Significance of Diversification of Energy Resources

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Significance of Diversification of Energy
Resources
In the Name of God

• Reza Amrollahi

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Outline

• Energy Production and Its Perspectives
• Definition of Security and Its Categories
• Security Disruption in Energy Supply
• Types of Energy Production Risks
• Diversification Security in Energy Supply
• Energy Production Factors
• Energy Diversification Factor
• Energy Supply Risk Factor
• Solutions
• Summing Up

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Energy Its Perspectives

• World population would reach 8.2 billion in 2030,
  from 6 billion in 2000.
• One third of the world population have no access
  to electricity and another one third have only
  limited access.
• If the per capita energy usages in the developing
  and developed states are to be the same then the
  energy demand would increase 8 fold till 2050.
• In 2030 70 of total energy demand would form in
  developing countries.
• Therefore, the energy exchange trade (production,
  demand, supply, transport) would significantly
  grow.

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Energy Its Perspectives

• In 2030
• Still more than 1.4 billion people have no
  electricity.
• Natural gas would rapidly replace other energy
  resources.
• Growth in natural gas usage would be limited by
  advances in other energy technologies.
• Flower-house emissions would increase steeply.
• Conclusion
• Stability of states in near future depends
  primarily on their capability to produce clean
  and enough secure energy.

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Definition of Security

• Security can be relatively defined as
• Getting Free of Risks, Survival,
• and Preservation of Basic Values
• Security is the fundamental concern for all
  states from military and non-military aspects.
• Non-military aspects can be divided into
  different categories, including Energy
  Production, Economic, and Environmental issues.

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Security and Disruption

• Energy Supply and Risking Factors

Technological Limitations Major Dependence on
One or Few Technologies for Energy Production
Geographic Limitations Major Dependence on One
or Few Countries for Energy Imports
Energy Supply Risk
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Security and Disruption

• Energy production security similar to security
  itself, covers a vast and diverse concept.
• Countries with major reliance on limited energy
  supplies and import them would be more vulnerable
  to risks.
• Instabilities in energy supply and demand,
  technological, or geographical limitations can
  lead to disruptions in energy market.
• Energy importing countries usually do not face
  political chaos, but they are threatened by
  market disruptions (e.g. developed states).

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Security and Disruption

• On the other hand, developing countries usually
  experience all three types of disruptions
• Disruptions Because of Political Issues Due to
  Inability of Exporting Country, Internal
  Political Problems (Internal Chaos, Post-war
  Issues, etc.), External Problems, and Group
  Decisions of Unions,
• Disruptions in Markets Due to, for instance,
  Embargos,
• Disruptions Due to Accidents Natural Disasters,
  with no humans playing role.

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Types of Energy Supply Risks

Effective Risks in Energy Supply
Non-diversifiable Risks
Diversifiable Risks
Problems in the Global Market
Problems in Access to Technologies
Problems in the Local Markets
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Types of Energy Supply Risks

• Non-diversifiable Risks
• Correspond to oscillations in the global market
  and affect a large number of producers and
  consumers in countries.
• Diversifiable Risks
• Correspond to those risks, against which a
  country can increase the security factor by
  taking proper policies and programs.

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Diversification Security

• According to IEA, in 2030 fossil fuels would
  produce about 89 of worlds energy with the
  current rate.
• This will be 2 above the corresponding figure at
  the beginning of the current century.
• At present, major available energy resources are
• Oil
• Coal
• Natural Gas
• Nuclear Energy
• Hydro-power

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Diversification Security

• Share of various energy resources in the world
• (Source IEA)

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Energy Production Factors

• For a quantitative rather than a qualitative
  measurements we define two energy production
  factors.

