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Module 1: Energy Balance and Energy Economics

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Energy Balance and Energy Economics - Lesson Summary

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The key points from this module are: The Sankey diagram is a very good way to represent the flow of energy from primary sources to secondary energy all the way to end uses and in different sectors.A PECSS diagram which stands for Primary Energy Consumption by Source and Sector gives a very clear understanding of what the different primary energy sources are, what are their contributions to the energy requirements. The carbon intensity is the CO2 emissions per unit of energy produced. The energy intensity is the energy required per unit GDP, as well as the GDP per capita. Japan has a strong dependence on energy imports. Japan has tried to diversify its primary energy supply sources which will ensure that it has good energy security in case one of the countries fails to meet the required amount of export. So, to ensure this Japan has also got very strong diplomatic relations with these countries. Japan has a dependency of 11.9 %share by the nuclear power energy which reduced to about 0.8 %in the year 2016. Japan need to nuclear power to have a stable supply. It needed nuclear power to reduce electricity cost. It also helped in reducing the CO2 emissions from the country. The pathway to Japan’s energy is not very sure whether they will be going totally, total dependence on the nuclear power plant as earlier before this Fukushima incident or it will be totally out of the dependence on the nuclear power energy. The GDP comes from Australia is most of them from service sectors, then industrial sectors than agriculture. Australia has the target to reduce 26 to 28% of CO2 emissions by 2030. The energy bottlenecks for Australia is infrastructure mainly, that is they have to invest more and more money for electricity transmission as well as storage of energy. Australia is having a lot of uranium energy as well as sunlight, so they can make use of uranium and sunlight they can start the renewable energy source like solar and uranium. So, the CO2 emission will be reduced, as well as diversification of fuel is very very important for Australia as the energy security can be improved because of that. Mexico adopted what is called general law on climate change in 2012. The targets are a minimum of 35% of electricity would be from clean energy source by 2024. Reducing emissions by 30% by the year 2020 and 50% reduction in emission by 2015 and this is with the reference to the base year 2000. Mexico is shifting from an oil-based economy to a gas-based economy by importing natural gas from the US and Canada. Whether it's a yes-no decision or a decision where we are choosing between a number of options, the basis and the economic calculations are the same.The simple payback period is an index which just reflects the number of years in which the investment will pay back for itself. The simple payback period must be less than the life of the equipment of the project. Net Present Value is the present value of benefits minus the present value of cost. There are situations even if your prices remain constant we still discount the future, so even if there was no inflation, we generally prefer money today compared to money in the future. So, this whole concept of discounting is independent of inflation.As the discount rate increases the cost of saved energy would then increase because of the effect that initial investment that we are making is now equivalent in terms of higher annualized investment.