Energy Planning Issues: A Comprehensive Approach, Lab Reports of Energy Efficiency

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ENERGY SYSTEMS PLANNING

(Session 4)

Energy System (Planning Issues)

Dr. Shree Raj Shakya

Department of Mechanical Engineering, Pulchowk campus, Institute of Engineering, Tribhuvan University

• Due to the long lead time of energy projects , there has always been some concern for planning in the energy sector
• This related, however, to individual production and transport projects meant to start operating in the future, when a need for increased energy supply was expected.
• It was only in the electrical energy sector , and this because of its physical structure, that real extension planning appeared, first for the short term and later to progressively longer time horizons.
• Triggered by the electricity subsector to answer questions referring to longer-term availability of supply of primary energy resources such as coal, petroleum, natural gas, etc., the producing subsectors started some planning of their own.
• A phase of uncoordinated sub-sectoral energy planning prevailed for some time , originating a certain amount of data and limited planning expertise.

Planning Issues

• The main objective of an energy master plans (EMP) is to ensure the availability of energy at the lowest possible total economic, financial, environmental and social cost , consistent with the pursuit of other national development goals.
• Because of limited resources , energy options must be selected so as to achieve balanced development throughout the economy, i.e. energy strategy and policy must represent an integrated part of overall socio- economic development.
• Accordingly, the success of an energy policy is measured by its effect on growth, employment, balance of payment, inflation and income distribution as well as on aspects less readily quantifiable in monetary terms , for example quality of life, environment and strategic considerations.

Planning Issues - The energy master plan (EMP)

Planning Issues - Hierarchy of interactions in integrated

national energy planning (INEP)

• The existing status is the reference base and its analysis has to include all items and issues of relevance and reference for the further planning especially for the energy demand, energy supply and pricing , the point of departure must be very well defined.
• Energy demand projection can be carried out either in a macro

(economic) or in a micro (structural) approach.

• The macro approach is top-down : total energy demand is forecast first and then shares of this demand are apportioned by end-use energy.
• The micro approach is bottom-up: separate forecasts are made for each final consumption sector and these are then added to obtain the total energy demand.
• As far as developing countries are concerned , a special difficulty, generated by their rural-urban dichotomy , has to be faced, i.e. separate projections have to be made for the demand for non-commercial and commercial energy resources.

Planning Issues - The energy master plan (EMP)

• Energy supply projections are based on studies of

possible development of domestic primary energy resources and resulting import necessities. Again difficulties appear in relation to non-commercial primary energy resources — fuelwood and charcoal — for the most part supplied by a vast number of individual consumers themselves , operating at a subsistence level.

• Energy pricing is the third key element of energy planning

which has a major role in stimulating energy efficiency and inter-fuel substitution and in mobilizing the financial resources to implement the plan. They should correctly reflect the cost of supply. Similar difficulties appear for the non-commercial resources , especially when substitution actions are intended to reduce deforestation.

Planning Issues - The energy master plan (EMP)

• For example, for petroleum-importing developing

countries — from the balance of payments standpoint a priority ranking could be considered that would specially promote:

• projects that save (through more efficient use) or displace petroleum (through inter-fuel substitution) in large quantities ;
• projects that can yield these results in the shortest time ; and
• projects meeting the same results at the least cost , i.e. projects that give the highest economic and financial returns when based on a reasonable range of oil price assumptions.

Planning Issues - The energy master plan (EMP)

• At the second level , the energy sector is treated as a separate entity composed of subsectors such as electricity, petroleum products and so on.
• This permits detailed analysis of the sector with special emphasis on interactions among the different energy subsectors , substitution possibilities , and the resolution of any resulting policy conflicts , such as competition between kerosene and electricity for lighting, or woodfuel and kerosene for cooking.
• At this level, the balance supply/demand of the energy system is optimized. To this purpose alternative solutions and scenarios are formulated and ranges of acceptable options computed. Depending on the size and structure of the energy system , the period of time involved , the nature of constraints and the optimization criteria , adequate modelling and computer programs would present the alternatives ranged in various hierarchical options. In general, the first ranking should display the options according to their least present value costs as reference alternatives , and compared with policy (strategic) alternatives.

Planning Issues - The energy master plan (EMP)

Planning Issues - Basic steps for implementing Integrated National

Energy Plan (INEP)

Planning Issues - A characteristic basic structure of national energy

planning

A systematic approach to energy planning

includes a number of steps

1. Defining the goals and wider objectives of the plan,
2. Determining the approach to be taken,
3. Identifying the information required from the planning process,
4. Choosing the analysis process,
5. Conducting the analysis,
6. Presenting the results to decision-makers,
7. Preparing the energy plan.

These steps can all be seen as part of a dynamic planning process.

Each step may be performed several times before proceeding to the

next. Each may be revised as information from succeeding steps

becomes available.