Michel Godet highlighted the lack of a global, qualitative approach as one of the errors associated with classical forecasting. According to Godet, the forecasting of future events cannot be based solely on past data. The omission of qualitative and non quantifiable parameters such as natural disasters or behavior of relevant actors is tantamount to an incorrect forecast (Godet 1982)
The qualitative approach operates on the premise that 'nothing can be taken for granted' (Lecturenote). All the parameters that relate to the phenomenon under investigation must be considered in detail. The interactions of demand and supply in markets chiefly influence the prices of commodities in such markets. I believe in order to forecast future energy price scenarios; one must consider qualitaitve parameters which will influence energy demand and supply. The qualitative parameters which I believe should be included in energy price scenarios in 2025 are highlighted below:
Prosperity and population Growth
A significant portion of global energy demand is accounted for by homes and businesses, especially when electricity usage is considered (ExxonMobil 2012). Rising prosperity and a continued rise in the number of households globally will cause demand to grow by 25 percent in the residential/commercial sector during the course of the next two decades ( ExxonMobil 2012).
As population and prosperity increases, more dwellings would be constructed to house people. These dwellings would require energy for heating, cooling, lighting and also other electrical appliances. These energy requirements translate to an overall increase in global energy demand; almost all of this demand would be met by electricity and natural gas (ExxonMobil 2012). An increase in demand for natural gas and electricity spawn from an increase in prosperity and population is an important parameter to consider when considering future energy prices.
Shift in Primary Fuels for Electricity Generation/Fuel Substitution
Electricity can be produced from a number of fuel sources; however the choice of the mix of these sources is influenced by technology, environmental policies, investment costs and fuel prices. 'The mix of fuels used for electricity generation represents one of the biggest variables in the energy landscape in the coming decades' (ExxonMobil 2012).
Several Countries have been making use of coal as the major fuel source for electricity generation. However because of the issue of Global warming and the resulting environmental policies that now encourage a shift to cleaner fuels, one can expect a significant increase in the demand for Natural gas. 'Natural gas emits up to 60 percent less Co2 than coal when used for electricity generation' (ExxonMobil 2012). Furthermore a transition to a stronger reliance on low green house gas emitting fossil fuel technologies, such as a shift from coal to natural gas would lead to a reduced impact on energy consumption (AGECC 2010)
Renewable energy sources would also pose as major players in the migration from coal. The rapid increase is a resultant of falling technology costs, rising fossil-Fuel Prices and Carbon Pricing , but the chief factor is subsidies: from '$88 billion globally in 2011, they rise to nearly $240 billion in 2035' (World Energy Outlook 2012) . This demand shift would also have a significant effect on future energy prices.
Climate Change
As mentioned previously, global warming is an issue that would play a significant role in the future price of energy. In a bid to curb Carbon emissions, Government's have introduced costs in the form of taxes, caps, mandates and subsidies. CO2 is expected to be priced at $60 per ton in OECD countries by 2030 (ExxonMobil 2012). If this is true coal would become more expensive than natural gas, nuclear and wind power. The demand for cleaner sources of fuel is expected to rise, more money is expected to be invested in developing Renewable energy technologies also Vehicles are expected to become more efficient in order to minimize fuel consumption and reduce carbon emissions.
Unanticipated Events
A qualitative approach takes into account all the parameters, regardless of whether they can be quantified or not ( Lecture note) . One of these parameters is the occurrence of disasters, it is almost impossible to predict the occurrence of a disaster. However it is imperative that we consider such parameters in the forecasting of future energy prices. Disasters such as oil spills have significant effects on oil prices. 'After an oil spill occurs, the precautionary demand of crude oil and gasoline will increase due to consumers' uncertainty of expected supply' ( Eads n.d ).
Unanticipated events may also include major innovations and technological breakthrough (Shell 2011) .Such events cannot be directly projected or quantified, however their impact on energy prices is very significant. Another major aspect of uncertainty is the fact that even established trends cannot be guaranteed.
Political Instability
The 1973 Oil crisis is a typical example of a situation where political instability affected the prices of Energy. Such an event could not be quantified in terms of models and data; however the resulting impact on energy prices was overwhelming. 'The immediate results of the Oil Crisis were dramatic. Prices of gasoline quadrupled, rising from just 25 cents to over a dollar in just a few months' (Horton n.d).
Although such an event cannot be quantified in terms of models, a comprehensive forecast of future energy prices must take into account political instability as this can have a significant impact on future prices of energy.
Mergers
There have been significant mergers in the past ; 1998 British Petroleum (BP) and Amoco merged to form BPAmoco, which later merged with ARCO and in 1999 Exxon , the largest U.S oil company merged with Mobil , the second largest' (United States Government Accountability Office 2007).These Mergers resulted in increased Market Concentration and significant increases in wholesale prices of Gasoline (United States Government Accountability Office 2007 ).
Even though the impact of more recent Mergers is unknown, we can expect to see fortification of respective market holders through future mergers. Such fortifications could also lead to monopoly in the Energy Market.
Oil Reserves
As economies grow, energy supplies would need to grow to match the growing needs. As demand grows, supply must also grow accordingly to avoid problems. Studies show that Oil and other liquid fuels will remain the world's largest energy sources even up to 2040 (ExxonMobil 2012). The status and distribution of significant oil reserves would play a significant part in energy that is supplied in the future,' 75% of today's oil was discovered before 1980' (ExxonMobil 2012).
Economic growth
'The economic growth and the improved living standards it enables will require more energy' (ExxonMobil 2012). A typical example of this sort of thing is the economy of China, the surge in the demand for energy in China will extend over the next two decades, also in non OECD (Organization for Economic Cooperation and Development) countries energy demand will grow by close to 60 percent (ExxonMobil 2012). Conclusively, as countries achieve economic growth they would require more energy hence economic growth is an important qualitative parameter to consider when forecasting future energy prices.
Nuclear Energy
As choice of fuels shift from coal to lower carbon emitting sources, we can expect the demand for nuclear fuels to increase significantly. Although the Fukushima accident in Japan is expected to slowdown global Nuclear capacity, studies show that nuclear capacity is expected to by 80 percent through to 2040; rising by 2 percent a year on average (ExxonMobil 2012) . This demand for nuclear power as an alternative source would also play a significant part in future energy prices and thus should be extensively considered in order to forecast accurately.
