The Challenge of Energy Security in the 21st Century : Trends of Significance 9789814311625, 9814311626

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The Energy Studies Institute (ESI) seeks to advance the understanding of local, regional, and global energy issues through independent research and analyses aimed at addressing, informing, and influencing public opinion and policies. ESI is a multidisciplinary, autonomous research institute established within the National University of Singapore. Our research and analyses are focused on three key areas: Energy Economics, Energy Security and Energy, and the Environment.

The Institute of Southeast Asian Studies (ISEAS) was established as an autonomous organization in 1968. It is a regional centre dedicated to the study of socio-political, security and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment. The Institute’s research programmes are the Regional Economic Studies (RES, including ASEAN and APEC), Regional Strategic and Political Studies (RSPS), and Regional Social and Cultural Studies (RSCS). ISEAS Publishing, an established academic press, has issued more than 2,000 books and journals. It is the largest scholarly publisher of research about Southeast Asia from within the region. ISEAS Publishing works with many other academic and trade publishers and distributors to disseminate important research and analyses from and about Southeast Asia to the rest of the world. ii

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First published in Singapore in 2011 by ISEAS Publishing Institute of Southeast Asian Studies 30 Heng Mui Keng Terrace Pasir Panjang Singapore 119614 E-mail: [email protected] Website: http://bookshop.iseas.edu.sg jointly with Energy Studies Institute National University of Singapore 29 Heng Mui Keng Terrace Block A, #10-01 Singapore 119620 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies. © 2011 Institute of Southeast Asian Studies, Singapore The responsibility for facts and opinions in this publication rests exclusively with the authors and their interpretations do not necessarily reflect the views or the policy of the publishers or their supporters. ISEAS Library Cataloguing-in-Publication Data The challenge of energy security in the 21st century : trends of significance / edited by Hooman Peimani. 1. Energy policy. 2. Renewable energy sources. 3. Water-power—Asia 4. Organization of Petroleum Exporting Countries. 5. Liquefied petroleum gas. 6. Energy policy—International cooperation. I. Peimani, Hooman. HD9502 A2C43 2011 ISBN 978-981-4311-61-8 (soft cover) ISBN 978-981-4311-62-5 (E-book PDF) Typeset by Superskill Graphics Pte Ltd Printed in Singapore by Mainland Press Pte Ltd iv

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To my son, Justin

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Contents List of Tables and Figures

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List of Maps

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List of Acronyms

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Acknowledgements

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About the Contributors

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1.

Introduction Hooman Peimani

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Global Trends in Renewable Electricity, Renewable Fuels, and Markets for Renewable Heating and Cooling Benjamin K. Sovacool

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Resource Mutualism or Codependence? The Water-Energy Nexus in Asia Anthony Louis D’Agostino

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OPEC’s Long-Term Role in Affecting Energy Security Hooman Peimani

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Whither a Gas OPEC? Not in the Pipeline Benjamin Tang

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Contents

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6.

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Shared Interests or Competing Actions: What Drives Energy Security Cooperation between Asia and Europe? Susanne Wallenoeffer Conclusion Hooman Peimani

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Index

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List of Tables and Figures Tables 2.1 Renewable Energy Potential (by source) for the World 2.2 Global Rates of Production and Capacity, Growth and Investment in Renewable Energy Systems, 2008 2.3 Top Five Countries for Renewable Energy Growth and Cumulative Investment, 2008 2.4 Top Ten Countries for Annual and Cumulative Investment in Wind Energy 2.5 Overview of First- and Second-Generation Solar PV Systems 2.6 Top Five Countries for Annual and Cumulative Investment in Solar PV 2.7 Hydropower’s Share of Regional Electricity Production, 2008 2.8 Top Ten Producers of Geothermal Electricity by Total Capacity and Percentage of Capacity, 2005 2.9 Top Ten Ethanol Producers, 2008 2.10 Top Ten Biodiesel Producers, 2008 3.1 Water-Energy Intersections 3.2 Water Resource Availability and Withdrawal Across Asia 3.3 Groundwater Withdrawal in Selected Indian States 3.4 Irrigation Requirements by Biofuel Crop 3.5 Projections for Biofuel Production and Energy Share 3.6 Bioethanol Production and Water Requirements 4.1 Change in Regional/Global Oil Reserves 5.1 Proportion of Pipeline and LNG Movement against World Gas Production 5.2 Distribution of Gas Reserves (Proven) at end 2008

9 10 14 16 22 24 28 29 30 31 40 42 53 63 65 66 94 109 114 ix

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List of Tables and Figures

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5.3 5.4 5.5 5.6 5.7 5.8 5.9

Distribution of Oil Reserves (Proven) at end 2008 Distribution of Net Gas Exporters, 2008 Regional Reserves-to-Production (R/P) Ratios, 2008 Region-to-Region Natural Gas Trade Flows, 2008 (in bcm) HHI for Gas Importing and Exporting Countries, 2001–08 Hirschman Herfindahl Index for Gas Importing and Exporting Countries, 2008 HHI for PNG and LNG Trading Countries, 2001–08

Figures 2.1 Growth Rates for Selected Renewable Energy Technologies, 2006–08 2.2 Expansion of Renewable Electricity Generation in the EU Electricity Market 2.3 Annual and Cumulative Growth in Global Wind Capacity, 2000–09 2.4 Production Costs (in U.S. cents based on US$ value in 2007/kWh) for Fossil Fuel, Nuclear, Renewable, and Cogeneration Power Plants 2.5 Average Cumulative Wind and Wholesale Power Prices in the United States, 2003–07 2.6 Total Capacity Growth and Percentage of Annual Capacity Growth for Power Plants in the United States, 2000–07 2.7 Annual and Cumulative Growth in Global Grid Connected Solar PV Capacity, 2000–08 2.8 Solar PV Installation Costs in the United States, 1998–2007 2.9 Global Geothermal, Wind, Hydro, and Biomass Electricity Generation 2.10 Total Capacity of Solar Thermal Water Heaters, 2005 2.11 Solid Biomass Share in Large Heat Production of Industrialized Countries, 2005 2.12 Annual Utilization of Geothermal Heat by Country 3.1 Final Electricity Consumption Forecasts, 2006–30 3.2 Contracted Global Desalination Capacity by Technology 3.3 Cost Range per m3 for Reverse Osmosis Plants of Varying Sizes 3.4 Typical Cost Breakdown for Desalination Plants 3.5 Freshwater Withdrawals by Sector 3.6 Once-through Cooling System Design 3.7 Closed-loop Cooling System Schematic x

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115 116 118 119 120 122 124

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18 19 20 23 25 27 33 34 35 44 47 48 50 52 56 56

List of Tables and Figures

3.8 3.9 5.1 5.2 5.3 5.4 6.1

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Average Withdrawal Factors for Various Thermoelectric Plant Configurations Withdrawal and Consumption Factors for Various Thermal Plant Configurations World Production and Consumption of Natural Gas (in bcm) World Trade in Natural Gas — Pipeline and LNG (in bcm) Natural Gas Prices at Regional Hubs between 1990–2008 (U.S. dollar/million BTU) U.S. Natural Gas Prices between 1990–2009 (U.S. dollar/thousand cubic feet) Renewables in Asia

57 59 107 108 112 113 148

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List of Maps 2.1 3.1 4.1 4.2 5.1 6.1

Map of Renewables Total Renewable Water Resources Per Capita OPEC Members The Persian Gulf Members of OPEC and GECF Asia and the European Union

11 41 83 88 110 135

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List of Acronyms ASEAN ASEF ASEM BB bcm bpd CCS CO2 CSP EAEF EC EEP EIA ENVforum EPIA EU FAO G-20 GECF GW GWh GWI HHI IDA IEA IGCC

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Association of Southeast Asian Nations Asia-Europe Foundation Asia Europe Meeting billion barrels billion cubic metres barrels per day carbon capture and storage carbon dioxide concentrating solar power EC-ASEAN Energy Facility Programme European Community Energy and Environmental Programme Energy Information Administration Asia-Europe Environment Forum European Photovoltaic Industry Association European Union Food and Agriculture Organization of the United Nations The Group of Twenty Finance Ministers and Central Bank Governors Gas Exporting Countries Forum gigawatt gigawatt-hours Global Water Intelligence Hirschman-Herfindahl Index International Desalination Association International Energy Agency Integrated Gasification Combined Cycle xiii

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IPEEC IRENA ITER kW kWh LNG m bpd MED MIT MMT MSF MW MWh MWp NDRC NGCC OAPEC OECD OPEC PNG PV REN21 RO R/P SEB STRACO2 TCM TW TWh U.A.E U.K. U.N. UNFCCC U.S.A. U.S.S.R. VC

International Partnership for Energy Efficiency Cooperation International Renewable Energy Agency International Thermonuclear Experimental Reactor kilowatt kilowatt-hours liquefied natural gas million barrels per day multi-effect distillation Massachusetts Institute of Technology million metric tones multistage flash distillation megawatt megawatt-hours megawatt peak National Development and Reform Commission National Gas Combined Cycle Organization of Arab Petroleum Exporting Countries Organization for Economic Cooperation and Development Organization of the Petroleum Exporting Countries piped natural gas photovoltaics Renewable Energy Policy Network for the 21st Century reverse osmosis reserves-to-production state electricity board Support to Regulatory Activities for Carbon Capture and Storage trillion cubic metres terawatt terawatt-hours United Arab Emirates United Kingdom United Nations United Nations Framework Convention on Climate Change United States of America Union of Soviet Socialist Republics vapour compression

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Acknowledgements I acknowledge with appreciation the valuable assistance of the following members of the Energy Security Division of the Energy Studies Institute, National University of Singapore: Krishna Mayur Booluck, Koh Chung Wei, Nicholas and Geoffrey Kevin Pakiam. This book could not be completed without their dedication and meticulous work, which covers a wide range of areas and includes contributions in terms of both form and content.

