Interpretation of macro indicators of energy intensities

Bruno Lapillonne, Vice President, Enerdata

Reunión Técnica de Trabajo del Proyecto BIEE24 – 26 de febrero, 2014, San José, Costa Rica

2

Middle East

Africa Latin America

Total Asia other

Europe/CIS

Asia OECD

North America

0%

20%

40%

60%

80%

100%

2006 2009 2012

Increasing number of countries with quantitative targets

Targets are expressed in different ways and relate to different part of the consumption: on total (primary )consumption (around 20%) , on final energy consumption (around 20%) , or end-use sectors (case of 60% of countries)

0%

20%

40%

60%

80%

100%

Primary Final consumptionEnd-use sectors Energy Suppliers

Countries with quantitative targets

Source WEC surveys ( 85 countries, of which 10 in Latin America)

3

Mode of expression of policy targets by region

Europe CIS North America

Latin America

Africa Asia OECD

Asia other Middle East

Total0%

10%20%30%40%50%60%70%80%90%

100%

Energy consumption reduction Energy efficiency improvementEnergy intensity reduction Incandescent lamps banishmentDiffusion of efficient equipment & other

Predominance of targets on energy savings and energy efficiency improvement which can be either a fix savings compared to an historical consumption (case of EU countries that must save 9% of their average final consumption over 2001-2005 ) or compared to a projection (case of several Latin American countries).But also targets on energy intensity reduction still exists.

Source WEC surveys ( 85 countries, of which 10 in Latin America)

4

Macro indicators are mainly energy intensity indicators that relate the energy consumption to the GDP .

These energy intensities can first of all be used to monitor these energy intensity targets;

They also enable to understand the dynamics of the primary and final energy consumption in relation to the economic growth and the different trends in these intensities.

As the difference between the primary energy intensity and final energy intensity is mainly explained by the power sector, macro indicators will also include the power sector.

Macro indicators: what are they ?

Out

line

1. Energy intensity trends2. Primary vs final intensity3. Final energy intensity variation: role of

structural changes

1. Absolute values of intensities are not really meaningful .

2. Instead of showing annual trends with multiple fluctuations, summarize trends by period

19901992

19941996

19982000

20022004

20062008

20100.00

0.05

0.10

0.15

0.20

0.25

Primary intensityFinal energy intensity

koe/

M$9

3

Argentina

How to analyze trend in energy intensities?

19911993

19951997

19992001

20032005

20072009

20110.00

0.05

0.10

0.15

0.20

0.25

Primary intensityFinal energy intensity

koe/

M$2

000

Costa Rica

3. A trend over 1990 -2011 is meaningful in both countries (increase then decrease) define trends on homogenous periods (e.g. 1998-2004 and 2004-2011 for Costa Rica).

Variations over time of energy intensities are usually expressed in average annual growth per year (%/yr) over a period: they measure overall energy efficiency trends from an economic viewpoint

Trends in primary energy intensity : Argentina (%/year)

1990-1995 1995-1998 1998-2004 2004-2010-6%

-4%

-2%

0%

2%

4%

6%

Primary intensity Final intensity

Average annual growth rate (% per year) (agr) between year m and n : agr= ((In/Im)* (1/(n-m) – 1)*100as In= Im (1+agr) n-m (with I energy intensity)

Regular decrease in Argentina since 2004, slightly faster for final than primary intensityBefore increase faster for primary than final

Sendero Energético: case of Uruguay

100 110 120 130 140 150 160 170 1805.0

5.2

5.4

5.6

5.8

6.0

6.2

6.4

6.6

6.8

7.0 1000 tep

600 tep

700. tep

800.tep.

1997

1998

1999

2000

2001 2002

2003 2004

2005 2006 2007

2008

2009 2010

PIB/hab

ktep

/$20

05

Source: DNE/MIEM

Out

line

1. Energy intensity trends2. Primary vs final intensity3. Final energy intensity variation : role of

structural changes

10

Primary and final intensity trends: case of Brazil

Source BIEE/EPE

Different trends as to the variation of primary and final intensity in Brazil depending on energy transformations and mainly the power sectorSince 1998, and especially since 2005, energy transformations contribute to increase the primary intensity due to the development of thermal power generation and biofuels production

-2%-2%-1%-1%0%1%1%2%2%3%3%

1990-1993 1993-1998 1998-2005 2005-2010

%/a

ño

Intensidad primária Intensidad final Transformación

Different trends in primary and final energy intensities

As a long term trend, primary intensity increases faster (or decrease slower) than final intensity due to increased losses in energy transformations. Indeed, economies are more and more electricity intensive, which increase transformations losses as electricity is produced with conversion losses , the magnitude of which depends on the power mix (thermal vs renewables (hydro, wind…) and the accounting of hydro and wind (no loss for hydro and wind with IEA but same losses as thermal for OLADE) However on recent years and in some EU countries reverse trends are observed due to improved efficiency of power plants (gas combined cycle, cogeneration, wind)

