1' dia

1
LIMITED RESOURCES SEARCH FOR NEW
RENEWABLE ENERGY

Comenius University Lectures, Bratislava
Net Energy Analyses
G. TOTH
ENERGY ECONOMICS
2
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NEW RENEWABLE ENERGY

NEW RENEWABLE ENERGY
GLOBAL ISSUES. ENERGY BASICS
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10
Schylla and Charybdis
11
Schylla and Charybdis

• Scylla and Charybdis are two sea monsters of
  Greek mythology situated on opposite sides of a
  narrow channel of water.
• The phrase "between Scylla and Charybdis" has
  come to mean being in a state where one is
  between two dangers and moving away from one will
  cause you to be in danger from the other.

12
ParallelismSchylla and Charybdis Alternative
Energy

• Alternative Energy
• Wind energy
• Solar energy
• Water energy
• Bio energy

• Fossil Energy
• Coal
• Natural Gas
• Oil

• Darkgreen Energy
• Bioenergy from
• fossil energy
• The importance of the harmony with the
  environment!

13
Energy balance
What is energy balance? Energy balance is a
systematic presentation of energy flows and
transformations in a system. Energy can not be
created or destroyed, only modified in form!
14
Example Energy balance I.
Source Bio-Genezis Ltd.
15
Example Energy balanceTechnical
Fermentation
Biogas
input
output
16
Example Energy balance II.

• The energy balance is POSITIVE because
• Total energy output of the process 100
• Useful energy output of the process 100 -10
  90
• Energy input ? 35
• 5 Electric 30 Heat
• Useful energy output gt Energy input
• 90 gt 35
• Energy output Energy input Energy Loss
  Energy balance
• 100 ( 5 30 ) 10
  55

17
What is the pitfall of the energy balance? I.
Transportation ?
18
The complete process
Energy for transportation
19
The complete energy balance

• The complete energy balance is NEGATIVE
• Total energy output of the process 100
• Useful energy output of the process 100 -10
  90
• Energy input ? 95
• 60 Transportation 5 Electric 30 Heat
• Useful energy output lt Energy input
• 90 lt 95
• Energy output Energy input Energy Loss
  Energy balance
• 100 ( 60 5 30 ) 10
  -5

20
What is the pitfall of the energy balance? II.

• The complete energy balance is POSITIVE
• Total energy output of the process 100
• (Useful energy output of the process 100 - 10
  90)
• Energy input ? 95
• 60 Transportation 5 Electric 30 Heat
• Total energy output lt Energy input
• 100 lt 95
• Energy output Energy input Energy
  balance
• 100 ( 60 5 30 ) 5

21
Is this really the complete process to produce
biogas?
What is the pitfall of the energy balance? III.
Energy for transportation
22
The complete process to produce biogas
New / renewable energy generation using fossil
energy?! I.
Energy to grow basic materials
Energy for transportation
23
New / renewable energy generation using fossil
energy?! II.

• Some input process uses fossil fuel diesel oil

24
Energy balanceEconomical aspect

• Income
• saleable outputs
• (electric power, heat )

• Cost
• loss
• transportation
• every input (energy, basic materials)
• unsaleable outputs

25
Direct indirect cost

• Direct cost
• because of the production
• the company pays
• example energy, basic material, wage
• Indirect cost
• because of the production
• society pays
• externals

26
Direct costs example ethanol production from corn

• USA average 2007
• Energy cost 10 cent / liter
• Chemical and enzyme costs 6 cent / liter
• Maize net cost 22 cent / liter
• Other costs 2 cent / liter
• ? 40 cent / liter

Source Jozsef Popp 2007
27
Indirect costs example bioethanol production
from corn

• USA bioethanol production 2006 5 billion gallon
• Indirect costs
• Cost of tax allowance (2006) 2,5 billion
• Environment costs (CO2 , NOx) ? billion
• Who has paid the indirect costs?
• Sociality (through taxes to the governments)