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About the Contributors Hooman PEIMANI (Ph.D.) is the Head of Energy Security Division at the Energy Studies Institute based at the National University of Singapore. Drawing on his years of work experience with academic (e.g., Geneva School of Diplomacy) and non-academic, private and public (Canadian Government) and national and international institutions in North America, Europe and West Asia, including UN agencies (e.g., UNCHR, UNICEF, UNRISD and WHO), he specializes in energy (energy security) and security (regional/ international), particularly those of South and West Asia, the Middle East and the Asia-Pacific region. Having over twenty years of research experience to include working with many internationally-known institutes (e.g., Jane’s Defence/UK; Arab Petroleum Research Center/France; Geneva Centre for the Democratic Control of Armed Forces; Centre for International Cooperation and Security/UK), his extensive publications include 10 books, 27 book chapters, over 200 journal/newspaper articles, scores of government/ UN documents/reports and several book reviews of which many are available on the Internet. He has also contributed as an expert to newspapers (e.g., The Wall Street Journal) and the publications of many news agencies (e.g., Asahi Shimbon, Kyodo News, Reuters and UPI) and/or been quoted by them, in addition to freelance contributions to many newspapers (e.g., South China Morning Post; Moscow Times) and news agencies (e.g., Inter Press Service/ Berlin; International Relations and Security Network/Zurich and Eurasianet/ New York). In the capacity of an expert on energy and security, he has made since 1997, regular contributions to the programmes and publications of Radio Free Europe/Radio Liberty and the programmes of Radio France Internationale and Deutsche Welle while presenting as invited speaker in dozens of academic and non-academic events in North America, Europe, xvii

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West Asia and the Asia-Pacific region. His recent TV appearances include twelve interviews by BBC and Channel News Asia in 2010. Anthony D’AGOSTINO is a research associate at the Centre on Asia and Globalisation (CAG) with research interests in energy policy, climate change adaptation, and environmental decision analysis. Prior to joining CAG, Anthony worked with the Institute of Water Policy at the Lee Kuan Yew School of Public Policy, using system dynamics to address public policy and water policy challenges. He has worked with the Greenhouse Gas Protocol at the World Resources Institute and at UNEP-ROAP, respectively, focusing on corporate GHG emissions and sustainable buildings. His research has appeared in Energy, Energy Policy, and Energy for Sustainable Development. Benjamin K. SOVACOOL (Ph.D.) is an assistant professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore, and a research fellow in the Energy Governance Program at the Centre on Asia and Globalization. Dr Sovacool has worked as a researcher, professor, and consultant on issues pertaining to energy policy, the environment, and science and technology policy. He has served in advisory and research capacities at the U.S. National Science Foundation’s Electric Power Networks Efficiency and Security Program, Virginia Tech Consortium on Energy Restructuring, Virginia Center for Coal and Energy Research, New York State Energy Research and Development Authority, Oak Ridge National Laboratory, Semiconductor Materials and Equipment International, the U.S. Department of Energy’s Climate Change Technology Program and the International Institute for Applied Systems and Analysis near Vienna, Austria. Dr Sovacool has published more than eighty academic articles and presented at more than thirty international conferences and symposia. He is the co-editor with Marilyn A. Brown of Energy and American Society: Thirteen Myths (2007); and the author of The Dirty Energy Dilemma: What’s Blocking Clean Power in the United States (2008); Powering the Green Economy: The Feed-In Tariff Handbook (2009); and Climate Change and Energy Security: A Global Overview of Technology and Policy Options (forthcoming). Benjamin TANG is a senior economic analyst at the Energy Studies Institute (ESI), National University of Singapore. His research interests include modelling energy demand in Singapore and analysing the relationship between oil prices and macroeconomic indicators. He is currently researching potential carbon control and pricing regimes for Singapore. xviii

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About the Contributors

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He participated in the International Association of Energy Economics (IAEE) conferences in New Orleans, the United States, and Perth, Australia, in 2008, presenting papers on “Liquefied Natural Gas Terminal and Electricity Market in Singapore” and “Electricity Demand for Singapore and Rebound from Generation Efficiency Gains” respectively. He is a frequent opinion contributor in the local press, writing on contemporary issues in the energy market. In addition, he is an occasional reviewer for the internationally refereed journal, Energy Economics. Prior to joining ESI in the first half of 2008, he was employed at Credit Suisse Singapore in a middle-office role, supporting Japan’s fixed income traders in a risk management and financial controlling capacity, and managing the deployed extension of the team. He has been an intern at Shell Chemicals and the Monetary Authority of Singapore. Susanne WALLENOEFFER is a political scientist with an MA (awarded with merit) in European Politics, Business and Law from the University of Surrey, U.K. She gained in-depth knowledge of European affairs through working closely with the European institutions and other organizations in Brussels during her time with the Brussels Office of a German political foundation. Her Master’s thesis focused on the EU’s potential as a global security actor. From 2008 to 2009, she has been managing the Asia-Europe Environment Forum at the Asia-Europe Foundation as a Project Executive. Currently, she is working on climate change issues in sub-Sahara Africa as an international expert for the GIZ SADC Forestry Programme in Botswana.

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Introduction

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INTRODUCTION Hooman Peimani

Perhaps the twenty-first century could be named the energy century for at least two major reasons. On the one hand, global energy requirements are expanding on a steady basis, corrected for short periods of fluctuations in demand caused by ups and downs in the performance of all economies, especially the large and/or growing ones. All projections for the foreseeable future suggest the continuity of this trend, reflecting the predictable enlarging of the world’s economies, the growing population worldwide, and, by and large, improving living standards, which will all surely encourage more energy consumption. Meeting the phenomenal increase in energy requirements of all countries will be a herculean task in itself and will require a long-term solution since the bulk of the currently used energy is non-renewable and thus finite. Thus, at least because of the rapid depletion of the global oil, gas, and coal resources, the current pattern of consumption will not be sustainable. This will therefore demand finding practical alternatives to fossil energy — a major challenge given that clean and renewable energies as a whole are at the stage of infancy for various reasons. On the other, there are major environmental challenges with dire consequences for life in all forms on earth should our current wrong pattern of life, environmentally speaking, continue. In particular, our large and growing energy consumption has been the single major factor causing global warming, which is destroying our nature steadily and rapidly. Today, it is quite clear that continuing with this way of life, which reflects a thoughtless

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and irresponsible pattern of energy consumption, will not be sustainable because of its devastating impact on the environment. Consequently, for these two reasons at least, energy will be the single major challenge of the twenty-first century. Energy is no doubt important as all countries now put it on their agenda as the top, if not, one of the top issues. Obviously, its degree of importance varies from one country to another since it is directly geared to the scale of economic development and prosperity of a given country, which determines the type and amount of required energy. Against this background, energy security has become a major preoccupation of every country. This is true for energy-rich and energy-poor countries alike, although it has different manifestations for both categories of countries. Countries depending on energy imports are concerned not just with the availability of their required types of energy, but also the security of supply routes, and thus, the means of transportation of energy to their countries. On the other hand, energy-rich countries that have their needed types of energy within their territorial boundaries and are not concerned about the availability of supply, concern themselves with their uninterrupted and timely distribution inside their countries. In both cases, meeting their energy demands through imports, production, and/or both, is a major issue to address as success or failure in this regard determines their ability to continue, and/or expand, their economic activities and meet the daily demand of their respective peoples. In this context, many factors affect their energy security. Of course, the starting point is to determine the type of required supplies (fossil/nonfossil), the availability of adequate supplies, the uninterrupted access to them (whether inside one’s country or outside) and their distribution in the designated areas of a country over a given period of time. However, achieving energy security takes place within a national, regional, and/or global context, which is affected by political, economic, military/security, social, and environmental factors. Hence various factors could affect such an objective even when adequate supplies at an affordable price are available. In short, energy security is in fact a multidimensional subject of crucial importance for all countries, regardless of the type of their required energy. Given this reality, the traditional approach to this subject, which focuses mainly on the security of supplies, is no longer sufficient to prepare energy consumers for the challenges of the twenty-first century. Consequently, energy security is affected by the various factors spelled out above. They act as parameters directly influencing the attainment of this objective for any given country. They also contribute to the formation of trends in energy markets, which have an impact on their immediate

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environment. There are also trends not just of significance for one group of countries or another, whether they are energy consumers or suppliers, but which are of global importance. They therefore form the major trends in the global energy markets affecting all participants in these markets in one form or another, of course, to varying degrees, depending on their role and requirements. The impact of such trends on global energy markets will be long term. In a sense, this book reflects the appreciation of the importance of these trends in the foreseeable future. Of course, there are many trends that one could elaborate on for their relative salience. Knowing this fact, one must be kept in mind that dealing with all such trends would not be feasible within the limit of this, or any other, single book due to the sheer size of the undertaking. One should also take into consideration the degree of importance of such trends for all players in the global energy markets. Appreciating these realities among others, we have made efforts to select those trends that are especially relevant to the ongoing major debates on energy, and energy security, in particular. Within this framework, certain subjects detailed below deserve elaboration as they serve as the background to the criteria used for selecting trends covered in this book. Fossil energy deposits, particularly those of oil and gas, are much larger than the estimates of the 1980s and even the 1990s. Many new oil and gas reserves have been found since the 1990s while geological indicators suggest the availability of even more supplies all over the world. Furthermore, thanks to technological improvements, many previously inaccessible oil and gas reserves available in geologically difficult locations (both onshore and especially offshore ones located deep under the sea) are now physically accessible, and/ or extractable in an economically sensible manner. In short, there are more oil and gas supplies for consumption, which lessen concerns about their availability — unfortunate fact, environmentally speaking, as it reduces the urgency of finding environmentally clean substitutes for them. Yet, while the issue of availability of supplies seems to be answered affirmatively, that of sustainability is yet to be answered. This means that the worsening environmental situation, particularly global warming, urgently requires serious efforts to decrease the consumption of fossil energy — which is the major contributor to this phenomenon — and to make up for the expected shortfall with a growing consumption of clean and renewable energy. Despite the acknowledgment of its importance and urgency, as reflected in various national, regional, and international efforts, this issue has practically been pushed to the sidelines, given the abundance of fossil energy. Thus, to prompt serious discussions that are to be followed by concrete actions for reducing energy dependency on