The following parameters can be reasonably quantified;
Prosperity and population Growth
Prosperity can be quantified in terms of Gross domestic product (GDP), Population growth can also be estimated in terms of facts and figures. Once these parameters are obtained, it becomes possible to derive a direct relationship to Energy demand and the consequent impact on energy prices. For example 'by 2030 China and India will be the world's largest and 3rd largest economies and energy consumers , jointly accounting for about 35% of global population, GDP and energy demand' (BP 2012).
Climate change
This can be measured in terms of the distribution of CO2 emissions globally. Also CO2 emissions can be measured according to the source of fuel, for example 'in 2010, 43% of CO2 emissions from fuel combustion were produced from caol, 36% from oil and 20% from gas '(IEA 2012)
Shift in Primary Fuels for Electricity Generation/Fuel Substitution
This parameter can be measured in terms of availability, distribution and consumption of alternative fuel sources for power generation. One of the major substitute fuels for Coal in electricity production is Natural gas; this is because of its low carbon emitting nature. Statistics can be obtained regarding what countries consume the most Natural Gas, who produces more and who has the largest reserves. These figures would assist in determining the overall demand of natural gas as a substitute for coal in power generation. An Idea of the nature of the demand would assist to predict future prices.
Oil Reserves
This can be measured in terms of the distributed Proven Oil reserves all over the world and their quantity in barrels. Further quantification may also include the number of barrels of oil a country consumes or exports per day, these figures provide an insight into the nature of the future supply of oil all over the world.
Economic growth
The percentage change in the Gross Domestic Product or Gross National Product of a nation, gives insights to the growth of an economy. These figures can be used to predict demand energy demand; for example in 2010 'Slow GDP growth in the countries outside the Organization of the Petroleum Exporting Countries (non OPEC) resulted in lower demand for petroleum and other fuels (EIA 2012).
I completely agree with Godet's proposition that Qualitative parameters are important in carrying out accurate forecasts. The process of forecasting is subject to uncertainty, in order to reduce this uncertainty it is important to examine all the parameters that affect both the phenomenon under investigation and its surrounding environment. It is important to 'Take nothing for granted '
Furthermore, omitting unquantifiable parameters such as unanticipated events and the wishes of principal actors from a forecast makes it tantamount to errors.
Godet's Ideas could have improved the potential of the following technologies
EHD Exchanger
A qualitative approach of forecasting would have taken regulations and environmental Impact analysis into consideration. This would have allowed the engineering Firms to take the appropriate steps to avoid regulation problems. Godet's Ideas state that the wishes of all the principal actors involved must be considered in order to make an accurate forecast (Lecture note). The wishes of the legislators/regulators as regards the environment were neglected in this case.
Heat Recovery from Slag process in Steel Plants
This project was discontinued because the Payback time was too long. A qualitative approach would take into cognizance all the parameters that influence payback period and their relationships. This would make it easier to either reduce payback period or negotiate with the principal actors (Investors) to allow for longer payback periods.
Absorption pump using natural refrigerants
As stated in the paper, this project failed firstly because the target market did not grow and secondly because of a regulatory barrier. Both parameters are qualitative; although they could not have been quantified they should have been considered in forecasting the factors that could mitigate the success of the project.
I agree with the conclusion of the study; there is a high risk of failure associated with public R&D projects in energy efficiency. However,' R&D projects are capable of bringing new energy efficiency technologies to the market at a certain probability of successes' (Kimura 2010)
The OPEC oil price rise in 1973 had an important effect on energy use and energy efficiency - although much of the impact was short-lived. In 2003-4 the oil price effectively doubled, reaching $50/barrel for a period and in 2008 it trebled for a brief period to almost $150/barrel.
A major player now is Gazprom in Russia. News has broken that Gazprom will cut supplies of natural gas to Europe unless it is allowed to raise prices by 200% for export customers as of 31 March 2013. (Customers in Russia historically pay much lower prices).
a) Describe your measured response to this, as either an energy supplier (utility) or major energy user (large manufacturer). (STATE CLEARLY WHICH POSITION YOU ADOPT).
Discuss whether you believe that your response above was based upon 'out of the box' solutions, or a more conservative, incremental approach?
Discuss more broadly (not specific to your own response above) the relative merits and limitations of an 'out of the box' or 'incremental' approach, identifying what you believe the two approaches mean.
Your answers to 2 a-c above are based upon assumed positions within organizations which may employ many people. The next part of this question relates to the impact rising energy prices and, perhaps more importantly, the effect of climate change, may have on your own style of living.
At a personal/domestic level, can you foresee a situation in which we may consider that for the benefit of all, we may need to make do with less, in terms of capital goods, travel, and perceived acceptable levels of comfort? I expect you to be subjective in your answer.
NOTE: In your answer to Question 2 I do NOT expect a treatise on the geo-political aspects of Gazprom, but please concentrate on answering the Question as posed.
Answer in 2000-2500 words (15%)
A)
I have decided to adopt the position of a Major Energy User.
'Erdemir began production in 1965 and has a production capacity of 5.2 million tons/year of crude steel; it is the largest iron and steel company in Turkey' (Wikipedia 2010). This makes Erdemir a major energy consumer in Europe.
Erdemir has decided to take the following steps in response to the decision by Gazprom to cut gas supplies to Europe if it is not allowed to hike its prices by 200 percent.
In the advent of such a problem, Erdemir has held a meeting with its stake holders, the following decisions were reached;
Look for alternative sources of Natural gas
Fuel substitution
Implementation of Energy Saving measures to cut back on energy consumption
Investment in research and development in the area of renewable energy technologies
Downsize in order to accommodate the increase in gas prices
These decisions are operational, strategic and innovative. A mix of both incremental and Out of the box solutions would help Erdemir adopt a slightly balanced approach to solving the problem at hand.