Qualitative Evaluation
Quantitative Evaluation 1. Comparison to Other
States 2. Position of Technology
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Energy Diversification Factor

• Primary Energy Supply in Various Countries
• (Million Ton Crude Oil)

2002 2001 2000 1999 Country
2290.4 516.9 265.9 350.0 203.5 538.3 143 156.1 126.4 75.4 2253.9 517 266.4 248.2 193.9 524.2 134.5 149.6 119.7 71.6 2302.6 521.6 257.6 350.9 190.9 523.6 125.00 146.1 105.3 77.5 2242.3 516.4 255.1 244.4 178.5 502.1 121.7 140.6 90.1 71.0 US Japan France Canada South Korea India Iran Indonesia Saudi Arabia Turkey
10376.4 10150.1 9963.5 9711.6 Total World
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Energy Diversification Factor

• Percentage of Primary Commercial Energy Supply
  (Based on 2003 Statistics)

Oil Natural Gas Coal Nuclear Energy Hydro-power Country
39.7 49.2 36.1 33.0 49.8 32.8 41.8 50.3 54.9 42.9 26.6 13.6 15.1 27.0 11.4 7.8 56.0 29.9 45.1 25.4 24.9 22.2 4.7 10.6 24.1 53.6 0.5 17.6 __ 20.8 7.9 10.3 38.3 5.7 13.8 1.1 __ __ __ __ 2.6 4.5 6.5 23.5 0.7 4.5 1.5 2.1 __ 1.7 US Japan France Canada South Korea India Iran Indonesia Saudi Arabia Turkey
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Energy Diversification Factor

• To measure the diversification of various energy
  resources we define the energy diversification
  factor d as
• Here
• N is the number of energy resources,
• xi is the percentage of the ith energy in the
  countrys supply.

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Energy Diversification Factor

• Calculated Diversification Factors for Countries

Energy Diversification Factor Country
3.0 3.1 3.4 2.3 3.4 4.6 5.7 4.0 6.0 2.9 US Japan France Canada South Korea India Iran Indonesia Saudi Arabia Turkey
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Energy Diversification Factor

• Canada with the smallest and Saudi Arabia with
  the largest diversification factors have
  respectively the most even and most uneven usage
  of energy resources.
• Iran has a close d-factor to that of Saudi
  Arabia, showing its unreasonable situation.
• Some states essentially have no capacity to
  produce some forms of energy, e.g. hydro-power in
  Saudi Arabia.
• Hence, diversification in energy production
  schemes should be of the primary concern for Iran.

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Energy Supply Risk Factor

• From the energy supply security side, we can take
  quantitative measures too.
• Energy supply risk factors are given relative to
  crude oil for Japan as
• Liquid Natural Gas 1.94
• Crude Oil 1.00
• Coal 0.317
• Nuclear Power 0.026
• Unexpectedly, the risk factor for nuclear energy
  (in Japan) is much lower than other forms, being
  75 times less than LNG.
• Jap. J. Political Sci. 5, 1 (2004)

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Energy Supply Risk Factor

• This remarkable difference can be due to Japans
  access to nuclear fuel cycle.
• Therefore inability to access the peaceful
  nuclear fuel cycle will be a direct cause for
  increasing nuclear energys risk factor.
• Of course, there are numerous political,
  regional, and global issues affecting this
  situation.
• In fact a precise evaluation of risk factors for
  every country requires a separate and detailed
  research.

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Energy Supply Risk Factor

• If we take zero risk factor for Hydro-power and
  equal factors for LNG and natural gas, then we
  can define the total energy supply risk factor e
  as
• where ri is the risk factor of ith energy.

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Energy Supply Risk Factor

• Calculated Energy Supply Risk Factors

Energy Supply Risk Factor Country
0.99 0.83 0.67 0.89 0.80 0.64 1.51 1.14 1.43 0.99 US Japan France Canada South Korea India Iran Indonesia Saudi Arabia Turkey
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Energy Supply Risk Factor

• India and France have the smallest energy supply
  risk factors
• Cause
• Major reliance respectively on nuclear and coal
  energies (low risk resources).
• Iran and Saudi Arabia have the largest energy
  supply risk factors.
• Cause
• Heavy reliance on high risk energy resources
  (fossil fuels).
• Although the geographical and local benefits of
  these two countries are not included in this
  estimation, however, several compensating issues
  should be considered in the long term as follows
  in the next pages.

