Measuring EnergySecurity:

It’s Not Just Economics

Colin Axon, Brunel UniversityRichard Darton, University of OxfordChristian Winzer, University of Cambridge

EPRG, Cambridge, 12th March 2012.

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

Energy Security is…

…whatever Energy Securityresearchers say…

“…continuous availability of energy invaried forms, in sufficient quantities, andat reasonable prices”United Nations DevelopmentProgram (UNDP), 2000.World Energy Assessment - Energy and theChallenge ofSustainability

“Energy insecurity can be defined as the lossof welfare that may occur as a result of achange in the price or availability of energy”Bohi and Toman (1996)

“…energy supply security must be gearedto ensuring… the uninterrupted physicalavailability of energy products on themarket, at a price which is affordable for allconsumers (private and industrial), whilerespecting environmental concerns andlooking towards sustainable development”European Commission, 2000.

Commonalities and DifferencesBetween Typical Definitions

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

III) Speed of Impacts: Constant – Slow Changes – Fast Changes

IV) Size of Impacts:Impending Change - Small Change - Phase Change

V) Sustention of Impacts: Transitory – Sustained – Permanent

VI) Spread of Impacts: Local – National – Global

VII) Singularity of Impacts: Unique - Seldom – Frequent

VIII) Sureness of Impacts: Deterministic – Stochastic –Heuristic - Unknown

Dimensions of Energy Security: Broad Concept

II) Scope of the Impact Measure:

Continuityof Service

Supply

Continuityof the

Economy

Severity Filter:

Difference Between Concepts

I) Sources of Risk:

Continuity ofCommodity

Supply

Sustainabilityand Safety

Energy Security

* Natural Risk

* Technical Risk

* Human Risk

Christian Winzer: Conceptualising Energy Security DECC Seminar, 2012/03/07 p. 4C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

Continuityof ElectricitySupplies

ContinuityofDomesticElectricitySupplies

Continuity ofDomesticCooking dueto Natural GasDisruptions

Potential Continuity Metrics: Sinks and Sources

etc...

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

PotentialContinuityMetrics:

Price Welfare UnsuppliedConsumption

a. Increasing Constant orIncreasing

Constant orDecreasing

b. Constant orDecreasing

Decreasing Constant orDecreasing

c. Constant orDecreasing

Constant orIncreasing

Increasing

So we are trying to protect against?

Christian Winzer: Conceptualising Energy Security DECC Seminar, 2012/03/07 p. 6

Continuityof What?

c. Unsupplied Comsumption?

b. Welfare?

a.Prices?(demand weighted!)

Quantity

Price

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

Integrals or Intersects

Direction?(up-/downside)

Size?(Amplitude)

Speed?(Frequency filter of Averaging Period)

Point in Time?(present/future)

Singularity?(distance between)

Quantity

Price / Welfare/Consumpt. Loss Which Signal Filters?

Shocks, Stresses and other Severity Filters

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

Some Common Problems

The use of compound measures can increase therisk of problems due to hidden dependencies

Concentration Measures (weighted/unweighted)

Diversity Indexes

Import Shares

Physical Reliability

Range of Risks

Dimensionless Scales

Correlations

Data Reliability

Supply Chains

Workshops

Economic Activity

Infrastructure

Policy Needs toMake Trade-offs

Riskto

Continuity

Cost efficiency of allocationand production

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

Supplies relative todemand

Impacts on theenvironment

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

The Role of Metrics

Finding criteria to tell us whetherone policy, project, or product

increases or reduces “security”

ManyLocal

MEASUREMENTSFew System INDICATORS

Balancing economic,environmental, and

human/social impacts

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

1. Clear definition of what is to be assessed,and why(Government policy, plant operation, sector regulation, etc).

2. The metrics must assess impacts on economics andbusiness, the environment, and society.

3. Coverage – key aspects must be included.

4. Available data – quantifiable empirical data.

5. Composites if appropriate (weighting).

6. Avoid duplication and needless complexity.

The Requirements of the Metrics

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

Chee Tahir, A. and Darton, R.C. (2010)Journal of Cleaner Production 18, 1598-1607