Look for alternative sources of Natural gas
Erdemir's first approach to handling the situation would be to seek alternative suppliers of natural gas . Most of Turkey's natural gas needs are met by Russia and Iran. 'Iran holds the world's second largest gas reserves after Russia, with proven natural gas reserves standing at 9991.6 trillion cubic feet' (Oxford Institute for Energy Studies 2010). Also Iran has been exporting gas to turkey since the end of 2001 (Oxford Institute for Energy Studies 2010). Erdemir has decided to meet most of its energy demands with natural gas supplies from suppliers in Iran till the situation is resolved. This approach is incremental, less risky and with lower lead times as Turkey already imports gas from Turkey.
Fuel substitution
Apart from diversification of suppliers, the company is looking to diversify fuels in the short term. This is to ensure redundancy, energy Security and reduce costs. Although this approach might create increased dependence on fossil fuels and attract carbon costs, it solves the short term problem posed by Gazprom. Coal and Oil provide suitable alternatives to natural gas in producing energy, this approach is operational and Lead times are shorter.
Implementation of Energy saving measures to cut back on energy consumption
This approach involves replacing existing machinery with more efficient models in order to increase energy savings and minimize waste. Improving efficiency by a significant amount would help to minimize the amount of energy required for the manufacturing process. 'For example By- Product gases from the coke oven, blast furnace and basic oxygen Furnace (BOF) can be fully reused, saving additional fuel sources, In Germany BOF by-product gas recovery saves the equivalent of 300 million cubic meters of natural gas per year ' (World Steel Association 2008). This is an incremental approach; it is conservative and provides an interim solution to the problem at hand.
Investment in research and development in the area of renewable energy technologies
This is a slightly less conservative approach. Erdemir has decided to invest in Renewable Energy Technologies; this would help reduce dependence on Natural gas and help prevent a situation like this from reoccurring in the future. It would require a lot of research and development, high risk and long payback periods are also expected. However the reward for this approach is commensurate; apart from reducing dependence on fossil fuels, carbon costs would also be reduced along with CO2 emissions.
Downsize in order to accommodate the increase in gas prices
Another incremental approach is to cut down staff size, this would quickly free up funds to cater for increased gas bills.
B)
Erdemir's response to the Gazprom crisis majorly incremental, most decisions are conservative and involve low risk and are without ambitious expectations on returns. However in order to slightly balance out this strategy and avoid losing our competitive advantage in the event of a breakthrough in the market as a result of this crisis; the company has decided to take the radical step of investing in Research and Development in the area of Renewable technologies. The expected results are ambitious; we hope to cut back on Carbon emissions, reduce dependence on fossil fuels and overall minimize cost by generating some of our own electricity. However, this out of the box solution is not without high risk and high expenditure.
C)
Erdemir has adopted several Incremental Approaches to solving the Gazprom crisis. An incremental approach refers to 'improvements within a given frame of solutions, it simply means doing better what we already do' (Norman , Verganti 2012) .' Incremental solutions are less ambitious in their scope and they offer less potential for returns for the Organization but consequently the associated risks are much less '(O'Sullivan 2008). For example, the Decision by Erdemir to downsize is not very ambitious and would save just enough money to slightly offset Natural gas bills however the associated risk is low. One of the major benefits of Incremental approaches is that it poses lower risks, for example the risk involved in looking for alternative fuel sources like coal is definitely lower than the risk involved in investing in Research and Development to develop greener fuel sources. However although Incremental solutions are characterized by low risks, fewer resources and smaller endeavors they only lead to small degrees of growth thus they result in slowness to reach growth targets before competitors leading to loss of competitive advantage(O'Sullivan 2008). It is advisable to have many incremental solutions running at the same time, yielding short term results also a few Out of the box solutions can be implemented at the same time in order to yield long term results. This is the approach Erdemir has taken to handle the Gazprom crisis.
Having said this, the clear characteristics of incremental solutions are highlighted below;
Improvement of existing designs, and existing components
Low risk , thus incremental solutions are more attractive to Investors
Incremental solutions lead to continuous improvement
Incremental solutions are usually implemented in response to perceived customer needs
The clear advantages of this approach are;
The inherent low risk associated with it
Incremental solutions usually require fewer resources
A continuous incremental approach would lead to overall improvement of existing designs and better processes
However as stated before, this approach is not without its drawbacks. The major demerit of Incremental solutions is the slowness to reach growth targets before competitors
Erdemir has also adopted an out of the box approach to balance out our overall strategy to responding to the Gazprom crisis. The company has decided to invest in Research and Development in the area of renewable technology. The overall aim is to reduce dependence on fossil fuels there by reducing carbon emissions. Additional benefits include improved efficiency and reduced energy costs. The rewards of this approach are high and so are the risks, radical solutions involve 'doing what was not done before' (Norman , Verganti 2012) . Radical solutions are usually difficult to implement, however they are critical to long-term competitive advantage (Dunlap -Hinkler , Mudambi,Kotabe n.d). A typical example is Apple's development of multi -touch interfaces and their associated gestures to control handheld devices, this development came as a radical and significant shift in the world of mobile devices and how people interact with them ( Norman,Verganti 2012) . Radical solutions are usually characterized by a major growth leap in competitive advantage like in the case of Apple; however this is not without great risk. For example, 'Philips invested significant resources -time and money - in the development of its interactive TV, however Customers did not purchase this product in sufficient quantities to allow Philips reach its revenue target' O'Sullivan 2008). It is possible for an organization to embark on a radical approach , investing significant resources in terms of time and money and still come out unsuccessful. This is why some companies prefer to spread out their resources across both incremental and radical solutions, like Erdemir has decided to do.
The major characteristics of Radical solutions are highlighted below;
Successful Radical solutions lead to very high competitive advantage
Radical solutions are capable of starting a revolution in the market, for example the the tablet devices introduced by Apple in the last decade have successfully revolutionized the mobile device market. Such solutions can be referred to as Breakthroughs
Radical solutions lead to a step change in growth, unlike incremental solutions; growth is exponential and very significant ( O'Sullivan 2008) .
The clear advantages of this approach are;
High competitive advantage, if the solution is successful, Organizations enjoy the benefits of being pioneers in the market.