28
LIMITED RESOURCES SEARCH FOR NEW
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NEW RENEWABLE ENERGY

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31

• Sector analysis

32
Sector analysis Solar energy I.

• There is no (or minimal) necessary energy input
  for functioning
• Calculable energy production
• Very high investment costs
• It needs a big producing area
• Minimal need for human work

33
Sector analysis Solar energy II.

• current shortage of silicon (the principal raw
  material of solar cells)
• the cumulated total of installed European
  capacity is 1791.7 MWp
• grid-connected applications with 94.4 of
  installed capacity

34
Installed photovoltaic capacities in the European
Union (in MWp)
35
Sector analysis Wind energy advantages -
disadvantages

• There is no necessary energy input for
  functioning
• It produces virtually no pollution of air, water
  or soil
• Installing wind turbines is relatively quick
• Not relatively high investment costs
• Minimal need for space
• The price of wind power is not affected by fuel
  price increases or supply disruptions
• But
• Incalculable energy production
• Noise

36
Wind energy in the EU I.
Source Hungarian Wind Energy Association
37
Wind power installed in the European Union at the
end of 2005 (in MW)
38
Problems of wind energy

• too slow extension of the electrical power grid
• indefinite purchase price of energy (in many
  countries)
• not enough energy storing capacity

39
Investments to the wind energy

• Question
• Is it profitable? Is the project safe?
• Problem
• Receiving price of the electricity
• price level
• receiving period

40
Sector analysis Geothermal energy

• There is minimal necessary energy input for
  functioning
• High investment costs
• Necessary to pump back (in many countries) ?
  causes higher costs!!!
• It needs high geothermal gradient

41
Heating with geothermal energy in the EU
42
Situation of high temperature geothermal energy
(electricity production) in 2004 and 2005
43
Sector analysis Water energy

• The sector is extremely dependent on geography
• There is no necessary energy input for
  functioning
• Really high investment costs
• It needs much space ? causes in environment
  changes

44
Types of biomass

• Consistent biomass
• - firewood
• - energy grass
• - forestry cut offs
• Biofuel
• - biodiesel
• - bioetanol
• Biogas

45
Consistent biomass

• High input energy
• - cutting
• - transportation
• - loading
• Technical problem with energy grass (too high Si
  matter)

46
Biofuel

• High input energy
• agricultural work (reaping, plowing costs)
• transportation, loading
• preparing costs
• The whole process employs high number of people

47
Ethanol producing capacity of the word billion
liter
48
Biodiesel producing capacity of the word billion
liter
49
Secondary products of the biofuel

• 4,65 kg by-product is issued at the process of
  producing 1kg of bioethanol!
• It needs a demand not only for the biofluel but
  also for the secondary products!

50
Price influence biofuel secondary product
fix parameter
51
Energy balance for bioethanol produced from
various feedstocks
Source Energy Balance of Bioethanol A Review,
Pål Börjesson, Department of Technology and
Society, Environmental and Energy Systems
Studies, Lund Institute of Technology, March 2006
52
Energy balance for bioetanol and biodiesel

• Fuel Energy IN Energy OUT
• Biodiesel (soy bean) 1.0 3.2
• Ethanol 1.0 1.34

Source Study by U.S. Dept of Energy (DOE) and
U.S. Dept of Agriculture (USDA), 1998
53
Biogas

• No necessary input energy
• The process of producing biogas can use the
  by-products of other processes
• stock breeding (excrement)
• refuse water
• communal trash

54
Thank You for Your attention!
55
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58
Balance

• We use the symbol multifunctional.
• Energy balance

• Input energy
• The energy used by the process.

• Output energy
• The energy given by the process.
• (Is all of it useful?)

