Master Course of Energy Finance and

System Analysis

Energy System Models

CHAPTER1
Introduction

ZHANG Qi, PhD, Professor

Academy of Chinese Energy Strategy
China University of Petroleum at Beijing
E-Mail: zhangqi@cup.edu.cn
1
 Syllabus

 Chapter 1: Introduction of Energy System (4 hours)

 Chapter 2: Energy System Modeling and Analytical Approach (4 hours)

 Chapter 3: Energy System Model Programming (2 hours)

 Chapter 4: Energy System Analysis Models (6 hours)

 Energy Demand Estimation, Energy Supply Expansion Planning

 Supply-Demand Balance: TIMS, GCAM

 Project Presentation and Discussion (4 hours)

 Chapter 5: Energy Economics Models(8 hours)

 Energy-Environment-Economics: Oil, Gas, electricity,

 Energy Finance: Renewable, Oil, Gas,

 Project Presentation and Discussion (4 hours)

2
 In this chapter, you will learn

 Information and Regulations

 Review of Energy Types and

Technologies

3
Energy Systems

4
Energy Flow

5
World Population and Energy Consumption

6
Primary Energy Consumption per Capita

7
Per Capita GDP and Primary Energy
Consumption

8
The World’s Primary Energy Consumption

9
Primary energy consumption per capita 2014

Tonnes oil equivalent

BP Statistical Review of World Energy

2015
© BP p.l.c. 2015
10
Primary Energy Consumption in Major
Countries

11
 Electricity Consumption in Major
Countries

Source: IEA “ENERGY BALANCES OF OECD COUNTRIES (2013 Edition)” / “ENERGY BALANCES OF NON-OECD COUNTRIES (2013
Edition)” 12
Electricity Consumption per Capita in Major
Countries

13
Dependence on Imported Energy Sources in
Major Countries

14
Proven Reserves of Energy Resources

15
Fossil fuel reserves-to-production (R/P) ratios
at end 2014
Years

BP Statistical Review of World Energy

2015
© BP p.l.c. 2015
16
 World Energy Outlook

20000
18000
百万吨油当量(Mtoe)

16000
14000
12000
10000
8000
6000
4000
2000
0
1990 1995 2000 2005 2010 2013 2015e 2020e 2025e 2030e 2035e
美国 中国 其他国家/地区 全球

 In 2013, Energy consumption is 2.2 Toe per capita and 2900 Mtoe in China in
total; World total 13000 Mtoe . In 2035, China TPES will become more than
数据来源：BP世界能源展望2035
4500 Mtoe and world 18000 Mtoe. 。
17
Coal

18
 Coal
 Coal, the second source of primary energy (roughly
30%), is mostly used for power generation (over
40% of worldwide electricity is produced from coal).
In addition, It is also used in the production of over
70% of the world’s steel.
 Coal is abundant, affordable, easy to transport,
store and use, plus free of geopolitical tensions; all
these attributes made it very popular.
 On the other hand, pulverized coal plants are the
most carbon-intensive source of power generation,
and this is a real issue, as CO2 emissions need to be
dramatically and urgently reduced
19
 Coal Facts

 Total world coal production reached a record

level of 7822.8 Mt in 2013, or 0.4% more than in
2012.

20
 Coal reserves-to-production (R/P) ratios

Years
2014 by region History

BP Statistical Review of World Energy

2015
© BP p.l.c. 2015
21
 Distribution of proved coal reserves:
1994, 2004 and 2014

Source: World Energy Resources 2013 Survey, World Energy Council.

BP Statistical Review of World Energy
2015
© BP p.l.c. 2015
22
 Coal in today’s energy system
 The importance and implication of coal today
 Generates over 40% of electricity
 Can be important for economic & social development & energy security
 Produces almost 50% of CO2 emissions & is a key source of air pollution

 China is at the center of the coal world

 Responsible for 80% of rise in coal use since 2000 & now half global use
 Is world's top coal producer and – until recently – largest importer

 After a decade of growth, global coal use halted in 2014 and is

expected to decline in 2015
 Coal prices are at decade lows on a glut of supply & tepid demand
 The COP-21 Paris Agreement raises important questions for coal

23
 Coal prices to remain under pressure

 Global overcapacity & weaker than expected demand look set to

put further downward pressure on coal prices through to 2020
24
 Global coal demand by region

 Strong growth in coal use in India & Southeast Asia offset

declines in the EU & the US, but does not match the rise seen
over last decade in China
25
 Has coal use in China already peaked

 China’s coal use may have already peaked, reflecting the

gradual economic rebalancing & further growth in low-
carbon sources of power
26
 Responses to air pollution will shape
coal’s future

 While China is taking commendable steps to tackle the problem,

burning coal remains the major source of local air pollution in the
country
27
 Australia pushes ahead as the world’s
largest exporter