It leads to exponential growth.
The major demerits include;
Most radical solutions take considerable time to become accepted ( Norman, Verganti 2012)
The success rate of radical innovation is not very high ; once in every 5 -10 years . There is usually a high risk of failure (Norman,Verganti 2012)
Radical solutions usually require a lot of resources in terms or time and money
Lead times and pay back periods are usually high
In conclusion, it is important to note that both approaches complement each other. 'Radical solutions bring new paradigms, and create a potential for major changes. Incremental solutions are necessary to transform radical ideas into a form that is acceptable beyond early adopters. Without radical solutions, incremental solutions reach a limit. Without incremental solutions, the potential enabled by radical solutions would not be captured' (Norman and Verganti).
D)
I believe it is necessary for us to make do with less in terms of capital goods, travel and perceived acceptable levels of comfort for the good of all. However this would not happen if the following measures are not taken
Education
Most people believe global warming is a myth, at least most people in Nigeria do. Some other people are completely ignorant of the issue. I believe in order to curb excessive consumption and energy waste; people must be made aware of the causes and effects of global warming. If people realize the direct impact of their actions on the environment, perhaps they will reconsider before doing some certain things. People can be educated on the issue of global warming in the following ways;
School Curriculums
It is important to infuse school curriculums with courses which teach students the importance of saving energy and the impact of energy waste on the environment. If students are being taught about these issues at an early age, it would go a long way in creating the required awareness concerning energy consumption and global warming.
Public Seminars
Apart from schools, the government can hold public seminars to enlighten members of the public in the importance of energy savings and the impact on the environment.
Television/Radio
Radio and Television also serve as effective tools with which to sensitize the public towards global warming.
Incentives
People would like to experience the direct benefits of minimizing their energy consumption. For example; a family that has decided to forgo a holiday trip abroad in order to cut back on the energy consumption associated with air travel, would like to experience the same level of enjoyment obtainable abroad in their country. Needless to say, it becomes important for the Government to put systems in place which encourage people to spend their holidays in their home countries instead of traveling.
Development of efficient Public transport system
Some developing countries do not have efficient public transport systems; this is one of the reasons why most citizens have to buy vehicles. A typical example is Nigeria, in the absence of an efficient railway system, Individuals have to buy vehicles. This increase in the number of privately owned vehicles on the road results in increased consumption of energy and carbon emissions. In countries like Nigeria, Private vehicles are not even a luxury but a necessity, if this problem is tackled by providing efficient railway systems which run on alternative sources of energy, I believe the Carbon emissions in major cities like Lagos can be significantly reduced.
In conclusion, I think it would be necessary to make do with less energy in the future. This would go a long way in complementing the various energy saving technologies already in implementation today. However I think this can only become a reality if the public is properly sensitized towards this issue. Energy saving is an individual responsibility, one which we must all participate in.
3
Refer to Section 3.4 of the Module Documentation:
Discuss which of the changes listed in Section 3.4 have had an influence (positive or negative) upon technology. (For example, developments in industrial gas turbines have been spurred by the 'dash of gas', one would assume). No need to select all of them for comment.
What policy steps are omitted from the list which you feel should be there - ones which perhaps have influenced thinking within your own organization?
Which of the policy steps have, in your opinion, been most beneficial for environmental protection, and why?
What actions do you feel that individuals can take to help us have a secure and environmentally-friendly energy future?
Why would you choose these? Relate, if relevant, to your answer to 2(d).
Discuss 'green' policies, including any you may have selected in your answers so far, that may attract unpopular responses from the population at large.
What can the UK Government do to present its 'green' policies in a better light?
Answer in 1500-2000 words (15%)
A)
The following Changes have influenced technology
More recent major reductions in the use of coal for power generation
The reduction in the use of coal for power generation has influenced technology significantly. This reduction has led to the development of renewable technologies as alternatives for power generation. For example 'Solar pv was the fastest growing renewable technology worldwide between 2000 and 2011, with an average annual growth above 40%' (IEA 2012).
This has also given rise to the use of Natural gas fired Electric plants. 'Natural gas can provide base load,intermediate and peaking electric power. Also natural gas power plants can be constructed in as little as 20 months' (Center for Climate and Energy Solutions 2012).
Replacement of gas derived from coal by gas from the North Sea
The advent of natural gas on the scene has influenced technology in a positive way. Natural gas provides a suitable alternative to coal gas. Technologies like combined cycle power plants and Natural gas with Carbon capture and Storage are an offshoot of this replacement. There have also been significant technological improvements in the way natural gas is drilled. An example of such technological developments is the introduction of 'Horizontal drilling, unlike traditional vertical drilling techniques horizontal drilling allows multiple wells to originate from the same drill pad, this is a more economical technique' (Marcellus Facts n.d)
Privatization of the electricity industry and of British Gas
'The privatization of the electricity industry in the UK led to a market shift from coal towards natural gas. At privatization, generation based on fossil fuel used 92 percent coal, 7 percent oil, and only 1 percent gas. However, 5 years later purchase of British coal fell from 74 million metric tons to 30 million, and by August 1996, gas accounted for 23 percent generation' ( World bank 1997)
In addition the Power generation sector added 9.5 megawatts of capacity in 1990-1996. This is an indicator of technological advancement and improvement as a result of privatization of electricity (World Bank 1997).
Encouragement of combined Cycle Plants, with gas as the fuel
The encouragement of NGCC (Natural Gas Combined-Cycle Plants) as a result of the fall in Gas prices has influenced technology positively. Measures have been taken to improve efficiency and increase the capacity of NGCC plants (World Bank 1997), 'a combined cycle power plant produces high power outputs at high efficiencies (up to 55%) and with low emissions. This is a major improvement in technology as compared to conventional power plants which yield 33% electricity with 67% as waste' (Electrical Engineering Portal n.d)
The introduction of escalating taxes on vehicle fuels
This has given rise to the advent of hybrid vehicles. The technology is posed to make vehicles faster, cleaner, and safer as well as more fuel efficient (Calcar 2006). The introduction of fuel taxes has prompted manufacturers to seek alternative means to power vehicles and break away from the shackles of fossil fuels. This is has lead to technological improvement, as these hybrids offer cleaner and more efficient ways of running vehicles.
