energy management challenges essay

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Article Contents

Introduction, 1 smart-home definition, 2 smart-home infrastructures, 3 smart-home energy-management scheme, 4 technical challenges of smart homes, 5 conclusion, conflict of interest.

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Smart homes: potentials and challenges

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Rasha El-Azab, Smart homes: potentials and challenges, Clean Energy , Volume 5, Issue 2, June 2021, Pages 302–315, https://doi.org/10.1093/ce/zkab010

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Decentralized distributed clean-energy sources have become an essential need for smart grids to reduce the harmful effects of conventional power plants. Smart homes with a suitable sizing process and proper energy-management schemes can share in reducing the whole grid demand and even sell clean energy to the utility. Smart homes have been introduced recently as an alternative solution to classical power-system problems, such as the emissions of thermal plants and blackout hazards due to bulk plants/transmission outages. The appliances, sources and energy storage of smart homes should be coordinated with the requirements of homeowners via a suitable energy-management scheme. Energy-management systems are the main key to optimizing both home sources and the operation of loads to maximize home-economic benefits while keeping a comfortable lifestyle. The intermittent uncertain nature of smart homes may badly affect the whole grid performance. The prospective high penetration of smart homes on a smart power grid will introduce new, unusual scenarios in both generation and loading. In this paper, the main features and requirements of smart homes are defined. This review aims also to address recent proposed smart-home energy-management schemes. Moreover, smart-grid challenges with a high penetration of smart-home power are discussed.

Smart homes provide comfortable, fully controlled and secure lifestyles to their occupants. Moreover, smart homes can save energy and money with the possibility of profiting from selling clean renewable energy to the grid. On the other hand, the probable decrease in total domestic-energy loads encourages many governments to support promising smart-home technologies. Some countries have already put out many rules, laws and subsidy programmes to encourage the integration of smart homes, such as encouraging the optimization of the heating system, supporting building energy storage and/or deploying smart meters. For instance, the European Standard EN 15232 [ 1 ] and the Energy Performance of Building Directive 2010/31/EU [ 2 ], which is in line with Directive 2009/72/EC as well as the Energy Road Map 2050 [ 3 ], encourage the integration of smart-home technologies to decrease power demand in residential areas.

To control the environment, a smart home is automated by controlling some appliances, such as those used for lighting and heating, based on different climatic conditions. Now, recent control schemes adapt many functions besides classical switching ones. They can monitor the internal environment and the activities of the home occupants. They also can independently take pre-programmed actions and operate devices in set predefined patterns, independently or according to the user’s requirements. Besides the ease of life, smart homes confirm efficient usage of electricity, lowering peak load, reducing energy bills and minimizing greenhouse-gas emissions [ 4 , 5 ].

Smart homes can be studied from many points of view. The communication systems [ 6 ], social impacts [ 7 ], thermal characteristics [ 8 ], technologies and trends of smart homes [ 9 ] are reviewed individually. Moreover, the monitoring and modelling of smart-home appliances via smart meters are reviewed for accurate load forecasting, as in [ 10 , 11 ]. Recently, power-grid authorities have modified residential electrical tariffs to encourage proper demand-side management by homeowners. Different from previous reviews, this paper introduces smart homes from the electrical/economic point of view. It also discusses smart-home energy-management systems (SHEMS) in two different modes, offline load scheduling and real-time management. The prospective impacts of unusual smart-home power profiles on future smart grids are also summarized.

After this introductory section, Section 1 describes the different definitions of smart homes within the last two decades. Smart-home communication schemes and other infrastructures of smart homes are discussed in Section 2. Section 3 discusses in more detail the existing functions of SHEMS, their pre-proposed optimization techniques and related technical/economical objective functions. The impacts of smart homes on modern grids are also discussed in Section 4. Finally, in Section 5, the main conclusions and contributions of the paper are highlighted.

The term ‘smart home’ has been commonly used for about two decades to describe houses with controlled energy schemes. This automation scheme confirms easier lifestyles for homeowners than normal un-automated homes, especially for elderly or disabled persons. Recently, the concept of ‘smart home’ has a wider description to include many applications of technologies in one place.

Sowah et al. [ 12 ] define smart homes as: ‘Houses that provide their occupants a comfortable, secure, and energy efficient environment with minimum possible costs regardless their occupants.’ The Smart Homes Association defines a smart home as: ‘The integration of technology and services through home networking for a better quality of living’ [ 13 ].

Makhadmeh et al. define them as: ‘Incorporated residential houses with smart technology to improve the comfort level of users (residents) by enhancing safety and healthcare and optimizing power consumption. Users can control and monitor smart-home appliances remotely through the home energy-management system (HEMS), which provides a remote monitoring system that uses telecommunication technology’ [ 14 ].

Smart homes can be defined as: any residential buildings using different communication schemes and optimization algorithms to predict, analyse, optimize and control its energy-consumption patterns according to preset users’ preferences to maximize home-economic benefits while preserving predefined conditions of a comfortable lifestyle.

Distributed clean energy generated by smart homes provides many benefits for prospective smart grids. Consequently, the effects of smart homes on future power grids should be extensively studied. In the near future, smart homes will play a major role as a power supplier in modern grids, not only as a power consumer.

The general infrastructure of smart homes consists of control centres, resources of electricity, smart meters and communication tools, as shown in Fig. 1 . Each component of the smart-home model will be discussed in the following subsections.

Infrastructure of SHEMS source

2.1 The control centre

The control centre provides home users with proper units to monitor and control different home appliances [ 15 ]. All real-time data are collected by SHEMS to optimize the demand/generation coordination and verify the predefined objectives. The main functions of the control centre can be summarized as follows [ 15 ]:

(i) collecting data from different meters, homeowners’ commands and grid utility via a proper communication system;

(ii) providing proper monitoring and analysing of home-energy consumption for homeowners;

(iii) coordinating between different appliances and resources to satisfy the optimal solution for predefined objectives.

2.2 Smart meter

The smart meter receives a demand-response signal from power utilities as an input to the SHEMS system [ 16 , 17 ]. Recently, advanced smart-metering infrastructures can monitor many home features such as electrical consumption, gas, water and heating [ 18 ].

2.3 Appliances

Smart-home loads can be divided according to their operating nature into two categories: schedulable and non-schedulable loads. Non-schedulable loads are operated occasionally according to the homeowner’s desires without any predictable operating patterns, such as printers, televisions and hairdryers, whereas schedulable loads have a predictable operating pattern that can be shifted or controlled via SHEMS, such as washing machines and air conditioners [ 19 ].

According to [ 19 ], controllable devices are also classified into interruptible and non-interruptible load according to the effect of supply interruption on their tasks. Electric vehicles (EVs) can be considered as an exceptional load [ 20 , 21 ]. EVs have two operating modes: charging and discharging. Therefore, EVs are interruptible schedulable loads during the charging mode. Moreover, EV battery energy can also be discharged to supply power to the grid during critical events, which is known as vehicle-to-grid [ 22 ]. By SHEMS, EVs can participate in supplying loads during high-priced power periods. In low-priced power periods, EVs restore their energy from the grid [ 23 , 24 ].

2.4 Resources of electricity

Solar and wind plants are the most mature renewable-energy sources in modern grids. Nowadays, many buildings have installed photovoltaic (PV) modules, thermal solar heaters or micro wind turbines. For smart homes, various functions can be supplied by solar energy besides generating electricity, such as a solar water heater (SWH), solar dryer and solar cooler [ 25 ]. Moreover, PV plants are cheap with low requirements of maintenance [ 26 ], whereas hot water produced by SWHs can be used in many home functions, such as washing and cooking, which increases the home-energy efficiency [ 27 ].

Energy storage may be considered as the cornerstone for any SHEMS. SHEMS are usually installed with energy-storage systems (ESSs) to manage their stored energy according to predefined objectives. Many energy-storage technologies are available in the power markets. Batteries and fuel cells are the most compatible energy-storage types of smart-home applications [ 28 ]. A fuel-cell structure is very similar to a battery. During the charging process, hydrogen fuel cells use electricity to produce hydrogen. Hydrogen feeds the fuel cell to create electricity during the discharging process. Fuel cells have relatively low efficiency compared to batteries. Fuel cells provide extra clean storage environments with the capability of storing extra hydrogen tanks. That perfectly matches isolated homes in remote areas [ 29 ].

Although wind energy is more economical for large-scale plants, it has a very limited market for micro wind turbines in homes. Typically, micro wind turbines require at least a wind speed of 2.7 m/s to generate minimum power, 25 m/s for rated power and 40 m/s for continuous generated power [ 30 ]. A micro wind turbine is relatively expensive, intermittent and needs special maintenance requirements and constraints compared to a solar plant [ 31 ].

Recently, biomass energy has been a promising renewable resource alternative for smart homes. Many pieces of research have recommended biomass energy for different types of buildings [ 32 ]. Heating is the main function of biomass in smart homes, as discussed in [ 33 , 34 ]. In addition, a biomass-fuelled generation system is examined for many buildings [ 35 , 36 ].

2.5 Communication schemes

Recently, communication systems are installed as built-in modules in smart homes. Both home users and grid operators will be able to monitor and control several home appliances in the near future to satisfy the optimum home-energy profile while preserving a comfortable lifestyle. Therefore, both wired and wireless communication schemes are utilized, which is known as a home area network (HAN), to cover remote-control signals as home occupants’ ones. Fig. 1 shows an example of a HAN that consists of Wi-Fi and cloud computing networks for both indoor and outdoor data exchange, respectively [ 37 , 38 ].

Energy-management systems for homes require three main components: the computational embedded controllers, the local-area network communication middleware and the transmission control protocol/internet protocol (TCP/IP) communication for wide-area integration with the utility company using wide-area network communication [ 37 ].

According to home characteristics, many wired communication schemes can be selected, such as power-line communication (PLC), inter-integrated circuit (I2C) and serial peripheral interface or wireless technologies such as Zigbee, Wi-Fi, radio-frequency identification (RFID) and the Internet of Things (IoT) to develop HANs. A few of the most common techniques will be discussed briefly in the following subsections [ 38 ].

PLC is a technique that uses power lines to transmit both power and data via the same cable to customers simultaneously. Such wired schemes provide fast communication with low interference of data. Moreover, PLC provides many communication terminals, as all power plugs can be used for data transferring. As all electrical home devices are connected by power cables, PLC can communicate with all these devices via the same cable.

PLC set-up has a low cost, as it uses pre-installed power cables with minimum hardware requirements. With a PLC communication scheme, home controllers can also be integrated easily with a high speed of data transfer. On the other hand, PLC has a high probability of data-signal attenuation. Furthermore, data signals suffer from electromagnetic interference of transmitted power signals.

2.5.2 Zigbee

Zigbee is a wireless communication technique [ 37–46 ]. Zigbee follows the IEEE 802.15.4 standard as a radio-frequency wireless communication scheme. It does not require any licenses for limited zones such as homes [ 37 ]. Also, Zigbee is a low-power-consuming technique. Therefore, it is suitable for basic home appliances, such as lighting, alarm systems and air conditioners [ 39 , 40 ]. Zigbee usually considers all home devices as slaves with a master coordinator/controller, which is known as a master–slave architecture.

Zigbee provides highly secured transferred data [ 38 , 41 ] with high reliability and capacity [ 42 ]. It also has self-organizing capabilities [ 42 ]. Conversely, Zigbee is relatively expensive due to special hardware requirements with low data-transfer rates. Moreover, Zigbee is not compatible with many other protocols, such as internet-supported protocols and Wi-Fi.

2.5.3 Wi-Fi technology

Wi-Fi is a wireless communication technique that follows the IEEE 802.11 standard. Wi-Fi provides high-rate data transfer that is compatible with many information-based devices such as computers, laptops, etc. [ 43 , 44 ].

Wi-Fi is a highly secured scheme with many of the familiar internet capabilities and low data-transfer delays (<3 ms) [ 45 ]. On the contrary, it is a relatively high-power-consuming scheme compared to Zigbee schemes [ 45 ]. Also, home devices can affect transmitted data signals by their emitted electromagnetic fields [ 46 ]. Wi-Fi can also suffer from interference from other communication protocols such as Zigbee and Bluetooth [ 43 ].

