CHAPTER ONE 1.0 INTRODUCTION 1.

1 Background Information Affordable energy in ample quantities is the lifeblood of the industrial societies and a prerequisite for the economic development of the others. Not surprisingly, access to and the costs of energy have long been political issues within and among nations. Wars have been fought at least in part over access to prime energy resources and may be again (Holdren, John P, 2001). Energy is obviously the economic mainstay of any society in the world. The key development areas of any nation such as industrialization, technology, agriculture and food security, education and transportation system are anchored on availability, sufficiency and cost of energy. As every nation strives to increase the standard of living of the citizens, the energy consumption increases, since increase in standard of living has to do with more access or affordability of energy consuming assets. In order words the energy demand in any nation will definitely be on the increase as population and standard of living increase, therefore any nation planning for the future must plan effectively for the future energy requirement of the nation.

1.2 Energy classification based on utilization In terms of utilization, energy can be classified as energy for transportation, power generation, heating, industrial purpose and cooking. At present all the classifications derive most of their energy from fossil fuel and hydrocarbon based sources with huge challenges; ranging from environmental degradation, climate change, supply crisis to price volatility.

1.3 Problem statement In Nigeria, energy has been seen by most citizens as one critical input in economic development that is still far from been adequate. It has impacted strongly on the standard of living and virtually every sector of the economy especially transportation, manufacturing and commerce. All the recent national development documents such as NEEDS, SEEDS and VISION 20:2020 have identified workable strategies in resolving age long energy problems as one of the most needed initiatives now.

1.4 The importance of this paper Due to the importance of energy to the present economic reality and future survival of any nation it is paramount to review what experts, stakeholders and energy users worldwide consider as challenges facing the global energy sector with the view of proffering strategic solution to these challenges. 1.4 Objectives of this paper Energy is obviously one of the most topical issues in the world today. This is because it has great impacts such that can never be overemphasized; on the world economy, technology and environment. This paper is aimed at reviewing the various challenges facing energy production and utilization alongside current strategies identified to solve these challenges. Hence this seminar paper is prepared with the following objectives in mind; 1. To review the current situation analysis of global and local energy outlook.

2. To review current challenges facing energy production and utilization.

3. To review how the identified challenges are been resolved globally and locally. 4. To identify potentials and opportunities for mechanical engineers, inherent in solving

energy challenges. 5. To identify likely areas of research and development needs in the bid to solve energy problems. 1.5 Scope of this paper Energy as a topic is very wide with multi-dimensional perspectives it can be viewed, reviewed or discussed but this paper focused more on the energy for power generation; current resources, technologies, alternative energy sources, globally and locally identified challenges. Though this paper is suppose to be engineering or technology biased but energy issues can not be viewed without looking at a bit of economics and policies alongside the technologies, hence the paper also reviewed current government policies aimed at solving energy challenges.

CHAPTER TWO 2.0 GLOBAL AND LOCAL ENERGY OUTLOOK 2.1 Global energy consumption Global energy consumption in the last half century has increased very rapidly and is expected to continue to grow over the next 50 years (F. Kreith, D. Goswami, 2007). Various sources estimated that the worldwide average annual increase in energy consumption will be 1.6%2.5% (IEA 2004; IAEA 2005). Statistics from the International Energy Agency (IEA) World Energy Outlook 2004 show that the total primary energy demand in the world increased from 5536 GTOE in 1971 to 10,345 GTOE in 2002, representing an average annual increase of 2%. As stated in BP statistical review 2011, all forms of energy grew strongly and far above anticipated growth rate in 2010, with growth in fossil fuels suggesting that global CO2 emissions from energy use grew at the fastest rate since 1969.

World primary energy consumption which includes commercial renewable energy grew by 5.6% in 2010, the largest increase (in percentage terms) since 1973. Consumption in OECD countries grew by 3.5%, the strongest growth rate since 1984, although the level of OECD consumption remains roughly in line with that seen 10 years ago. Non-OECD consumption grew by 7.5% and was 63% above the 2000 level. Consumption growth accelerated in 2010 for all regions, and growth was above average in all regions. Chinese energy consumption grew by 11.2%, and China surpassed the US as the worlds largest energy consumer. Oil remains the worlds leading fuel, at 33.6% of global energy consumption, but oil continued to lose market share for the 11th consecutive year (BP statistical review, 2011). Table 2.1 shows the summary of primary energy consumption as compiled by BP statistical review of June 2011 edition.