Encouragement of renewable energy investment by utilities
Utility companies have made significant investments in Renewable energy in recent times. For example; 'Scottish Power has invested over 80 % of their new generation capacity in renewable since 2006, these investments sum to over GBP 2.25bn each over the period' (Bloomberg New Energy Finance). Investments like this have had a positive influence on technology; they create a suitable environment for technological advancement in the renewable sector to thrive.
Grants via the Energy Saving Trust to encourage domestic take-up of Renewables
This has been very helpful in promoting renewable technologies. These grants target small businesses and domestic households with incentives for subscribing to sustainable energy products, services and solutions. In addition to creating a cleaner environment, the grants help to provide room tor technological advancement and business growth for Renewable energy companies.
Encouragement of combined heat & power plants in industry and commerce
Combined heat and power has a huge potential to deliver energy savings and emission reductions. Encouraging CHP's has helped to increase the overall installed capacity of CHP's in the UK;'UK CHP capacity has almost doubled In the last 10 years , with around 6000MW of electricity generating capacity currently installed on around 1500 sites' (Hinnels 2008).
A review of future electricity needs recommended a new generation of nuclear reactors and encouragement for wind energy
This measure has given room for improvement of two very important sustainable sources of energy. Nuclear energy represents a sector of opportunities in the world's energy mix that has not been fully harnessed. Reviews like this would allow for the exploitation of opportunities available in Nuclear power production through technological advancement. Wind energy on the other hand is being harnessed on a larger scale, this review allows for even more opportunities to come to the lime light in this field.
B)
The following policy steps are missing from the list and in my opinion should be included.
Feed in Tariffs
'Feed in tariffs put a legal obligation on Utility companies to buy electricity from renewable energy producers at a premium rate for a guaranteed period, this makes the installation of renewable energy systems a worthwhile and secure investment for the producer' (World Future Council n.d) . The inclusion of Feed in Tariffs as an energy policy in the UK would help promote investment in renewable my members of the public (both consumers and manufacturers)
Standardization/Certification
In addition to policies that encourage renewable energy technologies, there should be a means of ensuring that they meet particular standards. It is one thing to flood the market with renewable technologies; it is another to ensure that they are up to standard and that consumers get value for their money. Policies should be put in place to ensure that renewable technologies meet minimum designated standards in terms of efficiency, capacity and lifespan.
Regulations to curb Carbon emissions from Buildings
There are no policies on the list which specifically take into cognizance the emission of carbon from both industrial and domestic buildings. Such laws should be put in place, for example Building owners should be made to pay a certain fee if carbon emissions exceed a certain quota ; this would automatically prompt building energy managers to seek ways to minimize waste and improve efficiency.
Introduction of Carbon Tax
Carbon taxes place a fee on the use of fossil fuels depending on how much carbon their combustion emits. 'These taxes make fossil fuel more expensive to use, they also encourage utilities, businesses and Individuals to reduce consumption and increase efficiency. Carbon taxes also help to give renewable energy a more competitive edge' (HowStuffWorks n.d).
C)
The following policy steps have been most beneficial for environmental protection
More recent major reductions in the use of coal for power generation
Significant reduction in the use of coal for power generation can be cited as one of the major ways to tackle Carbon emissions. Substitution of coal with Natural Gas is one major way this is achieved.
The introduction of escalating taxes on vehicle fuels
This policy is expected to make vehicle fuels more e efficient and reduce associated carbon emissions. A significant amount of the carbon emissions come from vehicles; this policy tackles this problem head on. By introducing vehicle fuel taxes, consumers would be forced to make do with less fuel and manufacturers would have to come up with more efficient fuels and vehicles.
Encouragement of renewable energy investment by utilities
The overall encouragement of renewable technology through financial incentives would help to reduce dependences on fossil fuels and consequently reduce carbon emissions.
d)
As individuals, I believe we have a major role to play in conserving energy. It is important for individuals to adopt a personal sense of responsibility towards saving energy. I have highlighted some of the steps individuals can take to help secure a more environmentally-friendly future;
Drive less; make more use of public transport
Cut down on Air travel
Make conscious efforts to minimize energy wastes; Turn off lights when not in use, turn off electrical appliances when not in use
Make a conscious effort to buy energy efficient electrical appliances
Try to wash dishes by hand as often as possible
Subscribe to recyclable products
Take short showers
Open windows occasionally instead of using the Air conditioner all the time
E)
These measures help to minimize energy consumption on an individual level. If everyone adopts this sort of mentality towards energy consumption, it is possible to make significant improvements to our energy future. Driving less would reduce the number of vehicles on the road and consequently reduce carbon emissions. Electrical efficient appliances minimize the amount of energy consumed to perform a specific task ; For example 'ENERGY STAR qualified refrigerator models use at least 15% less energy than required by current federal standards and 40% less energy than the conventional models sold in 2001 ' (Green and Save n.d).
F)
The following polices are likely to attract unpopular responses from the public
The introduction of escalating taxes on vehicle fuels
This translates to a direct increase in the amount of money members of the public would have to pay for fuel. As a result, people are likely to frown at this policy. Most people are likely to interpret the policy as unfair or relate it to a misuse of tax payers money
Review of future electricity needs recommending a new generation of nuclear reactors and encouragement of wind energy
This policy is likely to be unpopular among members if the public. As much as people are open to sustainable energy, they are not very open to the adverse it effects it has on their surrounding environment. For examples three out of four people who frown at wind power in the UK do so for the following reasons; noise, visual intrusion and Electromagnetic interference (Danish Wind Industry Association n.d).
Nuclear reactors often frighten people; people have not forgotten major nuclear disasters like the disaster at Chernobyl. It would take a lot of convincing for members of the public to completely embrace Nuclear power plants.
G)
Awareness campaigns are necessary to enlighten the public on the benefits of these policies. If people understand the benefits of particular policies to our immediate and future environment, they are more likely to agree with them. Such campaigns would focus on making members of the public aware of the pros and cons of certain policies. For example the Government can launch campaigns through television, radio and newspapers to clarify the issues surrounding escalating vehicle taxes. The members of the public deserve to know why taxes are being increased and what the Government intends to achieve by this policy.