 The four largest exporters represent more than 80% of seaborne coal trade;
India overtakes China to become the world’s largest importer
28
 Summary of Coal Energy
 Coal will remain an important part of the global energy
mix through 2020, but faces big challenges:
 Shifts in the policy landscape post COP-21
 Rising concerns over pollution

 Coal demand in China might have already peaked, with

major implications for global energy & climate trends
 India & Southeast Asia are the new drivers of global coal
demand, as the fuel plays a role in their economic &
social development
 The long-term viability of the coal industry hinges on the
widespread uptake of clean technologies:
 Urgent need to phase-out inefficient subcritical coal plants
 Carbon capture & storage is a vital asset protection strategy

29
 Coal Power

Advanced Technologies:
Sub-critical PC Units, Large-Scale CFB, PC-SC,USC, IGCC
30 30
Lifecycle Assessment of CO2 Emissions
Intensity for Energy Sources

31
Environmental Issues

32
An affordable and reliable source of electricity

Source: IEA Projected Costs of Generating Electricity, 2010

33
Oil

34
 Oil includes crude oil, condensates, natural gas
liquids, refinery feedstocks and additives, other
hydrocarbons (including emulsified oils,
synthetic crude oil, mineral oils extracted from
bituminous minerals such as oil shale,
bituminous sand and oils from CTL and GTL) and
petroleum products (refinery gas, ethane, LPG,
aviation gasoline, motor gasoline, jet fuels,
kerosene, gas/diesel oil, heavy fuel oil, naphtha,
white spirit, lubricants, bitumen, paraffin waxes
and petroleum coke).

35
Oil production/consumption by region
Million barrels daily
Production by region Consumption by region

36
 Oil reserves-to-production (R/P) ratios

2015 by region History

37
Distribution of proved oil reserves: 1995, 2005
and 2015

38
World Oil Demand

39
Major Oil Trade Movement 2015
(Million Tonnes)

40
Crude oil prices 1861-2015

41
USA Oil Rig Count and WTI Price

42
 World oil demand growth slows

 Cools from 1.7%/yr in 2009-15 to 1.2%/yr in 2016-2021

43
 Upstream oil capex

 Drop of 17% in 2016 follows 24% reduction in 2015

44
 Chinese demand growth

 Economy slows and shifts from industry to

services
45
 Energy Investment
1.8 Trillion USD in 2015, 2.4% of GDP, 8% less than 2014 mainly from
upstream of Oil and Gas

Source: IEA, WEIO 2016

46
 Oil and Gas Investment

Source: IEA, WEIO 2016

47
 Rig Numbers

Source: IEA, WEIO 2016

48
 Oil gas companies with different types

Note: Investment figures are in 2015 dollars.

低油价考验以借贷融资为依托的美国页岩油产业，导致了该领域的一半以上投资下降。
Source: IEA, WEIO 2016
49
 Renewable Energy Investment

Source: IEA, WEIO 2016

50
 Total Investment

Oil gas sector still the biggest one 46% of total

Source: IEA, WEIO 2016

51
 Summery of Oil

 Global oil supply growth is plunging, as low

prices take their toll
 Iranleads OPEC gains over the forecast period
 Despite a near-term dip, US production rises to an all-
time high

 While global oil demand growth is slowing, oil

use crosses the symbolic 100 mb/d mark towards
the end of the decade

52
Natural gas

53
 Gas reserves-to-production (R/P) ratios Years

History
2015 by region

BP Statistical Review of World Energy 2016

54
Distribution of proved gas reserves:
1995, 2005 and 2015 （Percentage）

BP Statistical Review of World Energy 2016

55
 Gas production/consumption by region
Billion cubic metres

Production by region Consumption by region

BP Statistical Review of World Energy 2016

56
Gas consumption per capita 2015
Tonnes oil equivalent

BP Statistical Review of World Energy 2016

57
 Gas prices $/Mmbtu

BP Statistical Review of World Energy 2016

58
Major gas trade movements 2015
Trade flows worldwide (billion cubic metres)

BP Statistical Review of World Energy 2016

59
Natural gas expected to surpass coal in mix
of fuel

60
61
Shale Gas Production
Horizontal drilling
Hydraulic fracturing ['fræktʃərɪŋ]

62
 Natural gas plants are flexible both in technical and
economic terms, so they can react quickly to
demand peaks, and are ideally twinned with
intermittent renewable options such as wind power.
 Over the course of a month, various spikes in
demand have a sizeable knock-on effect on the cost
of delivering electricity, so having a source of energy
– namely gas – which can cope with these spikes is a
significant advantage.