RFID is a wireless communication technique that conforms to the electronic product code protocol [ 47–52 ]. It can coincide with other communication schemes such as Wi-Fi and Zigbee. It can be utilized for a relatively widespread range of frequencies, from 120 kHz to 10 GHz. It also covers a wide range of distances, from 10 cm to 200 m [ 48 ]. Many researchers are investigating RFID home applications, such as energy-management systems [ 49 ], door locks [ 50 ] and lighting controls [ 51 ].

RFID operates on tags and reader-identification systems with a high data-transfer rate. Nevertheless, RFID has expensive chips with low bandwidth. The possibility of tag collision within the same zone decreases the accuracy of the RFID scheme.

This scheme connects home devices, users and grid operators via the internet to monitor and manage smart homes [ 6 , 38 , 53–65 ]. Consequently, the IoT and cloud computing have proven to be cheap, popular and easy services for smart homes. Moreover, IoT schemes are compatible with many other communication protocols, such as Zigbee, Bluetooth, etc., as listed in Table 1 . Internet hacking is the main problem with IoT schemes. System security and privacy are critical challenges for such internet-based schemes.

IoT protocols features

Today, building energy-management systems (BEMS) are utilized within residential, commercial, administration and industrial buildings. Moreover, the integration of variable renewable-energy sources with proper ESSs deployed in buildings represents an essential need for reliable, efficient BEMS.

For small-scale residential buildings or ‘homes’, BEMS should deal with variable uncertain load behaviours according to the home occupants’ desires and requirements, which is known as SHEMS. Throughout recent decades, many SHEMS have been presented and defined in many research studies.

In [ 66 ], SHEMS are defined as services that efficiently monitor and manage electricity generation, storage and consumption in smart houses. Nazabal et al. [ 67 ] include a collaborative exchange between smart homes and the utility as a main function of SHEMS. In [ 68 ], SHEMS are defined from the electrical-grid point of view as important tools that provide several benefits such as flattening the load curve, a reduction in peak demand and meeting the demand-side requirements.

3.1 Functions of SHEMS

Adaptive SHEMS are required to conserve power, especially with the increasing evolution in home loads. SHEMS should control both home appliances and available energy resources according to the real-time tariff and home user’s requirements [ 4 ]. Home-management schemes should provide an interface platform between home occupants and the home controller to readjust occasionally the load priority [ 5 ].

As shown in Fig. 2 , the majority of smart-home centres can be summarized as having five main functions [ 5 ], as follows:

Functions of SHEMS

(i) Monitoring: provides home residents with visual instantaneous information about the consumed power of different appliances and the status of several home parameters such as temperature, lights, etc. Furthermore, it can guide users to available alternatives for saving energy according to the existing operating modes of different home appliances.

(ii) Logging: collects and saves data pertaining to the amount of electricity consumed by each appliance, generated out of energy-conservation states. This functionality includes analysing the demand response for real-time prices.

(iii) Control: both direct and remote-control schemes can be implemented in smart homes. Different home appliances are controlled directly by SHEMS to match the home users’ desires, whereas other management functions are controlled remotely via cell phones or laptops, such as logging and controlling the power consumption of interruptible devices.

(iv) Management: the main function of SHEMS. It concerns the coordination between installed energy sources such as PV modules, micro wind turbines, energy storage and home appliances to optimize the total system efficiency and/or increase economic benefits.

(v) Alarms: SHEMS should respond to specific threats or faults by generating proper alarms according to fault locations, types, etc.

3.2 Economic analysis

Economic factors affecting home-management systems are classified into two classes. First, sizing costs include expanses of smart-home planning. Second, operating costs consist of bills of consumed energy. These costs depend mainly on the electrical tariff.

3.2.1 Sizing costs

These include capital, maintenance and replacement costs of smart-home infrastructures, such as PV systems, wind turbines, batteries/fuel cells and communication systems. In most previous SHEMS, such planning costs usually are not taken into consideration, as management schemes usually concern the daily operating costs only [ 69 ].

3.2.2 Operating costs

The electricity tariff is the main factor that gives an indication of the value of saving energy, according to the governmental authority; there are many types of tariffs, as follows [ 70–74 ]:

(i) Flat tariffs: the cost of consumed energy is constant regardless of the continuous change in the load. Load-rescheduling schemes do not affect the electricity bills in this scheme. Therefore, homeowners are not encouraged to rearrange their consumed energy, as they have no any economic benefits from managing the consumption of their appliances.

(ii) Block-rate tariffs: in this scheme, the monthly consumed energy price is classified into different categories. Each category has its own flat-rate price. Therefore, the main target of SHEMS is minimizing the total monthly consumed energy to avoid the risk of high-priced categories.

(iii) Seasonal tariffs: in this scheme, the total grid-demand load is changed significantly from one season to another. Therefore, the utility grid applies a high flat-rate tariff in high-demand seasons and vice versa. SHEMS should minimize the total consumption in such high-priced seasons and get the benefit of consumption in low-priced seasons.

(iv) Time-of-use (TOU) tariff: there are two or three predefined categories of tariffs daily in this scheme. First, a high-priced-hours tariff is applied during high-demand hours, which is known as a peak-hours tariff. Second, an off-peak-hours tariff is applied during low-demand hours with low prices for energy consumption. Sometimes, three levels of pricing are defined by the utility grid during the day, i.e. off-, middle- and high-peak costs, as discussed in [ 75 ]. SHEMS shift interruptible loads with low priority to off-peak hours to minimize the bill.

(v) Super peak TOU: this can be considered as a special case of the previously described TOU tariff but with a short peak-hours period of ~4 hours daily.

(vi) Critical peak pricing (CPP): the utility grid uses this tariff scheme during expected critical events of increasing the gap between generation and power demand. The price is increased exceptionally during these critical events by a constant predefined rate.

(vii) Variable peak pricing: this is a subcategory of the CPP tariff in which the exceptional increase in the tariff is variable. The utility grid informs consumers of the exceptional dynamic price increase according to its initial expectations.

(viii) Real-time pricing (RTP): the price is changing continuously during pre-identified intervals that range from several minutes to an hour. This tariff is the riskiest pricing scheme for homeowners. The electricity bill can increase significantly without a proper management system. SHEMS should communicate with grid utility and reschedule both home appliances, sources and energy storage continuously to minimize the total bill.

(viii) Peak-time rebates (PTRs): a proper price discount is considered for low-consumption loads during peak hours, which can be refunded later by the grid.

Depending on the electricity tariff, SHEMS complexity varies dramatically. In the case of using a flat-rate tariff, the algorithm becomes simpler, as one value is recorded for selling or buying the electricity. Tariffs may be published from the proper authority or predicted according to historical data. Prediction of the dynamic tariff is a main step in any SHEMS. Many time frames of tariff prediction are proposed that vary from hourly, daily or even a yearly prediction. Many optimization techniques with various objective functions are proposed to handle different features of both smart-home infrastructures and electricity tariffs, as will be discussed in the following section.

3.3 Pre-proposed SHEMS

Different SHEMS may be classified according to four features: operational planning of load-scheduling techniques, system objective functions, optimization techniques and smart-home model characteristics, as will be discussed in the following subsections.

3.3.1 Load-scheduling techniques

SHEMS concern the generation/load power balance to provide a comfortable lifestyle with the minimum possible costs. Scheduling loads according to their priority and the periods of renewable energy (solar, wind and EV state) can help in reducing the overall energy consumption daily. According to data collected by the management system, an initial load schedule is suggested daily to minimize the daily cost of consumed energy [ 76 ].

By using a proper optimal scheduling algorithm, electricity bills can be reduced by shifting loads from high-priced to low-priced intervals [ 77 , 78 ]. Many techniques have been proposed for home load scheduling, as will be discussed in the following subsections:

(i) Rule-based scheduling: in this algorithm, all home appliances and resources are connected to smart data-collector taps. By processing the collected data, different appliances are scheduled according to their priorities and based on the if/then rule. Also, some high-priority loads are supplied by home renewable sources/storage to maintain their function during predicted peak hours [ 79 , 80 ].

(ii) Artificial intelligence (AI): many AI controllers have been proposed for home load scheduling, such as artificial neural networks (ANNs), fuzzy logic (FL) and adaptive neural fuzzy inference systems (ANFISs). Table 2 compares between the three types of scheduling scheme based on AI.

Optimization techniques for load scheduling

3.3.2 Objective functions

(i) Single-objective techniques: in these schemes, only one criterion is minimized or maximized according to the home-user requirements. Several minimization objective functions were proposed, as follows:

lifetime degradation [ 47–49 ];

life-cycle costs [ 93 ];

gas emissions [ 94–96 ];

both active and reactive losses [ 97 , 98 ].

On the other hand, some research defined other single maximizing objective functions, such as:

net present value [ 96 ].

economic profits [ 97 , 98 ].

increased system reliability: according to many well-known reliability indices, such as loss of power supply probability, loss of load probability and others [ 99 , 100 ].

generated power [ 101 , 102 ].

loadability [ 103 ];

Multi-objective techniques: homeowners may have several criteria to be optimized together. Multi-objective optimization (MOO) problems consider many functions simultaneously. MOO finds a proper coordination that moderately satisfies the considered objectives. In [ 102 ], SHEMS with MOO techniques are summarized. Table 3 lists some examples of such multi-objective functions.

Multi-objective functions of SHEMS

3.3.3 Optimization techniques

Optimization techniques aim usually to identify the best coordination taking into consideration predefined constraints. Many approaches are available for addressing optimization problems. These approaches can be classified into two categories: classical and AI-based techniques. Table 4 lists various SHEMS optimization techniques and their main features.

Optimization techniques in SHEMS

Classical methods, especially linear programming types, have been usually applied in the last decade for smart homes with limited objective functions and simple model characteristics of tariff and home appliances. Recently, AI-based techniques have been proposed to cover more complicated models of smart homes with multi-objective functions with high levels of comfortable lifestyles.

3.3.4 Home-model characteristics

The smart-home model differs significantly according to three factors: installed variable energy sources, applied tariff and EV deployment. PV systems have been applied for nearly all studied smart homes due to their low price, simplicity of installation, low maintenance requirements and easily predicted daily power profile. On the other hand, a few pieces of research have considered micro wind turbines in their home models, such as [ 120 ]. Wind turbines are limited by high-wind-speed zones that are usually located in rural areas. In addition, homeowners usually do not prefer wind turbines due to their high prices, mechanical maintenance requirements and the unpredictable variation in wind power.

Dynamic tariffs are applied in most smart-home research. Specifically, the TOU tariff is analysed in a lot of studies, such as [ 121 , 122 ], whereas little research uses RTP, such as [ 123 , 124 ]. EV is studied as an energy source in the parking period or vehicle-to-grid (V2G) mode. In [ 75 , 125 ], EV in V2G mode reduces the electricity bill in peak hours, whereas, in [ 126–130 ], ESSs are managed only to reduce the electricity usage from the grid.

Many technical challenges arise for modern grids due to the increasing mutual exchange between smart homes and utility grids, especially power-quality control. Electric-power-quality studies usually confirm the acceptable behaviour of electrical sources such as voltage limits and harmonics analysis. Recently, smart power grids have diverse generation sources from different technologies that depend mainly on power electronics devices that increase the difficulty in power-quality control. Power-quality constraints should be taken into consideration for any energy-management systems to provide harmony between modern sources and loads.

On the other hand, power-quality issues should not form an additional obstacle against the integration of new technologies in modern grids. Therefore, both advanced communication schemes and AI-based techniques make modern grids ‘smart’ enough to cope with selective power-quality management. Smart homes exchange power with utility grids. With the prospective increase in such smart homes, the effect of their behaviour should be studied and controlled. Smart homes affect the grid-power quality in three different areas, as will be discussed in the following paragraphs [ 154–156 ].