Also the Government can attempt to tie certain incentives and subsidies to unpopular policies. The promise of cheaper electricity or energy in the advent of the implementation of certain policies would cause the public to consider a change of opinion.
(a) Based upon the 'call for proposals' in Appendix 1 in the Module and the Annex below, compile a document - a Project Proposal - in support of a feasibility study/small research project (maximum budget £250,000 or equivalent in Euros etc.). Select a subject of relevance to your organization, your future career or your current energy-related interests. (Discuss your selection with your tutor - for HW students discuss with me in class).
Include in your proposal a SWOT analysis, bar chart of tasks/timescales and a financial analysis, as well as energy-saving and/or CO2 reduction predictions.
Answers to Question 4, including sketches, photos, charts etc., should not exceed 20 pages (50%)
Viento Energy Limited
Wind Power pumps for rural communities in Northern Nigeria
Introduction
Nigeria has an estimated population of 132 million, growing annually at a rate of 2 percent (USAID n,d). Although the population has grown rapidly over the years, the same level of growth has not been reflected in the supply of water, especially in the rural communities. The responsibility of Water supply resides with the Government, either at the federal, state or local level depending on the area involved. However, inefficient schemes at these levels have forced individuals to look for private means of meeting their domestic water needs.
In Nigeria it is common practice for homes to have their water needs meet by an electrical water pump. These pumps are usually powered by electricity from diesel or petrol generators or power from the utility company. Domestic water needs vary, however often times, these pumps are made to run for several hours of the day to supply adequate water to meet domestic needs. This ultimately translates to increased energy consumption in terms of electrical energy, increased carbon emissions as petrol and diesel generators release carbon in to the atmosphere. This is the typical scenario in Urban Areas In Rural areas with little or no access to grid connection; water is usually supplied from local wells or from via water tankers which get their water from one or more of the few electrical water pumps available in the community. In this case energy is expended to pump the water in the first place and to distribute it via the water tanker to the final consumer. In the absence of such electrical pumps or local wells, people have to travel for kilometers to fetch water from neighboring communities.
Wind energy is a clean and renewable source. One of the ways in which wind energy can be harnessed is by building systems that make use of wind power to provide water for communities that are off the grid. These pumps may either be electrical or mechanical (Zilter 2009). These systems can help proffer lasting solutions to the issue of Water scarcity in rural areas in Nigeria, while reducing carbon emission inherent in the conventional methods in existence today.
Parts of Northern Nigeria experience relatively high wind speeds; in Sokoto the wind speed gets as high as 5.4 m/s at a height of 30 m (Idris N.A et al 2012). Viento Energy sees this as a potential market for Wind power pumps in Nigeria. Rural communities in areas with a sufficient wind resource would constitute the target market for this solution. Case studies show that Wind Power Pumps can service the needs of about 3500 people depending on the installed capacity and the availability of wind ( Ziter 2009) . Viento Energy proposes to replicate similar technologies in Sokoto, with slight modifications to suit the chosen geographical Site and targeted rural communities.
This Proposal would review the history of Wind powered pumps, both Electrical and Mechanical. Technological and Cost analysis would be made. The most feasible approach in terms of finance, technological maturity and Expertise would be taken to provide the solution. The proposal would also take into cognizance the carbon savings accruable from the project. Details of how to penetrate the market would also be covered.
Background and history of Wind powered water pumps
The use of wind energy to power water pumps is not new, this process has been in existence since the 13th century in Europe; water was pumped to drain marshes, produce salt from seawater and irrigate agricultural land (Ziter 2009). A major breakthrough in windmill technology came in the late 19th century with the arrival of the American windpump, these pumps were able to operate for long periods and were used mainly to supply water for domestic purposes (Zilter 2009). However, due to the simple multi-blade design and inherent mechanical flaws, American wind pumps had an output of only 4-8% of the wind energy available (Ziter 2009).
Mechanical Wind pumps have since faced substantial improvements. Systems have become lighter, less expensive and more efficient. The introduction of a counterbalance to oppose the weight of the pumping rod was a significant development (Ziter 2009). Previously, cyclical loading led to fluctuations in rotor speed, which caused fatigue and decreased pumping efficiency, the use of a counterbalance helps to dampen this effect (Ziter 2009).
Although significant technological advancement has been made with Mechanical wind pumps, major drawbacks are inherent in the mechanical pumping system. A windmill must be located directly on top of the source from which it is drawing water. This is a huge drawback as the best water resource sites are not the best wind resource sites ( Ziter 2009). Also, Mechanical windmills are designed with a lot of blades, this allows them to provide high torque at low wind speeds, however this limits their productivity as wind speeds increase (Ziter 2009). The overall conversion efficiency of mechanical water pumps is limited to a range of 7 - 27 % (Ziter 2009).
Electrical wind turbines capable of converting the kinetic energy in the wind into electricity are the basis for electrical wind pumps. These turbines have been in development since the 1890s (Ziter 2009). Electrical wind pumps are often designed with lower solidity rotors which are capable of generating higher tip speed ratios and producing more power (Ziter 2009). Electric wind pumps have fewer moving parts; also the turbines do not have to be placed close to the site of water pumping as electricity can be transmitted over long distances through a power line. These qualities give them an advantage over traditional wind pumps , they also require less maintenance . Electrical wind pumps are generally more twice as efficient as traditional windmills, they are also cost competitive with diesels and Photovoltaic systems
Project proposal
Viento Energy intends to roll out Electrical wind pumps for meeting domestic water supply and irrigational needs in rural communities all over Northern Nigeria and Africa. As a result of the distribution of the wind resource, the project would be confined to areas of high wind availability. Viento Energy has chosen two rural communities in Sokoto state as sites to carry out preliminary research on the proposed project.
Viento Energy proposes to install 2 electrical wind pumps in two Local Government areas in Sokoto State, Nigeria. The proposed local government areas are; Binji Local Government Area and Bodinga local Government area. 'Binji has an area of 559 km square and a population of 105,027 at the 2006 census' (Wikipedia n.d). 'Bodinga has an area of 564 km square and a population of 175,406 at the 2006 census' (Wikipedia n.d).