63
 Combined Cycle Gas Turbine Power Plant

Advantages:
Clean
Compact
High efficiency
Fast startup shutdown
Low capital cost

Disadvantages: Hot Exhaust gas

High fuel cost 450-600 ○ C
Fossil fuel

64
Hydro Power

65
 Hydro Power

Advantages:
Clean
Free fuel cost
Low operation cost
Long lift-time

Disadvantages:
High capital cost
High geography
requirements
Inhabitant relocation
Impacts on ecological
environment

66 66
 Hydroelectricity consumption by region

Million tonnes oil equivalent

67
 Nuclear energy

BP Statistical Review of World Energy

2015
© BP p.l.c. 2015
68
 Nuclear fission is a mature technology that has been in use for
more than 50 years. The latest designs for nuclear power
plants build on this experience to offer enhanced safety and
performance, and are ready for wider deployment over the
next few years.
 There is great potential for new developments in nuclear
energy technology to enhance nuclear’s role in a sustainable
energy future.
 Nevertheless, important barriers to a rapid expansion of
nuclear energy remain. Governments need to set clear and
consistent policies on nuclear to encourage private sector
investment. Gaining greater public acceptance will also be key,
and this will be helped by early implementation of plans for
geological disposal of radioactive waste, as well as continued
safe and effective operation of nuclear plants.

69
Nuclear Power in The World

70
Nuclear Power Generation

71
 Installed Capacity of Nuclear Power in
China
increased
（10000Kwe）
（%）
3,000 核电装机容量 累计同比（%） 40.0
35.0
2,500
30.0
2,000
25.0
1,500 20.0
15.0
1,000
10.0
500
5.0
0 0.0
2007 2008 2009 2010 2011 2012 2013 2014 2015

数据来源：Wind资讯
72
Thermal Power Plant and Nuclear Power Plant

Advantages:
Clean
High energy density
Low fuel cost
Long life time
Enough resource

Disadvantages:
High capital cost
Nuclear accident
Radioactive
contamination

73
Nuclear Power Plant

• Two common reactor

types: Boiling Water
Reactor and Pressurized
Water Reactor.
• BWR: P=1000 psi
T=545F
• PWR P=2250 psi
T=600F
• PWR is most common
and is basis of marine
nuclear power.
74
 Boiling Water Reactor (BWR)

Containment Structure
•Referred to as the direct cycle.
Steam •Water is boiled directly in the
Control Generator reactor vessel and produces steam
Rods to turn the turbine.

•Steam is produced directly inside

Turbine the reactor and there is no need of a
separate steam generator.

•Steam from the rector goes directly

Generator

to the turbine to produce power.

Condenser •More effective in removing heat

Reactor Vessel r from the fission reaction using
latent heat rather than sensible
heat.

75
 Pressurized Water Reactor (PWR)

The water in a PWR is

Containment Structure
maintained at a high pressure
in the range of 2000-2500 psi
Steam to prevent water from boiling.
Control Generator
Rods
High pressure water is
circulated through the reactor
core to pick up heat without
Turbine
any boiling of water.
Generator
Pressurize hot water is then
circulated through the steam
generator where heat is
transferred to a secondary
Condenser
Reactor Vessel
water stream that enters as
liquid water and exits steam.

76
 Expanding Chain Reaction

 The fission reaction

produces more
neutrons which can
then induce fission in
other Uranium atoms.

77
 Moderator

 Neutrons are slowed

down by having them
collide with light atoms
(Water in US reactors).

 Highest level of energy
transfer occurs when
the masses of the
colliding particles are
equal (ex: neutron and
hydrogen)

78
 Control Rods

 Control rods are made

of a material that
absorbs excess
neutrons

 By controlling the
number of neutrons, we
can control the rate of
fissions

79
Inside a Nuclear Reactor

80
Nuclear Reactor Technologies

81
Optimal Combination of Power Sources to Correspond to
Demands

82
Renewable energy consumption/share of power by region

Other renewables consumption by region Other renewables share of power generation by region
Million tonnes oil equivalent Percentage

BP Statistical Review of World Energy

2015
© BP p.l.c. 2015 83
Biofuels production by region
Million tonnes oil equivalent

World biofuels production

BP Statistical Review of World Energy

2015
© BP p.l.c. 2015
84
 What is Solar Power?