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fossil fuels, it is important to alert everyone to the mentioned facts and how clean and renewable energy is used and what the trends in this area are. Asia is undoubtedly the world’s single largest energy consumer and its consumption will grow on a constant basis, thanks to its large and growing economies and expanding populations with an increasing demand for energy. The twenty-first century will surely be the Asian century when it comes to economic growth and, therefore, energy consumption. This reality will certainly have a major impact on global energy markets. The continent and its subregions (e.g., South Asia, Southeast Asia, and West Asia, including the Persian Gulf ) have experienced a major increase in water consumption, with the effect of creating serious problems locally, and also globally, due to the environmental interdependence caused by rapid depletion of water resources. Water consumption will surely increase on a major scale as a “natural” phenomenon caused by economic growth and growing population. However, water and energy are not two independent issues to be dealt with separately. To oversimplify the case, one could say that on the one hand, energy is needed to move water, purify it for consumption, and treat waste water. On the other, water is needed by the energy industry as a cooler for power generators, among other usages. Hence there is a consolidating water-energy nexus as a major global trend. This nexus will become even more prominent as demand for both water and energy will certainly rise in the foreseeable future, a result of expanding economies and enlarging populations with improving living standards. OPEC has been the major organization of oil exporting countries since its inception in 1960. Whereas its influence and the major role it played in the global energy market were undeniable realities in the 1970s, there have been suggestions for its declining influence due to various reasons. They include depleting oil resources and the numerical strength of oil exporters outside the oil organization. Predications on the declining importance of oil because of its depletion and pollutive nature have not passed the test of reality. On the one hand, forecasts for peak oil have proven to be wrong. Many large and small oilfields have been found especially over the last decade to push up the amount of available crude oil significantly higher than a decade earlier. Based on geological evidence, many new oilfields will likely be discovered over time. Consequently, there is no shortage of oil, which guarantees its availability over the next few decades at least. On the other hand, fossil fuels have kept their importance as still the largest and thus main type of energy used worldwide. Renewables are yet to become a serious alternative to fossil fuels due to their underdevelopment caused mainly by a lack of adequate investment over the last two decades. Therefore, oil, as an

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easier type of fossil energy for extraction, transportation, and consumption, compared with gas and coal, has retained its “popularity” and importance. To be frank, the rise of new oil exporters outside OPEC, in addition to the old ones, has had a negative impact on OPEC. However, the organization is regaining its influence for certain reasons, which will enable it to become potentially even more influential than it was in the 1970s. As a result, the rerise of OPEC constitutes a major trend of undeniable significance for the global oil markets. OPEC’s half-century history with its positive consequences for its membership has provided an incentive for many gas exporters to consider the formation of a similar organization. In the absence of such an organization, gas prices are mainly determined by bilateral agreements and the challenges of exporting gas. In many cases, they are dissatisfactory for exporters lacking the clout and influence to sell at their desired prices. Thus, as natural gas gains more popularity, evident from its growing consumption as an environmentally cleaner type of fossil energy than oil and coal, the issue of its availability at an affordable price and, therefore, its pricing are paramount for consumers, in addition to the mentioned interest of its exporters. Within this context, the possibility of the creation of a gas cartel, with its predictable implications for both consumers and suppliers, is a major issue especially because efforts, though still not very substantial, have been made in this regard. Finally, Asia has been rising as the world’s largest economy and the twenty-first century powerhouse. Thanks to its large and growing populations whose living standards are improving, and also its growing economies, especially in the Asia-Pacific region, Asia is the world’s largest energy consumer and will remain so in the predictable future. Even though the issue of supply availability is crucial for the continent, it is equally important for Asia to improve its energy efficiency, diversify its sources of energy, and move away especially from its current heavy reliance on oil, gas, and coal, an environmentally unsustainable pattern of energy consumption. In general, its non-fossil energy sector is small and insignificant despite differences between and among its countries with respect to their progress in this field. For this matter, Asia needs to receive the required technology, unavailable locally, to address these issues. Europe is advanced in certain required technology compared with Asia, which means its cooperation in the energy field with Asia is a potentially beneficial one. The European Union and some Asian countries have been taking initial steps in this regard for more than a decade. For its major potential to decrease the consumption of fossil energy with its devastating environmental impact, and to encourage the more efficient use of fossil

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energy while promoting non-fossil and environmentally clean energy, an Asia-Europe energy cooperation is an important trend to be observed. Against this background, this book deals with a selected number of major trends of long-term importance, which, in one way or another, will have a significant impact on energy markets. Towards that end, Chapter 2 focuses on renewable energy. Benjamin K. Sovacool analyses trends in the energy markets for renewable electricity, renewable fuels, and renewable heating and cooling. He explores recent growth in renewables, looking at the use of wind, solar, hydroelectric, geothermal, and biomass resources to generate electricity, ethanol, and biodiesel as transportation fuels, and solar thermal, geothermal, and biomass to provide direct heating and cooling. His chapter focuses on historical trends in the past few years that will likely continue. The author dedicates most of his attention to the two fastest growing sources of renewable energy, namely wind and solar electricity supply, while exploring market trends for many other renewable technologies and areas. Chapter 3 concentrates on the water-energy nexus. Anthony Louis D’Agostino emphasizes this nexus for its impact on energy security, which is mainly overlooked or underrated by the traditional approach to this subject. In the treatment of the subject, he provides an overview of the water-energy nexus with an emphasis on the intersection points considered to be of the greatest consequence for Asia, the largest energy consumer facing serious water challenges. His key areas of attention include desalination, groundwater abstraction, thermoelectric cooling, and biofuels production. According to the author, these are the areas that will likely force difficult policymaking and resource allocations in a continent whose phenomenal growth in population and affluence will increase pressure on its finite water and energy resources. Having examined different components of the water-energy nexus in Asia, he makes remarks about its future. Chapter 4 deals with OPEC. Hooman Peimani provides a historical summary of the oil organization since its foundation in 1960. Drawing on the historical facts, he analyses its development from a simple grouping of major oil exporters to an organization capable of affecting global markets, thanks to the strength of its members as large exporters capitalizing on their resources, which account for the bulk of the world’s reserves. He also examines the factors that have weakened OPEC since the 1970s. While acknowledging its current relative weaker influence globally, he rejects views exaggerating this weaker impact, based on its large global share of oil demand. After elaborating on the significance of non-OPEC oil exporters, he draws conclusions on the future of OPEC based on its current membership’s long-term role in the global energy markets.

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Chapter 5 elaborates on the possibility of founding a gas cartel similar to OPEC. Benjamin Tang examines different factors, which could contribute to its creation in the foreseeable future. Starting with the impact of a gas cartel on energy security, he analyses factors such as the distribution of gas reserves, the export and reserve-to-production ratios, gas trade flows, and the competition and conditions that favour cartelization. Acknowledging possible “game changing events” in the future with a major impact on the global gas markets, he draws on all the mentioned issues to reject the possibility of a gas cartel along the lines of OPEC, at least in the next decade. Chapter 6 focuses on the cooperation between Asia and Europe on energy security. Towards that end, Susanne Wallenoeffer evaluates the cooperation between Asia and Europe on energy. Keeping in mind that the EU definition of Asia does not include all of Asia as it excludes the Caucasus, the Persian Gulf, and the Asian part of the Middle East, she provides a historical account of the efforts made in this regard since the 1980s to include ASEAN and non-ASEAN relations. Her focus is on the EU ties with its strategic partners, which are the major Asian economies (Japan, China, and India) and with which the European Union’s cooperation has been comparatively more prominent, while also dealing with EU-ASEAN ties. In studying the major trends in these relations, she identifies drivers contributing to the trend of increased energy cooperation between the European Union and Asia. Her conclusions stress the strengthening nature of the Asian-EU cooperation as a trend, with an emphasis on the EU ties with its strategic Asian partners. Chapter 7 offers conclusions. Providing a brief summary of major points raised in the previous chapters, it looks at the likely long-term impact of major trends on energy markets.

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Benjamin K. Sovacool

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GLOBAL TRENDS IN RENEWABLE ELECTRICITY, RENEWABLE FUELS, AND MARKETS FOR RENEWABLE HEATING AND COOLING Benjamin K. Sovacool

1. INTRODUCTION Renewable resources of energy have immense potential to supply a much larger fraction of the world’s electricity, fuel for transportation, and heat and other energy services. Renewable energy can be utilized through a variety of sources, approaches, systems, and technologies: • • • •

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Plants and algae require sunlight for photosynthesis before they can be converted to biofuels or biopower; Hydropower capitalizes on rain and snowfall resulting from water evaporation and transpiration; Wind generates electricity directly by turning a turbine, or indirectly in the form of ocean waves, but the wind itself is driven by the sun; Tidal and geothermal energy are the only renewable energy resources that are not a direct result of solar energy. Tides rise and fall due to the

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gravitational attraction between the oceans and the moon. The heat trapped in the earth itself is due to both leftover heat from the formation of the planet, and the radioactive decay of elements within the crust, such as uranium and thorium. When the potential for these energy sources is quantified, the numbers are startling. One recent assessment, which collected actual data on wind speeds (at a hub height of 80 metres) at 7,753 surface stations, identified about 72 terawatts (TW) of potential.1 One fifth of this potential could satisfy 100 per cent of the world’s energy demand and more than seven times its electricity needs.2 If we exclude biomass and look at solar, wind, geothermal, and hydroelectric energy resources, the world has roughly 3,439,685 terawatthours (TWh) of potential — about 201 times the amount of electricity the world consumed in 2007 (see Table 2.1).3 So far, less than 0.09 per cent of the potential for renewable energy to meet global energy needs has been harnessed. However, that percentage is starting to increase. This chapter explores recent growth in renewable energy markets and explores the use of wind, solar, hydroelectric, geothermal, and biomass resources to generate electricity; ethanol and biodiesel as transportation fuels; and solar thermal, geothermal, and biomass to provide direct heating and cooling. The late economist John Kenneth Galbraith once mused that “the function of economic forecasting is to make astrology look respectable”. His comment emphasizes how difficult projecting future trends in any area can be, from political elections and the weather, to energy markets and the economy. Thus, Table 2.1 Renewable Energy Potential (by source) for the World Technology

Available energy (TWh/year)

Electrical potential (TWh/year)

Current electricity generation (TWh/year)

Worldwide capacity factor (per cent)

Solar PV

14,900,000

3,000,000

11.4

10 to 20

Concentrated Solar Power Wind

10,525,000

4,425

0.4

13 to 25

630,000

410,000

173

20.5 to 42

Geothermal Hydroelectric

1,390,000 16,500

890 14,370

57.6 2,840

73 41.6

Source: Ren21, 2009.