Both local governments offer a market for off the grid wind powered electrical pumps. The speed of the wind in Sokoto gets as high as 5.4 m/s at a height of 30 m (Idris N.A et al 2012). In addition to favorable wind conditions, the domestic water needs of people in these areas are typical met by manual labor, animal traction, hand pumps and gasoline/petrol powered water pumps. Wind electrical pumps offer a cleaner and cost effective alternative to these methods.
Viento Energy plans to provide installations to meet the domestic needs of a portion of these areas and reduce Carbon emissions in the process. The carbon emissions from Nigeria from year 1990 to 2009 range from 45,375 to 70,344 metric tons with values getting as high as 90,000 metric tons on some years(United Nations Statistics Department 2012). Viento seeks to reduce carbon emissions by providing clean solutions for pumping water in rural communities in Sokoto, starting with Binji and Bodinga Local Government Areas.
Overall Objective of the Research
The research intends to achieve the following objectives;
Identify the capability of Electrical water pumps in supplying domestic water needs in rural communities in Northern Nigeria
Identify best practice for shortest installation times and best results
Identify Carbon Savings potential of Electrical Wind Pumps
Demonstrate the general advantages of Renewable based Water pumping technologies over conventional fossil fuel based Water pumping technologies
Identify the willingness of Locals to receive training and empowerment concerning electrical wind pumps
Over view of the Wind Electrical Pump
The major components of an electrical wind pumping system are the turbine rotor, tower, electrical generator, motor and pump as well as electrical wiring.
Rotors usually consist of a three blades, designed with low solidity in order to provide a high tip speed ratio. These rotors require a higher startup wind speed; around 4-5 m/s for a 1kW turbine (Ziter 2009)
Synchronous generators find application in this system. Synchronous generators are used to convert mechanical output from turbines into electrical power; they are referred to as synchronous generators because the speed of the rotor always matches the supply frequency (Canton University n.d). As the turbine rotor increases speed, the output frequency of the generator increases, resulting in an increase in the power delivered to the wind pump (ZIter 2009).
An induction motor which is capable of operating according to the output frequency provided by the generator is selected. The torque supplied by a motor for a given output frequency is a function of its RPM (revolutions per minute), when generator output changes, the torque-speed relationship of the motor changes according to the new operating frequency (Zinter 2009). Fitting pumps are selected to match the output of the motor.
In addition to a proper wind turbine and pumping system, other aspects such as Storage from which water is pumped, storage tank at the desired water output location and the necessary plumbing. A location must be selected for the turbine that would yield the appropriate wind source .Appropriate tower height must be selected (Ziter 2009).
Electrical Wind pump Vs Mechanical wind pump
Figure 1 shows a schematic diagram of both a Mechanical wind pump and an Electrical wind pump. Electrical wind pumps are characterized mainly by
Wind turbines coupled directly with AC motors, which drive a centrifugal pump at varying speeds. This eliminates the need for batteries and inverters (National Renewable Energy Laboratory n.d)
Matching of wind turbines with water pumps is done by varying the load electrically instead of mechanically (National Renewable Energy Laboratory n.d)
Wind turbines do not have to be located over water wells, more wind can be found at the crest of a hill, while water is usually found at lower elevations
Mechanical wind pumps are chiefly characterized by;
High solidity rotors which limit pump speed to 40 - 50 strokes per minute , this makes them suitable for low wind speeds (National Renewable Energy Laboratory n.d)
Overall conversion efficiency usually lies between 7 % - 27% (Ziter 2009)
'They must be located directly over the borehole , so the pump rod is directly connected to the rising main and the pump' (National Renewable Energy Laboratory n.d)
Figure 1 Schematic diagram of typical Mechanical and Electrical Wind Pumps (National Renewable Energy Laboratory n.d)
Based on the features highlighted above, Vienna Energy has chosen electrical wind pumps as the proposed technology for the Sites. This is because they best suit the sites in question.
Work Breakdown
The entire project can be broken down into 2 phases as there are two sites. The work to be carried out on each site can be broken down into the following steps;
1. Sizing of Systems
Water systems must be sized properly; oversized systems translate to waste of financial resources where as undersized systems would not meet the entire demand. The main criteria for sizing a system are water demand and total pumping head (National Renewable Energy Laboratory n.d). The size of the population can be used to estimate the daily water demand and peak hour demand, per capita water consumption for domestic water supply lies between 10 - 1000 liters per capita day (National Renewable Energy Laboratory n.d).
As shown in figure 1, the total pumping head is the total head required to pump water from the water source to the reservoir. This translates to the sum of the pumping head, the friction and the discharge head (National Renewable Energy Laboratory n.d). This is also illustrated in figure 1.
Proper sizing would help determine what rating of turbines would be suitable for each site, along with the size of reservoirs and storage tanks to use.
2. Site selection
Exact locations for the wind turbine and reservoirs would be determined by experts. Location of sites would determine the kind of pumps to use. Length of electrical cable along with pipes required for storage would be determined by the distance between the reservoir and the target storage tank.
3. Installation
Actual turbine installation would follow immediately after proper site selection. All electrical installations and Plumbing would fall under this category.
4. Training of Service personnel and Routine checks
Electric wind turbines require little maintenance; however Vienne Energy recognizes the need to train locals on basic operation of installed turbines. Routine checks would also be carried out during the period.
These steps would be completed at Bidji and Bodija Local Government Area respectively.