4.1 Generating equipment

Integrated micro generation schemes in smart homes are mainly single-phase sources based on inverters with high switching frequencies that reach to many kHz. Low-order harmonics of such a generation type can usually be disregarded. However, with the expected continuous increase in such micro generators, the harmonics of low-voltage networks may shift into a range of higher frequencies, perhaps from 2 to 9 kHz [ 157 ]. Therefore, more research is needed to re-evaluate the appropriate limits for generation equipment in smart homes. Moreover, single-phase generation increases the risk of an unbalanced voltage in low-voltage grids. Therefore, negative-sequence voltage limits should be re-evaluated particularly for weak distribution networks. Also, a need for zero-sequence voltage limits may arise [ 154 ].

4.2 Home appliances

Modern home appliances depend mainly on electronic devices, such as newer LED lighting systems, EV battery chargers, etc., with relatively low fundamental current and high harmonic contents compared to traditional ones. According to many power-system analysers, many harmonics will increase significantly to risky levels, particularly fifth-harmonic voltage, with increase in such new electronic appliances [ 155 ].

4.3 Distribution network

In future grids, significant unusual operating scenarios may be possible with high penetration of domestic generation, especially with the possibility of an islanded (self-balanced) operation of smart homes. Short-circuit power will differ significantly during different operating conditions compared to classical grids. Moreover, low-voltage networks may suffer from damping-stability problems due to the continuous decrease in resistive loads, in conjunction with the increase in capacitive loads of electronic equipment. In addition, resonance problems may occur with low frequencies according to the continuous change in the nature of the load [ 156 ].

Although smart homes have bad impacts on utility grids, there are no charges applied from the grid authority to homeowners based on their buildings’ effects on grid-power quality. Therefore, home planners and SHEMS designers are usually concerned only with the economic benefits of their proposed schemes.

Smart homes, using new revolutions in communication systems and AI, provide residential houses with electrical power of a dual nature, i.e. as producer and consumer or ‘prosumer’. The energy-management system includes many components that mainly depend on a suitable communication scheme to coordinate between available sources, loads and users’ desire. Among many proposed communication systems, the IoT has many advantages and was chosen in many studies. Besides the popularity of the IoT, it does not need any special equipment installation and is compatible with many other communications protocols.

Many functions are applied by management systems such as monitoring and logging to facilitate a proper interaction between home occupants and the management scheme. Home security also should be confirmed via the management scheme by using different alarms corresponding to preset threats. Home users control different home appliances according their desires by SHEMS and via cell phones or manually.

The electricity tariff plays an important role in defining management-system characteristics. Tariffs vary from simple fixed flat rates to complicated variable dynamic ones according to the electrical-grid authority’s rules for residential loads. According to the tariff and selected objective functions, pre-proposed optimization techniques vary significantly from simple classical linear programming to sophisticated AI ones.

Modern electronic-based home appliances increase power-grid-quality problems, such as high harmonic contents, unbalanced loading and unpredictable short-circuit currents. On the other hand, power-grid authorities do not charge homeowners according to their buildings’ effects on the power quality. Therefore, all proposed energy-management systems are concerned mainly with the economic profits from reducing electricity consumption or even selling electrical power to the utility grids. In the future, price-based power-quality constraints should be defined by the grid authorities to confirm proper power exchange between both smart homes and grids. A possible future direction is behaviour modelling of aggregated smart homes/smart cities in different operating scenarios to conclude probable power-grid scenarios for stability and quality.

This work was supported by the project entitled ‘Smart Homes Energy Management Strategies’, Project ID: 4915, JESOR-2015-Cycle 4, which is sponsored by the Egyptian Academy of Scientific Research and Technology (ASRT), Cairo, Egypt.

None declared.

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As the demands of the workplace keep rising, many people respond by putting in ever longer hours, which inevitably leads to burnout that costs both the organization and the employee. Meanwhile, people take for granted what fuels their capacity to work—their energy. Increasing that capacity is the best way to get more done faster and better.

Time is a finite resource, but energy is different. It has four wellsprings—the body, emotions, mind, and spirit—and in each, it can be systematically expanded and renewed. In this article, Schwartz, founder of the Energy Project, describes how to establish rituals that will build energy in the four key dimensions. For instance, harnessing the body’s ultradian rhythms by taking intermittent breaks restores physical energy. Rejecting the role of a victim and instead viewing events through three hopeful lenses defuses energy-draining negative emotions. Avoiding the constant distractions that technology has introduced increases mental energy. And participating in activities that give you a sense of meaning and purpose boosts the energy of the spirit.

The new workday rituals succeed only if leaders support their adoption, but when that happens, the results can be powerful. A group of Wachovia Bank employees who went through an energy management program outperformed a control group on important financial metrics like loans generated, and they reported substantially improved customer relationships, productivity, and personal satisfaction. These findings corroborated anecdotal evidence gathered about the effectiveness of this approach at other companies, including Ernst & Young, Sony, and Deutsche Bank. When organizations invest in all dimensions of their employees’ lives, individuals respond by bringing all their energy wholeheartedly to work—and both companies and their people grow in value.

The science of stamina has advanced to the point where individuals, teams, and whole organizations can, with some straightforward interventions, significantly increase their capacity to get things done.

Steve Wanner is a highly respected 37-year-old partner at Ernst & Young, married with four young children. When we met him a year ago, he was working 12- to 14-hour days, felt perpetually exhausted, and found it difficult to fully engage with his family in the evenings, which left him feeling guilty and dissatisfied. He slept poorly, made no time to exercise, and seldom ate healthy meals, instead grabbing a bite to eat on the run or while working at his desk.

• Tony Schwartz is the CEO of The Energy Project and the author of The Way We’re Working Isn’t Working . Become a fan of The Energy Project on Facebook .
• CM Catherine McCarthy ( [email protected] ) is a senior vice president at the Energy Project.

Partner Center

Energy management is the proactive and systematic monitoring, control, and optimization of an organization’s energy consumption to conserve use and decrease energy costs.

Energy management includes minor actions such as monitoring monthly energy bills and upgrading to energy-saving light bulbs. It can mean more extensive improvements like adding insulation, installing a reflective roof covering or improving HVAC (heating and cooling) equipment to optimize energy performance.

Energy management also includes more elaborate activities, such as creating financial projections for commissioning renewable energy services and making other improvements for clean energy consumption and reduced energy costs in coming years.

More sophisticated energy management programs take advantage of technology. For instance, utility tracking software predicts future energy usage and plans energy budgets. Which help a company’s strategic decision makers ensure its energy management strategy correlates with its objectives and financial planning. Enterprise management software uses IoT, advanced connectivity and big data, allowing a corporation to take advantage of energy data analytics for better facility management, and helps with energy consumption and energy management challenges.

With ESG disclosures starting as early as 2025 for some companies, make sure that you're prepared with our guide.

Register for the ebook on GHG emissions accounting

Around the globe, there is a great need to save energy , which impacts prices, emissions targets, and legislation that affects us all. Not only can energy management help reduce the carbon emissions that contribute to global warming, it also helps reduce our dependence on increasingly limited fossil fuels.

According to energystar.gov (link resides outside of IBM), energy use is a US commercial office building’s single largest operating expense. It represents about a third of an enterprise’s typical operating budget and accounts for almost 20% of the nation’s annual greenhouse gas emissions. Energy StarÒ says office buildings waste up to one-third of the energy they consume.

Energy management is even more important in Europe, where the energy supply (link resides outside of IBM) is especially vulnerable to cyberattacks. This is because, on average, EU corporations invest 41% less on information security than American companies. Therefore, European companies need more initiatives that implement energy security solutions and help them safeguard data, access, and networks.

In addition to helping mitigate global problems that result from carbon emissions, energy management programs also bring benefits to corporations.

Having energy management software in place helps control a corporation’s budget and reduce the risk that is associated with energy price increases that can impact a business’s ability to operate. Tracking utility costs and energy efficiency allows corporations to budget more efficiently and gain better insight into overall operational costs. According to Energy Star, decreasing energy use by 10% can lead to a 1.5% increase in net operating income.

Energy monitoring and management not only bring cost savings to a company’s bottom line through decreased usage and consumption but can also mean reduced reliance on sometimes volatile supply chains. Energy management programs can also help companies lower costs through competitive procurement.

Having a strong environmental, social and governance (ESG) foundation helps companies save energy, increase transparency and work toward better sustainability goals.

Energy management solutions that use a single system of record to reduce energy use, cost, time, and the burden of reporting allow clients to manage the impact of environmental risks . While also, identifying efficiency opportunities and assess sustainability risks, thus focusing on ESG strategic outcomes.

Besides saving energy costs and lowering carbon emissions, reducing your company’s carbon footprint also shows the company’s commitment to the environment, which promotes an image of greater sustainability and advocating for green energy. Reducing greenhouse gas emissions leads to having, and being recognized for, greater corporate social responsibility.

A strategic approach to consulting with sustainability experts on your sustainability strategy and roadmap leads to the most effective energy and ESG management . In addition to other benefits, consulting on efforts that can include decarbonization and transition to renewables can also help your business attract new and often younger employees who value the optimization of sustainable energy and renewable energy use and take corporate social responsibility seriously.

Intelligent asset management can create energy efficiency for several industry use cases. Some of these include:

• Buildings:  Managing energy in your offices, factories and other facilities helps save energy and reduce carbon output in various ways.  Intelligent asset management uses technology such as AI, IoT, and analytics to help you inspect and monitor a building’s efficiency, calculate potential impacts to the grid, anticipate failure, and better plan maintenance procedures. Companies that use this technology can increase their productivity and make their facilities more energy-efficient, reducing emissions, mitigating climate risk and extending asset lifecycles. They gain operational insights into clean energy sources, efficient waste management and decarbonization.
• Sustainable supply chains:  Using AI and blockchain, intelligent supply chain automation can help reduce the impact that current supply chain weaknesses are having on your business. A more resilient, sustainable supply chain allows clients to act quickly and confidently and mitigate disruptions. Measuring Scope 3 emissions—indirect emissions that are not caused by a company directly but occurring within its supply chain, from warehousing, transportation and waste operations, among other areas—gives companies a competitive advantage in terms of sustainability. While Scope 3 emissions are out of a company’s direct control, measuring them identifies emission problems in their supply chain and allows them to perhaps affect change. Compared to Scope 1 (direct emissions) and Scope 2 (indirect), Scope 3 emissions generally represent the highest levels of greenhouse gases.
• Manufacturing:  Manufacturing facilities burn numerous fossil fuels and are some of the largest energy consumers. Creating an energy management program to sustainably reduce energy use for manufacturing includes collecting and analyzing energy-efficiency data (from various meters, databases and multiple plant sites) and creating a project management plan. A more IT-based factory floor that uses the Industrial Internet of Things (IIoT) and analytics means better predictive maintenance and quality, which leads to smarter manufacturing. Case studies show that changing energy consumption patterns in manufacturing requires management personnel that are committed to reducing energy use because it requires change, infrastructure investment and possibly retraining.

Energy management also comes with its own set of challenges. Some of these include:

• Not enough data integrity, analysis, or clear benchmarks:  Traditional building management systems and meters that collect data through manual energy audits don’t provide data that lets you see wasteful energy usage patterns. Using an energy management system makes it easier and more convenient to access and use more data about energy consumption. A strong energy management system automatically generates regular, reliable, and customized energy reports.
• Faulty systems, incorrect settings, and poorly maintained equipment:  Scheduled checks that are conducted too infrequently mean wasted time and money. Equipment that breaks down unexpectedly thrusts you into reactive maintenance, which can create challenges and unexpected expenses. In contrast, intelligent energy systems alert you to equipment breakdown and energy wastage immediately. They provide real-time information on energy consumption, and you can set energy KPIs for consistent results. Having a proactive maintenance strategy, with routine and preventive maintenance schedules, means that equipment is serviced regularly and has longer lifespans.
• Failure to plan for energy upgrades:  In-depth energy data lets you make smart decisions about energy retrofits or upgrade initiatives that bring cost savings and a good ROI.

Save energy and decarbonize with intelligent asset management.

Reduce energy and carbon emissions with efficient data centers and more sustainable, secure IT operations.