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this chapter looks closely at trends in the markets for renewable electricity, renewable fuels and renewable heating and cooling, but it does so with an appreciation of Galbraith’s scepticism about the art of forecasting. The chapter focuses intently on historical trends in the past few years (which still give readers an excellent sense of what is going on in these markets), but refrains from making any projections about the future. It dedicates most of its space to the two fastest growing sources of renewable energy — wind and solar electricity supply — although it does explore market trends for many other technologies and areas. 2. GLOBAL OVERVIEW Growth in global renewable energy markets has been impressive, to say the least. From 2004 to 2008, annual renewable energy investment quadrupled to reach more than $160 billion when large hydroelectric facilities are included (see Table 2.2). Investments in solar photovoltaics (PV) increased Table 2.2 Global Rates of Production and Capacity, Growth and Investment in Renewable Energy Systems, 2008 Production/Capacity Annual Growth Annual Investment (2008) Rate (2007–08) (2008) Electricity Supply Wind Solar PV CSP Small hydro Large hydro Geothermal Biomass

121 13 0.5 85 860 10 2

GW GW GW GW GW GW GW

29% 70% 6% 8% 4% 4% 4%

$49 billion $39 billion — $6 billion $42.5 billion $2 billion $2 billion

Transportation Fuels Ethanol 67 billion litres/year Biodiesel 12 billion litres/year

34% 34%

$10 billion $5.5 billion

Direct Use/Heating Geothermal Solar Biomass

— 15% —

$2 billion $7.2 billion —

50 GWth 145 GWth 250 GWth

Note: Solar PV includes only grid connected systems. Annual growth rate percentages rounded to nearest whole number. Source: REN21 (Renewable Energy Policy Network for the 21st Century), Renewables Global Status Report: 2009 Update (Washington, D.C.: REN21, 2009).

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Source: Reproduced with kind permission of Geoffrey Pakiam (map generated from ).

Map 2.1 Map of Renewables

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by a factor of 16; investments in wind energy increased 250 per cent; investments in solar heating doubled; biodiesel production increased by a factor of six; and ethanol production doubled (see Figure 2.1 for trends from 2006 to 2008).4 From 1999 to 2004 geothermal electricity systems grew 16 per cent and direct use for heating grew by 43 per cent.5 Table 2.3 confirms that such investment has occurred in almost every part of the world. To select just a few examples, China doubled its wind capacity for the fifth year in a row, and the United States and European Union (EU) all added more capacity from renewable electricity systems than from natural gas, coal, oil, and nuclear power plants. By August 2008, no fewer than 160 publicly traded renewable energy companies had market capitalization greater than $100 million, more than doubling the number of only sixty in 2005.6 In 2007, China, Spain, and the United States all added more wind capacity to their domestic portfolios than the world added nuclear capacity.7 Put another way, the installation of small-scale and distributed power systems such as wind turbines and solar panels grew eighteen times faster than installations for conventional units; a large amount of this investment was financed not by governments, but the private sector.8 The stock of solar energy manufacturers grew from $3 billion in 2004 to $140 billion in 2007, an average growth rate of 40 per cent a year.9 The swelling growth of renewable energy has been driven predominantly by concerns about climate change, government incentives, and uncertainty about future costs and liabilities of fossil-fuelled power plants. For example, every country in the European Union had some sort of target for promoting renewable electricity by 2010 and many were on track to achieve those targets (see Figure 2.2). Global growth and investment can actually be classified into three distinct markets that account for the predominant share of global renewable energy use: renewable energy for electricity, renewable energy for transport and direct use for heating and cooling. 3. RENEWABLE ENERGY FOR ELECTRICITY The five most commonly utilized sources of renewable electricity on the market today are wind, solar, biomass, hydro, and geothermal. 3.1 Wind Land based and offshore wind energy has demonstrated robust market growth with more than eighty countries installing commercial wind farms in 2008. Most commercial turbines now operating have three evenly spaced blades and rotate on a horizontal axis. These wind turbines can harness wind speeds from

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Growth Increase Factor

Wind (GW)

Source: REN21.

0

20

40

60

80

100

120

140

Solar PV (GW)

Solar Hot Water (GWth)

Ethanol (bl/y)

Biodiesel (bl/y)

Figure 2.1 Growth Rates for Selected Renewable Energy Technologies, 2006–08

2006

2008

2007

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Philippines Spain Turkey

United States Japan Germany Brazil

China China United States United States United States Germany China

Turkey Brazil United States

China Germany

Spain

China United States Germany

United States Spain

United States

#2

Indonesia Japan Germany

Germany United States Spain Philippines

India United States South Korea Japan Italy Germany China France

China

#3

Spain Italy China Germany Finland Sweden Mexico United States Japan

Brazil France Argentina

Germany

Germany

#4

Italy South Korea Israel

India Brazil India

France Canada Brazil

Spain

Brazil

#5

Note: Solar includes only grid connected solar PV. Source: REN21, Renewable Energy Policy Network for the 21st Century, Renewables Global Status Report: 2009 Update (Washington, D.C.: REN21, 2009).

Geothermal power Solar PV Solar hot water/heat

Solar hot water/heat Ethanol production Biodiesel production Total Capacity All renewables Small hydro Wind Biomass power

Annual Growth New capacity investment (all renewables) Wind Solar PV

#1

Table 2.3 Top Five Countries for Renewable Energy Growth and Cumulative Investment, 2008

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Figure 2.2 Expansion of Renewable Electricity Generation in the EU Electricity Market

Source: Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, Renewable Energy Sources in Figures: National and International Development (Berlin: BMU, June 2007), p. 39.

3 metres to 25 metres per second and are able to operate in a range of climates from hot deserts to freezing areas in the Arctic and Antarctic. Wind turbines have also become larger in terms of size, installed capacity, and operating performance in recent years, with the average nameplate capacity of a turbine in 2007 being 1.5 megawatts (MW). A typical turbine installed in 2007

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therefore produces about 100 times more electricity than one installed in 1980, and has a rotor diameter eight times larger.10 Figure 2.3 shows that about 27 GW of new wind was installed worldwide in 2008, the highest volume ever achieved in a single year. For four straight years, the United States led the world in terms of installed on-grid capacity (see Table 2.4). In some regions, new wind installations actually operate more cheaply than conventional fossil fuelled or nuclear plants. For example, Amory Lovins explored the costs of producing electricity from a portfolio of options in 2007 and found that wind energy beat new nuclear, gas, and coal units (see Figure 2.4).11 Researchers at Lawrence Berkeley National Laboratory also surveyed actual production costs from 128 separate wind projects in the United States totalling 8,303 MW in 2007 and found they tended to produce electricity for less than 5 cents per kWh, making them cheaper than the national wholesale price for electricity (see Figure 2.5).12 Because of wind’s cost competiveness, it was, for the third straight year, the second largest new resource added to the U.S. grid (behind 7.5 GW of natural gas plants) in 2007, and ahead of coal, nuclear, and other resources (see Figure 2.6). In the United States alone, twenty-seven wind manufacturing facilities started operating in 2008 and plans for thirty more were announced. Despite this growth, significant untapped resources remain. Advances in materials, moorings, turbine, and blade design will likely increase the potential for wind energy commercialization and allow for commercial development in low wind speed and offshore wind areas. Such a “learning effect” has been expected to reduce costs by a further 20 to 60 per cent over the coming years.13 Table 2.4 Top Ten Countries for Annual and Cumulative Investment in Wind Energy

United States Germany Spain China India Italy France United Kingdom Denmark Portugal

Added in 2008 (MW)

Cumulative at end of 2008 (MW)

8,360 1,670 1,610 6,300 1,800 1,010 950 840 80 710

25,170 23,900 16,740 12,210 9,650 3,740 3,400 3,240 3,180 2,860

Note: Figures rounded to nearest 10 MW. Source: REN21.

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2000 2001 2002 2003 2004

2005 2006

2007 2008

2009

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Cumulative Installed Wind Capacity (MW)—Line

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Annual Installed Wind Capacity (MW)—Bars

Source: REN21 (Renewable Energy Policy Network for the 21st Century), Renewables Global Status Report: 2009 Update (Washington, D.C.: REN21, 2009).

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Figure 2.3 Annual and Cumulative Growth in Global Wind Capacity, 2000–09

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Source: Amory B. Lovins, Imran Sheikh and Alex Markevich, “Forget Nuclear”, Rocky Mountain Institute Solutions 24, no. 1 (Spring 2008): 23–27.

Figure 2.4 Production Costs (in U.S. cents based on US$ value in 2007/kWh) for Fossil Fuel, Nuclear, Renewable, and Cogeneration Power Plants

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Source: Mark Bolinger and Ryan Wiser, “Wind Power Price Trends in the United States: Struggling to Remain Competitive in the Face of Strong Growth”, Energy Policy 37 (2009): 1,062.

Figure 2.5 Average Cumulative Wind and Wholesale Power Prices in the United States, 2003–07

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Source: Mark Bolinger and Ryan Wiser, “Wind Power Price Trends in the United States: Struggling to Remain Competitive in the Face of Strong Growth”, Energy Policy 37 (2009): 1,063.

