Types of Energy

Comprises of radiant waves of various lengths;

Electromagnetic ultraviolet light, visible light, infrared, x-rays, radio
waves
Energy through movements of electrons. Can
Electrical generate other forms of energy including heat, light,
magnetism
Energy of Motion
Thermal Heat energy

Kinetic Energy in an object which is moving; flowing water,

Motion blowing wind (natural) or spinning shafts/swinging
pendulum (mechanical)

Energy moving as compression or vibration in a wave

Sound/Wave through mediums such as air or water
Energy

Originates in the bonds within every atom

Nuclear
Stored Energy

Gravitational Higher/massive objects have more potential

Potential gravitational energy

Energy found in the bonds between atoms and

Chemical molecules; can be harnessed by forming or breaking
these bonds

Found in physical properties of springs and polymers;

Elastic they can hold energy in tension till they regain natural
shape
 Sources of Energy

Primary Sources of Energy These exist and are available in Nature.

1. Biomass
2. Fossil Fuel (Coal, Oil, Natural Gas)
3. Nuclear
4. Hydropower 1. Renewable (replenished constantly by nature – solar, wind, hydro)
5. Tidal
6. Wind 2. Non-Renewable (limited through geological transformations over time
7. Geothermal such as coal, oil, natural gas
8. Solar
9. Animal

Secondary Sources of Energy

Primary sources of energy are moved and transformed into secondary energy – the form of energy that is not available in
primary form in the environment

1. Electricity
2. Refined fuels
3. Hydrogen
4. Synthetic fuels
Energy vs Power

• Power is a flow
• Rate of transformation of energy
• Joules per second (watt)
• Barrels of oil per day
• Liters/minute
• Horsepower
• Kilometers per hour

• Energy is a stock concept

• Volume of energy (Power x Time)
• Kilometers driven by a car (60km/h x 3 h = 180KM)
• Joules, kWh, TOE, BTU, Calories
? ?
Energy = Amount = Stock (Total GDP)
Power = Rate = Flow (GDP growth rate)
Watts / Kilowatts (KW): Measures for Power

Metric for electricity usage is watt (W)

• A watt is rate of electricity transformation, POWER, and is defined as Joules per Second (J/s)
• Electricity produced or consumed at a point in time

Watt-hour is a measure of the amount of electrical ENERGY

• Produced by a generator during a time interval (an hour, day, month etc.)
• Consumed by a light fixture, electrical appliance, motor etc. during a time interval

• Example – a 60 watt light bulb requires 60 watts to operate and it requires 60 watt hours to
operate for an hour

• 100watts Light Bulb, used for 10 hours = 1,000 Watt Hours = 1KWh = 1 Unit of Electricity
Power vs Energy: Graphical Depiction

Load Curve
25
KW

20 Power: at any point in time, depicted

by the line that plots load & hours

15

10
Energy: the multiplication of power
(height) and time (width); in other
5 words the area underneath the power
curve

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hours
Car – KM/Hour vs Distance Travelled

KM/Hour
Load Curve
25

Speed (KM/Hour)
20

15

10

Total Distance Travelled (KM)

5

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Time
Energy (Electricity)

A 10watt bulb was used for 4 hours. How much energy was
consumed in KWh?

10w x 4h = 40wh/1000 = 0.04KWh

Energy (Electricity)

A 1.5Ton air conditioner used for 5 hours consumed 14kWh. How

much power does it consume?

14KWh/5h = 2.8KW
Energy (Electricity)

• Unit Price of Electricity = PKR 20/KWh

• Power of 1Ton AC = 1.2KW
• Usage everyday = 5 hours

Assuming same consumption pattern everyday of the month (30

days), how much is the cost of electricity for the month?

1.2 x 5 x 30 = 180KWh x PKR 20/KWh = PKR 3,600

Energy X cost of energy
Energy (Electricity)

• The electricity bill informs the consumer about the

“Energy” consumed and applies the tariff (cost/unit of
energy)

• Most domestic and small scale consumers only pay for

the energy charges

• Large scale consumers also get charged for the “Power”

they use
Electricity Cost

There are two components of an electricity bill:

1. Variable Charges (volumetric): Variable charge is unit price of electricity which is given as
PKR per kWh (c/kWh, $/kWh). More units consumed from the grid will result in more
electricity costs. Variable charge varies based on the type of customer (residential,
commercial, industrial, agriculture) as well as based on how many units are consumed during
a month (higher consumption has a higher rate)

