Renewables and Consumption

If a coal power plant is closed and replaced by a wind farm and that wind farm produces the same amount of electricity as the coal plant, what happens to energy consumption? Depending on the coal power plant, and how you define energy consumption it could do anything from stay the same to falling by a factor of three. Welcome to the perplexing world of measuring energy consumption in an increasingly renewables world.

In popular discussion the phase "energy consumption" is used with little regard for its meaning. Yet, in many respects it is a problematic term. Take the European Union. It has a target of getting 20% of its energy consumption from renewable energy by 2020. Let me put that more accurately. It has a target of getting 20% of its final energy consumption from renewable energy. The word final is key, yet you will almost never see it appear in discussions about renewable energy targets.

There are two ways of measuring total energy consumption: primary and final energy consumption. Primary energy consumption is a measure of the energy content of all the oil, coal, natural gas etc that is taken out of the ground. Essentially we ask how much energy is released when we burn the stuff. Typically this is reported in tonnes of oil equivalent, that is how many tonnes of oil would release the same amount of energy if burned.

Final energy consumption is slightly different. It is the energy delivered to the final consumer. For example it only measures the electricity that is produced by a power plant, it does not care about the heat produced from burning coal or natural gas that was not converted to electricity. So, for a 50% efficient power plant the primary energy consumption is two times higher than the final energy consumption.

This sounds simple enough. But here is another problem. How do we measure primary energy consumption for renewable sources such as wind, solar, and hydro-electricity? In the case of coal we can ask how much energy is released when we burn the stuff. Obviously we do not burn anything for wind, solar and hydro. So, what do we do? Here we have two choices. We can use the energy content of the electricity generated as the primary energy. This is called the "physical energy content" method, and is used by groups such as the International Energy Agency. The second choice is to ask how much fossil fuel energy would have been required to produce the same amount of electricity. This is called the partial substitution method, and is used by BP in their often cited Statistical Review of World Energy. In the case of BP they add up all of the wind and solar electricity generated and convert it to primary energy assuming that it would have been burned in a 38% efficient fossil fuel power plants, that is BP say primary energy consumption from wind and solar is more than two times higher than the IEA does.

Which is correct? The correct is answer is neither. What we should really ask is what measure is most appropriate for the question we are trying to answer.

Let's imagine that we are trying to measure the energy efficiency of an economy. Typically this is done by recording its energy intensity, we just divide energy consumption by GDP. Now further imagine that a country was getting all of its electricity from coal power plants, and this represented 50% of its primary energy consumption. What would happen to its energy intensity if we replaced it all with solar?

If we used the IEA's definition of primary energy consumption the energy intensity would improve by more than 25%, simply because the primary energy consumption from electricity generation has more than halved. If we used BP's measure then things would stay where they are. Neither answer is satisfactory. After all we could use 5, 10, 15 or 20% efficient solar panels to get the job done. The efficiency of generating solar electricity then is completely irrelevant to how we measure how efficient the economy is.

In a similar vein consider two rather simplified purely electric energy systems, both with annual electricity demands of 100 terawatt hours. One gets all of its electricity from 35% efficient coal power plants, while the other gets them from 15% efficient solar panels. Now, replace those 35% efficient coal power plants with 40% efficient coal power plants and what happens? The energy intensity of the economy improves. But replace those 15% efficient solar panels with 20% efficient solar panels and absolutely nothing happens to energy intensity. Again, this is somewhat unsatisfactory.

To illustrate these points I will finish by considering Denmark, the country which gets more of its energy from wind farms than anywhere else.

Below I have plotted the change in Danish total primary energy consumption between 1990 and 2012 (from BP's primary energy statistics) using the partial substitution and final energy content methods for wind electricity. If we use the partial substition method then Denmark's primary energy consumption is essentially unchanged since 1990. However if we use the physical energy content method primary consumption has declined by almost 9%.

DanishPrimary

Now, you may be tempted to conclude from this that using the physical energy content method is a good thing if you want to promote the benefits of wind farms. But consider what percentage of primary energy consumption comes from wind farms using the partial substitution and physical energy content methods. It is two times lower using the physical energy content method.

DanishWind

In this case the partial substition method appears to be a much better way to track the changes in wind power penetration, otherwise we are saying a unit of fossil fuel electricity is worth two times more than wind in primary energy terms. Of course if you wanted to downplay the growth of wind farms it should be obvious how to do it.

So, as the cliche goes, "lies, damn lies, and statistics." The above can be read as a way to properly deconstruct energy consumption statistics, or as a guide to how to misuse them. Please do the former.