Table 2.1 Summary of global primary energy consumption as at end of Year 2010 S/N 1. 2. 3. 4. 5. 6 7 DESCRIPTION Oil Natural gas Coal Hydro Nuclear Biofuel Renewable GROWTH REMARKS RATE (%) 3.1 7.4 7.6 5.3 2 13.8 for 15.5

Strongest since 1984 Fastest global growth since 2003 China accounts for 60% of the global growth

Energy

power generation (Source: BP Statistical Review, June 2011)

Table 2.2 Summary of volume of energy consumption as at end of Year 2010

Oil Natural Gas Coal Nuclear Energy Hydroelectricity Renewable Total

40,281.1 2,858.1

3,555.8

626.2

775.6

158.6

12,002.4

Note: Oil is measured in Million tonnes; other fuel in million tonnes of oil equivalent. (Source: BP Statistical review, June 2011)

Figure 2.1 World Energy Consumption in Year 2010

(Source: BP Statistical review June 2011)

Figure 2.2 Regional Consumption pattern in Year 2010

(Source: BP Statistical review June 2011)

2.2 World Energy Resources

It is important to know every source of energy that is currently or potentially available to meet global energy demand now and in the future. It is also necessary to estimate the amount of energy that can be recovered from the various identified energy sources. The major sources of primary energy supply include fossil fuel (oil, coal, natural gas), nuclear and renewable energy resources. 2.2.1 Fossil fuel The Earth is endowed with a large, but finite, quantity of fossil fuels. Table 2.3 shows the global proven energy reserves while figure 2.3 shows the fuel reserves to production at the end of year 2010 as presented in BP Statistical review of June 2011. Oil According to BP (2011), the total proven world oil reserves at the end of 2010 were 1,383.2 billion barrels. World proved oil reserves in 2010 were sufficient to meet 46.2 years of global production. In case the production grows beyond the anticipated rate, the reserves would last for fewer years. Coal Coal remains the most abundant fossil fuel by global Reserve to Production ( R/P) ratios, though oil and natural gas proved reserves have generally risen over time (British Petroleum, 2011). From all indications, coal use will continue to grow for power production around the world because of expected increases in China, India, Australia, and other countries. From an environmental point of view, this would be unsustainable unless advanced clean coal technology (CCT) with carbon sequestration is deployed (F. Kreith, D. Goswami, 2007).

Natural Gas According to BP (2011), the total proven world natural gas reserves at the end of 2010 were 187.1 trillion cubic metre. Considering the production rate of gas in 2010, with no increase in production thereafter, these reserves would last for 58.6 years. If production continues to rise because of additional use of CNG for transportation and increased power production from natural gas, the reserves would last for fewer years. Of course, there could be additional new discoveries. However, even with additional discoveries, it is reasonable to expect that all the available natural gas resources may last from about 50 to 80 years, with a peak in production occurring much earlier. ((F. Kreith, D. Goswami, 2007). Table 2.5 Global energy reserves S/N ENERGY RESOURCES PROVED RESERVE RESERVE PRODUCTION (R/P) 1 Oil 188,800 Million Tonnes 46.2 Years of global TO

production 2 Coal 86,093 Million Tonnes 118 years of global

production 3 Natural Gas 187.1 Triliion Cubic Metre 58.6 years of global

production Figure 2.3 Fossil fuel reserves to production (R/P) ratios at the end of Year 2010

2.2.2 Nuclear Resources Nuclear resources is also a huge source of generating electricity but the serious concern about its environmental impacts and likelihood of diversion for the use as weapon production may limit its optimum utilization. The total global nuclear resources was estimated by UNDP in 2004 as 5.1

million tons. Also IAEA (2005) nuclear fission provided 16% of the electricity in the world in 2004, with a worldwide capacity of 368 GW. An additional 20 GW of nuclear power capacity was under construction during the same year. The IAEA also estimates that the worldwide nuclear power capacity will increase at an average rate of 0.5%2.2% until 2030 (IAEA 2005). Nuclear fusion could potentially provide a virtually inexhaustible energy supply; however, it is not expected to be commercially available in the foreseeable future (F. Kreith, D. Goswami, 2007).