Figure 2.6 Total Capacity Growth and Percentage of Annual Capacity Growth for Power Plants in the United States, 2000–07

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3.2 Solar Solar electricity systems generally come in two forms: solar photovoltaic (PV) panels and concentrating solar power (CSP). The first form, solar PV, has a number of unique characteristics. It is incredibly modular, meaning it can be installed at almost any capacity and scale (from a few watts in a household or weather station to dozens of MW for utilities) and constructed quickly. It is a form of technology that does not only compete with wholesale power, but also with retail power at the household level. PV technology is as close to a zero variable cost technology as one can get since its fuel is free and operating costs account for less than 1 per cent of total system cost for an ordinary household system. Contrary to most other ways of producing electricity, PV modules cannot be repaired, only replaced, meaning that most manufacturers offer a 25-year module warranty making it a secure form of supply.14 First-generation PV systems tended to be made of very pure monocrystalline silicon or multicrystalline silicon wafers, but newer, secondgeneration systems rely on thin-film semiconductors and can provide increased production volumes at reduced costs and greater efficiency. For example, cadmium telluride thin-film technology is actively commercialized with cell efficiencies of more than 16 per cent in the laboratory; thin-film PV has grown to nearly 7 per cent of worldwide PV shipments in only four years of commercial production. Many of these newer systems are beginning to utilize lower grade metallurgical silicon (which is more widely available and cheaper), along with other, non-silicon based materials and components (see Table 2.5). In 2008, the installation of solar PV systems surpassed 5.6 GW of capacity and cumulative capacity reached almost 15 GW (see Figure 2.7). Spain represented half of the new installations in 2008 with 2.5 GW of additions, followed by Germany, Japan, the United States, and South Korea (see Table 2.6).15 In terms of the manufacturing and production of solar PV modules, China became the new world leader (making 1.8 GW in 2008), followed by Germany (1.3 GW), and Japan (1.2 GW). The United States led the world in thin-film production (270 MW), followed by Malaysia (240 MW), and Germany (220 MW). Three notable trends occurred in the global solar PV market from 2007 to 2009.16 First, there were more installations of building integrated solar PV systems, with more than 25 MW installed in Europe. Second, thin-film technologies became a larger share of total installations. Finally, third, utilityscale PV power plants larger than 200 kW emerged in greater numbers, with more than 1,800 plants located worldwide by the end of the year.

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Made from very pure monocrystalline silicon with a single and continuous crystal lattice structure virtually free of defects and impurities Produced using numerous grains of monocrystalline silicon

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Uses polymers and other organic materials to produce electricity

Combines amorphous and multicrystalline in the top and bottom of a photovoltaic cell Uses photosensitive die separated by nano-materials to produce electricity

Made of silicon atoms in a thin homogenous layer rather than crystalline structure Made from non-silicon based materials

Easier to manufacture, more flexible, and more colourful than ordinary solar cells, but currently less efficient Less efficient and weaker than ordinary cells, but also less toxic and can be made from a variety of materials

Absorbs light more effectively, can be deposited on a wider range of substrates, is cheaper to produce, but less efficient Has the potential to be manufactured cheaply and offers high module efficiencies, but is still in early stages of development

Cheaper to produce, but has lower efficiencies

High efficiency, but complicated manufacturing process with high costs

Advantages/Disadvantages

Source: Malaysia Building Integrated Photovoltaic Project, PV Industry Handbook 2008 (Kuala Lumpur: MBIPV, 2008).

Organic Cells

Dye-Sensitized Cells

Copper Indium Diselenide Gallium Arsenide Micromorph Silicon

Cadmium Telluride

Amorphous Silicon

Second-Generation PV (Thin Film Cells)

Multicrystalline

Monocrystalline (single)

First-Generation PV (Crystalline Silicon Cells)

Description

Table 2.5 Overview of First- and Second-Generation Solar PV Systems

6.5%

11.5%

19% 18% 15%

16.5%

6 to 8%

11 to 14%

12 to 17%

Typical efficiencies

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0

1,000

2,000

3,000

4,000

5,000

6,000

2000 2001 2002 2003 2004 2005

2006

2007

2008

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Cumulative Installed Grid Connected Solar PV (MWp) – Line

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Source: European Photovoltaic Industry Association, Global Market Outlook for Photovoltaics by 2013 (Brussels: EPIA, April 2009), p. 4.

Annual Installed Grid Connected Solar PV (MWp) – Bars

Figure 2.7 Annual and Cumulative Growth in Global Grid Connected Solar PV Capacity, 2000 –08

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Table 2.6 Top Five Countries for Annual and Cumulative Investment in Solar PV Added in 2008 (MW)

Cumulative at end of 2008 (MW)

1,500 2,600 240 250 250

5,400 3,300 1,970 830 350

Germany Spain Japan United States South Korea

Note: Figures rounded to nearest 10 MW. Source: European Photovoltaic Industry Association, Global Market Outlook for Photovoltaics by 2013 (Brussels: EPIA, April 2009).

Particular markets, such as the United States, have exhibited strong growth, as well as significant reductions in cost. Installations of grid connected solar PV, for example, increased dramatically from 2000 to 2007, growing from 20MW to 500MW. The most significant growth occurred for nonresidential installations, which constituted less than half of the total installations each year in the early years, to about two thirds in 2007.17 Along with increased installations have come reduced costs. One recent assessment analysed residential and non-residential solar PV projects from 1998 to 2007 and compiled installed cost data from nearly 37,000 systems totalling 367MW of capacity, or 76 per cent of all grid-connected units in 2007. The assessment found that average installed costs declined from about $10,500 per installed kW in 1998, to $7,600 per installed kW in 2007, reductions in cost of about 3.5 per cent each year (see Figure 2.8).18 The overall decline in systems costs came mostly from reductions in non-module expenses, such as inverters, adhesives, installation, and maintenance, with the most significant decline in systems smaller than 5 kW. Costs could fall further around the world if new breakthroughs in research continue. Much development is focused on using alternative materials in solar cells (such as plastic solar cells and organic solar cells), as well as lower grade material and other alternatives discussed in Table 2.5 above, in essence breaking away from the industry’s reliance on highly refined silicon. If current trends continue, the cost of solar electricity generation is expected to drop to 6 to 10 ¢/kWh by 2020 due to improvements in module production through thinner layers, the introduction of a broader range of materials, the integration of glass and PV production facilities, the construction of adhesives on-site, innovative designs, and better economies of scale.19

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Source: Ryan Wiser, Galen Barbose, and Carla Peterman, Tracking the Sun: The Installed Cost of Solar Photovoltaics in the United States from 1998 to 2007 (Berkeley: Lawrence Berkeley National Laboratory, February 2009, LBNL-1516E), p. 3.

Figure 2.8 Solar PV Installation Costs in the United States, 1998–2007

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The second form of solar electricity production is CSP. CSP systems have seen a resurgence in recent years with 50+ MW parabolic trough plants coming online. Such systems have the advantage of thermal storage (often using molten salt), which allows the power to be dispatched whenever it is needed. Two major new CSP plants came online in 2008, the 50-MW Andasol-1 plant in Spain, and a 5-MW demonstration plant in California. Large projects are in the pipeline for Abu Dhabi, Algeria, Egypt, Israel, Italy, Morocco, Portugal, Spain, and the United States. 3.3 Biomass Bioelectric power plants differ by fuel source and the processes used to convert fuels into electricity. Fuels tend to be divided into agricultural wastes, residues, and wood wastes, energy crops, and municipal solid waste. Electricity generation can be thermochemical (that is, through combustion, which burns biomass in some way to produce heat or steam to turn a turbine), or biological (that is, digestion, which lets waste decompose to produce methane, a type of greenhouse gas full of energy, that is then captured and used to produce electricity). Gasification and pyrolysis involve high temperatures in a low or no oxygen environment to produce a gas or liquid for use. Anaerobic digestion mimics the same processes that humans use to eat: waste is presorted to remove plastic, steel, and other non-biodegradable substances before it is digested by bacteria that excrete both cases (methane) and solid waste (faeces, usually in the form of fertilizer and compost). Installed bioelectric capacity worldwide in 2008 was about 2GW and biomass electricity generation grew at a rate of 4 per cent from 2007 to 2008. Figure 2.9 shows that bioelectric sources provided 7 per cent of total renewable electricity supply among OECD countries, with significant amounts coming from North America and South America. 3.4 Hydroelectric Hydroelectric facilities work by converting the kinetic energy of falling water into electricity. They often divert water from a river or impound it in a dam, steering the water through a penstock to a turbine that rotates under the pressure of the moving water.20 Hydropower is arguably the most mature and definitely the most used renewable resource to produce electricity, providing more than 66 per cent of the electricity in South America and more than 12 per cent of the electricity in every region and continent except the Middle East (see Table 2.7). More than $40 billion was invested in large-scale hydroelectric dams in 2008, along with an additional $6 billion in smaller run-of-river hydro systems.

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Source: Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, Renewable Energy Sources in Figures: National and International Development (Berlin: BMU, June 2008), p. 66.

Figure 2.9 Global Geothermal, Wind, Hydro, and Biomass Electricity Generation

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Table 2.7 Hydropower’s Share of Regional Electricity Production, 2008 North America Central and South America Europe Eurasia Middle East Africa Asia and Oceania

13.2% 66.4% 15.6% 18.8% 3% 16.9% 12.7%

Source: Lea Kosnik, “The Potential of Water Power in the Fight Against Global Warming in the US”, Energy Policy 36 (2008): 3,254.

3.5 Geothermal Electricity has been generated by geothermal vents producing steam since the early 1910s and geothermal power plants have operated for longer than fifty years. More than ninety countries have significant geothermal resources and seventy-two countries use some form of geothermal energy. The best geothermal resources are areas with strong volcanic activity, including the “ring of fire” that circumscribes the Pacific Ocean, Iceland, and the East African Rift Valley. Areas of young tectonic plate activity, such as Turkey and Japan, along with regions that have rocks with high permeability, such as Hungary, North America, and China, also have significant geothermal potential.21 Table 2.8 shows that Costa Rica, El Salvador, Iceland, Kenya, and the Philippines all receive more than 15 per cent of their electricity from geothermal resources. The United States is the world’s largest producer of geothermal electricity and geothermal electricity generation could increase sevenfold from its 10GW today, to 70GW worldwide, with current technology utilized only where cost effective resources exist.22 Thirty-nine countries positioned mostly in Africa, the Pacific, and South America, could also obtain 100 per cent of their electricity from geothermal resources if they wished. New research is currently focusing on enhanced geothermal systems that can extract deeper sources of heat or rocks with lower permeability. In the United States, recoverable deep geothermal resources are estimated to be greater than 200,000 exajoules or 2,000 times the annual energy demand. An interdisciplinary study led by MIT projected in 2006 that more than 100,000MW of enhanced geothermal capacity could be built by 2050 with an investment of between only $800 million and $1 billion.23

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Table 2.8 Top Ten Producers of Geothermal Electricity by Total Capacity and Percentage of Capacity, 2005 Top Producers by Total Capacity

GWh/yr

United States Philippines Mexico Indonesia Italy Japan New Zealand Iceland Costa Rica Kenya

17,917 9,253 6,282 6,085 5,340 3,467 2,774 1,483 1,145 1,088

Top Producers by Percentage El Salvador Kenya Philippines Iceland Costa Rica Nicaragua Guadeloupe (France) New Zealand Indonesia Mexico

22% 19% 18.5% 17% 15% 9.5% 8% 7% 6.5% 3.5%

Source: Ingvar B. Fridleifsson et al., “The Possible Role and Contribution of Geothermal Energy to the Mitigation of Climate Change”, in IPCC Scoping Meeting on Renewable Energy Sources, edited by O. Hohmeyer and T. Trittin (Luebeck, Germany: IPCC Geothermal, January 2008).

