Unit-2 :Estimations and

Evaluation of Energy resources

Sustainable Energy – 20EE017
Department of EEE
UNIT – II (11+4 Hours)

Estimations and Evaluation of Energy resources

Units of measurement: Energy and Power, comparison of different forms of energy,

the energy life cycle, estimation and valuation of fossil mineral fuels, estimation
and valuation of Nuclear Fuel Resources, Estimation and Valuation of Renewable
Energy Resources.

# Lessons for Sustainable Development

 Units of measurement: Energy and Power

• Since any discussion of energy resources requires

quantification and comparisons across all types of
primary energy sources, the first challenge is to deal
with the diverse units involved in reporting data on
resources.

• Many approaches for measuring units of energy have

developed over time, stemming from personal
preferences and differences among application sectors
such as science, engineering, wholesaling, retailing,
international trade, and public policy.
• Common scientific and engineering units — e.g., joules
(J), calories (cal), and British thermal units (Btu) — have
precise definitions.
• 1.0 Btu is the amount of energy required to raise the
temperature of 1.0 pound of water from 39.1 to 40.1° F
when the water is at normal atmospheric pressure.
• 1.0 J is defined as the work done when a force of 1.0
newton moves an object 1.0 meter in the direction of
the force; a newton is the force that accelerates a mass
of 1.0 kg at 1.0 m/s2 in the direction of the force.

Note:
One pound of water is defined as exactly 0.45359237 kilograms (kg), or 0.45359237 litres (L)
39.1 °F = 3.94 degree Celsius to 40.1 ° F = 4.5 degree Celsius –> 0.56 difference
• Units that are widely used in energy trade and commerce are mass
or volume of a particular fuel: barrels (bbls) of oil, thousands of
(standard) cubic feet (MCF) of natural gas, and tonnes or tons of
coal. MCF is an abbreviation derived from the Roman numeral M
for one thousand, put together with cubic feet (CF) to measure a
quantity of natural gas.

• To convert these units to J or Btu, we multiply the stated volume or

mass of fuel by a representative heat content per unit volume or
unit mass of that particular fuel. (Eg. 1 cubic foot of natural gas is
equal to 10,55,055.85262 joules)

• The chemical composition of fossil mineral fuels (oil, natural gas,

coal) and of biomass, especially municipal solid waste, is complex
and variable by fuel source and extent
of purification prior to utilization.

• Thus, the heat contents per unit mass or volume of these fuels also
vary. For example, the heat content of 1.0 cubic foot of natural gas
can range from 950 to 1,200 Btu.

Note: 1 bbl= 158.987 litres 1 ton =1000 kg

• Similarly, renewable energy that can be derived
from solar energy at a particular location is the
integral over time (usually per day or per year) of
the actual solar flux collected by a conversion
device of a specified area and multiplied by the
conversion efficiency.

• The energy units are then in watt-hours, joules,

or some equivalent energy unit.

• Since photovoltaic devices generate electricity

directly, any comparison in energy content
between them and a fossil fuel needs to
recognize the inefficiencies of converting the
fossil fuel to electricity.
• Despite the diverse nomenclature,
magnitudes, and measurement systems, it is
important to be familiar with commonly used
energy units and their quantitative
equivalents.

• Two common units of power are kilowatts

(kW) and horsepower (hp)
1 hp = 746 W or 0.746 kW
 Comparison of Different Forms of Energy
• Informative comparisons of different forms of energy are more
challenging than converting energy units.

• Today, fossil fuels are our predominant primary source of

commercial energy, nuclear fission fuels are a smaller second group,
and a portfolio of varied “renewables” make up a third small, but
increasing, group. (Classification)

• Each category of primary energy has been developed largely based

on the market criteria of competitive cost per unit of energy
service delivered.

• In examining the availability of energy resources, we will look at

these three categories of energy sources sequentially because of
their intrinsic differences, their methods of extraction, and the
technologies necessary for converting them to diverse end uses.
 Nuclear Power Plant

To arrest the radiation / leakage from the Nuclear reactor

Nuclear reactors are the heart of a nuclear power plant.
• From a sustainability perspective, the quality of
various types of energy is determined by
scientific, technological, economic, and
environmental factors, as well as by inputs such
as user preferences and behavior.

• Sustainability views energy as a means (and

sometimes, but not always, as the only practical
means) to accomplishing a purpose that benefits
humans and the earth’ s ecosystem.

• All forms of energy use have some impacts on the

earth’s ecosystems, but these have usually been
treated as secondary considerations.
• For resource assessment, compatibility with prescribed
tasks suggests one framework for comparing and even
prioritizing different categories of energy.

• Depending on the desired energy service, where that

service is needed, and the budget of the service
providers and users, one or another form of energy
may be preferable.