2. Demand Charges (Power): Demand charges basically apply to a facility’s power consumption.
This rate is applied to the maximum Kilowatt (KW) used by a facility in a given month. This is
mostly applied to large/bulk consumers like commercial and industrial consumers.
Variable Cost & Demand Charges Explained

Load Curve
25 Demand Charge
(applied on the peak)
20

15

10

Area under the curve:

0
Variable Charges applied to
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 this area
Tariff: K-Electric

Demand Charges
MW, GW, TW

Metric X 1000 (Resulting Metric) Examples

1 Watt 1Kilowatt (KW) Appliances, machinery
1KW 1Megawatt (MW) Power Plants
1MW 1Giga-Watt (GW) Country Capacity
1GW 1TeraWatt (TW) Large countries

• Large power plants are in the MW range. 660MW Thar Coal Plant
• Rooftop Solar Plants (Industrial Scale) can be 1-2MW
• Multiple 50MW wind plants exist in Pakistan

• Pakistan’s total Installed Capacity is 33,554MW or 33.5GW

• Pakistan’s Annual Electricity Production in 2017-18 was 131,275 (GWh) or 131.2 (Terawatt
Hour)
BTU, Heat Rates and Efficiency

BTUs (British Thermal Units) is a measure of thermal energy (heat)

A typical coal plant needs 10,000 BTUs to make a kilowatt hour of electricity (there are 3,412 BTUs in a kilowatt
hour of electricity)
A coal plant with a “heat rate” of 10,000 BTU/kWh thus has an efficiency of 34.12%
{3,412/10,000 x 100}

In other words, 10,000BTUs based on its energy value and ideal conversion should have produced
2.93KWh of electricity (10,000/3412); but is only producing 1KWh.

A combined cycle gas turbine (CCGT) plant may need 7,000 BTUs to create a kilowatt hour of electricity
The efficiency is much better: 49% (3,412 / 7,000)

Heat rate is just another way of describing the efficiency of converting a fuel into electricity; the lower a heat
rate, the more efficient the plant

Hard to get heat rates below 7,000 (i.e., efficiencies greater than ~50%)
Measurement of Energy

• Units of energy can be various = watt-hours, joules, calories, barrels of oil, british thermal unit

(BTU)

• Each represents a fixed amount of energy available to do work

• Each unit of energy is interchangeable

 Energy Conversions

• TJ = TeraJoules
• Gcal = GigaCalories
• MTOE = Millions Tons of Oil Equivalent
• MBTU = 1000 BTU
• GWh = Gigawatt hour

• Tera = Trillion (12) Other useful conversions/measurements:

• Giga = Billion (9) 1. 1 Gallon = 3.78 Litre
• Mega = Million (6) 2. 1 Barrel of oil = 42 US Gallons = 158.9 Litres
• Kilo = Thousand (3) 3. MT = Metric Tons = 1000KG
• Hecto = Hundred (2)
• Deca = Ten (1)
Capacity Factors

Actual energy produced as a % of theoretical maximum that can be produced.

5KW plant can produce a maximum of 120KWh (energy) in a day {5KW x 24h}
If this 5KW power plant produced 70KWh its capacity factor is 58% {70/120}

Generally capacity factors for different power plants are calculated based on annual numbers.
Total hours in a year = 8760

Hence a 1MW plant that produces 3,000MWh in a year has a capacity factor of 3000/8760 = 34%

Capacity factors are determined by fuel availability, weather conditions, maintenance, breakdowns.

Solar based plants have a capacity factor of 17% while Fossil Fuel based plants are over 60%.
Capacity Factor

A 100MW plant operates at a capacity factor of 40%. How much

energy did it produce in a day?

100MW x 24h = 2400MWh x 40% = 960MWh

 Rates of Transformations & Stocks

In the entire energy system there are

multiple transformations taking place
between each system.