ENERGY ECONOMICS
59
Net Present Value (NPV)

• Definition
• Net present value (NPV) is a standard method for
  the financial appraisal of long-term projects.
  Used for capital budgeting, and widely throughout
  economics, it measures the excess or shortfall of
  cash flows, in present value (PV) terms, once
  financing charges are met.

60
The formula of counting NPV

• NPV ?nt 1(Ct/(1r)t-C0)
• t - the time of the cash flown - the total time
  of the projectr - the discount rateCt - the net
  cash flow (the amount of cash) at time t.C0 -
  the capital outlay at the beginning of the
  investment time ( t 0 )

61
Example for the NPV

• Which alternative is the best?
• (Investment costs 40 , discount rate 10)
• 1.) I get 99 in the next year.
• 2.) I get 121 in two years.
• 3.) I get 60 now and 50 in the next year.
• We count all future volumes back in the present.

62
Example for the NPV Alternative 1

• I get 99 in the next year.
• NPV -C0 Ct/(1r)t
• NPV -40 99 / (10,1)1 50

63
Example for the NPV Alternative 2

• I get 121 in two years.
• (Investment costs 40 , discount rate 10)
• NPV -C0 Ct/(1r)t
• NPV -40 121 / (10.1)2 60

64
Example for the NPV Alternative 3

• I get 60 now and 50 in the next year.
• (Investment costs 40 , discount rate 10)
• NPV -C0 ?nt 1(Ct/(1r)t)
• NPV -40 60 50/(10.1) 65.45

65
Answer

• 1.) NPV 50
• 2.) NPV 60
• 3.) NPV 65.45
• Alternative No. 3 is the best one.

66
Internal Rate of Return (IRR) 1

• Definition The internal rate of return (IRR) is
  a capital budgeting metric used by firms to
  decide whether they should make investments. It
  is an indicator of the efficiency of an
  investment.
• NPV ?nt 1(Ct/(1IRR)t) 0
• We use IRR only to decide whether a single
  project is worth investing in.

67
Internal Rate of Return (IRR) 2
A
NPV
IRR

B
68
Return on investment (ROI)

• Definition
• return on investment (ROI) is the ratio of money
  gained or lost on an investment relative to the
  amount of money invested.

69
ROI calculation method (example 1)

• 1.) 1,000 investment ? earns 50 in interest
• 2.) 100 investment ? earns 20 in interest
• ROI
• ROI1 50 / 1000 5
• ROI2 20 / 100 20
• 1.) more cash (50) than 2.) (20)
• 2.) higher ROI (20) than 1.) (5)

70
Consequence

• The investor wants to get the most profit for the
  least money.
• It is studying the ROI and not only the money
  gained from the investment

71
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74
ROI calculation (example 2)

• You have 200 that you want to INVEST at a bank
• The bank is offering a time deposit account for 1
  year that pays 10 interest.
• It costs you 5 to travel to the bank (round
  trip).
• (You travel two times at the beginning of the
  period and at the end of the period.)
• 200 10 interest 220 at the end of 1 year.
• MINUS 6 6 12 total travel cost.
• 220 - 12 208 208 - 200 8 (total
  earns)
• ROI (8 / 200 )100 4

75
The arithmetic of the ROI

• ROI 1 100
• when the final value is twice the initial value
• ROI gt 0 when the investment is profitable
• ROI lt 0 when the investment is at a loss
• ROI -1 -100
• when investment can no longer be recovered

76
Investment return period

• Alternative 1
• The investor get back its many in one year.
• Alternativ 2
• The investor get back its many in five years.
• Which one is better? Alternative 1
• People want to get maximal profit in minimal time.

77
Net Energy Gain (NEG)

• Definition
• the difference between the energy required to
  harvest an energy source and the energy provided
  by that same source.
• NEG EnergyConsumable - EnergyExpended
• NEG is not the same as financial gain!

78
Values of the NEG

• NEG gt 0
• This energy source can be used as a primary
  source of energy! (I invest less energy than I
  get back.)
• NEG 0
• NEG lt 0
• This energy sources can not be used as a primary
  source of energy! (I invest more or equal energy
  than I get back.)