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Energy Supply Risk Factor

• Iran has huge natural gas reservoirs, but this
  would not help to attain a more reasonable energy
  supply risk factor

Pressure drop in many oil fields and the
necessacity of gas reinjection
Very low internal prices, encouraging unreasonabl
e consumption
Limitations in Long-term Usage of Natural Gas
Heavy subsidies paid, encouraging Illegal trade
Global limitations in usage of fossil fuels due
to flower-house emissions
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Solutions

• In general, countries having large energy
  diversification factors (i.e., uneven usage of
  resources), have large energy supply risk factors
  too. In both cases Iran has almost the worst
  situation.
• There are three inter-related solutions for Iran
• Diversification of Energy Resources
• Development of Low Risk Technologies
• (Coal, Hydro-power, and Nuclear Power)
• 3. Maximum Utilization of Renewable Energies

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Solutions

• Hydro-power
• Iran has not yet fully developed its hydro-power
  capacities. Through the completion of existing
  projects, the share of this clean energy form
  would increase.
• Within 9 months the total installed capacity of
  hydro-power plants would exceed 6007MW, which
  constitutes 18 of total countrys electricity.
• After completion of current projects during the
  next twenty years, the total capacity of
  hydro-power plants in Iran would reach 11,584.4MW.

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Solutions

• Karon-3 Dam

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Solutions

• Jiroft Dam (Illustration of Spillway)

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Solutions

• Natural Gas
• Currently, European Union is considering Iran as
  the best alternative for Russia to import natural
  gas.
• From another point of view, exports of national
  reservoirs such as natural gas and oil, in their
  crude form, results in destruction of many
  economic potentials as well as very low surplus
  benefits.
• Perhaps the best way to deal with this, is to
  keep the exports and therefore exchange with
  money to minimum, and replace it with the imports
  of science and technology, in the
  infra-structures of energy production with high
  efficiency, nuclear energy, renewables, and
  collaboration in the nuclear fusion research.

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Solutions
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Solutions

• Coal
• Current estimations show that only 50 of the
  countrys coal can be used for total required
  electricity over the next 30 years.
• Irans Electricity Development Organization has
  the first coal plant with the Clean Coal
  Technology in Tabas, close to the Mazino coal
  mines.
• If the share of coal from the total energy supply
  is one-third of the current total value, then
  internal coal mines would last for about a
  century.

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Solutions

• Nuclear Power
• Atomic Energy Organization of Iran initially
  planned in 1977 for a minimum of 9000MW and
  maximum 19800MW nuclear power according to
  country needs and consultation with Stanford
  Research Institute.
• 2x1200MW reactors in Bushehr and 1800MW plants in
  Ahwaz were planned.
• After the revolution, contracts were
  unfortunately stopped. However Bushehr plants
  would be ready for operation at reduced capacity
  in 2 years.

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Solutions
Bushehr reactors under construction
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Solutions

• With the completion of Irans hydro-power
  projects within the current year, energy
  diversification and supply risk factors would
  improve to 4.3 and 1.29, respectively, which show
  a much more favorable situation.
• Completion of Bushehr nuclear plants, Tabas coal
  plants, and all remaining hydro-power projects
  should be done in about 15 years. In this case,
  the energy diversification and supply risk
  factors would reach 3.5 and 1.09, respectively,
  which represent a situation quite comparable to
  developed states.

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Solutions

• Current Status of Energy Factors and Their
  Expected Values in Future
• For comparison, the Energy Diversification and
  Supply factors respectively for France and the
  United States are 3.4 and 0.99.

Factor Current Value Mid-2006 2020
Diversification d-Factor 5.7 4.3 3.5
Supply e-Factor 1.51 1.29 1.09
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Solutions

• Renewable energies require heavy initial
  investment and small energy production
  capacitites, which limit their usefulness.
• Considering all political aspects and the serious
  enviornmental issues involved with nuclear
  fission, the best remaining choice for energy
  production is the peaceful and clean NUCLEAR
  FUSION technology.

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Summing Up

• Not only diversification in energy resources of
  developing countries has direct relationship to
  their energy supply security, but also it is a
  condition for sustained development as well.
• Developed countries with stable economies enjoy
  favorable diversified energy production among
  various resources and rely on low-risk energies.
• Nuclear energy, contrary to the serious political
  difficulties during the construction have never
  been, at least up to now, affected by external
  problems after operation.

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Summing Up

• From both energy diversification and supply
  security views, there is a one-to-one
  correspondence. In general countries with large
  d-factors (less diversified) have large e-factors
  (less reliable situation) too.
• In both cases Iran is the most critical state.
• Through completion of hydro-power, coal, and
  nuclear projects, Irans energy factors would
  come close to the figures for developed countries.

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• Thank You for Your Attention