4. RENEWABLE ENERGY FOR TRANSPORT Renewable resources not only produce electricity, but they also offer substitutes to petroleum in the transport sector. Two types of renewable fuel, often called biofuels, are the most common: ethanol and biodiesel. 4.1 Ethanol Ethanol is the most widely used renewable fuel today. Worldwide, 67 billion litres of ethanol were produced in 2008 (see Table 2.9). First-generation ethanol fuels are made by converting the carbohydrate from biomass into sugar, which is then converted into ethanol in a fermentation process similar

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Table 2.9 Top Ten Ethanol Producers, 2008 Billion litres/year United States Brazil China France Canada Germany Spain Thailand Columbia India

34 27 1.9 1.2 0.9 0.5 0.4 0.3 0.3 0.3

Source: REN21.

to brewing beer. The two most common feedstocks are sugar cane (Brazil) and maize (United States). While the United States was the world’s largest producer of biofuels in 2008, reliance on corn-grain ethanol is not a sustainable scenario for the future, given that the production of corn requires large amounts of fertilizer, and that corn grain is also an important source of food and feed. In contrast, the ethanol programme in Brazil produced almost as much ethanol, but used it to meet approximately half the country’s transportation fuel requirements. Brazil’s success is a function of many factors, including its choice of sugar cane (which is less land intensive and produced at a lower cost than corn) and its use of by-products such as bagasse to produce electricity. Brazilian mills are self-sufficient in steam and electrical energy production. In many cases, surplus energy is exported to the electric grid and sold as a by-product. Globally, the first-generation ethanol industry is booming. Thirty-one new ethanol refineries came online in the United States in 2008, increasing total production capacity to 40 billion litres a year. An additional 8 billion litres of capacity are under construction and the country now has more than 1,900 ethanol refuelling stations. Brazil saw similar expansion with a total of 400 ethanol mills operating at the end of 2008. Research on second-generation ethanol has also come a long way. One type, cellulosic ethanol, is defined as fuel derived from cellulose, that is, hemicelluloses or lignin extracted from renewable biomass. The secondgeneration market is relatively small, but growing with 12 million litres of cellulosic ethanol capacity operating in the United States in 2008, and new operational plants in Canada, Germany, Spain, and Sweden.

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4.2 Biodiesel Biodiesel is produced through a process in which organically derived oils are combined with alcohol (ethanol or methanol) in the presence of a catalyst to form ethyl or methyl ester. The biomass-derived ethyl or methyl esters can be blended with conventional diesel fuel or used as a neat fuel (100 per cent biodiesel). Biodiesel can be made from any vegetable oil, animal fats, waste vegetable oils, or microalgae oils. Germany, the United States, and France lead world biodiesel production and about 12 billion litres were produced worldwide in 2008 (see Table 2.10). 5. DIRECT USE FOR HEATING AND COOLING Although electricity accounts for 17 per cent of global final energy demand, and transport, 29 per cent, low temperature direct heating and cooling account for 44 per cent.24 A large chunk of these heating and cooling needs are met by off-grid households that use traditional biomass to heat their homes and cook meals. High temperature process heat accounts for another 10 per cent of total final energy demand. Globally, heat is the largest single energy end use, but current heating systems have numerous problems. Fossilfuel based sources such as coal or natural gas are relatively expensive and contribute to climate change, and biomass combustion inside homes contributes to serious health problems and deforestation. The direct use of renewable resources for heating and cooling can be broken down into three dominant categories: solar thermal, biomass cogeneration, and geothermal.25

Table 2.10 Top Ten Biodiesel Producers, 2008 Billion litres/year Germany United States France Brazil Argentina Thailand Spain Italy Columbia United Kingdom

2.2 2.0 1.6 1.2 1.2 0.4 0.3 0.3 0.2 0.2

Source: REN21.

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5.1 Solar Thermal Solar thermal systems exploit heat from the sun (solar radiation) and use it to heat and cool spaces, or assist in industrial process needs. Solar thermal collectors have many uses, one of the most popular being pool heating in the United States. Solar hot water heating is dominated by China, which was home to 67 per cent of existing capacity, and 80 per cent of new capacity added in 2008; Turkey, Japan, and Germany came next (see Figure 2.10). 5.2 Biomass Biomass cogeneration plants, which tend to produce large amounts of heat along with small amounts of electricity as a by-product, are much more efficient than conventional sources of supply that tend to produce only heat or electricity. In 2005, such cogeneration systems provided more than 10 per cent of the heat-related needs of Austria, Denmark, Finland, and Sweden (see Figure 2.11). 5.3 Geothermal Geothermal heating has a wide variety of applications and configurations, from space heating and horticulture, to melting snow, bathing and swimming, and aquaculture. One type, the geothermal heat pump, uses low-grade heat in the earth to provide heat in the winter, and to act as a heat sink in the summer, using conventional vapour compression and underground piping systems that also provide cooling. Top producers of geothermal energy use were China, Sweden, and the United States in 2005 (see Figure 2.12). 6. CONCLUSION The renewable energy market has grown by leaps and bounds over the past few years. Renewable energy systems and the markets they create, collectively, have four sets of advantages underpinning their growth. First, renewable energy technologies are modular and flexible: solar panels, wind turbines, geothermal heat pumps, and biomass plants can operate in centralized configurations (for power supply and/or district heating, and combined heat and power) or in smaller decentralized configurations (such as smaller wind farms, solar panels integrated into homes and buildings, or heat pumps). Heat pumps, solar panels, and solar thermal devices can operate on diverse scales of heating in active/passive and grid-connected/off-grid modes. Second, they have security benefits by reducing the exposure of households, businesses,

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Total capacity (GWth)

Figure 2.10 Total Capacity of Solar Thermal Water Heaters, 2005

0.6 1 1.5 2 6 7 8 9 10 13 23 24 45 46 48 54 56 64 74 84 100 141 159 168 200 210 215 230 258 362 548 557 576 875 998 1,192 1,554 1,690 1,890 2,133

Estonia Namibia Lithuania Latvia Ireland Finland Norway Luxembourg Macedonia Malta Albania Hungary Slovak Rep. Czech Rep. Belgium Barbados Canada New Zealand Slovenia Poland Tunisia United Kingdom Sweden South Africa Portugal Mexico The Netherlands Denmark Switzerland Italy Cyprus Spain France* India Taiwan Australia United States Austria Brazil Greece Israel Germany Japan Turkey China

3,346 4,655 4,899

6,300

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0

1

2

3

4

5

6

7

8

9

10

52,500

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Source: International Energy Agency, Renewables for Heating and Cooling (Paris: International Energy Agency, 2007), p. 46.

33

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N

ds

Source: International Energy Agency, Renewables for Heating and Cooling (Paris: International Energy Agency, 2007), p. 50.

e Th

he et

n rla

Figure 2.11 Solid Biomass Share in Large Heat Production of Industrialized Countries, 2005

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100

1 4/18/11, 3:31 PM

Source: International Energy Agency, Renewables for Heating and Cooling (Paris: International Energy Agency, 2007), p. 52.

Kenya Thailand Vietnam Ecuador Ireland Ukraine Chile Rep. of Korea Mongolia Tunisia Colombia Spain Portugal Belgium Lithuania Greece Macedonia Argentina Croatia The Netherlands Slovenia Iran Poland Czech Rep. Jordan India Bulgaria Mexico Finland Israel Austria Serbia Algeria Canada Romania Germany Australia Slovak Rep. Norway Switzerland Denmark France Russia Georgia Brazil New Zealand Italy Hungary Japan Iceland Turkey United States Sweden China

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Utilization (TJ/year)

Figure 2.12 Annual Utilization of Geothermal Heat by Country

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Benjamin K. Sovacool

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utilities, and countries to disruptions in supply and sudden changes in the price of natural gas, petroleum, and other fuels. Many renewable systems also run a lower risk of technical system failures, and when used on-site or close to the point of consumption, reduce the risk of outages and interruptions. Third, some combination of hydro, wind, solar, biomass, geothermal, and biofuel resources exist in abundant amounts in every country, unlike conventional fuel sources, which are highly concentrated in a few key locations. Fourth, systems based on such resources are already cheaper than conventional alternatives in regional markets. Wind electricity is cheaper than conventional sources in some parts of Europe and North America. Hydroelectric power is cheaper than alternatives in many parts of Africa, Asia, and South America. Solar heat is cheaper than electricity in Denmark and the Netherlands and comparable to electricity in Austria, Germany, and Italy. Geothermal is cost competitive in dozens of countries.26 As Galbraith noted, predicting the future is always uncertain. However, as investors around the world come to appreciate these advantages and understand the true potential behind renewable resources, renewables will likely come to constitute a greater percentage of energy supply and use as time progresses. NOTES 1 Cristina L. Archer and Mark Z. Jacobson, “Evaluation of Global Wind Power”, Journal of Geophysical Research 110 (2005): 1–20. 2 Ibid. 3 Benjamin K. Sovacool and Charmaine Watts, “Going Completely Renewable: Is it Possible (Let Alone Desirable)?”, Electricity Journal 22, no. 4 (May 2009): 95–111. 4 REN21 (Renewable Energy Policy Network for the 21st Century), Renewables Global Status Report: 2009 Update (Washington, D.C.: REN21, 2009). 5 Ingvar B. Fridleifsson et al., “The Possible Role and Contribution of Geothermal Energy to the Mitigation of Climate Change”, in IPCC Scoping Meeting on Renewable Energy Sources, edited by O. Hohmeyer and T. Trittin (Luebeck, Germany: IPCC Geothermal, January 2008). 6 REN21 (Renewable Energy Policy Network for the 21st Century), op. cit. 7 Amory B. Lovins, “Does a Big Economy Need Big Power Plants?”, New York Times Freakonomics Guest Post, 9 February 2009. 8 Amory B. Lovins, “Preface to the Chinese Edition of Winning the Oil Endgame”, 29 February 2008. 9 John Burges, “Renewable Energy in Florida: Why Solar Makes Sense”, Energy Investor, 24 March 2008. 10 Global Wind Energy Council, Global Wind Energy Outlook 2008 (Brussels: GWEC, October 2008).