The Process Analysis Method

Indicators

Process

Impact

Issues External Impact Receivers

CAUSES

CREATES

DESCRIBED BY

CHANGING

AFFECTING

Human /Social

Environmental Economic

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

Overview of System

Definition of Security

Framework for AnalysisAnalyse the system to identify all significant impactson the three domains - stores of value (capital)

Characterise these impacts with metrics

Definition of System Boundary in Time and SpaceThe overview must include all processes within the boundary

The Process Analysis Method

Environmental

Economic

Human /Social

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

Framework for Analysis

1. Three domains / stores ofvalue (capital)

2. Perspectives• resource efficiency• human/social advance• environmental compatibilityIndicators reflect these

4. Identify issues associatedwith impact on External ImpactReceivers.EIR=guardian of capital

5. For each issue select anindicator

3. Identify Internal ImpactGeneratorsIIG=business process or policythat impacts a store of value

6. Quantitative measures foreach indicator – the metrics

The Process Analysis Method

EnvironmentalEconomicHuman /

Social

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

PAM Applied to Energy Security

Perspectives:Resource efficiency and fairness in (dis)benefit

(Bruntland)

Continuity and resilience

We used:

Our system:• Find resources• Extract resources => dispose of waste• Condition and process resources => dispose of waste• Transport resources• Convert resources => dispose of waste• Distribute (infrastructure)• Use => dispose of waste

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

Internal Impact Generators:• Government / Regulatory bodies• Resource extraction companies• Resource processing companies• Energy/power device manufacturers• Users

External Impact Receivers:• Consumers• Employees• Capital Providers• Utility companies• Communities• Future communities

PAM Applied to Energy Security

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

# / yearNumber ofengineeringgraduates

Availability of skilled labourEmployment

Years?Payback timeInflexible assets (planning,high cost, technical)

Interest rateCost of capitalAvailability of capitalNeed for capitalintensive plant

MetricIndicatorIssueImpact

??Political instabilityNo access toGovernment

#StirlingDiversity Index

Increase in dependence -forced change in supply

£ / PJ (or KWh)Cost / unitCost increaseDepletion of finiteresources

Example Output

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

# / yearHospital admissionsMortality / morbidityof the general public

Health impacts(e.g. particulates)

Customer MinsLost (CMLs)

Time unavailableTechnical failure

??Regulatoryuncertainty

Flight of capital

# / yearProportion of planningapplications rejected

Public oppositionVisual impacts

%# of tankers hijackedPiracyShipping delay

Hours / dayTime availableDemand > supplyLoss of power

MetricIndicatorIssueImpact

Example Output

Non-economic Feedbacks from Sustainability

2000. Reformed nuclear laws2002. Reformed nuclear laws-No new plants-Maximum lifetime 32 years-Remaining energy 2.62 Mio GWh-Last closure expected 2022

2010. Reformed nuclear laws-Lifetime extension between 8 and 14years-Additional energy 1.8 Mio GWh for 17plants-Last closure expected 2036

2011. 13th Reformed nuclear laws-closure of first 8.5GW (~10.5%peak)within 1 month-closure of all remaining plants by 2022

Closure of Nuclear Plants in Germany

Image Courtesy Wikipedia

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

UK Nuclear R&D Workforce

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

A set of metrics not planned for some defined purposeis merely a collection of statistics.

When a measure becomes a target, it ceasesto be a good measure.

Goodhart’s Law re-stated by Marilyn Strathern

A Metrics Health Warning!

C. Axon, R. Darton, C. Winzer: Measuring Energy Security. Colin.Axon@brunel.ac.uk

Summary

Reconceptualising Energy Security brings realisation ofthe important processes involved.

Need to create metrics in a transparentmanner to monitor progress which will….

…act as a coherent assessment of theUK's Energy Security, and guide

formulation of coherent policy.

EnvironmentalEconomicHuman /

Social