced and High-Impact Research

  • Purpose:

    To facilitate the development and implementation of innovative technologies within the Indian power sector, enhancing its efficiency, reliability, and sustainability

  • Focus Areas:

    • Energy Efficiency: Including energy audits, fuel audits for thermal power stations, and training for plant optimization. 

    • Power System Automation/Distribution Automation: Modernizing power grids and distribution networks. 

    • Smart Grids: Developing and deploying smart grid technologies for improved grid management and energy distribution. 

  • Implementation:

    • CPRI's Role: The Council for Scientific and Industrial Research (CSIR) - Central Power Research Institute (CPRI) is the lead agency for implementing the MAHIR mission. 

    • Collaboration: The mission involves collaborations with various stakeholders, including IITs/NITs, CPSEs (Central Public Sector Enterprises), and IEEMA (Indian Electric Machinery Manufacturers Association). 

    • Technical Scoping Committee: A Technical Scoping Committee, comprising subject matter experts, is responsible for identifying emerging research areas and evaluating proposals. 

    • Call for Proposals: CPRI has issued calls for proposals for research projects under the MAHIR mission. 

  • Key Objectives:

    • Technology Development: Identifying and developing technologies that can address the challenges and opportunities in the power sector. 

    • Technology Transfer: Facilitating the transfer of knowledge and technologies to the industry. 

    • Commercialization: Supporting the commercialization of developed technologies through CPSEs and start-ups. 

  • Impact:

    The MAHIR scheme is expected to contribute to:

    • Increased energy efficiency and reduced energy consumption. 

    • Improved power system reliability and stability. 

    • Enhanced grid management and energy distribution. 

    • Development of indigenous technologies and expertise in the power sector

Law of Conservation of Energy

• Energy cannot be created or destroyed, only transformed.

• The addition of primary energy sources will change the amount of

  energy in the system

Forecasting Energy Demand

• Factors influencing demand forecast include GDP per capita, energy intensity, and population.

• Limitations in predicting market dynamics must be acknowledged.

  • GDP growth may not be the same as realized GDP growth

  • Energy intensity metrics may not be robust about the relationship

    between the cost and availability of energy and GDP effects.

  • Predictions for falling energy intensity, particularly if based on

    extrapolating historical rates, may not be accurate about the future dynamics the system will face