79
Example for NEG

• Oil extraction
• Nowadays 8 barrels of crude oil are extracted
  for every barrel of crude used in the extraction
  process.
• NEG EnergyConsumable - EnergyExpended
• NEG 8 1 7

80
Energy Return On Investment (EROI)

• EROI or EROIE (Energy Return on Invested Energy)
• Definition
• EROI is the ratio of the amount of usable energy
  acquired from a particular energy resource to the
  amount of energy expended to obtain that energy
  resource.

81
EROI calculation method

• EROI
• Quantity of energy sup plied
• Quantity of energy used in sup ply process
• In common parlance Energy Output
• Energy Input

82
Values of the EROI

• EROI gt 1
• This energy source can be used as a primary
  source of energy! (I invest less energy than I
  get back.)
• EROI 1
• EROI lt 1
• This energy sources can not be used as a primery
  source of energy! (I invest more or equeal energy
  than I get back.)

83
Example EROI 1

• Oil extraction
• Nowadays the energy investments needed to use
  the energy of crude oil is estimated to 8 1.
• I get 8 units of energy. I invest 1 unit
  of energy.
• When the figure goes down to 1, the oil ceases
  to be an energy source.
• for example 1 2

84
Example EROI 2
Source The Enciclopedia of Earth
85
The suspense of the EROI calculation

• How much energy is calculated in the sup ply
  process?
• Epurchased Eself ?
• different lobbies

86
The relationship of the EROI to net energy gain

• They measure the same quality of an energy
  source in numerically different ways
• EROI it measures the ratio or efficiency of the
  process
• Net energy it describes the amounts
• (Net Energy Gain EnergyConsumable -
  EnergyExpended)
• Net Energy / Energy expended EROEI - 1

87
The EROI and the energy quality (only in the
process of extraction)

• Better energy quality ? higher EROI in the
  process of extraction
• Example
• Oil extraction
• average 8
• Middle East 30

88
EROI Energy quality

• Benzine
• EROI 0,81
• Diesel Oil
• EROI 0,83

• Bioethanol
• EROI 1,25 - 1,67
• Biodiesel
• EROI 1,93 3,40

Why are we producing benzine and diesel oil, if
the EROI lt 1 ? People immolate some part of the
all produced energy to create a better quality of
energy!
89
Different forms of energy
90
Flexible energy forms

• Flexible energy sources
• We can use them not only to produce energy.
• Example
• Biomass - energy, food, feed, building material,
  paper, medicines, chemicals
• Oil - energy, chemicals
• Potential problem
• (Too) big competition between different
  industries for the flexible energy sources.

91
Rigid energy forms

• Rigid energy sources
• We can use them only to produce energy.
• Example
• Coal electric production
• Uranium electric production
• These energy forms are used only to produce
  energy ? demand only in one market.

92
Which investments are the most popular?

• The least investment costs.
• The most profit.
• Wind energy at the coasts and in the mountains.

93
Sector analyses Wind Energy

• NEG between 17 and 39
• EROI from 5 to 35, average 18
• Wind energy is in a favorable position.
• Benchmark
• coal-fired power generation has an EROI between 5
  and 10.
• nuclear power is no greater than 5.

94
Sector analyses Bioethanol

• EROI 1,5
• (from corn in the USA)
• EROI 8
• (from sugarcane in Brazil)
• Benchmark
• coal-fired power generation has an EROI between 5
  and 10.
• nuclear power is no greater than 5.

95
Sector analyses hydropower

• EROIhydropower 10
• Benchmark
• coal-fired power generation has an EROI between 5
  and 10.
• nuclear power is no greater than 5.