With the IEA accounting, year to year variation depend on the share of hydro and wind in power generation as there is no loss for hydro and to 60-70% losses for thermal plant and 67% for nuclear

The primary intensity decreases slower than the final intensity in Argentina since 2004 (or increased faster between 1998 and 2004). Part of it may be due to increasing losses in transformations linked to a reduction in power efficiency and increasing market share of electricity for final consumers

Trends in primary energy intensity : Argentina (%/year)

1990-1995 1995-1998 1998-2004 2004-2010-6%

-4%

-2%

0%

2%

4%

6%

Primary intensity Final intensity Transformations

13

Share of hydro in power generation in Brazil

Source BIEE/EPE

Increase in thermal power generation , contribute to reduce the average efficiency of power generation , which increases losses in energy transformations and contributes to increase the primary intensity.

0%

20%

40%

60%

80%

100%

1990 1995 2005 2010

Eficiencia del sector eléctricoEficiencia del sector eléctrico (térmico)

Efficiency of power generation in Brazil

Decomposition of primary intensity variations

0,00

0,10

0,20

0,30

0,40

1993 1998 2005 2010

ktoe

/M$2

000

Intensidade final Generación eléctrica Otras transformaciones

Case of Brasil

Source: BIEE/EPE

1998 2004 20100.00

0.05

0.10

0.15

0.20

0.25

Final energy intensity Power generationOther transformations

koe/

M$9

3

Case of Argentina

Source: BIEE/Secretaria de Energia

Most of the losses in transformations come from the power sector : 80% of the gap in general , of which 3/4 losses in thermal power generation and 5% T&D losses

Share of electricity in final consumption in Argentina

1990 1995 1998 2004 20100%

5%

10%

15%

20%

25%

% electrcity

Source BIEE

Increasing share of electricity result in increasing losses in transformations as significant part of power generation in thermal power plants, i.e. with losses

Out

line

1. Energy intensity trends2. Primary vs final intensity3. Final energy intensity variation : role of

structural changes

1998 2004 20100.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

industry transport households services agriculture

koe/

M$9

3

Final energy intensity by sector: Argentina

Where does the reduction of energy intensity come from ?Contraction of industry and services contribution to total final energy intensity

Industry: energy consumption to VAAgriculture: energy consumption to VA Services: GDP: energy consumption to VATransport: no intensity as VA of transport correspond to transport companies only ; can only be related to the GDP As industry is more energy intensive than services ( industry has a higher intensity than services , by ~ a factor 7 on average at word level), any increase in the share of services in GDP contribute to decrease the final energy intensity (or the other way around if the share of industry increases) structural effect

To see what is the impact of structural changes, need to show :-- the change in the share of agriculture, services and industry in total GDP-- the differences of intensity by sector

Sectoral intensities

Sectoral intensities and structural changes: case of Brazil (1/2)

Intensidad energética sectorial (ktoe/M$2000)

Source: BIEE/EPE0.00

0.05

0.10

0.15

0.20

0.25

0.30

199019911992199319941995199619971998199920002001200220032004200520062007200820092010

ktoe

/M$2

000

Agricultura Industria Servicios

Services are 20 times less intensive than industry As the share of services in increasing, this contributes to reduce the final energy intensity

1995 2005 20100%

20%

40%

60%

80%

100%

Agricultura IndustriaServicios Impuestos

GDP structure

Sectoral intensities and structural changes: case of Brazil

Source: BIEE/EPE

The increasing share of services in the GDP contributed to reduce the final energy intensity by 0.4%/year between 1995 and 2009, all things being equal

1990-95 1995-99 1999-2009 2009-2011

-1.5%-1.0%-0.5%0.0%0.5%1.0%1.5%2.0%2.5%3.0%

Final intensity Final intensity at constant structureStrutural changes

Sectoral intensities and structural changes: case of Uruguay

Intensidad energética sectorial (koe/MUYU05)

Source: MIEM/DNE0.000

0.002

0.004

0.006

0.008

0.010

0.012

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Agricultura Industria Servicios

Services are 11 times less intensive than industry As the share of services in increasing, this contributes to reduce the final energy intensity

2000 2007 20110%

20%

40%

60%

80%

100%

59.3% 56.1% 60.8%

Agricultura IndustriaServicios Impuestos

GDP structure

Sectoral intensities and structural changes: case of Uruguay (2/2)

Source: MIEM/DNE

As the share of services in increasing, this contributed to reduce the final energy intensity by 0.5%/year on average between 2000 and 2011, all things being equal

2000-2007 2007-2011 2000-2011

-1.5%-1.0%-0.5%0.0%0.5%1.0%1.5%2.0%2.5%3.0%

Final intensity Final intensity at constant structureStrutural changes