Accelerate sustainability by managing all your environmental, social, and governance (ESG) indicators in a single platform.

Optimize your real estate and facilities management operations for higher efficiency and sustainability.

Boost your sustainability journey and energy management efficiency by charting a sustainable and profitable path forward with open, AI-powered solutions and platforms plus deep industry expertise from IBM.

Automating application resource management should be your first step in the sustainability journey.

Learn how to minimize energy use and embed responsible computing across your IT environment.

Enterprises that want to reduce their carbon footprint should expand their sustainability goals to include green IT and responsible computing.

Unlock the full potential of your enterprise assets with IBM Maximo Application Suite by unifying maintenance, inspection and reliability systems into one platform. It’s an integrated cloud-based solution that harnesses the power of AI, IoT and advanced analytics to maximize asset performance, extend asset lifecycles, minimize operational costs and reduce downtime.

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• 16 December 2022

Energy crisis: five questions that must be answered in 2023

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Energy markets have been on a roller-coaster ride this year. In response to Russia’s invasion of Ukraine, Western countries imposed financial sanctions on Russia and embargoed its oil exports. Russia cut its gas supplies to Europe in retaliation. Major importers such as Germany had to slash their energy use and look elsewhere for supplies. Low- and middle-income nations struggled to access affordable energy. Countries including Pakistan, Bangladesh and Sri Lanka faced blackouts; fuel price hikes spilled over into food markets.

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The world’s energy problem

The world faces two energy problems: most of our energy still produces greenhouse gas emissions, and hundreds of millions lack access to energy..

The world lacks safe, low-carbon, and cheap large-scale energy alternatives to fossil fuels. Until we scale up those alternatives the world will continue to face the two energy problems of today. The energy problem that receives most attention is the link between energy access and greenhouse gas emissions. But the world has another global energy problem that is just as big: hundreds of millions of people lack access to sufficient energy entirely, with terrible consequences to themselves and the environment.

The problem that dominates the public discussion on energy is climate change. A climate crisis endangers the natural environment around us, our wellbeing today and the wellbeing of those who come after us.

It is the production of energy that is responsible for 87% of global greenhouse gas emissions and as the chart below shows, people in the richest countries have the very highest emissions.

This chart here will guide us through the discussion of the world's energy problem. It shows the per capita CO2 emissions on the vertical axis against the average income in that country on the horizontal axis.

In countries where people have an average income between $15,000 and $20,000, per capita CO 2 emissions are close to the global average ( 4.8 tonnes CO 2 per year). In every country where people's average income is above $25,000 the average emissions per capita are higher than the global average.

The world’s CO 2 emissions have been rising quickly and reached 36.6 billion tonnes in 2018 . As long as we are emitting greenhouse gases their concentration in the atmosphere increases . To bring climate change to an end the concentration of greenhouse gases in the atmosphere needs to stabilize and to achieve this the world’s greenhouse gas emissions have to decline towards net-zero.

To bring emissions down towards net-zero will be one of the world’s biggest challenges in the years ahead. But the world’s energy problem is actually even larger than that, because the world has not one, but two energy problems.

The twin problems of global energy

The first energy problem: those that have low carbon emissions lack access to energy.

The first global energy problem relates to the left-hand side of the scatter-plot above.

People in very poor countries have very low emissions. On average, people in the US emit more carbon dioxide in 4 days than people in poor countries – such as Ethiopia, Uganda, or Malawi – emit in an entire year. 1

The reason that the emissions of the poor are low is that they lack access to modern energy and technology. The energy problem of the poorer half of the world is energy poverty . The two charts below show that large shares of people in countries with a GDP per capita of less than $25,000 do not have access to electricity and clean cooking fuels. 2

The lack of access to these technologies causes some of the worst global problems of our time.

When people lack access to modern energy sources for cooking and heating, they rely on solid fuel sources – mostly firewood, but also dung and crop waste. This comes at a massive cost to the health of people in energy poverty: indoor air pollution , which the WHO calls "the world's largest single environmental health risk." 3 For the poorest people in the world it is the largest risk factor for early death and global health research suggests that indoor air pollution is responsible for 1.6 million deaths each year, twice the death count of poor sanitation. 4

The use of wood as a source of energy also has a negative impact on the environment around us. The reliance on fuelwood is the reason why poverty is linked to deforestation. The FAO reports that on the African continent the reliance on wood as fuel is the single most important driver of forest degradation. 5 Across East, Central, and West Africa fuelwood provides more than half of the total energy. 6

Lastly, the lack of access to energy subjects people to a life in poverty. No electricity means no refrigeration of food; no washing machine or dishwasher; and no light at night. You might have seen the photos of children sitting under a street lamp at night to do their homework. 7

The first energy problem of the world is the problem of energy poverty – those that do not have sufficient access to modern energy sources suffer poor living conditions as a result.

The second energy problem: those that have access to energy produce greenhouse gas emissions that are too high

The second energy problem is the one that is more well known, and relates to the right hand-side of the scatterplot above: greenhouse gas emissions are too high.

Those that need to reduce emissions the most are the extremely rich. Diana Ivanova and Richard Wood (2020) have just shown that the richest 1% in the EU emit on average 43 tonnes of CO 2 annually – 9-times as much as the global average of 4.8 tonnes. 8

The focus on the rich, however, can give the impression that it is only the emissions of the extremely rich that are the problem. What isn’t made clear enough in the public debate is that for the world's energy supply to be sustainable the greenhouse gas emissions of the majority of the world population are currently too high. The problem is larger for the extremely rich, but it isn’t limited to them.

The Paris Agreement's goal is to keep the increase of the global average temperature to well below 2°C above pre-industrial levels and “to pursue efforts to limit the temperature increase to 1.5°C”. 9

To achieve this goal emissions have to decline to net-zero within the coming decades.

Within richer countries, where few are suffering from energy poverty, even the emissions of the very poorest people are far higher. The paper by Ivanova and Wood shows that in countries like Germany, Ireland, and Greece more than 99% of households have per capita emissions of more than 2.4 tonnes per year.

The only countries that have emissions that are close to zero are those where the majority suffers from energy poverty. 10 The countries that are closest are the very poorest countries in Africa : Malawi, Burundi, and the Democratic Republic of Congo.

But this comes at a large cost to themselves as this chart shows. In no poor country do people have living standards that are comparable to those of people in richer countries.

And since living conditions are better where GDP per capita is higher, it is also the case that CO 2 emissions are higher where living conditions are better. Emissions are high where child mortality is the lowest , where children have good access to education, and where few of them suffer from hunger .

The reason for this is that as soon as people get access to energy from fossil fuels their emissions are too high to be sustainable over the long run (see here ).

People need access to energy for a good life. But in a world where fossil fuels are the dominant source of energy, access to modern energy means that carbon emissions are too high.

The more accurate description of the second global energy problem is therefore: the majority of the world population – all those who are not very poor – have greenhouse gas emissions that are far too high to be sustainable over the long run.

The current alternatives are energy poverty or fossil-fuels and greenhouse gases

The chart here is a version of the scatter plot above and summarizes the two global energy problems: In purple are those that live in energy poverty, in blue those whose greenhouse gas emissions are too high if we want to avoid severe climate change.

So far I have looked at the global energy problem in a static way, but the world is changing  of course.

For millennia all of our ancestors lived in the pink bubble: the reliance on wood meant they suffered from indoor air pollution; the necessity of acquiring fuelwood and agricultural land meant deforestation; and minimal technology meant that our ancestors lived in conditions of extreme poverty.

In the last two centuries more and more people have moved from the purple to the blue area in the chart. In many ways this is a very positive development. Economic growth and increased access to modern energy improved people's living conditions. In rich countries almost no one dies from indoor air pollution and living conditions are much better in many ways as we've seen above. It also meant that we made progress against the ecological downside of energy poverty: The link between poverty and the reliance on fuelwood is one of the key reasons why deforestation declines with economic growth. 11 And progress in that direction has been fast: on any average day in the last decade 315,000 people in the world got access to electricity for the first time in their life.

But while living conditions improved, greenhouse gas emissions increased.

The chart shows what this meant for greenhouse gas emissions over the last generation. The chart is a version of the scatter plot above, but it shows the change over time – from 1990 to the latest available data.

The data is now also plotted on log-log scales which has the advantage that you can see the rates of change easily. On a logarithmic axis the steepness of the line corresponds to the rate of change. What the chart shows is that low- and middle-income countries increased their emissions at very similar rates.

By default the chart shows the change of income and emission for the 14 countries that are home to more than 100 million people, but you can add other countries to the chart.

What has been true in the past two decades will be true in the future. For the poorer three-quarters of the world income growth means catching up with the good living conditions of the richer world, but unless there are cheap alternatives to fossil fuels it also means catching up with the high emissions of the richer world.

Our challenge: find large-scale energy alternatives to fossil fuels that are affordable, safe and sustainable

The task for our generation is therefore twofold: since the majority of the world still lives in poor conditions, we have to continue to make progress in our fight against energy poverty. But success in this fight will only translate into good living conditions for today’s young generation when we can reduce greenhouse gas emissions at the same time.

Key to making progress on both of these fronts is the source of energy and its price . Those living in energy poverty cannot afford sufficient energy and those that left the worst poverty behind rely on fossil fuels to meet their energy needs.

Once we look at it this way it becomes clear that the twin energy problems are really the two sides of one big problem. We lack large-scale energy alternatives to fossil fuels that are cheap, safe, and sustainable.

This last version of the scatter plot shows what it would mean to have such energy sources at scale. It would allow the world to leave the unsustainable current alternatives behind and make the transition to the bottom right corner of the chart: the area marked with the green rectangle where emissions are net-zero and everyone has left energy poverty behind.

Without these technologies we are trapped in a world where we have only bad alternatives: Low-income countries that fail to meet the needs of the current generation; high-income countries that compromise the ability of future generations to meet their needs; and middle-income countries that fail on both counts.

Since we have not developed all the technologies that are required to make this transition possible large scale innovation is required for the world to make this transition. This is the case for most sectors that cause carbon emissions , in particular in the transport (shipping, aviation, road transport) and heating sectors, but also cement production and agriculture.

One sector where we have developed several alternatives to fossil fuels is electricity. Nuclear power and renewables emit far less carbon (and are much safer) than fossil fuels. Still, as the last chart shows, their share in global electricity production hasn't changed much: only increasing from 36% to 38% in the last three decades.

But it is possible to do better. Some countries have scaled up nuclear power and renewables and are doing much better than the global average. You can see this if you change the chart to show the data for France and Sweden – in France 92% of electricity comes from low carbon sources, in Sweden it is 99%. The consequence of countries doing better in this respect should be that they are closer to the sustainable energy world of the future. The scatter plot above shows that this is the case.

But for the global energy supply – especially outside the electricity sector – the world is still far away from a solution to the world's energy problem.

Every country is still very far away from providing clean, safe, and affordable energy at a massive scale and unless we make rapid progress in developing these technologies we will remain stuck in the two unsustainable alternatives of today: energy poverty or greenhouse gas emissions.

As can be seen from the chart, the ratio of emissions is 17.49t / 0.2t = 87.45. And 365 days/87.45=4.17 days

It is worth looking into the cutoffs for what it means – according to these international statistics – to have access to energy. The cutoffs are low.

See Raising Global Energy Ambitions: The 1,000 kWh Modern Energy Minimum and IEA (2020) – Defining energy access: 2020 methodology, IEA, Paris.

WHO (2014) – Frequently Asked Questions – Ambient and Household Air Pollution and Health . Update 2014

While it is certain that the death toll of indoor air pollution is high, there are widely differing estimates. At the higher end of the spectrum, the WHO estimates a death count of more than twice that. We discuss it in our entry on indoor air pollution .

The 2018 estimate for premature deaths due to poor sanitation is from the same analysis, the Global Burden of Disease study. See here .

FAO and UNEP. 2020. The State of the World’s Forests 2020. Forests, biodiversity and people. Rome. https://doi.org/10.4060/ca8642en

The same report also reports that an estimated 880 million people worldwide are collecting fuelwood or producing charcoal with it.