96
Different energy sources, different EROI
Source Ron Swenson (2006)
97
Thank You for Your attention!
98
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101
Energy Return On Investment (EROI)

• EROI or EROIE (Energy Return on Invested Energy)
• Definition
• EROI is the ratio of the amount of usable energy
  acquired from a particular energy resource to the
  amount of energy expended to obtain that energy
  resource.

102
EROI calculation method

• EROI
• Quantity of energy sup plied /
• Quantity of energy used in sup ply process
• In common parlance Energy Output
• Energy Input

103
Values of the EROI

• EROI gt 1
• This energy source can be used as a primary
  source of energy! (I invest less energy than I
  get back.)
• EROI 1
• EROI lt 1
• This energy sources can not be used as a primary
  source of energy! (I invest more or equal energy
  than I get back.)

104
Example for EROI

• Coal mining in the 70s
• The energy investments needed to use the energy
  of coal is estimated to 30 1 .
• I get 30 units of energy. I invest 1 units of
  energy.
• When the figure goes down to 1, the coal ceases
  to be an energy source.
• for example 1 2

105
EROI
Source Charles Hall, Pradeep Tharakan, John
Hallock, Wei Wu and Jae-Young Ko,Advances in
Energy Studies Conference, Porto Venere, Italy,
September 2002
106
EROI (time periods) 1
Source The Enciclopedia of Earth
107
EROI (time periods) 2

• Total EROI is gt 1 if
• Energy output gt Energy input
• Constructiion Self use Operation Maintrance
  lt Power Generation
• The energy payback period is the time needed to
  produce an amount of energy equivalent to that
  invested in its start-up.

108
How "Physical" a Measure is EROI? 1

• Example (Oil / Natural gas)
• EROEI Concept The fewer the steps in converting
  one form of ENERGY into another is also (usually)
  the most efficient (the least LOSS).
• It is expressed using the Laws of
  Thermodynamics
• The 1st Law of Thermodynamics (Law of
  Conservation of Energy) the 2nd Law of
  Thermodynamics (Law of Entropy)
• If you change one form of ENERGY into another
  form IT TAKES ENERGY to do so, and/or there will
  be a LOSS OF NET ENERGY at the end.

109
How "Physical" a Measure is EROI? 2

• EROI is not a "pure" physical measure.
• It is not independent from
• economic
• political
• and institutional influences.

110
EROI and the economic expansion

• higher EROI sources
• greater potential for economic expansion

111
Fossil energy

• Not counting the environmental costs
  (externalities), the fossil energy is really
  cheap.
• It will be cheap until the EROI is not around 1.
• But
• counting the environmental costs, fossil energy
  loses its cheapness

112
Price of energy example Canada

• Canada
• In good wind areas, the costs of generating
  electricity range
• 0,05 0,10 / kWh
• Generating electricity with diesel generators can
  range
• 0.25 - 1.00 / kWh

113
Price of energy example Brazil 1

• Brazil
• There are 25000 isolated settlements in the
  Amazonas Region. (They are not conducted with the
  state electric network)
• They use 3 milliard liter diesel oil to produce
  electric yearly.
• The used diesel oil is transported through the
  rivers with a cost of 1 milliard yearly.
• The Amazonas Region is a great place to produce
  from palm oil to biodiesel. ( 0.5 / l)

Source F.O. Licht 2007
114
Biofuel fossil fuel Which one is really cheap?

• Energy efficient
• 1 l etanol 0.65 l benzin
• 1 l biodiesel 0.91 l diesel oil
• When is it worth to buy bioetanol?
• If the price of etanol is lt price of benzine
  0,65

115
Price of energy example Brazil 2

• 3 milliard l diesel oil is needed 3 / 0.91
• 3.3 milliard l biodiesel.
• Total producing costs of biodiesel from palm oil
  
• 0.5 3.3 milliard l 1.65 milliard
• ( 1.65 milliard - 1 milliard ) / 3 milliard
  0.22
• Conclusion If the price of 1 l diesel oil gt
  0.22 it will be economically more efficient to
  produce electric from palm oil than to use diesel
  oil.

