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# Some Basic Concepts.ppt

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### Some Basic Concepts.ppt

1. 1. Some Basic Concepts UNIVERSITY of HOUSTON BAUER COLLEGE of BUSINESS ADMINISTRATION ENERGY INSTITUTE www.uh.edu/energyinstitute Econ 3385 – Economics of Energy S. G ürcan Gülen, Ph.D.
2. 2. Measuring Energy <ul><li>We measure: </li></ul><ul><ul><li>Crude oil in barrels (bbl) or tons (t) </li></ul></ul><ul><ul><li>Natural gas in cubic feet (cf) or cubic meters (cm) </li></ul></ul><ul><ul><li>Coal in tons </li></ul></ul><ul><ul><li>Electricity generation capacity in watts and generation & consumption in watthours </li></ul></ul><ul><ul><li>And, energy in barrels (or tons) of oil equivalent, or British thermal units (Btus), or joules (J), or calories (cal) </li></ul></ul>
3. 3. Measuring Energy <ul><li>Some conversion factors </li></ul><ul><ul><li>1 ton of oil = 7.33 barrels of oil </li></ul></ul><ul><ul><li>1 barrel = 42 gallons </li></ul></ul><ul><ul><li>1 gallon = 3.8 litres </li></ul></ul><ul><ul><li>1 cubic meter of gas = 35.3 cubic feet of gas = 0.00629 barrels of oil equivalent = 0.0009 tons of oil equivalent </li></ul></ul><ul><ul><li>1 terawatt = 1,000 gigawatts (= 1,000 megawatts (= 1,000 kilowatts)) </li></ul></ul>
4. 4. Measuring Energy <ul><li>Common unit that measures the “heat content” is Btu: </li></ul><ul><ul><li>The quantity of energy needed to raise the temperature of one pound of water by one degree Fahrenheit. </li></ul></ul><ul><ul><li>1 Btu = 1,055 Joules = 0.252 kilocalories </li></ul></ul><ul><ul><li>1 Joule = 0.00024 kilocalories </li></ul></ul><ul><ul><li>Therm = 1,000,000 Btus </li></ul></ul><ul><ul><li>Quad = 10 15 Btus </li></ul></ul>
5. 5. Measuring Energy <ul><li>Some examples </li></ul><ul><ul><li>1 barrel of oil  5.8 million Btus </li></ul></ul><ul><ul><li>1 cubic foot of gas  1,030 Btus </li></ul></ul><ul><ul><li>1 short ton of coal  14.6 – 26.8 million Btus </li></ul></ul><ul><ul><li>1 kWh of fossil-fuel generation  10,300 Btus </li></ul></ul><ul><ul><li>1 kWh of consumption  3,412 Btus </li></ul></ul><ul><li>Sources for further information </li></ul><ul><ul><li>www.eia.doe.gov (Annual Energy Review) </li></ul></ul><ul><ul><li>www.bp.com/worldenergy/calculator/main.htm </li></ul></ul>
6. 6. Measuring Energy <ul><li>1 cubic meter of gas = 35.3 cubic feet of gas = 0.00629 barrels of oil equivalent = 0.0009 tons of oil equivalent </li></ul><ul><ul><li>1 cubic meter of gas = 35.3 x 1,030 Btus = 36,359 Btus </li></ul></ul><ul><ul><li>36,359/5,800,000 = 0.00627 (boe) </li></ul></ul><ul><ul><li>0.00627/7.33 = 0.0009 (toe) </li></ul></ul>
7. 7. Energy Efficiency THERMAL Oil 4 Coal 13 Gas 4 Nuclear 6 Hydro 8 Other Combustion Heat and/or mechanical energy Generator system Photovoltaic Fuel Cell Electricity Input: 35 mboe/d Output: 11 mboe/d or 6,825 TWh/yr
8. 8. Energy Efficiency <ul><li>Output equivalency: </li></ul><ul><ul><li>11 mboe x 5.8 mBtus x 365 = 23,287 x 10 12 </li></ul></ul><ul><ul><li>1 TWh = 10 9 kWh = 3,412 x 10 9 Btus </li></ul></ul><ul><ul><li>23,287 x 10 12 / 3,412 x 10 9 = 6,825 TWh </li></ul></ul><ul><li>Efficiency </li></ul><ul><ul><li>Input: 35 mboe x 5.8 mBtus = 203 x 10 12 </li></ul></ul><ul><ul><li>Output: 11 mboe x 5.8 mBtus = 63.8 x 10 12 </li></ul></ul><ul><ul><li>Efficiency: 63.8 x 10 12 / 203 x 10 12 = 31.4% </li></ul></ul>
9. 9. Energy Efficiency <ul><li>Heat rate: 3,412 Btus / efficiency rate </li></ul><ul><ul><li>3,412 / .314 = 10,866 </li></ul></ul><ul><li>If you know cost of fuel and heat rate, you can calculate fuel cost per kWh </li></ul><ul><ul><li>If coal is \$30/t (or, \$30 per 20 mBtus), a plant with the above heat rate will generate 1 kWh at 0.016 \$/kWh or 1.6 ¢/kWh: </li></ul></ul><ul><ul><ul><li>(Heat rate/Btu content of 1t of coal) x Price of coal = (10,866/20,000,000) x 30 = 0.016 </li></ul></ul></ul>
10. 10. Energy Efficiency <ul><li>10,866 is very high and represent old technology; new combined-cycle gas plants have a heat rate of about 6,000. </li></ul><ul><ul><li>3,412/6,000 = .57 or 57% efficiency </li></ul></ul><ul><ul><li>Last year, natural gas was \$2.5 per 1,000 cf: (6,000/1,030,000) x 2.5 = 0.015 \$/kWh </li></ul></ul><ul><ul><li>This winter, natural gas was \$10 per 1,000 cf: 0.06 \$/kWh </li></ul></ul><ul><li>Note, however, that fuel cost is only part of generating electricity! ( www.eia.doe.gov/oiaf/kyoto/tbl16.html ) </li></ul>