This is according to the IEA's World Energy Balances 2020. Here is a visualization of the data.

The second largest energy source across the three regions is oil and the third is gas.

The photo shows students study under the streetlights at Conakry airport in Guinea. It was taken by Rebecca Blackwell for the Associated Press.

It was published by the New York Times here .

The global average is 4.8 tonnes per capita . The richest 1% of individuals in the EU emit 43 tonnes per capita – according to Ivanova D, Wood R (2020). The unequal distribution of household carbon footprints in Europe and its link to sustainability. Global Sustainability 3, e18, 1–12. https://doi.org/10.1017/sus.2020.12

On Our World in Data my colleague Hannah Ritchie has looked into a related question and also found that the highest emissions are concentrated among a relatively small share of the global population: High-income countries are home to only 16% of the world population, yet they are responsible for almost half (46%) of the world’s emissions.

Article 2 of the Paris Agreement states the goal in section 1a: “Holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.”

It is an interesting question whether there are some subnational regions in richer countries where a larger group of people has extremely low emissions; it might possibly be the case in regions that rely on nuclear energy or renewables (likely hydro power) or where aforestation is happening rapidly.

Crespo Cuaresma, J., Danylo, O., Fritz, S. et al. Economic Development and Forest Cover: Evidence from Satellite Data. Sci Rep 7, 40678 (2017). https://doi.org/10.1038/srep40678

Bruce N, Rehfuess E, Mehta S, et al. Indoor Air Pollution. In: Jamison DT, Breman JG, Measham AR, et al., editors. Disease Control Priorities in Developing Countries. 2nd edition. Washington (DC): The International Bank for Reconstruction and Development / The World Bank; 2006. Chapter 42. Available from: https://www.ncbi.nlm.nih.gov/books/NBK11760/ Co-published by Oxford University Press, New York.

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The data produced by third parties and made available by Our World in Data is subject to the license terms from the original third-party authors. We will always indicate the original source of the data in our documentation, so you should always check the license of any such third-party data before use and redistribution.

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Geography Notes

Essay on energy management: top 9 essays | india.

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Here is a compilation of essays on ‘Energy Management’ for class 6, 7, 8, 9, 10, 11 and 12. Find paragraphs, long and short essays on ‘Energy Management’ especially written for school and college students.

Essay on Energy Management

Essay Contents:

• Essay on the Environmental Aspects of Energy Management System

Essay # 1. Meaning of Energy Management :

The use of energy has been a key in the development of the human society by helping it to control and adapt to the environment. Managing the use of energy is inevitable in any functional society.

In the industrialized world the development of energy resources has become essential for agriculture, transportation, waste collection, information technology, communications that have become prerequisites of a developed society. The increasing use of energy since the industrial revolution has also brought with it a number of serious problems, some of which, such as global warming, present potentially grave risks to the world.

In society and in the context of humanities, the word energy is used as a synonym of energy resources and most often refers to substances like fuels, petroleum products and electricity in general. These are sources of usable energy, in that they can be easily transformed to other kinds of energy sources that can serve a particular useful purpose.

Consumption of energy resources (e.g., turning on a light) requires resources and has an effect on the environment. Many electric power plants burn coal, oil or natural gas in order to generate electricity for energy needs. While burning these fossil fuels produces a readily available and instantaneous supply of electricity, it also generates air pollutants including carbon dioxide (CO 2 ), sulphur dioxide and trioxide (SOx) and nitrogen oxides (NOx).

Carbon dioxide is an important greenhouse gas which is thought to be responsible for some fraction of the rapid increase in global warming seen especially in the temperature records in the 20th century, as compared with tens of thousands of years-worth of temperature records which can be read from ice cores taken in arctic regions.

Burning fossil fuels for electricity generation also releases trace metals such as beryllium, cadmium, chromium, copper, manganese, mercury, nickel and silver into the environment, which also act as pollutants. Certain renewable energy technologies do not pollute the environment in the same ways and therefore can help contribute to a cleaner energy future for the world.

Renewable energy technologies available for electricity production include bio fuels, solar power, tidal power, wind turbines, hydroelectric power, etc. However, serious environmental concerns have been articulated by several environmental activists regarding some of these modes of electricity generation.

According to them, some pollution is invariably produced during the manufacture and retirement of the materials associated with the machinery used in these technologies. There is, however, general agreement that the most effective way to save the environment from expanding energy production is energy conservation.

Since the cost of energy has become a significant factor in the performance of economy of societies, management of energy resources has become very crucial. Energy management involves utilizing the available energy resources more effectively that is with minimum incremental costs.

Many times it is possible to save expenditure on energy without incorporating fresh technology by simple management techniques. Most often energy management is the practice of using energy more efficiently by eliminating energy wastage or to balance justifiable energy demand with appropriate energy supply. The process couples energy awareness with energy conservation.

Since now energy plays an essential role in industrial societies, the ownership and control of energy resources plays an increasing role in politics. At the national level, governments seek to influence the sharing (distribution) of energy resources among various sections of the society through pricing mechanisms; or even who owns resources within their borders. They may also seek to influence the use of energy by individuals and business in an attempt to tackle environmental issues.

Producing energy to sustain human needs is an essential socials activity and a great deal of effort goes into the activity. While most of such effort is limited towards increasing the production of electricity and oil, newer ways of producing usable energy resources from the available energy resources are being explored.

One such effort is to explore means of producing hydrogen fuel from water. Though hydrogen use is environmentally friendly, its production requires energy and existing technologies to make it are not very efficient.

Essay # 2. Need for Energy Management:

To achieve economic growth, we need to and have to use more and more energy to increase the pace of development. We need to increase the manufacturing of good in quality and volume.

It is estimated that industrial energy use in developing countries constitutes about 45-50% of the total commercial energy consumption. Much of this energy is converted from imported oil, the price of which has increased tremendously so much so that most of developing countries spent more than 50% of their foreign exchange earnings.

Not with standing these fiscal constraints, developing countries need to expand its industrial base like India if it has to generate the resources to improve the quality of life of its people. The expansion of industrial base does require additional energy inputs which becomes more and more difficult in the present scenario.

Generation of power needs resources. Resources available on earth are of diminishing nature. It is getting depleted very fast with time as use is increasing exponentially. There are some resources, which are renewable, e.g., solar power, wind power and geothermal power. Technology is also being developed to harness these renewable resources to generate power.

The capital investment requirement is very high as compared to normally available resources. It can be quoted here that with the available technology, we could hardly generate 5% of total power generation as on date. Hence, to restrict the use or increase the life of diminishing type of resources.

Let us see the other aspect of life, whereas everybody can’t understand all technical reasons or benefits of the whole world until he himself realizes some benefit for his action or efforts. In this competitive world, cost competitiveness is very essential for survival of every individual. To establish any work/motive or task, energy in one or other form is an essential component.

Thus, the need to conserve energy, particularly in industry and commerce is strongly felt as the energy cost takes up substantial share in the overall cost structure of the operation. Hence it calls management of energy or in other words management of resources or energy conservation. Energy resources needs to be managed irrespective of a developed nation or a developing nation.

Essay # 3. How to Manage Energy?

Energy management is not by chance/incident/accident. It is a mission with a target. It can’t be done single handedly or by sitting on a table. It needs coordinated effort by team of energy conscious people with a milestone to be established.

Very concerted efforts in a planned manner to established energy management strategy needs to be established based on the target of energy conservation.

Strategy/Methodology of Energy Management:

Having established the need of energy management/conservation, a systematic approach needs to be discussed and concluded.

Same of steps to reach to the target of energy conservation can be listed as below:

(1) Identification of inefficient areas/equipment:

i. Enlistment or knowledge of type of energy being used.

ii. Study of machines/technology employed.

iii. Process study and identification of major energy consumption areas.

iv. In depth process study to identify the inefficient use of energy.

(2) Identification of technology/equipment requirement.

(3) Discussion, brain storming and conclusion of resources requirement.

(4) Management of resources like manpower, machine or technology.

(5) Evaluate your actions/efforts to estimate the rate of return.

‘Inefficient action/efforts cannot give efficient results.’ ‘Only efficient efforts and economic ideas need to be tested’.

(6) Implementation of new process/new technology/new machines.

(7) Re-evaluate your actions/your efforts.

Essay # 4. Techniques Employed for Energy Management :

(1) Self-knowledge and awareness among the masses.

(2) Re-engineering and evaluation.

(3) Technology upgradations.

(1) Self-Knowledge and Awareness among the Masses:

For the successful energy management and implementation, the knowledge of process and machine for the leader is very important. On the first instance, there is always a resistance from the user. There might be psychological mind blocks in the user’s mind.

This needs to be made known and clarified. It is further more important to make the owner of the process understand the cost benefit of the energy conservation. Creating awareness to the process owner can give most economic and low cost solutions to save energy.

(2) Re-Engineering and Evaluation:

After utilizing the low cost or awareness concept, we need to do in depth study the process machine. We need to ascertain, the scope and extent of energy conservation in the area under consideration. Evaluate the existing situation/employed technology in terms of process requirements and production capacity and capability.

Sometimes, we do land into a situation of handicap with machine capacity and capability for the sake of energy conservation. It must not be done. Once it is established, that there is a potential of energy optimization. We need to start evaluation and re-engineering of the process /equipment. It may be terms of layout, motor capacity, types of starters employed, nature of loads, etc.

(3) Technology Upgradations:

After having established the scope of energy conservation in the specified area. The latest technology availability is suitability, sustainability and pricing needs to be studied.

Economics needs to be worked out like pay-back period, return of investment, quality of energy savings, etc.

Please Remember:

“Better the diagnosis, best will be the result”.

Essay # 5. The Energy-Saving Meaning in Energy Management :

When it comes to energy saving, energy management is the process of monitoring, controlling and conserving energy in a building or organization.

Typically this involves the following steps:

1. Metering your energy consumption and collecting the data.

2. Finding opportunities to save energy and estimating how much energy each opportunity could save. You would typically analyse your meter data to find and quantify routine energy waste and you might also investigate the energy savings that you could make by replacing equipment (e.g., lighting) or by upgrading equipment.

3. Taking action to target the opportunities to save energy (i.e., tackling the routine waste and replacing or upgrading the inefficient equipment).

4. Tracking your progress by analyzing your meter data to see how well your energy-saving efforts have worked. (And then back to step 2 and the cycle continues…)

Many people use ‘energy management’ to refer specifically to those energy-saving efforts that focus on making better use of existing buildings and equipment. Strictly speaking, this limits things to the behavioural aspects of energy saving (i.e., encouraging people to use less energy by raising energy awareness), although the use of cheap control equipment such as timer switches is often included in the definition as well.

The term “energy management” is also used in other fields such as:

i. It’s something that energy suppliers (or utility companies) do to ensure that their power stations and renewable energy sources generate enough energy to meet demand (the amount of energy that their customers need).

ii. It is used to refer to techniques for managing and controlling one’s own levels of personal energy.

Essay # 6. Importance of Energy Management :

Energy management is the key to saving energy in your organizations. Much of the importance of energy saving stems from the global need to save energy – this global need affects energy prices, emissions targets and legislation, all of which lead to several compelling reasons why you should save energy at your organization specifically.

The Global Need to Save Energy:

If it was not for the global need to save energy, the term “energy management” might never have even been coined.

Globally we need to save energy in order to:

i. Reduce the damage that we are doing to our planet, earth. As a human race we would probably find things rather difficult without the earth, so it makes good sense to try to make it last.

ii. Reduce our dependence on the fossil fuels that are becoming increasingly limited in supply.

Controlling and Reducing Energy Consumption at Your Organization:

Energy management is the means to controlling and reducing your organization’s energy consumption.

And controlling and reducing your organization’s energy consumption is important because it enables you to:

i. Reduce costs this is becoming increasingly important as energy costs rise.

ii. Reduce carbon emissions and the environmental damage that they cause – as well as the cost-related implications of carbon taxes and the like, your organization may be keen to reduce its carbon footprint to promote a green, sustainable image. Not least because promoting such an image is often good for the bottom line.

iii. Reduce risk the more energy you consume, the greater the risk that energy price increases or supply shortages could seriously affect your profitability or even make it impossible for your business/organization to continue. With energy management you can reduce this risk by reducing your demand for energy and by controlling it so as to make it more predictable.