Stocks (Energy) can be counted; however

it is transformed (increased or decreased)
based on the rate of transformation (flow)

Stock Flow
Flow
Stock

https://www.visualcapitalist.com/u-s-energy-consumption-one-giant-diagram/
 Energy Transformation – Through the Energy Supply Chain
Discovery Storage & Further Final
Harvesting
transportation processing Consumption

Exploration Primary Purification Secondary

Natural energy Final Energy Final Energy
& Energy & Energy Distribution Devices
Resources Consumers services
Production Sources conversion Sources

Oil Fields Oil Rigs Crude Oil Oil Refinery CNG Petrol Stations Homes Phones Communication
Coal Deposits Coal Mines Natural Gas Gas Refinery Hi-Octane Transmission Offices Geysers Miles/KM
Gas Reserves Gas Rigs Coal Power Plants Electricity Gas pipelines Industry Appliances Cool Room

Energy is transformed through the entire supply chain – from a primary source of energy to final energy
services.

Throughout the supply chain there is a significant need for infrastructure to change the type and the
location of the energy.
4 Dimensions of Energy Transformation
All transformations throughout the supply chain can be described through the four dimensions:

1. What – This is about changing the form of energy (purification, processing, refining, low to high grade)

2. Where – Transporting energy to where it is required. Coal is mined in areas where there is no population,
brought to a generation plant, converter to electricity (“What” dimension) and then transported to people’s
homes. Solar and other distributed generation systems now place the “What” dimension closer to “Where”
(solar on people’s rooftop)

3. When – Energy is required at specific times. It is not necessary that energy is demanded when its available.
Hence infrastructure for storage is required.

4. How Certain – Not all energy sources are available at the time and place desired. The “Intermittency” of
renewables; demand uncertainties

Goods & Services can only be compared to each other if they are identical in their What, Where, When and How
Certain
The Electricity Grid
 History
1752 – Ben Franklin tied a key onto a kite during a storm to show static electricity and lightning were same
1800 – Alessandro Volta created the first battery cell. “Volt” became a standard for batteries/energy
1821 – Micheal Faraday invented the first electric motor
1879 – Thomas Edison created the incandescent light bulb
1882 – Pearl Street Power Station was opened in New York by Edison.
1883 – Nikola Tesla invented the “Tesla Coil” – changed electricity from low voltage to high voltage
Battle of the Currents: Edison vs Tesla/Westinghouse. Nikola Tesla worked with businessman George
Westinghouse to create the Alternating Current (AC) system today. Edison’s system was based on Direct Current
(DC)
1888 – Tesla introduced the induction motor (one of the most important inventions – AC Motor – which is the
major tool in modern industries and appliances)
1893 – Westinghouse Electric Company used AC system to light Chicago World’s Fair

Most (almost all) electricity systems are AC these days however appliances like LEDs, Solar Cells and EVs run on
DC power.
https://www.thehistoricalarchive.com/happenings/57/the-history-of-electricity-a-timeline/

https://www.need.org/Files/curriculum/infobook/Elec3I.pdf
Recommendation
The Electricity System

• System Components
• Generation
• Conventional fuels, renewables
• Transmission
• Electricity transportation, infrastructure
• Distribution
• End user

• System Constraints
• T&D Losses around 20%
• Expensive & complex grid which may not feasibly
reach remote/isolated areas

• The electricity “grid” is a bundle of services that ensures electricity reaches the final consumer

• The Grid does not have a single market structure everywhere and has varying levels of operating models
 The Electricity Grid: System Components

132KV, 220KV, 500KV

Primary Energy Energy Energy

Transformation Transportation Consumption

https://www.researchgate.net/figure/Electric-Power-Generation-Transmission-and-Distribution-Network-in-Ghana_fig2_249649269
4 Dimensions of Energy Transformation
All transformations throughout the supply chain can be described through the four dimensions:

1. What – This is about changing the form of energy (purification, processing, refining, low to high grade)
2. Where – Transporting energy to where it is required. Coal is mined in areas where there is no population,
brought to a generation plant, converter to electricity (“What” dimension) and then transported to people’s
homes. Solar and other distributed generation systems now place the “What” dimension closer to “Where”
(solar on people’s rooftop)

3. When – Energy is required at specific times. It is not necessary that energy is demanded when its available.
Hence infrastructure for storage is required and/or the ability to make available when required.

4. How Certain – Not all energy sources are available at the time and place desired. The “Intermittency” of
renewables; demand uncertainties

Electricity Grid has all four transformation dimensions.

The Electricity Grid Services (The “What”)

1. BTU to KWh: changing the primary energy source to electricity

2. Frequency: 50Hz in Europe/Asia (60Hz in USA)

3. Voltage: Varying the voltages throughout the system

4. Current: Alternating between DC to AC

5. Volume: The total amount of energy & power required changes

Spatial Issues (The Where)
The Grid is an interconnected network of
transmission lines.