Market Strategy
The strategy adopted by Viento Energy is to pitch the sale of these systems to the respective Local Governments. The value proposition of each system is the inherent sustainable nature of the technology. Electrical wind pumps would supply water without having to be powered by petrol; which happens to be relatively expensive. There is a demand for water, which would increase as population grows. Viento Energy proposes to pitch the sale of this technology on the following
The existing demand for water in these rural communities
The carbon free nature of the system
The fact that the system is independent of the escalating costs of petrol and diesel in the Country
In addition to installation, Viento Energy proposes to train Locals, on Basic operation and preventive maintenance of the system
These factors form the bedrock of the marketing Strategy adopted by Viento Energy. The systems would be sold to Local Governments at a Bulk price to cover for installation, expertise, training and logistics. In turn, the water would be sold to the Locals at a subsidized price
The Project Team
The team assigned to this project is made up of the following people;
Professor Anthony Nnodim
Professor Anthony is an expert in the area of Renewable Technologies, with a focus on innovative applications of Wind Power. He boasts of over twelve years of experience in the industry, having supervised quite a number of these kinds of projects he is the suitable choice for this project. He is the Consultant and would be responsible for Site selection, supervision and critical decision making as regarding technical issues.
Mr. Ifeanyi Ibekwe
A graduate of the Msc Energy Program from Heriot Watt University. Mr Ifeanyi would be responsible for Project Management; his responsibility would be to ensure that scheduled tasks are completed within the stipulated time frames. He would work closely with Professor Anthony to see that all installations are executed according to industry standards and within the stipulated time frames. He would also be responsible for measuring and recording the results of the entire Research Project.
Miss Juliet Oakley
Miss Juliet is an accountant. She would be on Site as the Financial Officer; her responsibility would include managing the cash flow. Also she would be in charge of releasing finances to the contractors we would be working with throughout the project
The Tasks for each team member is broken down in figure 2 and figure 3 according to the two Local Government Areas; Binji and Bodinga. Total work at each site would take about 5 months to complete. The tables also specify areas where the team would need to hire external expertise or labor to carry out some activities.
In addition to the Major tasks highlighted in the work breakdown, this tables show the subtasks that must be completed in order for a major milestone to be achieved. Timelines are also included, in order to avoid spending too much time on one activity without achieving results
Binji Local Government Area
Task
Assigned Resource
Duration
Sizing of Systems
Sub tasks include;
Accurate estimation of water demand per day
Determination of Turbine Capacity
Determination of the size of the Storage tank
Professor Anthony
Mr Ifeanyi
1 month
Site Selection
Sub tasks include;
Selection of wind turbine site
Selection of Storage tank site
Selection of Water reservoir site
Professor Anthony
Mr Ifeanyi
1 month
Installation
Sub tasks include;
Turbine installation
Electrical wiring
Pump installation
Installation of Storage tank
Plumbing activities
Professor Anthony
Mr Ifeanyi
*Hired contractors
*Hired Electricians and Plumbers
* Hired Masons
2 months
Training of Locals
Professor Anthony
Mr Ifeanyi
1 month
Figure 2 Work break down Schedule for Binji Electrical wind Pump
As stated previously, all financial dealings with contractors would be handled by Miss Juliet.
Mr Ifeanyi Ibekwe would be responsible for recording the results of the research carried out at each site
The same Time table applies for Bodinga Local Government Area. Total time for completion of both projects is ten months
Bondiga Local Government Area
Task
Assigned Resource
Duration
Sizing of Systems
Sub tasks include;
Accurate estimation of water demand per day
Determination of Turbine Capacity
Determination of the size of the Storage tank
Professor Anthony
Mr Ifeanyi
1 month
Site Selection
Sub tasks include;
Selection of wind turbine site
Selection of Storage tank site
Selection of Water reservoir site
Professor Anthony
Mr Ifeanyi
1 month
Installation
Sub tasks include;
Turbine installation
Electrical wiring
Pump installation
Installation of Storage tank
Plumbing activities
Professor Anthony
Mr Ifeanyi
*Hired contractors
*Hired Electricians and Plumbers
* Hired Masons
2 months
Training of Locals
Professor Anthony
Mr Ifeanyi
1 month
Figure 3 Work break down Schedule for Bodinga Electrical wind Pump
Financial Breakdown
The overall cost of the project can be broken down into Capital costs, installation costs,cost of hired Labor/Manpower and Salaries.
The salary breakdown is shown in Figure 4 below;
Salary Breakdown
Project Resource
Salary per month (GBP)
Total number of months
Total Cost(GBP)
Professor Anthony Nnodim
2,500
10
25,000
Mr Ifeanyi Ibekwe
1,200
10
12,000
Miss Juliet Oakley
1,000
10
10,000
47,000
Installation Cost
This includes cost of turbines, storage tanks, pumps and general labor costs. The table below shows estimated costs for all these items and Services
Item/Service
Cost (GBP)
Quantity
Total (GBP)
Wind Turbine
3,000
2 turbines
6,000
Electrical wiring
1,000
2 Sites
2,000
Plumbing Work
1,000
2 Sites
2,000
Storage tanks
700
2 tanks
1,400
Wind Turbine Installation
1,000
2 Sites
2,000
Installation of Pumps, motors and Generators
2,000
2 Sites
4,000
17,400
Transportation, Travel costs, accommodation costs as well as miscellaneous costs are highlighted in the table below
Item/Service
Cost (GBP)
Quantity
Total (GBP)
Accommodation
1,000
3 People
3,000
Travel
1,000
2 People
2,000
Transportation
700
3 People
2,100
Miscellaneous
700
3 People
2,100
9,200
The total cost of the project according to these tables is 73,600 GBP. Viento Energy plans to place the selling price of the entire scheme at 110,000 GBP. The profit of 36,400 GBP realized would be used for further expansion of Viento Energy and also the penetration of more rural communities with the Electrical wind pump scheme
SWOT Analysis
Strengths;
The technology is simple and robust with a lifetimes of over 15 years
The system has low maintenance requirements
Additional costs incurred due to fuel are eliminated
Wind is free of charge and so the system would not be affected by increasing prices of oil or gas
There is no Pollution associated with the pumping process
Pumping water with Electric Wind pumps eliminates the Carbon emissions associated with using conventional petrol generators
The overall Impact on the Environment is low, compared to other conventional technologies
Weaknesses;
The technology is Site specific as it is only viable to in places where there is a high availability of wind
Wind conditions are difficult to predict
The noise poses a disturbance to the surrounding communities
Disturbed Landscape view also poses a weakness
Lack of sufficient expertise in the area of wind technology among the Nigerian peopl