• In remote, off-grid locations in less well-developed

regions, low-tech energy sources for heating, cooking,
and electricity may better accommodate users’ needs
than high-tech electricity sources, such as diesel
generators fueled by imported and costly premium
fuels, or expensive solar photovoltaic systems that
require energy storage equipment.
• Ecologically sensitive regions, even those rich
in indigenous petroleum, may benefit from
substantive diversification of their energy
sources.

• For example, development of indigenous solar,

wind, geothermal, and natural gas resources
could allow remote communities in Alaska
to reduce their dependence on liquid
petroleum fuels that are expensive to
transport.
• Forms of energy can also be compared in terms of
either their technical suitability for a particular task or
the efficiency at which they can be converted to
another form better matched to the job.

• The classic example is the conversion of heat to useful

mechanical energy.

• Forms of energy that can be converted to electricity

include thermal energy (from combustion, nuclear
reactions, or geothermal sources) via mechanical work
and rotation of electrical generators, chemical energy
via fuel cells or electrochemical batteries, solar energy
via photovoltaic devices, and direct mechanical energy
via rotation of electrical generators.
• All energy conversion steps have inefficiencies
that squander some or a great deal of the
inputted energy.

• Energy is wasted by imperfections in equipment,

materials, and fuels, but ultimately it is wasted
because of inherent limitations in the conversion
of heat to work.
• Growing global energy use is now raising
concerns about the following impacts, to an
extent that they may influence choices for future
primary-energy portfolios:

– climate change associated with greenhouse gas

emissions from fossil-fuel energy use;
– health effects, smog, mining impacts, fuel safety, and
other impacts of fossil fuel use – many of which have
been addressed by regulatory actions;
– public concerns about the safety of large nuclear
power installations;
– impacts on land and water caused by manufacturing,
pollution, and other effects associated with different
types of renewable energy.
 The Energy Life Cycle
• There are typically several steps that occur in
series when transforming a natural source of
energy, such as mineral fuel, uranium,
geothermal heat, or solar radiation,
to a useful end product or service, such as
mechanical work or heat at a usable
temperature or more popularly electricity.

• This sequence can be thought of as the energy

life cycle.
• Exploration for and discovery of the primary
energy source,
• Production or harvesting the energy,
• Preparation, transport, and/or storage,
• Further processing, purification, and conversion,
utilization, Recovery, destruction or
decontamination, or storage of by-products
and/or wastes.

The overall efficiency of providing the desired

energy-intensive product or service is the product
of the efficiency of each sequential stage.
• All real-world processes are imperfect and waste some
energy and the overall energy utilization efficiency can
be quite low.
• Figure illustrates one of the most common energy life
cycles: transformation of the chemical energy of a
mineral fuel to visible light using an incandescent
electric bulb.
• There are different ideas on where to draw the
boundaries for lifecycle analysis.
• One approach includes activities well upstream and
downstream of the primary energy generation source.

• In the light bulb example, the analysis would account

for the energy and environmental impacts of
manufacturing and ultimately disposing of the (spent)
light bulb, of building the electric power station, of
mining and delivering the coal, and of disposing of
the ash and other wastes from the generation plant.

• A life-cycle view resonates with our core proposition

that energy provides useful products or services, but
typically does so with environmental penalties that
may or may not be known contemporaneously.
• To identify the substantive tradeoffs among sustainable
energy options, we need to understand current and
prospective consequences for the earth and its
inhabitants of each option under consideration.

• However, the larger the boundaries of the life cycle,

the more difficult it becomes to define precise
information requirements and to obtain putatively
responsive data.

• Thus, flexibility should guide the selection of spatial

and temporal boundaries for life-cycle analyses aimed
at informing sustainability decision-making.
 Basics of economic evaluation
• Life cycle analysis or assessment.
– Life cycle analysis is the act of measuring the
environmental impact of a product or service
throughout its life cycle, from the resources used to
create the product or service, across its use by the
user, to it's end of life destination.
– An LCA measures the environmental impacts of each
distinct part involved in creating and using products
and services, such as energy used in production, fuel
used in transport, and end-of-life ecological costs.
– This helps us compare between products, materials,
and methods used, providing useful information by
which to make decisions that could help the
environment.
• There’s more than one type of LCA as it happens, but
they all do the same thing: measure environmental
impacts of a product, service or material.
• An LCA is a standardized method to quantitatively
assess environmental impacts.
• Ultimately, an LCA is interested in what we have to take
from the environment, in terms of raw materials and
energy, and what impact the product then has on the
environment during its use (or the service, or the
material).
• It’s called “life cycle” because it usually takes the entire
existence of the product into account: from the raw
material stage of putting the product together, through
the use phase where the service, material or product
serves its’ purpose, to the “end-of-life” stage where the
product is broken down in whatever fashion occurs.
• LCA Stages
– Goal and scope
– Inventory (Life cycle Inventory)
– Impact assessment
– Improvement assessment
• LCA looks at the materials and energy that go into these
five processes:
– Raw material extraction
– Manufacture
– Distribution and transport
– Use and maintenance
– Disposal and recycling
• These are then looked into their impacts in terms of:
– Global warming potential
– Air, water and soil pollution
– Ecotoxicity
– Resource depletion
Payback time
• A simple method for estimating the payback
time is to divide the total initial capital (fixed
capital plus working capital) by the average
annual cash flow:

• The simple payback time is strictly

based on a cash flow, but for simplicity taxes
and depreciation are often neglected and the
average annual income is used instead of cash
flow.
• Return on Investment
– Another simple measure of economic
performance is the return on investment, ROI.

– Net annual profit is the same as annual operating

income after tax. If ROI is calculated as an average
over the whole project then
PRESENT VALUE METHODS
– The simple economic measures are not able to
capture the time dependence of cash flows during
the project.
– The timing of cash flows is very important to
investors, firstly because not all of the capital
must be financed immediately, and secondly
because capital that is repaid sooner can be put
back to work in another investment.

– Time Value of Money

– Value of money varies with time. Money earned
in the early years of the project is more valuable
than that earned in later years.
 What is Present Value?
• Present value is the current value of the future sum of money,
at a specified rate of return.
• The higher the discount rate, the lower is the present value
of the future cash flows. The lower the discount rate, the
higher would be the present value of future cash flows.
• Inflation lowers the purchasing power of money. If you don’t
invest money, inflation eats up its value.
• Future Worth
– The future worth of an amount of money, P, invested at
interest rate, i, for n years is

• Present worth
– The present value of a future sum is

– The interest rate used in discounting future values is

known as the discount rate and is chosen to reflect the
earning power of money.
Inflation

• Discounting of future cash flows should not be confused with

allowing for price inflation. Inflation is a general increase in prices
and costs, usually caused by imbalances between supply and
demand.

• Inflation raises the costs of feed, products, utilities (Consumer

spending), labor and parts, but does not affect depreciation
charges, which are based on original cost. Discounting, on the other
hand, is a means of comparing the value of money that is available
now (and can be reinvested) with money that will become available
at some time in the future.

• All of the economic analysis methods can be modified to

allow for inflation. In practice, most companies assume that
although prices may suffer inflation, margins and hence cash flows
will be relatively insensitive to inflation. Inflation can therefore be
neglected for the purposes of comparing the economic
performance of projects.
• Net Present Value
– The net present value (NPV) of a project is the sum of the
present values of the future cash flows

– The net present value is always less than the total future
worth of the project because of the discounting of future
cash flows.
– The net present value is a strong function of the interest
rate used and the time period studied. Net present value is
a more useful economic measure than simple payback and
ROI, since it allows for the time value of money and also
for annual variation in expenses and revenues.
Sensitivity Analysis (what-if analysis)
Sensitivity analysis determines how different
values of an independent variable affect a
particular dependent variable under a given set
of assumptions.
In other words, sensitivity analyses study how
various sources of uncertainty in a
mathematical model contribute to the model's
overall uncertainty. This technique is used
within specific boundaries that depend on one
or more input variables.
Usefulness of Sensitivity Analysis
 Estimation and Valuation of fossil
mineral fuels
Fuel Deposit vs Fuel Reserve
• Geological prospecting does not create reserves, but
rather identifies regions of the earth more or less likely
to contain “ deposits ” of oil or other mineral fuels.
• Deposits are quantities in place, a portion of which may
be suitable for commercial development.
• Reserves are created from deposits only when
investments are made to construct and operate facilities
(e.g., wells, supporting equipment) to produce some
portion of the deposited fuel for practical use.
• Geological prospecting involves the study and analysis of
geological formations, structures, and other indicators to
identify areas that are more likely to contain deposits of
oil, minerals, or other resources.
• The creation of reserves involves further exploration,
drilling, and extraction activities to confirm the presence
of economically viable quantities of the desired
resources. So, while geological prospecting provides
valuable information about where to search for
resources, it doesn't directly result in the creation of
reserves until further exploration and confirmation are
conducted.
• The reservoir engineering concept defined by the
accumulated production R(τ) from a source (e.g., a single oil
or gas well, or several wells linked) over its useful operating
lifetime, τ is used for estimation of fossil fuel reserves.
• The magnitude of these reserves can be estimated by
integrating the well production rate Q(t) over τ.
• For an assumed exponential decline in yearly production,

• where Q0 is the initial production rate and a is a fitting

parameter (see below), R(τ) becomes:

• In theoretical studies, τ would be taken as infinity, so that

from above equation
e-∞ is Zero
• However much well owners and their heirs might wish it, τ
is not infinity but some finite number that has typically
ranged from a few years to a few decades.