On top of these reasons, it’s quite likely that you have some rather aggressive energy consumption-reduction targets that you are supposed to be meeting at some worrying point in near future.

Essay # 7. Managing the Energy Consumption :

These are basic four steps involved in energy management such as in the case of energy management in building. Let us now discuss these four steps in detail taking the case of an energy management in a building that may be a commercial or home installation.

The Four Steps involved are:

2. Finding and quantifying opportunities to save energy.

3. Targeting the opportunities to save energy.

4. Tracking your progress at saving energy.

1. Metering your Energy Consumption and Collecting the Data :

As a rule of thumb the more data you can get and the more detailed it is the better.

The old school approach to energy-data collection is to manually read meters once a week or once a month. This weekly or monthly data is not nearly as good the data that comes easily and automatically from the modern approach.

The modern approach to energy-data collection is to fit interval-metering systems that automatically measure and record energy consumption at short, regular intervals such as every 15-minutes or half hour. There’s more about this on our page about interval data.

Detailed interval energy consumption data makes it possible to see patterns of energy waste that it would be impossible to see otherwise. For example, there’s simply no way that weekly or monthly meter readings can show you how much energy you’re using at different times of the day or on different days of the week. And seeing these patterns makes it much easier to find the routine waste in your building.

2. Finding and Quantifying Opportunities to Save Energy :

i. The detailed meter data that you are collecting will be invaluable for helping you to find and quantify energy-saving opportunities.

ii. The easiest and most cost-effective energy-saving opportunities typically require little or no capital investment.

iii. And one of the simplest ways to save a significant amount of energy is to encourage staff to switch equipment off at the end of each working day.

iv. Looking at detailed interval energy data is the ideal way to find routine energy waste. You can check whether staff and timers are switching things off without having to patrol the building day and night and with a little detective work, you can usually figure out who or what is causing the energy wastage that you will inevitably find.

v. And, using your detailed interval data, it’s usually pretty easy to make reasonable estimates of how much energy is being wasted at different times.

For-example, if you’ve identified that a lot of energy is being wasted by equipment left on over the weekends, you can:

i. Use your interval data to calculate how much energy (in kWh) is being used each weekend.

ii. Estimate the proportion of that energy that is being wasted (by equipment that should be switched off).

iii. Using the figures from (a) and (b), calculate an estimate of the total kWh that are wasted each weekend.

Alternatively, if you have no idea of the proportion of energy that is being wasted by equipment left on unnecessarily, you could:

i. Walk the building one evening to ensure that everything that should be switched off is switched off.

ii. Look back at the data for that evening to see how many kW were being used after you switched everything off.

iii. Subtract the target kW figure (ii) from the typical kW figure for weekends to estimate the potential savings in kW (power).

iv. Multiple the kW savings by the number of hours over the weekend to get the total potential kWh energy savings for a weekend.

Also, most buildings have open to them a variety of equipment or building- fabric-related energy-saving opportunities, most of which require a more significant capital investment.

Although your detailed meter data won’t necessarily help you to find these equipment or building-fabric-related opportunities (e.g., it won’t tell you that a more efficient type of lighting equipment exists), it will be useful for helping you to quantify the potential savings that each opportunity could bring. It’s much more reliable to base your savings estimates on real metered data than on rules of thumb alone.

And it’s critically important to quantify the expected savings for any opportunity that you are considering investing a lot of time or money into it’s the only way you can figure out how to home in on the biggest, easiest energy savings first.

3. Targeting the Opportunities to Save Energy :

Just finding the opportunities to save energy won’t help you to save energy – you have to take action to target them.

For those energy-saving opportunities that require you to motivate the people in your building, our article on energy awareness should be useful. It can be hard work, but if you can get the people on your side, you can make some seriously big energy savings without investing anything other than time.

As for those energy-saving opportunities that require you to upgrade equipment or insulation assuming you’ve identified them, there’s little more to be said. Just keep your fingers crossed that you make your anticipated savings and be thankful that you don’t work for the sort of organization that won’t invest in anything with a payback period over 6 months.

4. Tracking Your Progress at Saving Energy :

Once you’ve taken action to save energy, it’s important that you find out how effective your actions have been:

i. Energy savings that come from behavioural changes (e.g., getting people to switch off their computers before going home) need ongoing attention to ensure that they remain effective and achieve their maximum potential.

ii. If you’ve invested money into new equipment, you’ll probably want to prove that you’ve achieved the energy savings you predicted.

iii. If you’ve corrected faulty timers or control-equipment settings, you’ll need to keep checking back to ensure that everything’s still working as it should be. Simple things like a power cut can easily cause timers to revert back to factory settings – if you’re not keeping an eye on your energy-consumption patterns you can easily miss such problems.

iv. If you’ve been given energy-saving targets from above, you’ll need to provide evidence that you’re meeting them or at least making progress towards that goal.

v. And occasionally you might need to prove that progress isn’t being made (e.g., if you’re at your wits end trying to convince the decision makers to invest some money into your energy-management drive).

Managing Your Energy Consumption Effectively is an Ongoing Process :

At the very least you should keep analyzing your energy data regularly to check that things aren’t getting worse. It’s pretty normal for unwatched buildings to become less efficient with time it’s to be expected that equipment will break down or lose efficiency and that people will forget the good habits you worked hard to encourage in the past.

So at a minimum you should take a quick look at your energy data once a week or even just once a month to ensure that nothing has gone horribly wrong. It’s a real shame when easy-to-fix faults such as misconfigured timers remain unnoticed for months on end leaving a huge energy bill that could have easily been avoided.

But ideally your energy-management drive will be an ongoing effort to find new opportunities to target (step 2), to target them (step 3), and to track your progress at making ongoing energy savings (step 4). Managing your energy consumption doesn’t have to be a full-time job, but you’ll achieve much better results it you make it part of your regular routine.

Essay # 8. Energy Conservation and Its Need in Energy Management :

Energy conservation is the key element in energy management.

Energy conservation refers to efforts made to reduce energy consumption. Energy conservation can be achieved through increased efficient energy use, in conjunction with decreased energy consumption and/or reduced consumption from conventional energy sources.

Energy conservation can result in increased financial capital, environmental quality, national security, personal security and human comfort. Individuals and organizations that are direct consumers of energy choose to conserve energy to reduce energy costs and promote economic security. Industrial and commercial users can increase energy use efficiency to maximize profit.

Electrical energy conservation is an important element of energy policy. Energy conservation reduces the energy consumption and energy demand per capita and thus offsets some of the growth in energy supply needed to keep up with population growth.

This reduces the rise in energy costs and can reduce the need for new power plants and energy imports. This reduced energy demand can provide more flexibility in choosing the most preferred methods of energy production.

By reducing emissions, energy conservation is an important part of lessening climate change. Energy conservation facilitates the replacement of non-renewable resources with renewable energy. Energy conservation is often the most economical solution to energy shortages and is a more environmentally being alternative to increased energy production.

Why should we save energy?

“The earth provides enough to satisfy every man’s needs but not every man’s greed”. — Mahatma Gandhi

We need to save energy as:

i. We use energy faster than it can be produced. Coal, oil and natural gas – the most utilized sources take thousands of years for formation.

ii. Energy resources are limited. India has approximately 1% of world’s energy resources but it has 16% of world population.

iii. Most of the energy sources we use cannot be reused and renewed. Non-renewable energy sources constitute 80% of the fuel use. It is said that our energy resources may last only for another 40 years or so.

iv. We save the country a lot of money when we save energy. About 75 percent of our crude oil needs are met from imports which would cost about Rs. 1,50,000 crores a year.

v. We save our money when we save energy. Imagine your savings if your LPG cylinder comes for an extra week or there is a cut in your electricity bills.

vi. We save our energy when we save energy. When we use fuel wood efficiently, our fuel wood requirements are lower and so is our drudgery for its collection.

vii. Energy saved is energy generated. When we save one unit of energy, it is equivalent to 2 units of energy produced.

viii. Save energy to reduce pollution. Energy production and use account to large proportion of air pollution and more than 83 percent of greenhouse gas emissions.

ix. It is our duty to conserve today for tomorrow’s use. An old Indian saying indicates ‘The earth, water and the air are not a gift to us from our parents but a loan for our children’.

Essay # 9. Environmental Aspects of Energy Management System:

Environmental aspects are the building blocks of energy management system. The identification of environmental aspects is an important step towards recognizing their impact on our planet. This proves helpful in setting and formulating objectives, targets and other programs that may be directed towards solving environmental problems.

Environmental aspect and environmental impacts have cause and effect relationship with each other. As we know that the process of energy- generation, transport and utilization leads to environmental problems. Implications of these problems need to be closely studied. So, environmental aspects and their impacts need to be addressed as these are the part of energy management system.

IS014001 requires:

i. ‘The organization shall establish and maintain a procedure to identify the environmental aspects of its activities, products and services that it can control and over which it can be expected to have an influence, in order to determine those which have or can have significant impacts on the environment’.

Definition of Environmental Aspects:

IS014001 defines an environmental aspects as an:

i. ‘Element of an organization’s activities, products or services that can interact with the environment’.

Aspects can be:

i. Regulated or Non-Regulated

ii. Natural or Man-Made

iii. Positive or Negative

iv. Controlled or Influenced by the Organization

Examples of Aspects:

ii. Chemicals:

a. Corrosives

b. Flammables

d. Contained gases

iii. Resource use:

i. Wastewater

ii. Fumes (air emissions)

iii. Solid waste

iv. Hazardous waste

vi. Traffic

Environmental Impacts :

Environmental aspects and environmental impacts have cause and effect relationship. A significant environmental aspect is one that may produce a significant environmental impact.

IS014001 defines environmental impact as:

i. “Any change to the environment, whether adverse or beneficial, wholly or partially resulting from an organization’s activities, products or services”

IS014001 defines the environment as:

i. “Surroundings in which an organization operates, including air, water, land, natural resources, flora, flauna, humans and their interrelation”.

Surroundings in this context extend from within an organization to the global system.

Examples of Impacts :

i. Depletion of Natural Resources

ii. Destruction of Habitats

ii. Oxygen Level

iii. Toxicity

i. Air Toxicity

iii. Global Warming

iv. Ozone Depletion

Cause and Effect:

Environmental aspects and environmental impacts.

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Essay on Energy Security and Its Challenges | Energy Management

In this essay we will discuss about:- 1. Strategic Importance of Energy Security in the Asia-Pacific 2. The Evolution of Strategic Energy Security 3. A Region at Risk: Asia-Pacific 4. The Economics of Energy Security 5. Regional Implication of Energy Demand 6. The Dangers of Soaring Oil Prices.

Essay Contents:

• Essay on the Dangers of Soaring Oil Prices

Essay # 1. Strategic Importance of Energy Security in the Asia-Pacific:

Nearly three years into the global ‘war on terrorism’, there is still an incomplete recognition of the strategic importance of energy security. The current focus on energy security remains lacking and limited, with a rather out-dated reliance on the more traditional perspective of concentrating on the risks posed by instability and insecurity in the Middle Eastern oil-producing region.

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The Middle Eastern theatre mandates such focus on three reasons- its role as the major source and gateway for global energy, the instability rooted in the very nature of its regimes, and as the original source of the new wave of Islamist terrorism.

Yet, as the repercussions of the attacks of September 11, 2001, continue to alter the global geopolitical landscape on several levels, comprehensive energy security is the integral edifice absent from the newly evolving architecture of international security. This absence is most evident in the vulnerabilities of the key components of the global energy network, including troubling deficiencies in the transport of Liquefied Natural Gas (LNG) and the exposed weakness of pipelines.

Essay # 2. The Evolution of Strategic Energy Security:

Recognition of energy as a global security concern first garnered strategic attention in the 1970s, with the Organisation of Petroleum Exporting Countries (OPEC) oil embargo of 1973 and the overthrow of a key regional Western ally in Iran. From the start, the initial stage of energy security was linked to the volatile Middle East and was elevated as the defining issue in relations with the region.