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11 Amory B. Lovins, Imran Sheikh, and Alex Markevich, “Forget Nuclear”, Rocky Mountain Institute Solutions 24, no. 1 (Spring 2008): 23–27. 12 Mark Bolinger and Ryan Wiser, “Wind Power Price Trends in the United States: Struggling to Remain Competitive in the Face of Strong Growth”, Energy Policy 37 (2009): 1061–71. 13 See “Technological Learning” section of Benjamin Sovacool’s The Dirty Energy Dilemma: What’s Blocking Clean Power in the United States (Westport, Conn.: Praeger Publishers, 2008), pp. 89–92. 14 Fabrizio Donini Ferretti, “Financing Photovoltaic Energy: More Expertise and Transparency are Needed”, in Renewable Energy Finance Review 2007/08, edited by Michaela Crisell (London: Euromoney Yearbooks, 2007), pp. 10–15. 15 European Photovoltaic Industry Association, Global Market Outlook for Photovoltaics by 2013 (Brussels: EPIA, April 2009). 16 REN21, 2009. 17 Mark Bolinger, Financing Non-Residential Photovoltaic Projects: Options and Implications (Berkeley: Lawrence Berkeley National Laboratory, January 2009). 18 Ryan Wiser, Galen Barbose, and Carla Peterman, Tracking the Sun: The Installed Cost of Solar Photovoltaics in the United States from 1998 to 2007 (Berkeley: Lawrence Berkeley National Laboratory, February 2009). 19 Vasilis Fthenakis et al., “The Technical, Geographical, and Economic Feasibility for Solar Energy to Supply the Energy Needs of the US”, Energy Policy 37 (2009): 387–99. 20 Lea Kosnik, “The Potential of Water Power in the Fight Against Global Warming in the US”, Energy Policy 36 (2008): 3252–65. 21 Ingvar B. Fridleifsson et al., “The Possible Role and Contribution of Geothermal Energy to the Mitigation of Climate Change”, op. cit. 22 Ibid. 23 Jefferson Tester et al., The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems on the United States in the 21st Century (Cambridge: MIT, 2006). 24 Samantha Olz, Ralph Sims, and Nicolai Kirchner, “Contribution of Renewables to Energy Security”. International Energy Agency Information Paper (Paris: OECD/IEA, April 2007). 25 International Energy Agency, Renewables for Heating and Cooling (Paris: OECD/ IEA, 2007). 26 Samantha Olz, Ralph Sims, and Nicolai Kirchner, op. cit. REFERENCES Archer, Cristina L. and Mark Z. Jacobson. “Evaluation of Global Wind Power”. Journal of Geophysical Research 110 (2005): 1–20. Bolinger, Mark. Financing Non-Residential Photovoltaic Projects: Options and Implications. Berkeley: Lawrence Berkeley National Laboratory, January 2009.

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Bolinger, Mark and Ryan Wiser. “Wind Power Price Trends in the United States: Struggling to Remain Competitive in the Face of Strong Growth”. Energy Policy 37 (2009): 1061–71. Burges, John. “Renewable Energy in Florida: Why Solar Makes Sense”. Energy Investor, 24 March 2008. European Photovoltaic Industry Association. Global Market Outlook for Photovoltaics by 2013. Brussels: EPIA, April 2009. Ferretti, Fabrizio Donini. “Financing Photovoltaic Energy: More Expertise and Transparency are Needed”. In Renewable Energy Finance Review 2007/08, edited by Michaela Crisell. London: Euromoney Yearbooks, 2007. Fridleifsson, Ingvar B., et al. “The Possible Role and Contribution of Geothermal Energy to the Mitigation of Climate Change”. In IPCC Scoping Meeting on Renewable Energy Sources, edited by O. Hohmeyer and T. Trittin. Luebeck, Germany: IPCC Geothermal, January 2008. Fthenakis, Vasilis, et al. “The Technical, Geographical, and Economic Feasibility for Solar Energy to Supply the Energy Needs of the US”. Energy Policy 37 (2009): 387–99. Global Wind Energy Council. Global Wind Energy Outlook 2008. Brussels: GWEC, October 2008. International Energy Agency. Renewables for Heating and Cooling. Paris: OECD/IEA, 2007. Kosnik, Lea. “The Potential of Water Power in the Fight Against Global Warming in the US”. Energy Policy 36 (2008): 3252–65. Lovins, Amory B. “Does a Big Economy Need Big Power Plants?”. New York Times Freakonomics Guest Post, 9 February 2009. ———. “Preface to the Chinese Edition of Winning the Oil Endgame”, 29 February 2008. Lovins, Amory B., Imran Sheikh, and Alex Markevich. “Forget Nuclear”. Rocky Mountain Institute Solutions 24, no. 1 (Spring 2008): 23–27. Olz, Samantha, Ralph Sims, and Nicolai Kirchner. “Contribution of Renewables to Energy Security”. International Energy Agency Information Paper. Paris: OECD/ IEA, April 2007. REN21 (Renewable Energy Policy Network for the 21st Century). Renewables Global Status Report: 2009 Update. Washington, D.C.: REN21, 2009. Sovacool, Benjamin K. The Dirty Energy Dilemma: What’s Blocking Clean Power in the United States. Westport, Conn.: Praeger Publishers, 2008. Sovacool, Benjamin K. and Charmaine Watts. “Going Completely Renewable: Is it Possible (Let Alone Desirable)?” Electricity Journal 22, no. 4 (May 2009): 95–111. Tester, Jefferson, et al. The Future of Geothermal Energy: Impact of Enhanced Geothermal Systems on the United States in the 21st Century. Cambridge: MIT, 2006. Wiser, Ryan, Galen Barbose, and Carla Peterman. Tracking the Sun: The Installed Cost of Solar Photovoltaics in the United States from 1998 to 2007. Berkeley: Lawrence Berkeley National Laboratory, February 2009.

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3

RESOURCE MUTUALISM OR CODEPENDENCE? THE WATERENERGY NEXUS IN ASIA Anthony Louis D’Agostino

1. INTRODUCTION Traditional interpretations of energy security have centred on supply-side issues of fuel availability, supplier reliability, import dependence, price, and political stability, and have only recently considered the role of social impacts and environmental acceptability. Still absent is an articulation of vulnerabilities caused by non-energy inputs. Nuclear plants cannot generate electricity without fissile material or without sufficient volumes of cooling water. Likewise with water security, as groundwater and surface water resources are stretched to their limits across ever more regions and climate change induces heightened precipitation variability, water sector efforts have shifted in focus from supply to demand, and from development to management.1 Given that water serves as a key input in exploiting many energy sources and that water is ineluctably dependent on energy, parochial notions of “water security” and “energy security” merit rewriting. This water-energy nexus refers to the mutual dependence these two resources share, each impacting the ability to achieve security of the other.

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Since either resource supplies both direct and indirect inputs to the other in various stages of extraction, production, and distribution, changes in the quantity or quality of one inherently affect the other. For example, when heat waves rolled across Europe in 2003 and 2006, and through North America in 2006, power plant operators were forced to cut back generation because of insufficient cooling water. Hydroelectric plants were temporarily constrained by reduced river flows. Conversely, desalination’s growth as an energy-intensive solution to supplement freshwater supply demonstrates the bidirectionality of this relationship: that the water sector relies on the energy sector as well. The nexus stipulates inherent trade-offs involved in expanding the resource capacity of either — trade-offs that may be costly in some settings, negligible in others, and perhaps entirely avoidable with integrated planning measures.2 However, despite the breadth of intersections captured in Table 3.1, policies have more often than not ignored these intersectoral dependencies. This chapter therefore aims to provide an inexhaustive overview of the water-energy nexus, with an emphasis on the intersection points considered to be of greatest consequence for Asia.3 Key areas include desalination, groundwater abstraction, thermoelectric cooling, and biofuels production — areas that will likely force difficult policymaking and resource allocations in a region whose exponential growth in population and affluence exert an even greater toll on a finite resource base.

Table 3.1 Water-Energy Intersections Energy for Water ■

■ ■

Water movement • Groundwater pumping • Water lifting/conveyance • Water diversions (surface water, groundwater) Water treatment (raw, wastewater) Desalination

Water for Energy ■

■

■

Power sector • Condenser cooling • Hydroelectricity • Mining fuels • Fuel production • Emission controls Biofuel crops • Crop irrigation • Feedstock processing Mining ores

Sources: Torkil Jonch Clausen, “Water for Energy: Energy for Water”, presented at the 5th World Water Forum, Istanbul, Turkey, 16–22 March 2009; and Peter H. Gleick, “Water and Energy”, Annual Review of Energy and Environment 19 (November 1994): 267–99.

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A brief overview of water resources and energy use in Asia is presented in Section 2. Section 3 offers an overview of how energy resources are used in the delivery of water services. In Section 4, the water requirements embedded in energy resources are investigated. Section 5 follows with concluding observations. 2. OVERVIEW OF WATER AND ENERGY IN ASIA 2.1 Water Resources With an immense range in latitude, stretching from parts of Indonesia and East Timor at 10°S, up to China’s Heilongjiang Province at 53°N, Asia’s Map 3.1 Total Renewable Water Resources Per Capita

Source: Reproduced with kind permission of Geoffrey Pakiam (map generated from ).