• The useful lifetime is the period over which investment to

initiate and then maintain production continues to be
justifiable based on an acceptable rate of return on
investment.

• When this is no longer the case, production is said to have “

reached the economic limit. ” This occurs when revenue
from sales of incremental output of fuel can no longer keep
pace with production costs.

• Production then ceases even though there may be

gargantuan stocks of oil still in the well. This doesn’t matter.
Those stocks are deposits, but they are not proven reserves
because they cannot be economically developed under
prevailing financial realities.
 Estimation and Valuation of Nuclear
Fuel Resources
• Concerns about fossil-fuel Green house gases emissions and other
impacts are leading to re-examination of the major role that coal
presently plays in electricity generation.

• Nuclear fuel is also suited to large central electricity generation and

could be a low-GHG alternative to the aging fleets of coal power
plants worldwide .

• Whereas the use of fossil-fuel energy results in widely dispersed

GHG emissions that are gradually accumulating in the atmosphere
and slowly changing the climate in ways that are potentially
dangerous and not quickly reversible, nuclear power plants have
other types of risk.
• With such high concentrations of nuclear fuel, the possibility
of an uncontrolled reaction and potential release of damaging
radioactivity to the environment is a serious hazard that has
to be avoided by design and operational controls, so that the
chance of such an accident is extremely improbable.

• Nevertheless, nuclear energy is an important part of the

primary energy portfolio and nuclear power plants have a
good safety record, although they have experienced a few
serious accidents.
• The important nuclear power fuels are uranium and thorium.
These ores are found in deposits in many countries, yet have
been little exploited, especially thorium, as its conversion
reaction is not utilized in any of the current nuclear power
plant concepts.
• However, should uranium become scarce, thorium resources
could become of practical importance.
• This situation could be altered were nuclear power to
be used on a much larger scale, for example, to
displace fossil-fuel consumption in an attempt to
mitigate global warming.
• In this case, nuclear power would be required on a
scale about two orders of magnitude greater than is
current in order to be effective.
• This would result in serious compression of the time
scales by which incentives would become important for
use of both plutonium and thorium “ breeders ” (which
create new radioactive materials), and for use of
speculative additional fuel resources.
• With the last option, abundant nuclear fuels are found
in many mineral forms, but in more dilute forms.
• Exploiting them would imply greater costs and greater
environmental disruption than those of current nuclear
mineral sources.
• An extreme case is that of seawater, which is estimated to contain
about 400 million tonnes of uranium at a concentration of 0.003
ppm.
• The costs of extracting the uranium and the effects upon the
aquatic ecosystem of its extraction could render seawater
unattractive as a fuel source.
• A greater problem with nuclear power is that the existence of a
breeder reactor economy can lead to nuclear weapons
proliferation.
• The main difficulty for a nation wishing to acquire a nuclear
weapons capability is not mastering the associated technologies
(after all, they are 60 years old), but acquiring the materials needed
to fabricate nuclear weapons.
• Both plutonium and thorium isotopes, termed “ special nuclear
materials ” (SNM), are valuable for this use, and could potentially
be obtained from any nuclear power economy that reprocesses
either material, since reprocessing operations are potentially
vulnerable to covert diversion of some SNMs to weapons
development.
• In the long term, nuclear power technology will require additional
research to create better technologies for both safeguards and
reprocessing.
 Estimation and Valuation of
Renewable Energy Resources
• Energy resources that are being replaced /
generated at the same rate at which they are
being utilized are called RES.
• Solar Forms – Solar thermal, Solar
Photovoltaic, Biomass, Wind, Hydro, Wave,
OTEC
• Non-Solar – Tidal, Geo-thermal.
Wind Rose Diagram
• Given its history, one might think that renewable
energy would have evolved to be the major source of
energy today.
• But only a small fraction (about 10%) of the world’ s
primary energy is currently provided by renewable
sources, with hydropower, biomass, and geothermal
playing dominant roles in selected locations.
• Although renewable energy has real environmental
benefits that could improve our planet ’ s health, the
short-term economics of renewable systems have not
been widely competitive.
• Key issues include the low energy density, low capture
efficiency, and lack of dispatchability of many
renewable energy types. Such characteristics directly
affect their costs relative to the competition — fossil
and fissile fuels.
• Consequently, much remains to be done to increase the
performance of renewable energy systems — particularly in
terms of the ability to capture, store, and convert
it into more useful forms.
• In some cases, there can be significant environmental
impacts, particularly associated with land and water use.
Technology has played and will continue to play an essential
role in increasing the effectiveness and competitiveness of
renewable systems.
• Steps involved for estimation and Valuation of RES
– Renewable energy resource assessment
– Environmental impacts
– Technology development and deployment
– Storage
– Connecting renewables to hydrogen