116
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Price of the energy average production costs

• Windenergy in California
• 1993 7.5 cent / kWh
• 2004 3.5 cent / kWh
• Solarenergy in California
• 2007 (PV Roof)
• 60 cent / kWh
• 2007 (Solar plants)
• 13 cent / kWh

• Nuclear power plants in the USA
• 2005 1.7 cent / kWh
• Coal power plants in the USA
• 2005 2.2 cent / kWh
• Gas plants in the USA
• 2005 7.5 cent / kWh
• Oil-fired plants in the USA
• 2005 8.5 cent / kWh

120
Price of the energy fossil energy in the USA
121
Is fossil energy really cheap?

• today ? fossil energy is relatively cheap
• But
• fossil energy is finite
• tomorrow ? fossil energy will be expensive
• We will run out of!
• Alternative energy

122
Alternative energy fossil energy When should
we change?

• If the EROI (mining, extraction!) of an old
  energy source nears 1 from above we should
  change!
• We should find an alternative energy source with
  an EROI above the old one!
• If the EROI of an old energy source is 1, it
  will be too late to change!

123
History Future Biomass (only wood)

• EROEI Concept I Population has a direct
  influence on fuel scarcity.
• EROEI Concept II Acquisition and Transportation
  costs (ENERGY) increase as the distance to the
  source of fuel increases.
• EROEI Concept III Correct application of more
  efficient technologies lowers the cost of energy.

Time
124
Total Consideration EROEI
125
Problems with the EROI

• People immolate some part of the all produced
  energy to create a better quality of energy!
• We use processes with an EROI lt 1 to produce a
  better quality of energy.

126
EROI analyses

• EROIelectric production
• EROIbenzine,diesel oil production
• are not comparable with
• EROIcoal minig
• EROIoil extraction

127
EROI of nonrenewables

• Oil and gas (domestic wellhead)
• 1940's Discoveries gt 100.0
• 1970's Production 23.0, discoveries 8.0
• Coal (mine mouth)
• 1950's 80.0
• 1970's 30.0
• Oil shale 0.7 to 13.3
• Coal liquefaction 0.5 to 8.2
• Geopressured gas 1.0 to 5.0

128
EROI of renewables

• Ethanol (sugercane) 0.8 to 1.7
• Ethanol (corn) 1.3
• Ethanol (corn residues) 0.7 to 1.8
• Methanol (wood) 2.6
• Solar space heat (fossil backup)
• Flat-plate collector 1.9
• Concentrating collector 1.6

129
Electric production

• Coal U.S. average 9.0
• Western surface coal
• No scrubbers 6.0
• Scrubbers 2.5
• Hydropower 11.2
• Nuclear (light-water reactor) 4.0
• Solar
• Power satellite 2.0
• Power tower 4.2
• Photovoltaics 1.7 to 10.0
• Geothermal
• Liquid dominated 4.0
• Hot dry rock 1.9 to 13.0

130
Renewable energy or energy efficiency

• USA
• If the efficiency of fuel progress 1 miles / 1
  gallon than the total using of fuel decreases
  with 7,5 milliard gallon!
• (7,5 milliard gallon is the normative of biofuel
  using in the USA of the year 2012.)

131
Do we go back to the history in the future?
Conclusion We should use all of our renewable
energy sources. We dont go back to the history
but we use some historical energy sources.
132
Economical aspects renewables - slowly - quickly

• If an investment is profitable in a normal (not
  too long) period investors will do it.
• Example (biofuel)
• Only few petrol stations with biofuel
• Only few cars are able to use biofuel

133
Conclusion

• It is time to search for alternative energy
  sources.
• It is time to try to use the alternative energy
  sources to develop them ? second generation
  bioenergy.
• It is not time (we should wait) to change all the
  old energy sources for a new one.

134
Thank You for Your attention!