It can transport electricity over the vast

geographical distance with relatively low cost
(through transmission and distribution lines)

Electricity transmission & the grid replaced the

need for transporting fossil fuels to the customer’s
homes.

Generation plants that combust energy close to

fuel source, such as at mine mouths, ensured that
the fuel is transported through wires in the form of
electricity (since wires are cheaper than
roads/rails.
Load Matching: Supply & Demand (When)

Grid has
varying load
based on time
of the
day/month.

https://energy-charts.de/power.htm
 Load Matching: Supply & Demand (When)

Load Variability & Matching: The amount of electricity

demanded (load) varies at any given point in the day, month
and year. The total load can be seen as the top line. The Grid
operators need to “balance” this fluctuating demand with
supply. Given these varying loads, the grid operator
“dispatches” available supply from the various technologies
available that generate electricity

Base Load: The base load is the load that is always being
demanded, generally found as the lowest point on the load
demand curve.
Intermediate Load: The middle load between base and peak
load; provided by generation

Peak Load: Peak load is the highest point of electricity

demand. All grid operators need to have enough capacity to
meet the peak load which would mean that at any point in
time there will be generators sitting idle just to be called
whenever demanded.
https://www.e-education.psu.edu/eme807/node/667
Re-Plugging Capacity Factors

Since the load (demand) varies, the grid operator needs to

rely on generation to be dispatched when required.

Capacity factors give an indication on which plants are more

“dispatchable” – reliable to provide electricity when called
upon. CF determine the cost of electricity, influence
revenues for investors, and impacts the grid operator’s
supply reserves

Energy Conversion System Capacity Factor %

Since renewable power is dependent on variable fuel source
Nuclear power 90.3
(sunlight, wind), their dispatchability is limited. (You can’t
Coal 63.8
have solar power during evening peak times).
Natural gas 42.5
Hydroelectric 39.8 They system operator uses different sources of generation
Concentrating solar 33 (CA) based on their availability: for example using more solar
Wind 20-40 during daylight and more stable/available generators as
Photovoltaic solar 15-19 base load

https://www.e-education.psu.edu/eme807/node/667
Reliability: How Certain
Supply reliability (apart from adequacy) is an important part of the grid. Other technical features of the energy
grid are:

1. Frequency regulation: The frequency needs to be regulated and kept within a strict tolerance level in order
to ensure smooth supply.
2. Voltage Control: Voltages also need to be constantly maintained, real time, to ensure smooth supply
3. Spinning reserves: Additional generation capacity that can quickly substitute any major failures in the
generation or transmission network
4. Failure protection: Having the ability to restart the system without any external supply (Blackstart
capability)
5. System Planning: load demand projections and dispatch scheduling

https://energy-charts.de/power.htm
Power Outages & Load Management
REVENGE OF THE POWER GRID – Blackout in Manhattan, NY (July 2019)
“Saturday’s blackout was most likely caused by a disabled transformer at an area substation….. deferred
maintenance, increased demand, climate-change-driven weather calamities, and even the threat of cyberattack put
infrastructure at greater risk.”
https://www.theatlantic.com/technology/archive/2019/07/manhattan-blackout-reveals-infrastructure-risk/594025/

June heat wave revealed key capacity concerns – Washington (July 2019)
“A June heat wave showed that the California Independent System Operator is struggling to meet load levels that it
has easily met in the past, and the grid operator is working with state regulators to make sure enough capacity is
procured to avoid a shortfall”, according to the CEO of Cal-ISO.
https://www.spglobal.com/platts/en/market-insights/latest-news/electric-power/072519-june-heat-wave-revealed-
key-capacity-concerns-cal-iso-ceo

https://energy-charts.de/power.htm
 Electricity Characteristics

500KV, 220KV

• Just-in-time: energy is produced and consumed at the

same time. Hence supply must equal demand; any
imbalance will cause frequency/voltage issues and
blackouts

• Generation, Transmission & Distribution must be well

synced; any failure in one of the system can cascade
through the entire system

• This is real-time adjustment based on the electricity characteristics and just-in-time requirements

• Brownouts & blackouts can damage power plants, equipment and loss in revenue
Grid Losses

The grid has significant

losses in the entire supply
chain

Amory B. Lovings, “More Profit with Less Carbon.”