The evolution of this geopolitical marriage of the Middle East to Western energy consumers resulted in a cumulative disregard for the fundamental signs of discord mounting in the region that eventually erupted in the backlash of Islamist terror and rigid anti-Americanism.

But, with a short-sighted preference of regime stability to ensure the steady flow of oil, longer-term security was sacrificed. It is this painful lesson that defines the very nature of the region as a challenge to security and stability today. Thus the warning signs emanating from within the region were always there but generally neglected, leading to the current threats rooted in decades of dictatorship, a deficit of democracy, and looming demographic disaster.

Another lesson learned from the first stage of energy security was the danger of ignoring the domestic, political, economic and social dimensions of energy security. This set of dynamic internal factors has contributed to the emergence of the Middle East as a breeding ground for global insecurity and has combined with the external dependence on Middle Eastern oil to endanger new ‘regions at risk’.

Essay # 3. A Region at Risk: Asia-Pacific:

The dramatic geopolitical shifts stemming from the end of the Cold War and the global ‘war on terrorism’ in the wake of September 11 have resulted in an abrupt restructuring of the traditionally bipolar system of global governance that has served as the norm of the 20th century. Of all the regions subject to the repercussions of this new geopolitical landscape, the Asia-Pacific region has emerged as one of the key arenas.

A convergence of new factors, ranging from the threats posed by al-Qaeda to the sweeping engagement of the US military throughout the region, has endowed the region with a significantly enhanced strategic importance.

The implications for the Asia-Pacific region from within this new prism of global geopolitics and a greater reliance on military security have also been deepened by several underlying characteristics. Specifically, the Asia-Pacific has seen a pattern of increasing insecurity in recent years that has exposed the absence of any regional institution capable of forging common and cooperative security.

This pattern of mounting threats has been marked by three escalating crises- the Taiwan Strait crisis in 1996, the Asian financial crisis of 1997-99, and the recent North Korean nuclear crisis. There is also a danger of a fourth crisis, involving Chinese frustration with the intricacies of Taiwan’s political ambitions.

This absence of a governing regional structure has only exacerbated the region’s vulnerability within a new post-Cold War/post-September 11 threat matrix. Although there has been some attempt to address this regional insecurity through existing regional organisations such as the Association of Southeast Asian Nations (ASEAN), the regional states still lack the political will, military capability and experience to enforce security adequately in any significant multilateral approach.

And as the only substantive security architecture in the region is limited to the web of bilateral security treaties centered on the United States, there is a serious need for a new security regionalism.

Such an effort can link Asia-Pacific economic cooperation to a regional security process and also build on the regional powers of Australia, Japan and South Korea, each of which has been recently ‘deputized’ by the United States. Therefore, energy security may offer the most effective avenue towards this ‘securitised regionalism’, especially given the genuine level of cooperation and shared interests in seeking adequate and secure supplies of energy.

Such a need for regionalised security is also reflected in the less visible security challenges facing the Asia-Pacific region. These security problems are concentrated in the core of the region, in the very foundations of the still incomplete state- and nation-building process, and stems from the fragility and weakness of these states. Coupled with the economic, social and environmental issues in the region, the complexity of these threats requires a multilateral, yet regionally based approach.

ADVERTISEMENTS: (adsbygoogle = window.adsbygoogle || []).push({}); Essay # 4. The Economics of Energy Security:

In terms of pure economics, the outlook for energy security in the Asia-Pacific looks particularly troubling, with rising levels of oil consumption and an even stronger rise in demand. Some experts, such as Ji Guoxing of the Shanghai Institute of International Strategy Studies, contend that the Asia-Pacific region’s dependence on Middle Eastern oil may exceed 90% by 2010. While oilfields in Russian Siberia and Central Asia do offer some short-term energy relief, the lack of existing infrastructure to facilitate the transport of this oil poses costly political and economic challenges of their own.

Essay # 5. Regional Implication of Energy Demand:

Besides the dependence of imports on the Middle East, there is also a danger of tension stemming from such oil storage within the Asia-Pacific region itself. The growing demand for energy may strain relations between such important regional actors as China and Japan, for example, which may then engender a set of new destabilising regional or international conflicts.

But an even more immediate problem is the effect of oil-market volatility on the region, with the sharp rise in oil prices putting particular pressure on the currencies of some crude-importing, emerging-market countries and the dangers of soaring current account deficits and weaker economic growth.

This also threatens to impact the record of growth that has served as the driving force for Asian stability and development since the end of World War II. And while Asia is seen as the most affected region, the surge in oil prices, an increase of 48% over the past two years, also threatens other struggling oil importers.

Essay # 6. The Dangers of Soaring Oil Prices:

The danger of an ‘oil shock’ is an important but underestimated element of energy security. In a July Financial Times article, two analysts confirmed this ‘link between oil prices and financial markets’ by noting that it ‘has profound implications for both energy security and economics’.

The market volatility further reveals the structural weakness of all commodity-based economies, not just oil-producing states. In terms of economic theory, the fundamental danger of an over- reliance on one commodity for economic growth and development has been fairly well established, articulated as the so-called ‘Dutch disease’.

There is a further link between price rises for oil and other commodities. A broad commodity-wide pattern was revealed in the oil shocks of 1973-74 and 1979-82, as the prices of gold and soybeans doubled and wheat reached an all-time high price.

This pattern also reveals the deeper vulnerabilities of the developing countries to this economic aspect of energy security. It also merits more attention given the grave implications for social unrest and political instability in key energy-dependent states that may result from a sustained global surge in oil prices.

Several key Asian economies are the most at risk from persistently high crude prices, with the major net importing countries of China, India, Singapore and South Korea, as well as Taiwan, being the most vulnerable. The danger for these economies lies in the impact on the current account and growth, and domestic purchasing power.

This has already been demonstrated in regional currency markets, as the Singapore dollar hit near three-month low against the US dollar and the Thai baht reached a one-year low in late July. The North Asian currencies such as the South Korean won and New Taiwan dollar are also seen at risk.

Regional Energy Security in the Asia-Pacific:

Energy security in the Asia-Pacific remains a complex and multifaceted challenge with four main strategic issues mandating coordinated action:

1. Measures are needed to reduce Asian dependence on fossil fuels or to secure an adequate alternative supply to meet rising demands.

2. The need to address the environmental impact of the region’s energy structure, as seen by the environmental repercussions from the heavy coal used in Chinese industries.

3. The necessity for ensuring nuclear security in the face of regional ambitions to expand nuclear power.

4. Specific policies to improve the vulnerable regional energy infrastructure and transportation networks, as well as safeguarding vital sea-lanes and ‘chokepoints’.

As demonstrated by the set of four strategic priorities areas listed above, regional energy security in the Asia-Pacific requires a multilateral approach. There is a potential for regional cooperation, stemming from the convergence of national interests in the face of recent transnational threats. Much of these shared interests and threats have only been revealed in the aftermath of September 11 and the ensuing global ‘war on terrorism’.

To date, the regional approach to Asia-Pacific energy security has been focused on petroleum security, conservation and the search for alternative fuels. Specific examples of regional cooperation are largely through ASEAN, and include a Petroleum Security Agreement, requiring ASEAN member states to provide crude oil and/or petroleum products for countries in short supply.

Studies for a Trans-ASEAN Gas Transmission System and an ASEAN Power Grid have also been initiated and aimed at ensuring a reliable supply of energy to the region, with some notable progress to date related to cooperation in natural gas use and energy management.

Regional energy security was formalised as a priority issue at an Asia-Pacific Economic Cooperation (APEC). Energy Security Initiative Workshop on ‘Elements of Energy Security Policy in the Context of Petroleum’ held in Bangkok in September 2001, Dr. Piyasavasti Amranand, the secretary general of Thailand’s National Energy Policy Office (NEPO), reported to the APEC workshop that the current imbalance among reserves, production, and consumption of oil within the region has elevated oil security as a major concern for APEC officials.

Piyasavasti stated that the total reserves in the APEC region are far less than the regional demand, exacerbating the regional dependence on oil imports, especially from the Middle East, therefore, making energy security a key element in establishing economic development policies.

Thailand has long been sharing information with the Asia- Pacific Energy Research Centre (APERC) and other research centers, such as the ASEAN Centre for Energy (ACE), and has also implemented other measures that have substantially enhanced the energy security of the country. Strategic oil stockpiling by the Thai private sector is one of the measures, but there is an inadequate government role in developing a state-owned stockpile.

The 2001 APEC workshop also recognised the security of tanker traffic as a main concern. In an address to the workshop, APERC president Tatsuo Masuda explained that the combination of vulnerable transport from the Middle East and West Africa with the fact that tankers are getting smaller, while the number of tankers crossing the Indian Ocean to Asia triples or quadruples, necessitates a reduction of the risks posed by tanker traffic. Masuda specifically pointed the need for pipeline infrastructure projects connecting Russia, China, Korea and Japan, as a way by which to reduce this risk.

Limits to cooperation despite a degree of potential for regional cooperation, energy security remains hindered by the divides between the states of the Asia-Pacific. The sheer scale of diversity and scope of diverging national interests have significantly impeded even these early efforts of coordination. The absence of a recognised common goal is profound, making the pledges for joint strategic reserves and region-wide gas pipelines unfulfilled promises.

According to energy analyst Tomoko Hosoe of Facts Inc. and the East-West Centre, ‘Although the ASEAN grouping is a dynamic, populous region, its total economy and oil consumption are more on the scale of Korea’s than that of Japan or China,’ as seen by the fact that ‘Japan’s current oil stockholdings are large enough to supply all of ASEAN’s net oil imports for more than two years’. Hosoe further recognises that ‘ASEAN can be important in enhancing Japanese energy security, but on the oil front, ASEAN can do very little in terms of supply to East Asia in general or Japan in particular’.

Importance of Strategic Petroleum Reserves:

The role of strategic petroleum reserves in energy security has long been recognised as a crucial component to protect against unexpected shortages or disruptions of energy supplies. But adequate stockpiles have been difficult and costly to create and maintain, as the most vulnerable import-dependent economies are most often the least able to handle the prohibitive cost.

The United States, as the world’s largest oil importer, established a Strategic Petroleum Reserve (SPR) in 1975 to help prevent a repetition of the economic dislocation caused by the 1973 Arab oil embargo. The US strategic reserve comprises five underground storage facilities, hollowed out from naturally occurring salt domes in Texas and Louisiana. Oil stored at one of the sites, Weeks Island, was transferred after problems with the structural integrity of the cavern were discovered in the mid-1990s.

As, an important element in US energy security, the mere existence of a large, operational reserve of crude oil was seen as an effective way to deter future oil cutoffs and to discourage the use of oil as tool for geopolitical leverage.

In the event of an interruption, introduction of oil from the reserve to the market was expected to help calm market-driven crises, mitigate sharp price spikes, and reduce the economic effects of the shocks that had accompanied the 1973 disruption. It was further held that the reserve would buy precious time for any crisis to sort itself out or for diplomacy to seek some resolution before a potentially severe oil shortage escalated the crisis beyond the parameters of state diplomacy.

International Energy Agency:

With energy security as a core mission of the International Energy Agency, there has been a significant effort to foster a communal approach to the issue, with oil stockpiling as a central element. The IEA seeks to cooperate and complement the work of regional organisations such as APEC and ASEAN, and promotes the shared goals of energy security, high economic efficiency, and a cleaner environment.

In terms of the stockpiling, the IEA’s Agreement on an International Energy Programme (IEP) requires the participating countries to maintain emergency oil reserves equivalent to atleast 90 days of net oil imports, 7-10% restraint on national oil demand, and to participate in a crisis-allocation system through an Emergency Sharing System. Stocks of IEA net importers have decreased substantially from a peak of 160 days during the mid-1980s to 116 days by July 2001.

The decrease in oil stocks was mainly due to industry restructuring, which moved to a ‘just in time’ stockpiling. This decrease in IEA stocks is also expected to continue over the coming decade due to increasing oil imports and a lack of automatic stock adjustments within the IEA economies.