2.2.3 Renewable Energy Resources

Renewable Energy refers to energy sources like solar, hydro, wind, biomass and geothermal and which are non-depletable, inexhaustible, available on periodic or cycle basis. Global renewable energy resources are massive enough to provide the energy require to power the whole world but the level of utilization of various renewable energy is currently low though there is a considerable growth as stated in table 2.1. 2.3 Nigeria Energy resources Nigeria energy resources are made up of both non-renewable and renewable energy sources in abundance. Tables 2.6 show the detail of resources available for energy utilization in Nigeria. The table revealed that every energy source is grossly under utilized. Table 2.7 shows that petroleum products constitute about 80% of energy consumed in Nigeria. Table 2.1 Nigeria energy resources
Energy Type Crude Oil Natural Gas Large Hydro power Small Hydro power Coal Solar Radiation Tar sand Wind Energy Nuclear Biomass Fuel wood Resource Estimate 36.2 billion barrels 187 Trillion SCF 11,250 MW 3,500 MW 2.734 billion metric tons. 3.5 7.0 KWh/m2-day(485.1 Million MWh/day using 0.1% Nigeria land area) 31 billion barrels of oil equivalent 2.0 4.0 m/s at 10 M Height Lot (Not yet Quantified) 11 million hectare of forest and woodland

245 million assorted in 2001 Animal waste Energy drops and agric 72 million hecates of agric land and waste land residue 150,000 TJ/yr (16.6 x 106 toe/yr) Wave and Tidal Energy Geothermal Energy 37 and above 100oC ( Not yet expl.)
Sources: (i) Nigerian National Petroleum Corporation (NNPC) 2007) (ii) Renewable Energy Masterplan (REMP) 2005 (iii) Ministry of Mines and Steel Development (2008

Table 2.7 Commercial Primary Energy Consumption by type

Source: CBN Annual Report (2005, 2007)

2.4 Energy consumption pattern in Nigeria In Nigeria, more than 75 percent of energy consumption is in the transport sector. Households and industry account for a large share of the remainder. A breakdown of energy consumption among various means of transportation shows that highway traffic is by far the single largest consumer of transportation energy. This is because at present, the principal means of transporting people and goods are private cars and commercial vehicles.

CHAPTER THREE 3.0 ENERGY CHALLENGES Energy can be said to be a defining challenge for the 21st century. This is because how various energy issues are resolved will definitely shape the future globally and locally. Every form of energy has its peculiar challenges and different countries are also facing different energy issues from technology to economics related. In this section we review some of what the energy experts, stakeholders and users have identified as challenges that require urgent attention. 3.1 Resources depletion and energy sustainability With reference to BP Statistical review, June 2011 (see table in the previous section) the nonrenewable primary energy may be fully depleted in less than 70 years, if there are no discovery of more recoverable energy reserves and other sources of energy are not exploited. This is a big threat to meeting the huge energy demand as shown in figure 3.1

3.2 Climate Challenge Climate change is another global topical issue which is believed to heavily threaten sustainability of the whole world. The recent study in the Millennium Eco Assessment Report said that 60 percent of the life support systems are either damaged or gone, and that there is a 23 percent deficit between what were taking from nature and what it can replenish (J. Glenn, 2007). The Intergovernmental Panel on Climate Change (IPCC) has determined not only that climate change is a
fact, but also that there is a very high probability that it is being caused by humans. The cause, of course, is the continuously increasing level of CO2 introduced into the atmosphere by the burning of fossil fuels (Foundation for the future, 2007). According to Professor Mattew Bunn in his presentation during a Harvard Business Review (HBR) webinar in September 2011, the world may probably need to reduce global carbon emissions by 10-15 billion tons/year in 2050 with the current business as usual practice. This is really a daunting challenge.