Electricity Losses in US Energy System

33% of
Primary
energy is
converted to
useful
electricity

Further losses
at the
consumption
level

https://www.visualcapitalist.com/u-s-energy-consumption-one-giant-diagram/
 Grid Losses Example

70,000
Generation Transmission Distribution Consumer
100,000 90,000 75,000

60,000 Billing

Commercial Loss (Non-

T&D Losses (Technical Loss) Technical Loss)

How much is the total T&D Loss in terms of percentage?

 KE Tariff Determination by NEPRA

The units out by one

department are the inputs to the
other department.

The losses are accounted for in

Tariff determinations. The
utility are “allowed” a certain
number of losses and given
benefit with an incentive to
reduce these losses.

https://nepra.org.pk/Tariff/KESC/2019/SRO%20576%20I%202019%2022-05-2019.pdf
 Grid Costs & Recovery – Regulated Utilities

Generation Transmission Distribution Consumers

Costs & Investment Costs & Investment Costs & Investment Pays for per unit of
1. Power plant 1. Transmission lines, 1. Distribution electricity that
infrastructure grid stations, infrastructure (wires, recovers the cost of
2. Fuel resource transformers transformers, Generation,
3. Maintenance 2. Maintenance substations, Transmission,
3. Extensions connections) Distribution
2. Maintenance
3. Recovery

End consumers pay an electricity “tariff” that reflects the investment cost and rate of return for investors. This
tariff is denoted by cost per KWh or cost per unit (PKR/Unit, Cents/Unit)
 Selling Price – Based on Cost Markup

You want to start a basic clothing business and want to determine your selling price. How would you do that?

Fixed Cost Variable Cost Rate of Return

Price: 90,000 Cost: 18,000/month Price: 100rs per shirt 25% Return
(Entrepreneur)

Variable cost is easy – you only buy your raw materials for the shirts you want to produce. And its easy to figure
out how much material (and hence cost) you incur for each shirt. But what about the fixed costs?
Selling Price – Based on Cost Markup

Fixed Cost

Spread the cost over the useful life.

Capital Cost: 30
Labor 72
Price: 90,000 Cost: 18,000/month Materials 100
Total Cost 202
Life: 5 Years Production: 10/day Add 25% margin 252.5
Shirts in lifetime: 3,000 Production in month: 250

Unit Cost: 30/Shirt Unit Cost: 72/Shirt

Investment and Cost Recovery

Basic principal for

recovering cost especially
for infrastructure has been
Cost of Service Recovery.

All the infrastructure costs,

variable fuel & operating
costs, transportation and
distribution costs along
with investors rate of return
are added. The Total
recoverable cost is then
spread over the units of
Travis Bradford, “The Energy System”, chapter 4 electricity being delivered to
customers.
 Investment and Cost Recovery
Rate Base: The capital cost of the infrastructure along
with working capital, inventory. Simple Example
Cost to put up a plant: 100Million
Allowed Return: As per Government policy, given to Allowed Return: 20 Million
investors/utilities as per the rate of return required Operating cost: 30 Million
Transmission Cost: 20 Million
Recoverable Rate Base Charges: this is the minimum Distribution Cost 10 Million
charge/cost even if the plant is not operational Total Cost: 180 Million

Fuel, Operating Expenses & Others: these are the Lifetime Units delivered to customer:
variable charges that are passed on to the consumers. 9,000,000 kWh
Any fuel price change is passed on as fuel adjustment.
Hence whenever oil becomes expensive electricity Cost per unit:
tariffs increase in Pakistan 180Million/9Million = 20rs/unit

Total recoverable costs: is the total cost associated with

making the electricity available to the customer which is
then recovered from the customers through the
electricity tariff.
 KE Tariff Determination by NEPRA

NEPRA establishes KE’s

generation capability: the
efficiency of plants, the
auxiliary load, the total installed
capacity

https://nepra.org.pk/Tariff/KESC/2019/SRO%20576%20I%202019%2022-05-2019.pdf
 KE Tariff Determination by NEPRA

Fuel prices are established +

inflation + O&M Costs. These
are regularly adjusted and
passed through to consumers.

T&D losses are incorporated

and decreased over time.

Average cost of recovery is

established including the
returns

https://nepra.org.pk/Tariff/KESC/2019/SRO%20576%20I%202019%2022-05-2019.pdf