Generally, the IEA holds that stock drawdowns are one of the most concrete and effective emergency response measures. IEA stocks are seen to be adequate to handle a medium-scale disruption of short-to-medium-term duration, and larger disruptions of up to 12mbpd (million barrels per day) are also believed to be within IEA control, although only for a limited duration. Industry stocks are seen as less reliable than public stocks, as they are partly needed for operating purposes and are subject to much weaker governmental control.

ASEAN Position on Stockpiling:

The ASIAN Petroleum Security Agreement (APSA), reached in Manila in 1986, formulated an important strategic approach to control sudden shortfalls in oil supplies. The agreement specifically established an ASEAN Emergency Petroleum Sharing Scheme for petroleum products, in times of both shortage and oversupply.

In cases of shortage, which the agreement defines as “a critical shortage or when atleast one Member Country is in distress” , the oil-exporting members of ASEAN would move to aid the affected member state or states. The assistance would be triggered by crises involving cases where the total supply is less than 80% of the normal domestic consumption requirements. Such emergency oil supplies would be limited for domestic consumption in the distressed countries, however.

In times of broader crises, where more than one ASEAN member state is affected, the agreement calls for the distribution to be initially allocated in proportion to their respective normal domestic consumption and exports for the 12-month period prior to the crisis. Since its inception in 1986, APSA has never been actually executed, although it was once nearly implemented during the Gulf War crisis in the early 1990s.

Although such formal ASEAN assistance through shared resources is important in times of regional crises, there has been a recent move recognising the importance of establishing strategic stocks of oil as a reserve against sudden cuts or shortfalls in oil supplies. According to the IEA executive director Robert Priddle, “despite the fact that for many ASEAN nations the cost of maintaining such oil inventories appear prohibitive, such an effective insurance against major economic risks is worth a considerable price”.

The imperative for such stockpiling has been bolstered in recent years by the threat to world supply and transport in the wake of September 11 and unease over the implications for instability in the Middle East as a result of the war in Iraq and its postwar uncertainty. Other developments, such as an overall trend of decreasing oil stocks among IEA members for the past 15 years and a steady decline in OPEC spare capacity, have also served to reinforce the importance of such strategic reserves.

Some recent cost benefit analyses of expanding emergency oil stocks have found that, for smaller Asian oil-importing economies, a stockpile covering around 30 days of net imports is optimal. These studies have also recommended a joint stockpiling scheme sharing a common large-scale facility for the APEC region.

Within ASEAN+3 (the Southeast Asian grouping plus China, Japan and South Korea), both Japan and South Korea maintain-government-owned emergency petroleum reserve stocks as a strategic protection against short-term disruption in oil supply. As members of the IEA, both Japan and Korea are required by the organisation’s agreement to hold stocks equivalent to atleast 90 days of net imports. Both the Japanese and Korean reserves are also reportedly well above that requirement.

The Japanese Approach:

Japan’s vulnerability to disruptions in oil supplies was most profoundly exposed during the global oil crisis of 1973. That first oil crisis affected Japan greatly, both psychologically and economically, and resulted in a sharp reduction in Japanese Gross Domestic Product (GDP) growth, from 5.1 % to -0.5%. The crisis was also seen as an embarrassment to the government, with some critics pointing to its failure to foresee or contain the crisis. The shock gave a new impetus to the need for addressing the country’s energy security.

By 1975, the Japanese government enacted a stockpiling law, with private requirements creating a 90-day stockpile (government stockpiling was not initiated until 1978, with a 30-million-kilolitre target, later reaching 50 million kilolitres by February 1998). A second oil crisis in 1978 renewed concerns over Japan’s vulnerability, with volatility in oil prices demonstrated by a price rise from US$13.7 per barrel to $34 a barrel by 1980.

During the relatively smaller energy crisis stemming from the Gulf War of 1991, there were no serious supply shortages, although prices did increase sharply. Through this crisis, real GDP growth declined from 5.6% in 1990 to 3.1% in 1991. In 1990, the government announced that private-sector stockpiling would be utilised, increases in stockpiling were postponed, and the private sector was allowed to reduce stockpiling by four days in January 1991 to allow a release of supply. After the Gulf War, 10 sites for government stockpiling were constructed in August 1996.

The current private Japanese stockpile operates according to a 70-day requirement and utilises existing tanks and facilities in private companies. This private stockpiling system counts oil reserves in transportation, operation and distribution, and counts both crude oil and petroleum products.

In contrast, national stockpiling, initiated in 1978-79, uses only storage tanks and counts only crude oil. The Japanese approach to stockpiling, with its priority on a private structure, recognises a number of advantages and disadvantages to the system.

The Japanese position sees three main advantages to private stockpiling: less time and cost to meet target level; swift, flexible and effective release; and a tendency to reduce panic in the market (stockpiling as a ‘first aid’ kit). There are also three disadvantages identified under the Japanese system- an insufficient amount, and if stock falls below 45 days, it becomes difficult to release; a significant barrier for newcomers, encouraging a need for government subsidy; and less transparency in the market, thereby, making it difficult to see or measure the effects of the release.

Overall, the Japanese conclusion is that stockpiling is primarily a government concern, linked to national security, but sees private stockpiling as necessary to obtain swiftness, flexibility, and economising. Private companies are expected to supply and release stock swiftly and flexibly, and provide accurate and timely information, especially during emergencies. For its part, the Japanese government is expected to recognise and appreciate the function of private stockpiling and provide sufficient political support to the private sector.

According to information provided by Kazuyoshi Takayama of the Nippon Mitsubishi Oil Corp, the Japanese stockpiling system can only be reduced or released (‘drawn down’) by the government in times of a crisis involving an abrupt disruption in supply, although there is some consideration underway of an implementation of a draw down in cases of severe price fluctuation.

Takayama also pointed to the importance of Russia’s (East Siberia) vast resource potential to supply Japan and other East Asian economies. One of the most important appeals of this option is the price competitiveness of Russian energy to the Asian market, making it an important source for import diversification.

Japan’s Four-Part Strategy:

In addition, Japan has also adopted a number of related measures to buffer the effects of oil disruptions and price volatility.

The Japanese approach consists of four parts:

1. Diversification of energy, with a special focus on the alternative sources of nuclear energy and LNG, now accounting for about 13% and 12% respectively, and coal, once Japan’s dominant energy source until the shift to oil in 1970s.

2. Sourcing diversification, to offset its high dependence on Middle Eastern oil, seeks to promote other sources of crude oil, from China, Indonesia and Mexico. Imports from these countries declined after the late 1980s because of economic constraints, mainly after the Japanese liberalisation and deregulation of the oil industry. Japan also invests in producing crude oil overseas, as the share of Japanese-developed crude oil overseas is about 15% of total oil imports. Overall energy imports from the Middle East have been reduced to about 40%.

3. Energy conservation involving multiple measures: to reduce demand, improve self-sufficiency, reduce emissions, and reduce energy costs. Japan also pursues energy conservation through an improvement of energy efficiency in appliances (micro-energy conservation) and by shifting to less energy-intensive industries (macro-energy conservation); As a result of these policies and financial support, Japan’s energy efficiency has improved by almost 30%.

4. Emergency preparedness driven by experience of oil crises, Japan has established a mandatory private oil stock (currently 70 days); a government (national) stockpile of 50 million kilolitres; and a combined private and national stockpile of 160 days.

The South Korean Stockpile :

As the world’s fourth largest oil importer, there is an acute South Korean appreciation of the need for sufficient oil reserves. The Korean stockpiling system consists of a combination of government (Korea National Oil Corp) and private reserve, with the KNOC storage capacity expected to reach 164 million barrels by 2006.

As of June 2001, the KNOC capacity was 132 million barrels (65 days), comprising some 60 million barrels in the government stockpile and 72 million barrels held by the private stockpile. The South Korean government considers the drawing down of the stockpile as authorised in the event of a short-term disruption or to stabilise supply and demand.

There is also a degree of flexibility, with mechanisms allowing for a limited release of a portion of the KNOC stockpile and a temporary lease and redelivery mechanism or ‘time exchange’, which is strictly limited for increasing the stock level. South Korea sees this joint stockpiling between KNOC and private oil producers as a strategic alliance for securing stable supply and demand. KNOC also provides the use of its unused facilities to private oil companies.

The Thai Reserve :

Thailand is also developing measures to prepare for emergency disruptions in supply. Although Thailand’s dependency on energy imports has been substantially reduced in recent years, from 98% in 1980 to 63% in 2000, the Thai fuel import dependency is projected to increase to 70% over the coming decade (for 2000-2010).

Thailand’s dependency on oil imports has also followed a similar’ trajectory, decreasing to 55.1 % in 2000 from a 1980 level of 93.6%. The Thai approach to energy security is multifaceted and includes measures to promote the development of indigenous energy resources, diversify energy supplies and utilise renewable energy, as well as pursue greater overall efficiency.

Thailand’s current total storage capacity for crude oil is roughly 28 million barrels, and for petroleum products, excluding LPG, about 39 million barrels. The total existing storage capacity, therefore, stands at roughly 67 million barrels, representing about 110 days of consumption (at 2000 levels). Although this is well above the normal working requirements of 40-45 days, Thai officials have reported that actual stocks are lower than the storage capacity.

Thailand’s six refineries account for nearly all crude-oil storage. For petroleum products, however, oil traders and distributors hold a significant portion of this storage capacity, with 22.2 million barrels compared with 16.8 million barrels held by the refineries.

Currently, Thailand has a limited stockpile, mandated by its Fuel Act of 1978, required to be maintained by the Thai private sector. For crude oil, refineries are required to stock 3% of annual throughout (equivalent to about 11 days), and marketers and importers to stock 3-6% of different petroleum products based on sales to this mandatory stockpile. Leading experts estimate that for the Thai economy, the ideal stockpile would be of about 27 million barrels by 2010.

Last October, Thai Energy Minister Prommin Lertsuridej signed a Memorandum of Understanding with Philippine Energy Minister Vincent Perez to conduct a joint feasibility study on petroleum reserves and investment. The Thai Energy Ministry reported that the two countries have pledged to share their existing petroleum facilities under the cooperative agreement in order to strengthen their respective petroleum reserves as well as to create business opportunities.

This is particularly important for the Philippines because of a current shortage in local oil supply. This shortage, due to the government’s implementation of a Clean Air Act, has prompted higher imports of refined oil to the country through Subic Bay, where Thai subsidiaries in the Philippines have been granted conscious for the oil depots.

The Philippines :

Under the leadership of President Gloria Macapagal-rroyo, the Philippines have undertaken an economic transformation, deregulating its energy sector and offering new incentives for foreign investments. Although the Philippines was able to increase its crude-oil production from 1,000 barrels per day (bpd) in 2001 to an average of 23,512bpd in 2002, the rise in production volume is still modest in relation to the country’s needs. The Philippines consumed 342,000bpd on average in 2002, resulting in net oil imports of 318,488 bpd.

This dependence on imported oil is compounded by a projected annual increase in oil consumption of 5% over the next several years as economic growth increases demand in most sectors.

Oil demand for power generation, however, is expected to decline sharply as many ageing oil-fired electric power plants are shut down or converted to burn natural gas. And with more than 90% of the Philippines’ oil imports coming from the Middle East, the issue of an oil stockpile is a grave concern. The Philippines has been without any stockpile whatsoever since required contributions ended in 1998.

Indonesia also maintains oil stocks, but these reserves stem from the country’s role as an archipelago, ensuring adequate supplies to its islands rather than from a strategic imperative. Thus the Indonesian stocks are not generally thought to be large enough for effective protection in times of crisis.

Conclusion:

The imperative for energy security in vulnerable strategic regions as the Asia-Pacific is paramount for global stability and development. The priority of this challenge for the Asia- Pacific region is no accident, as it is the world’s fastest-growing energy consumer, with projected demand to surpass other regions steadily for some time.

But, it remains to be seen whether this troubled region will be able to forge a collective and cooperative approach in the wake of the daunting challenges and demands posed by the global ‘war on terrorism’ and an increasingly destabilising unipolar world.

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