CHAPTER II ELECTRICITY

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1 CHAPTER II ELECTRICITY 2.0 INTRODUCTION Electricity is a uniquely valuable form of energy, offering unmatched precision and control in application as well as efficiency. Certain other energy forms can meet the need more efficiently than electricity but they are limited in their range of application. Electricity can help to alleviate many of the concerns facing the world, today in a unique manner such as: a) It is available from various sources at a reasonable cost b) Its versatility allows it to be readily converted into easily and efficiently usable form. c) Its efficiency at the end use comes from its versatility. 2.1 THE LINK BETWEEN ELECTRICITY, ENERGY EFFICIENCY, AND ECONOMICS Electricity, energy efficiency and economics are inextricably linked. In order to reduce the demand for electricity one approach would be to use electricity wisely and introduce efficiency in end use. Today, the world still needs to consume energy prudently, since electricity increasingly drives productivity and innovation. The conservation ethic of coming years is energy efficiency. Increasing efficiency at the end use is the key to the long term prosperity of utility customers. Energy efficient technologies also raise productivity and reduce waste. The net effect of these improvements are: a) Energy efficiency reduces capital requirements and lowers production costs. b) Increasing the competitiveness of individual businesses and entire industries. These advantages spread through out the country, supplying the nation with economic benefits as well as increasing competitiveness in world markets. In addition, increases in energy efficiency offer the most cost effective approach for reducing long term environmental concerns. 11

2 2.1.1 Energy efficiency and its Link with Electricity Energy efficiency is a measurement of output achieved per unit of energy input. The term often refers to the performance of specific end uses or energy services such as lighting, heating, cooling and motor drives. Because of today's technological advances particularly, in electricity using equipment, all consumers can optimize energy efficiency by replacing, upgrading, or maintaining energy - using equipment. Electricity offers superior energy efficiency. It is the most highly organized form of energy available with 100% of its energy convertible into useful work. The advantages of electricity - used in manufacturing sector are: Energy Intensity: Electricity can deliver higher temperatures and greater intensity than fossil fuels. a Speed of production: Electricity's high energy intensity offers industries greater production output in a shorter period of time. This benefit reduces unit costs by spreading the costs of labour, overhead and interest on capital over a larger production volume. a Precise Control: Electricity can be more precisely controlled than conventional thermal processes. It can be applied at defined points, for specific periods of time and in exact amounts. Q Cleanliness: Electricity is clean at the point of use. It involves no fumes or residues which can damage materials being processed. a Flexible generation base: Electricity can be generated from a variety of fuels as well as by renewable resources. As a result it provides a more flexible generation base than conventional combustion equipment The Economics of Energy Efficiency Economics plays crucial role in energy efficiency policy. Since, energy prices and capital costs both affect the level of energy use. In turn the demand for electricity depends on three economics-based factors - the level of economic activity, the prices of electricity when compared with alternative energy forms, and the availability of high quality and efficient electricity consuming technologies. Each of these inter related factors determines the return on investment of conservation and of investments in new energy 12

3 efficient technologies. The return on investment in energy efficient technologies is highest, when energy prices are relatively high and capital costs are relatively low. High energy prices provide the financial incentive to use existing energy equipment in a more efficient manner through greater maintenance or increased use. Return on investment is relatively high when both energy prices and capital costs are moderately high. Under these conditions consumers have a substantial incentive to invest in low cost efficiency measures. They also make new, more energy efficient equipment more economically attractive when both energy prices and capital costs are relatively low, the return on investment drops. Under these conditions, businesses usually have little financial incentive to focus on energy efficiency measures. There may be some times efficiency drops. This raises concerns about long term competitiveness in electricity supply industry Clark W. Ceilings (1994). Economists cite a number of factors that contribute to this decline: a) Shifts from a manufacturing dominated to service dominated economy. b) Inadequate levels of investments in new plant, new equipment, and R & D to support innovation. c) Deterioration in work effort or a reduction in the traditional work ethic. d) Government regulations. e) Management failures. 2.2 ATTRIBUTES OF ELECTICITY Electricity offers society more than just improved energy efficiency. It has greater value than any other energy source. The inherent value of electricity needs technical innovation. It encompasses 3 dimensions, namely (a) Technical (b) Economic (c) Resource use. 13

