Energy demand and energy security - University of Exeter€¦ · Energy demand and energy security...
Transcript of Energy demand and energy security - University of Exeter€¦ · Energy demand and energy security...
Energy demand and energy security
Chapter 6: Richard Hoggett, Nick Eyre and Malcolm Keay
Two big questions
1 Why the focus on supply security?
2 How does energy efficiency fit in?
Security is about the balance of supply and demand
Mismatches are symmetrical - causes
Too little supply Too much demand
Too much supply Too little demand
Balancing mechanism failure
Potential responses are also symmetrical
Balance can be restored:
• By increasing supply/reducing demand
• By reducing supply/increasing demand
• By fixing the balancing mechanism (markets, delivery infrastructure etc)
So why the focus on supply? • Top left part of matrix (supply<demand) has
been main focus of concern (eg statutory security “of supply” document).
• Mainly due to supply side bias – demand side treated as a given (consumers must have access to “the services they need”); security therefore taken as ensuring enough supply to meet that demand.
• Balancing mechanisms often ignored (though they are the usual suspect in a crisis).
But there are some asymmetries
Disruptions have been more common on supply side (they can happen on demand side but have been constrained or predictable).
Some further (recursive*) asymmetries:
• Most of our information relates to supply side
• Value of lost load (VOLL) much higher than cost of supply
(*both are effect as well as cause)
Asymmetries 2: responses
• Supply side has large scale response mechanisms
• Responses on demand-side (diversity, storage, redundancy) may be (regarded as) trickier to mobilise
But:
• Governments have a legal responsibility to have the capacity to reduce oil demand by 10% (IEP)
• In practice, this has often been achieved or exceeded (IEA 2011b)
In any event, the future balance will be different
• Growing supply side inflexibility (non-dispatchable and capital intensive low carbon plant; gas imports)
• Growing demand side flexibility (smart grids, smart meters etc)
• Growing demand side complexity (uncertain trend of demand; new demands – EVs and dg; policy driven demands; gas/power interactions)
• Rising cost of energy (greater incentives for demand side – VOLL relatively lower)
UK Sources of Power Generation 2009 – Daily (3.8 GW Wind Capacity)
Sources: National Grid, Own Analysis
0
200
400
600
800
1,000
1,200
1
13
25
37
49
61
73
85
97
10
9
12
1
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3
14
5
15
7
16
9
18
1
19
3
20
5
21
7
22
9
24
1
25
3
26
5
27
7
28
9
30
1
31
3
32
5
33
7
34
9
36
1
GW
h/d
ay
Wind
Gas
hydro
Pumped Storage
Oil & OCGT
Imports
Coal
Nuclear
UK Sources of Power Generation 2025 Daily 43.2 GW Wind Capacity (OIES)
Sources: National Grid, Own Analysis
0
200
400
600
800
1,000
1,2001 13
25
37
49
61
73
85
97
10
9
12
1
13
3
14
5
15
7
16
9
18
1
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3
20
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7
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25
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5
27
7
28
9
30
1
31
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5
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7
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9
36
1
GW
h/d
ay
Wind
Gas
hydro
Pumped Storage
Oil & OCGT
Imports
Coal
Nuclear
2025 Hourly Analysis (OIES)
Sources: National Grid, Own Analysis
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
29
05
29
09
29
13
29
17
29
21
29
25
29
29
29
33
29
37
29
41
29
45
29
49
29
53
29
57
29
61
29
65
29
69
29
73
29
77
29
81
29
85
29
89
29
93
29
97
30
01
30
05
30
09
30
13
30
17
30
21
30
25
30
29
30
33
30
37
30
41
30
45
30
49
MW
h/
ho
ur
Wind
Gas
hydro
Pumped Storage
Oil & OCGT
Imports
Coal
Nuclear
Demand
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
57
85
57
89
57
93
57
97
58
01
58
05
58
09
58
13
58
17
58
21
58
25
58
29
58
33
58
37
58
41
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45
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49
58
53
58
57
58
61
58
65
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69
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73
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77
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81
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85
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89
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97
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59
29
MW
h/
ho
ur
Wind
Gas
hydro
Pumped Storage
Oil & OCGT
Imports
Coal
Nuclear
Demand
Days 121 – 127 Days 241 – 247
Balancing in Spain
Two
days
in
Spain
Electricity demand may well have peaked last decade (as may oil, gas
etc)…..
• Extended recession – lost decade(s) for Europe
• Energy efficiency (government policies plus AEEI)
• Higher electricity prices (global fossil prices plus cost of decarbonisation)
• “Negative demand” (small scale solar, CHP etc)
Demand: composition more significant than level -
but dependent on policy (National Grid scenarios)
The policy discussion revolves around energy efficiency
“Energy efficiency is the most cost effective way to reduce emissions [and] improve energy security ….. [It] can be seen as Europe's biggest energy resource”
(Commission – Energy 2020)
“Energy efficiency must be the starting point [for increased energy security]” (Malcolm Wicks]
Energy efficiency is one of the “six pillars” in the Government’s latest security of supply document
But energy efficiency is about reducing inputs, not service outputs
• Energy efficiency means less energy for same amount of services
• Doesn’t reduce dependence on energy services - except where non-energy services substituted (eg cycling)
• Dependence not represented by GDP share of energy or energy imports as in many policy docusments
• Greater efficiency = higher value energy (ie the pain of loss is greater; VOLL is higher)
Efficient A vs inefficient B
• A and B use the same amount of energy services. A is more efficient and spends 3% of GDP; B 5%.
• With a given %age supply reduction, both lose the same %age energy services
• With a given quantity reduction A loses more services
• B likely to be able to reduce demand more quickly and cheaply in an emergency because of inefficiency
• B also more likely to have greater diversity of supply and infrastructure because of higher energy flows
On the other hand
• B pays more for energy and suffers more from higher prices (but always did)
• B has a bigger gap to fill in an emergency (so …?)
• A may have better “buffers” (like insulation)
• A may have greater consumer awareness and responsiveness
• A may be less exposed to imports and fossil fuels in general
Role of energy efficiency
• Effects complex – no straightforward link with security
• Efficiency should not be considered in isolation or in an undifferentiated fashion; it’s the system effects of particular forms of efficiency that count
• Need wider strategy for informing and empowering consumers
Conclusions
• Demand has received too little attention in relation to security in the past, though demand reduction has been important
• Energy efficiency has been treated too simplistically
• In future, the demand side will take on a much greater potential role as energy markets decarbonise
• Governments will need to develop a coherent and integrated strategy to harness this potential effectively and need to pay attention to the balancing mechanisms that link demand and supply