Energy Demand - Just because we want it, doesn't mean we are going to get it!

Listening to a podcast on the solution to the energy problem (nuclear in the case), I was increasingly frustrated by the fundamental assumptions the speaker was making about the future that are dubious if not plain wrong. So at a future date I am going to do a blog on all the assumptions, often unstated, that are being made in the energy area. These include, oil production will continue to increase (Internation Energy Outlook for 2008 EIA), mix of energy types (liquid/gas/electric) will remain about the same, energy production will continue to be largely centralised, no new technology that can significantly effect supply or demand, the future will continue the trends of the past and for this post, energy demand will continue to grow at current rates.

(Note that graph does not seem to match with text in EIA report:

Total non-OECD energy demand increases by 85 percent in the IEO2008 reference case projection, as compared with an increase of 19 percent in OECD energy use. The robust growth in demand among the non-OECD nations is largely the result of strong projected economic growth. In all the non-OECD regions combined, economic activity—as measured by GDP in purchasing power parity terms—increases by 5.2 percent per year on average, as compared with an average of 2.3 percent per year for the OECD countries.)

For energy demand to continue to increase at this rate, the assumptions underlying this are:

• demand = consumption
• consumption is met by energy producers
• increasing demand/consumption requires additional energy generation capacity

The first assumption under this heading, is that energy demand equals energy consumption. In the past the market has been able to match demand by increasing production. The whole point about peak oil is that production cannot be further increased and therefore there may be a demand there, but it cannot necessarily be met.

The second assumption is that there will continue to be a centralised model of energy supply. Large power stations or windfarms put electricity onto the grid and the consumer takes electricity from the grid. Large oil companies supply liquid fuels to filling stations. Gas companies move gas along pipelines to point of use. Distributed power generation is increasing with small generation also feeding into the grid, but micro-generation can bypass the grid altogether, feeding direct to an appliance or into a buildings supply. Farmers are growing their own biodiesel and having it processed locally. It is therefore possible for energy consumption to increase but for demand for energy from suppliers to decrease.

For our lifetimes, energy has been cheap. So cheap that we can afford to waste it. Electricity suppliers have been forced to meet our demands to use as much energy as we want whenever we want. This leads to huge peaks and troughs in demand both an a daily, weekly and seasonal basis, and sudden peaks such as the end of a the World Cup Football when all the kettles go on. Variable pricing and smart metering is starting to be introduced and the effect of this will be to allow us to make use of energy when it is cheap (and plentiful) and defer use when it is expensive. We can run our washing machines when it is windy and cheap, rather than waiting to run out of clean clothes. Businesses can top up their refrigerator plant on windy nights and shut them down quickly in the case of sudden peaks of electricity demand. Petrol has been so cheap that we can afford to lose 80% of it's energy in heat and friction in the combustion engines that drive our cars, electric cars are inherently more efficient, even including losses from electricity generation (see http://pbjots.blogspot.com/2008/07/electric-vs-combustion-engine.html).


We have an insatiable appetite for cheap energy and my long term view is that we will work out how to harness the abundant energy that surrounds us. In the future we will be able to generated energy when we want it and where we want it. Each machine will create its own energy and maybe our homes will be their own mini-grid. The national grids will become a phase in history and energy demand and energy consumption will only be of interest to academics who must estimate our usage.

But I do not expect to see that in my lifetime! In developed countries, in the short term, I expect to see the need for large scale additional energy production decline because:

1. Production from power plants will be used more efficiently. With smart metering, variable pricing, intelligent homes and demand response we can flatten the peaks and use up the troughs.
2. The price of energy is reaching a tipping point where it is eating into peoples disposable income. People will be actively looking for ways to reduce their energy use by reducing waste and using costly energy more efficiently - sales of SUVs are falling, more is being spent on home insulation etc.
3. Innovation around energy use in products will significantly increase their efficiency. It has not been cost effective until now to spend significant money on R&D in this area. Once product designers start looking at the way products use energy as a whole, rather than just increasing efficiency of existing technology, significant gains can be made. The promise of nanotechnology is to create minute motors that use far less energy and increase the efficiency of energy generation. This might mean shaking a laptop once an hour to generate enough energy to run it!
4. Micro generation is becoming affordable, reducing demand from the grid.
5. Repair rather than Replace. As it becomes more expensive to make disposable products because of the increase in price of energy to make and distribute products and the increasing price of feedstock (plastic is made largely from oil), companies will move towards designing products for repair. This is already happening as insurance companies seek to repair instead of replace on claims. Repairs, especially with development of small scale fabrication equipment mean components can be manufactured locally, and this will require less energy.

(I have to say I am not 100% convinced of my own argument that we won't need additional large scale generation plant - but I want to throw it out there just to challenge assumptions that are being made.)

Developing countries have the opportunity to avoid our wasteful mistakes but also have different challenges:

• increasing population - fertility rates in developed countires are generally less than replacement, which is about 2.33 but depends on the country. See league table here and article in wikipedia
• need to address poverty - increasing standard of living for the poor requires more energy.

So while some of the factors for developed counties hold true, energy consumption will certainly increase if economic conditions allow. However, some of this consumption could be from locally produced supply.

China's consumption of energy is growing rapidly and 70% of it from Coal. World energy production will be heavily influenced by what happens in China. It is not clear to me what proportion of China's energy is used in producing goods for export, which will suffer a downturn should energy production and transport costs become high enough to make local production cheaper. eg. foods and other perishables. If there is also a move to repair rather than replace, what will this do to energy consumption? There is an overview of China and energy here: http://earthtrends.wri.org/updates/node/274 and I would be interested to hear from anyone with more information.



There is one final assumption - that the world economy will continue to grow. Just because it has done during our lifetimes, does not make economic growth inevitable. If we have a world recession, there is a whole different scenario, but shhhhh, don't say anything because if you do, it might happen.