4 2.2.1 Technical Electric powered equipment offers significant advantages when compared with conventional counter parts including reduced energy use, increased productivity and improved product quality, compactness and environmental cleanliness. Electricity's technical attributes included electrical phenomena, input energy density, volumetric energy disposition, controllability and synergistic combinations. Residential appliances, energy systems in buildings, and industrial processes frequently, involve the interaction of energy and matter to modify materials pump refrigerants or fluids or to transform them from one form to another. Electrical Phenomena: Three types of electrical phenomena can be involved in these transformation. They are electro motive, electro thermal and electrolytic. These phenomena are all unique to electricity as an energy form and contribute to its form value. Electromotive phenomena occur when mechanical motion is produced using electricity in materials processing. It can exert force with out physical contact permitting precise manufacturing of metal parts by rapidly accelerating them against a form. Electro thermal phenomena employs electricity to produce heat which in turn facilitates a physical or chemical change. Both the phenomena bring a change in the processing industries (eg. chemical, primary, metal stone, clay, glass, paper and petroleum etc.). Input Energy density: In combustion processes using chemical fuels. Eg., Oil and gas, the maximum achievable temperature is thermodynamically limited to about 3000 F where as for fossil fuels there is no inherent thermodynamic limit on the temperature. Volumetric energy deposition: Using Electro thermal phenomena when, fossil fuels are used to heat material heat it imposes surface radiation. This is slow and inefficient with induction heating, electrical energy is deposited directly within the material. The process can be reduced to several minutes or less. This process improves over all productivity, product yield, and product quality. 14

5 Controllability: Electricity is often referred to as an orderly form of energy. This reference means that electrical processes can be controlled more precisely than thermal processes. Since, electricity has no inertia, an industry can instantly vary energy input in response to process conditions such as, material temperature, moisture content or chemical composition as well as accurately maintain a desired state. Synergetic combinations: In some processes electrical, electro thermal, and electro motive effects combine in an advantageous way ECONOMIC Economic attributes include fixed cost, flexibility of raw material base and product quality and yield. > Fixed cost: High energy density and precise control typically result in increased production rates. In most cases these reduce fixed costs per unit of product. For example, components such as labour, overhead, and interest on capital are spread over a larger production volume. Thus even when the cost premium of electricity increases the energy cost per unit, total production cost per unit, may remain lower. > Flexibility of raw material base: Compared to conventional process, the electro technologies have a greater degree of flexibility with regard to raw material resources RESOURCE USE It includes flexibility of fuel supply, domestic resource balance of payments and national security, environmental and energy consumption. > Flexibility of fuel supply: The combustion based process is highly dependent on the availability of specific fuel sources. But the shift to electrically based processes assigns, responsibility for fuel choices to the electric utility. > Domestic resources balance of payment and national security: Total resource requirements and the need for imported fossil fuels, declines with the increased 15

6 use of electricity due to the overall efficiency of electrically based systems. As these imports decline, the impact on balance of payments declines. > Environmental: Electric processes and systems are the most environmentally benign at the point of end use. The application of electro technologies can mitigate the adverse environmental impacts in applications. Thus, electricity becomes the environmentally preferred energy form due to its efficiency at the point of end use. > Primary Energy consumption: The primary energy consumption is always higher for electrical processes than conventionally fueled system. Historically energy intensity has declined as use of electricity has declined. Thus restructuring of Electricity Supply Industry (ESI) plays a crucial role in curtailing the drop in economic efficiency. Therefore electricity is a key energy source in the modern economic chain. Electric utilities improve the productive capacity of any economy by improving economic efficiency. With out continuing improvement in ESI, the economic efficiency in the country cannot sustain economic growth. 2.3 SUMMARY This chapter highlighted electricity as an important input in Indian Economy. The relationship between electricity, energy efficiency, and economics are highlighted. It is clear from the attributes of electricity that, electricity's utility is diverse and it facilitates the achievement of many more needs. One should be aware of the role of electricity in Indian economy, especially with respect to adoption of restructuring in Electricity Supply Industry (ESI) which reflect the dynamic improvements. 16