Friday, September 23, 2005

Stat Pack: EIA's Annual Energy Review 2004 (Part 2)

Last week we gave you an Overview of EIA's Annual Energy Review 2004. This week we are going to break it down further to the sectors where energy is consumed.

Just to recap, here are definitions for each sectors from AER's Glossary:

Commercial Sector: An energy-consuming sector that consists of service providing facilities and equipment of: businesses; Federal, State, and local governments; and other private and public organizations, such as religious, social, or fraternal groups. The commercial sector includes institutional living quarters. It also includes sewage treatment facilities. Common uses of energy associated with this sector include space heating, water heating, air conditioning, lighting, refrigeration, cooking, and running a wide variety of other equipment.

Industrial Sector: An energy-consuming sector that consists of all facilities and equipment used for producing, processing, or assembling goods. The industrial sector encompasses the following types of activity: manufacturing (NAICS codes 31-33); agriculture, forestry, fishing and hunting (NAICS code 11); mining, including oil and gas extraction (NAICS code 21); and construction (NAICS code 23). Overall energy use in this sector is largely for process heat and cooling and powering machinery, with lesser amounts used for facility heating, air conditioning, and lighting. Fossil fuels are also used as raw material inputs to manufactured products.

Residential Sector: An energy-consuming sector that consists of living quarters for private households. Common uses of energy associated with this sector include space heating, water heating, air conditioning, lighting, refrigeration, cooking, and running a variety of other appliances. The residential sector excludes institutional living quarters.

Transportation Sector: An energy-consuming sector that consists of all vehicles whose primary purpose is transporting people and/or goods from one physical location to another. Included are automobiles; trucks; buses; motorcycles; trains, subways, and other rail vehicles; aircraft; and ships, barges, and other waterborne vehicles.
Energy Consumption by Sector

Section 2.1a of the AER contains a variety of interesting data. Let's start with the graphs. The top right pie chart shows the End-Use Sector Shares of Total Consumption in 2004: 21% residential, 18% commercial, 28% transportation and 33% industrial. If you look at the line graph below, it shows the amount of energy consumed to make electricity. In 2004, it's about the same percentage as the fuel shares of electricity.

Now take a look at the graphs of 2.1b. All four charts show the energy consumption for each sector. For the residential sector, natural gas is the primary fuel. For commercial, electricity is the primary fuel. For industrial, petroleum and natural gas are the primary fuels and for transportation, petroleum is the dominant fuel source.

Another important data point deals with "Electrical Losses" -- the energy lost in converting heat to electricity. Remember, energy is just another word for heat. Once you have heat, you can transfer it into electricity. But during the transfer process (thermal to electrical) only about one-third of the energy is converted to electricity.

Here's where cogeneration comes in. Plants can take that extra heat and use it for other purposes such as heating for buildings and manufacturing. It's a very efficient way of using energy.

Residential

Lets get back to the charts and find out how nuclear can fit into the picture. In the residential sector, natural gas is the primary fuel consumed. Electricity isn't far behind. Since 1970 natural gas consumption for heating has remained flat, whereas electricity consumption has increased 177%.

But as I'm sure you are aware, we still use fossil fuels to generate electricity. About 70% of the electricity comes from fossil fuels (coal, natural gas and oil), 20% from nuclear and 10% from other sources like renewables and hydropower. If you increase the nuclear share to 30% or even 40%, it would have a dramatic effect on the prices of fossil fuels, natural gas in particular.

That's what we like to call forward price stability. Because nuclear's fuel costs are so low, its market isn't subjected to the dramatic volatility we often see in oil and gas markets, something we've seen played out dramatically over the past few weeks as the energy-rich Gulf Coast has been hit successively by Hurricanes Katrina and Rita.

Industrial

Nuclear energy can make an important contribution to the industrial sector too. If you scroll back to the definition of the industrial sector you'll find: "Overall energy use in this sector is largely for process heat and cooling."

Process heat is used in the manufacture of glass, cement and iron. It creates hydrogen, generates wood pulp manufacturing and powers desalination. And nuclear energy could provide that heat.

American nuclear plants are only used to generate electricity. But nuclear vendors such as AREVA have been exploring the idea of building high temperature reactors specifically for process heat. And only a few days ago, French oil giant Total said it was investigating the possibility of building a nuclear power plant to power operations to extract oil from tar sands in Alberta.

Transportation

How can nuclear apply to the transportation sector? If you look at the chart, natural gas and petroleum are the only fuels in the sector. Where's electricity?

Over time, the plan is to move from using gasoline-powered vehicles with hydrogen vehicles. Right now the Department of Energy is in the research and development stage of this long term transition. To read about the Nuclear Hydrogen Initiative, click here:
Hydrogen is abundant in nature but occurs primarily in stable compounds that require significant energy to produce hydrogen for use as a fuel. Hydrogen is an energy carrier, much like electricity, that requires a primary energy source to produce. Domestic energy sources that do not generate greenhouse gases and have the potential to produce hydrogen at costs competitive with gasoline will be essential components of the long-term energy supply. The DOE Hydrogen Program is investigating the potential for all of the practical energy sources for hydrogen production, including: Fossil sources with carbon sequestration (coal and natural gas), Renewable energy sources (solar, wind, and hydroelectric), Biological methods (biomass and biological), and Nuclear energy.

(snip)

Among these primary energy sources, nuclear energy offers great potential for the large-scale production of hydrogen that is virtually emission-free and generated from domestic resources.
And that's how nuclear energy can make an important contribution to energy security and diversity. Come back next week for more number crunching.

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