•A renewable energy source

•The conversion of solar
power from the sun into heat
or electricity
•There are three main
methods of obtaining solar
energy
•Best suited for areas where
there is low cloud cover that
will block out the sunlight

85
 Methods of Using Solar Energy

Photovoltaic cells
•Consists of semi-conductors
•As light hits the surface, energy is produced
Solar Thermal Electricity
•A mirror is used to reflect the sunlight to a
central receiver
•A fluid is circulated that drives a generator
•The generator produces electricity
Solar Thermal Heater
•Solar panels on roof absorbs sunlight
•Sunlight is converted into energy that heats
the house

86
PV

87
Advantages

•Renewable
•Produces no pollution or
waste
•If the area is sunny,
solar energy can be
used in remote areas
where no other energy
source is available
•Require very little
maintenance
•Although expensive in
the beginning, you will
save a lot money in the
long-term

88
 Disadvantages

•Doesn't work at night

•Solar cells/panels can be very
expensive
•Can be unreliable unless you're in a
very sunny climate.
• Solar power isn't much use for high-
power applications. It may just be
enough to heat your house.
•To obtain decent amounts of solar
power, you need a large area of solar
panels.

89
Historical PV market vs. production by region
(%)

EPIA, 2013

90
Accumulated Install Capacity of PV In China

GWp
50
45 43
40
35
30 28.1
25
20 17.5
15
10 6.5
5 2.9
0.9
0
2010 2011 2012 2013 2014 2015

Data Source：China PV Association

91
Solar PV generation and projection by region

92
Solar Thermal Power

93
PV Plus

Source:信达证券
94
What is Wind Power?

•It is a renewable energy source

•The use of the wind to produce
electricity
•Wind energy is the fastest
growing energy source on earth
•The rate at which technology is
improving is making wind power
more and more appealing
•Most effective in areas that
receive a decent amount of wind

95
 Advantages

 The wind is free

 Does not cause green house gases or other
pollutants.
 Although wind turbines can be very tall, they only
take up a small plot of land. Therefore, the land
below can still be used (example: for agriculture)
 Wind farms are appealing to the landscape.
 Remote areas that have no other energy source
available can use wind turbines to produce their
own supply.
96
Disadvantages

•The amount of wind available always

varies. There will be times when they
produce no electricity at all.
•Wind turbines can be noisy. It can be
equivalent to the noise of a car traveling
at 70 mph.
•Because wind turbines have to be
anchored to the ground this could possibly
impact soil structure.
•They do not produce enough electricity to
power large amounts of homes.
•Birds and bats are threatened because
they can get caught in the turbines.

97
Recent Capacity Enhancements

2006
5 MW
600’

2003
1.8 MW
2000 350’
850 kW
265’

98
World Wind Power

Source: Global Wind Report 2016 Edition

99
Installed Capacity of Wind Power

Source: Global Wind Report 2016 Edition 100

Prediction of World Wind Power

Source: Global Wind Report 2016 Edition

101
 Wind Power in China

10000kWe Increased（%）

14,000 装机容量 累计同比（%） 120.0

12,000
100.0

10,000
80.0

8,000
60.0
6,000

40.0
4,000

20.0
2,000

0 0.0
2008 2009 2010 2011 2012 2013 2014 2015 2016

数据来源：Wind资讯
102
Biomass

103 103
Biomass Resources

104
Biomass Conversion Technologies

Source: Biomass annual report 2009, IEA, March, 2010

105
 Oil Refinery TO Bio-refinery

 A biorefinery is a facility that integrates biomass

conversion processes and equipment to produce
fuels, power, heat, and value-added chemicals
from biomass
106
Advanced Biorefinery Schematic

107
Geothermal Power

108
 Geothermal Power

Advantages:
Clean
Free fuel cost

Disadvantages:
Limited resource
Low energy density

109 109
Geothermal By Region

110
 Geothermal in China

（oC/km）

Y.Fengetal./Renewable and Sustainable Energy Reviews

33(2014)214–223

 Geothermal Resource is about 853 billion TCE, economical resource is about 256
billon tce.
 After 2020, geothermal energy will provide 50 million tce， 1% of TPES.
111
 Enhanced Geothermal System
Injection well Injection Water

Production
Hydro-fracture

IEA, Technology Roadmap Geothermal Heat and Power, 2011

112
Conceptual model of an industrial EGS plant

IEA, Technology Roadmap Geothermal Heat and Power, 2011

113
Ocean Energy

114
 Ocean Energy
 Tidal (['taɪdl]) power: the potential energy associated with tides
can be harnessed by building a barrage or other forms of
construction across an estuary.
 Wave power: the kinetic and potential energy associated with
ocean waves can be harnessed by a range of technologies under
development.
 Temperature gradients: the temperature gradient between the sea
surface and deep water can be harnessed using different ocean
thermal energy conversion (OTEC) processes.
 Salinity[sə'lɪnəti] gradients: at the mouth of rivers, where
freshwater mixes with saltwater, energy associated with the salinity
gradient can be harnessed using the pressure-retarded reverse
osmosis process and associated conversion technologies.

115
116
Energy Density of Energy Storage Technologies

117
 Cost of Energy Storage

Source: Electricity Storage Technologies 118

Discharge Time

Source: Electricity Storage

119 Technologies 119
Examples of Energy Storage Methods

120