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precipitation levels and per capita freshwater resources are remarkably diverse as seen in Table 3.2.4 Of particular interest are the countries with per capita renewable water resources under 1,700 m3, the threshold for water scarcity used by the popular Falkenmark indicator, one measure of water availability. Furthermore, national-level data offer little insight into subnational variation. For example, two of the wettest places on earth are found in India’s Cherrapunjee and Mawsynram, each with annual rainfall of nearly 11 metres. At a comparable latitude, Western Rajasthan receives less than 100 millimetres (mm) per year. China’s size and geographical diversity place it in a similar position. Much of Xinjiang Province and the

Table 3.2 Water Resource Availability and Withdrawal Across Asia

Bangladesh Bhutan Brunei Darussalam Cambodia China Democratic People’s Republic of Korea India Indonesia Japan Lao People’s Democratic Republic Malaysia Maldives Mongolia Myanmar Nepal Pakistan The Philippines Republic of Korea Singapore Sri Lanka Thailand Vietnam

Total renewable water resources per capita (m3/inhab/yr)1

Total water withdrawal per capita (m3/inhab/yr)2

Average precipitation, 1960–2008 (mm/yr)

7,761* 146,432 22,254 33,537* 2,130*

548 719 297 (1997)# 308 486

2,666 2,200 2,722 1,904 N/A

3,254* 1,647 12,400 3,361 57,914* 22,211* 100 13,361* 21,613* 7,605* 1,400* 5,553 1,451* 137 2,603* 6,462* 10,338

388 597 381 694 555 372 17 (1987)# 175 711 399 1,129 359 393 82 (1977)# 668 1,412 877

1,054 1,083 2,702 1,668 1,834 2,875 1,972 241 2,091 1,500 494 2,348 1,274 2,497 1,712 1,622 1,821

Notes: *: FAO estimate; #: actual data; 1: all data from 2007; 2: all data from 2002 and modelled unless otherwise specified Source: Self-generated, based on data from FAO Aquastat 2009.

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Tibet Autonomous Region receive less than 50 mm of annual precipitation, whereas the coastal provinces of Hainan and Fujian receive more than 1,600 mm.5 China also suffers from spatial mismatch between where populations are concentrated, and where freshwater is available. This has led to a situation where almost half of all Chinese cities face water shortages, and about one sixth suffers from severe water shortages.6 More than twenty million people in rural areas lack sufficient drinking water supplies.7 Plans have been drawn to correct this mismatch through water diversion programmes, most notably, the South-North Water Diversion Project, but doing so may impose hardships on the energy sector. To implement three separate water transfer projects, some 48 billion m3 of water will be diverted each year from the water-rich Yangtze to northern Beijing, Tianjin, and the Yellow River. One of the proposed diversion routes for the Western Route Project would require lifting water from the Zumuzu River 458 metres, with annual electricity demand estimated at 7.1 billion kWh.8 2.2 Energy Demand Continued population and economic growth, coupled with rapid urbanization, will further drive primary and secondary energy demand. Figure 3.1 shows projected electricity consumption through 2030, with India and China maintaining annual growth in excess of 4.5 per cent. Similarly, in the transportation sector, because of both rising incomes and the projected addition of 1.1 billion people to the region by 2050, oil demand will continue rising.9 In China and India, oil demand growth is forecast to exceed 3.5 per cent through 2030, with an Asia-wide growth rate of 3.0 per cent. In comparison, OECD countries will experience relatively little growth in electricity demand, with anticipated contraction of oil demand over the next couple decades, caused by rising energy prices, improved fuel efficiency, and a shift towards non-conventional fuels.10 3. ENERGY REQUIRED BY THE WATER SECTOR Energy is required at every phase of the water resource cycle, from withdrawal to filtration, treatment, and delivery, up through to the recovery of wastewater. The amount of energy needed to drive these processes is locally determined by topography, water quality, climate, and equipment efficiency. Cross-country comparative analysis of energy demand in the water sector is limited by the small number of agencies that have conducted energy audits. The United States, where significant work in this field has been undertaken by government and non-government agencies, provides a guideline for how

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Final electricity consumption in Reference Scenario (TWh)

Asia 1980 2000

Japan 2006

China

India

2015

2030

Source: Self-generated, based on data from IEA (International Energy Agency) 2008.

0

0%

1%

2%

4,000

2,000

3%

5%

6,000

0.7%

4.5%

6%

4%

4.4%

5.6%

8,000

10,000

12,000

Figure 3.1 Final Electricity Consumption Forecasts, 2006–30

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2006-2030 Forecast Growth Rate

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large this issue is, with a study indicating that 4 per cent of the country’s total electricity consumption is spent in moving and treating water and wastewater.11 California’s water sector consumes more than 10 per cent of the state’s energy (26,000 gigawatt-hours) according to a 2001 study (if irrigation is included, it may account for another 6,000 GWh).12 After including residential and commercial end uses, such as heating water for showers, dishwashers, and water lost to leaks, this value climbs to 13 per cent of national electricity demand.13 Water location plays a key role. Energy requirements for accessing groundwater are inversely related to water levels. Populations reliant on glacial melt for drinking water and irrigation, such as those in the Hindu Kush-Himalayan region, benefit from gravity-fed water, which minimizes conveyance requirements.14 In comparison, Asian megacities such as Jakarta, Kolkata, and Manila source at least 25 per cent of their freshwater supply from groundwater. If groundwater aquifers are depleted or polluted, then other supplies must be secured, which will likely be more energy-intensive. Gleick discusses several diversion projects in the United States, which, if completed, would consume electricity on a scale of tens of millions of MWh per year.15 However, this intersection also presents opportunities, especially for oil-rich countries able to leverage energy supplies to remedy water deficits — 40 per cent of municipal and industrial water in the Persian Gulf countries is produced through desalination.16 While the cost of desalination has steadily declined, concerns remain about its energy intensiveness and potential contribution to climate change. Another such opportunity exists in agriculture, where South Asian farmers have been using mechanical pumps for decades to extract groundwater in locations with inadequate or inaccessible surface water. However, unsustainable withdrawal levels, aided by underpriced or non-existent electricity tariffs, have led to over-exploitation in some parts, and a recreation of the tragedy of the commons. This is a dilemma arising from individuals pursuing their national interests in extracting resources from a common pool. Without coordination, this can eventually lead to depletion or a collapse of the resource. Often cited examples include over-fishing and deforestation. 3.1 Energy for Desalination The first historical accounts of desalination date back to seventeenth centurymaritime England, though its practice is widely believed to have originated in ancient Greece through simple evaporation-condensation.17 In the several

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hundred years since, desalination methods have diversified, becoming more energy efficient and cost-effective. As a result, desalination capacity has experienced exponential growth since the 1960s and now generates enough water which, if used exclusively by the domestic sector, could satisfy the needs of more than 260 million people using it at the rate of 200 litres per capita/day. Desalination technologies fit into two broad categories: thermal distillation and membrane filtration. In the former, water is thermodynamically brought to its boiling point and then condensed as fresh water primarily through three methods.18 In multistage flash distillation (MSF), bulk liquid is rapidly evaporated across a succession of “stages” of lower temperature and pressure, using heat recovery from the condensate to warm incoming tubes of feedwater. MSF plants greatly benefit from economies of scale and therefore are typically used in high-capacity settings. Through multi-effect distillation (MED), intake water is boiled in successive chambers of varying pressure, reusing the vapour heat from one “effect” to heat the brine liquid in the next. MED had been the most widely used thermal distillation technology before the rise of MSF. Lastly, vapour compression (VC), which maintains a market share based primarily in small-medium applications of 250–2,500 m3/day, uses a low pressure environment to lower the boiling point, and compresses vapour to heat the feedwater, instead of relying on boiled steam.19,20 The two major membrane technologies, reverse osmosis (RO) and electrodialysis (ED) comprise almost two thirds of contracted plant capacity (see Figure 3.2). In an RO system, feedwater is forced through a semipermeable membrane at a pressure exceeding the osmotic pressure leaving behind salts and other solutes. Since osmotic pressure is determined by salt concentration, feedwater of higher salinity requires higher pressures and hence more energy to overcome the osmotic potential. Unsurprisingly, RO is more cost-effective at lower salinities, such as that of brackish water, which may be desalted at about half the cost of seawater as seen in Figure 3.3.21 Saltwater remains the predominant feedwater for desalination plants of all technologies, with a 62 per cent market share by installed capacity, compared with brackish water with 19 per cent.22 Electrodialysis plants pass an electrical current through water to cause ion separation at either a cation- or anionspecific membrane. Similar to RO systems, energy requirements in ED plants vary with salinity. Worldwide, nearly 14,000 desalination plants are in operation or under contract, with a total production capacity exceeding 52 million m3 per day (m3/d). Plant capacity varies dramatically from village-sized photovoltaicpowered units of 25 m3/d like in Boujrain of Morocco, which satisfies the

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Figure 3.2 Contracted Global Desalination Capacity by Technology Electrodialysis 4%

Other 1%

Multi-effect distillation 9%

Multi-stage flash 27%

Reverse Osmosis 59%

Source: Self-generated, based on data from [26] GWI/IDA (Global Water Intelligence/ International Desalination Association), 2008.

personal and livestock needs of 100 households, to the forthcoming Carlsbad, California plant with a production capacity of nearly 190,000 m3/d.23 Expected to begin operations in 2011, this US$300-million plant will annually consume nearly 275,000 MWh of electricity and supply drinking water to 300,000 people — about 7 per cent of San Diego County.24 China and Japan possess the largest generating capacity in the region, at 4 per cent (2.3 million m3/d) and 2 per cent (1.5 million m3/d) of world capacity respectively.25 India lags far behind with a total brackish and seawater capacity of 500,000 m3/d.26 According to a 2004 market estimate, India and China are expected to install 650,000 m3/d of capacity before 2015, a small share if the average annual global growth from the last several years remains at 3 million m3/d of capacity.27 This share would expectedly grow if desalination costs continue their downward trend and can maintain competitiveness with other demand-side management or supply-side options such as wastewater recycling, groundwater abstraction, and catchment expansion. Zhou and Tol chart the cost of MSF desalination from 1955 to 2000 and project an average cost of $0.3/m3 in 2025.28 Current literature indicates a cost range, based on MSF plant size and other characteristics, from $0.52 to $1.75/m3.29

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