To achieve goal 7 of SDGs, ensuring access to clean and affordable energy is essential. It requires transitioning energy from non-renewable to renewable sectors. This involves transforming the global energy sector from fossil-fuel based to zero carbon sources. Primary energy is the energy we find in nature. Examples include crude oil, gas, coal, uranium, and renewable energy sources (not the electricity they produce). Secondary energy refers to energy that is transformed into another form after conversion, like electricity or refined petroleum products. That is, when we process the primary sources of energy for another form of products, we call it secondary energy.
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There are some specific efficiency factors or effectiveness in practice for energy transition. Efficiency factor can be defined as energy output of a system. It is divided by primary energy contribution in that system. For example: electricity produced / energy of coal used. It makes less sense for renewable energy sources since the primary energy source is endless (not finite). Yet, it informs us about improvement potential. That is, we need an efficient system by which the energy conversion process will be less harmful for the environment.
Growth and Energy Consumption Dynamics
In discussing consumption dynamics, if we compare OECD and non-OECD countries, we find some growth in OECD countries. However, this growth is not significantly high. In contrast, non-OECD countries are observing rapid growth in energy consumption. It is due to rapid population and economic growth in non-OECD countries. Europe and Asia are highly dependent on oil inputs. The Middle East and former Soviet group of countries are exporting a lot of oil globally. An important observation is that US, including Canada and Mexico, are oil-hungry economies. However, they are producing a lot of oil. They are becoming net exporters of oil. In the case of Gas production and consumption, the regions worldwide are almost balanced. This balance is because the gas transportation system is difficult and expensive. This is because gas is not so much mobile as oil. If we look for coal consumption and production, Asia pacific is nearly self-sufficient. Although it is not difficult to transport coal from one part to another, it is not profitable for businesses. It has low value. But still there are a lot of trade of coal between Asia pacific countries.
Renewable and Non-renewable Sources of Energy
Nevertheless, we observed that in the case of electricity generation, the share of primary energy is increasing almost every year. This growth is to produce more electricity. This means that we are trying to electrify everything. For example, transport sector, industrialization, or even household activities. That is because electricity is the only way for decarbonizing our economy. Electricity is produced by both non-renewable and renewable energy. However, to decarbonize our activities, we must focus on generating more electricity from renewable sources. The main demand sides of electricity are industrial production, public lighting, transport, commercial buildings, and houses. It is mainly supplied by power stations running on coal, gas, and oil. Nuclear fuels also contribute. Renewable sources like wind, solar radiation, hydropower, geothermal energy, and biomass are included too.
Load Management and Energy Consumption Patterns
The crucial thing here is how we manage to match demand and supply. The timing of this matching is important as well. Because of the lack of storage capacity of electricity due to peculiarity of supply chain, this matching is so important. There are two things to keep in mind in case of storage, like base load and peak load. Both base and peak load occur in demand curves on a daily, weekly, and annual basis. For example, if we notice the electricity demand curve for a typical winter, the curve starts declining from midnight. It grows from the morning throughout the day until the afternoon. Then the curve starts a dramatic rise in the afternoon until evening as people come home. They consume more electricity. So, there is a decrease in demand. If we look the curves for other seasons, we look a variety of falls and peaks. Hence, during peak electricity demand, it must match with supply to set price. The price level is bound to rise. It eventually switches our electricity generation structure to renewable sources. In electricity supply chain, there are four market segments. These include generation (power stations), transmission (high voltage cables), distribution (low voltage cables), and retail. We often have power stations far from areas of consumption. Thus, we need to send electricity from one area to another. Power stations use pollutants that are harmful to public health. They need a lot of space to install. Coal-based power stations are installed close to coal mining areas. We also need to change the voltage to reduce the thermal losses on power cables. In trading electricity, state agencies forecast demand and ask state controlled facilities to generate electricity that will meet demand. Most often this is done in the lowest cost manner. Often prime resources for electricity generation are state controlled as well (indigenous gas, oil, coal, hydro). There are other segments like transmission and distribution networks are very infrastructure heavy, thus there is lot less competition. So, there are state entities or private companies who are monopolies control transmission and distribution network depending on country characters. Some retail market segments are not producing electricity. They also have no connection with the network. For example, UK supermarkets or banks are selling electricity as they have customer-facing operations, arranging contracts for you. There are also independent (state funded) authorities to regulate those market segments.
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