3.3 Price volatility and cost

Fossil fuel is currently characterized with high price volatility. This is also a challenge to the access to affordable energy. The cost of putting in place energy support infrastructures is also a big challenge especially in developing nations. Though renewable energy is highly beneficial to the world energy sector but the cost of renewable energy technology is still limiting its utilization, therefore cost competitiveness is another energy challenge that must be surmounted in order to guarantee secured energy future. 3.4 Storage and distribution At the energy challenge conference in 2007 that was well attended by the industry experts and policy makers, storage and distribution were strongly identified as part of energy striking challenges. Each type of energy has its own challenges. For example, solar power has the inherent issue of how to store energy for use during nighttime hours. Biomass; artificial photosynthesis to produce CO that can be stored for nighttime use. Each of the three main end uses of energy heating/cooling for buildings, the transportation sector, and electric power generation has its own requirements for supply, storage, and distribution. Because of the complexity of the subject, energy system storage and distribution should be evaluated at a global systems level, and coming out of those analyses would be requirements leading to specific technologies (Foundation for the future, 2007).

In Nigeria storage facilities for petroleum products are grossly inadequate compared with the demand for the products. It is a big challenge; a personal survey revealed that the cost of constructing a tank farm in Nigeria is in the range of N5 billion to N40 billion ($31.25 Million $250 Million) depending on location and size. According to PPPRA template, March 2012 for

petroleum product pricing, throughput (storage in tank farm) and distribution accounts for about N10 in the total cost of any product.

3.5 Other challenges (Nigeria specific) All the challenges earlier mentioned are global issues but they are still applicable to Nigeria. More specifically the following are some of the daunting challenges facing energy sector in Nigeria:
1. Gross under utilization of energy resources. Table 3.1 shows the available resources and

low percentage utilization for coal, hydropower and natural gas.

2. Inefficiency in power sector due to huge Aggregate Technical and Commercial (AT & C)

loss. Also a lot of the power users are not aware of energy conservation culture which can yield good result if collectively done. Figure 3.1 shows Fig 1. Historical Trends of Cumulative Installed Capacity and Annual Peak Supply (MW)
7000 6000 5000 4000 3000 2000 1000

MW

Installed Gen. Cap Peak Supply

0
1950 1960 1970 1980 1990 2000 2010 Year

Source: PHCN
3. Low tariff which has prevented foreign investor in the past few years. Tariff has been

recently reviewed by NERC as part of pre- privatization incentive to attract or encourage both local and foreign bidders for PHCN assets (GENCO and DISCO).

4. Infrastructural challenges; Nigeria lacks necessary energy support infrastructures, for

example the gap noticed in power supply in figure 3.1 above also resulted from difference between generation capacity and facility to transmit. Also in oil and gas sector, refineries are not working optimally while storage and distribution facilities such as tank farms, pipelines and good road for road transportation of oil products are inadequate.

CHAPTER FOUR 4.0 Current strategies in resolving global energy challenges The world must provide more and more energy to fuel growing global economies, while: slashing carbon emissions to avoid catastrophic climate disruption, cutting dependence on fossil fuels increasingly, concentrate in the worlds most unstable regions, providing access to improve the lives of ~1 billion people who lack modern energy supplies, ensuring safety and national security (M. Bunn, 2011). This can be taken as strategic goals towards a secured energy future

In a 2001 editorial published in Science, John Holdren provides a well-written and insightful summary of some of the challenges earlier mentioned, concluding that addressing the complex issues of energy supply, sustainability, and security will require use of a range of approaches and a joint public-private effort. Strategic approaches and solutions to this impending energy challenges across the world vary from one continent to another and from one nation to another. Generally the renewable energy technologies, energy efficiency and conservation, hybrid or synergetic energy system, nanotechnology and considerable investment in multi-disciplinary research and energy innovation have been identified among several other solutions and approaches been adopted to resolve global energy issues. 4.1 Renewable Energy Asif and Muneer, in a 2007 paper, also discussed energy supply and demand challenges and strongly endorse renewable energy technologies as the solution to the growing energy challenges. In the course of preparing this paper, several reviews done on resolving both present and future energy issues, renewable energy technologies have stood out as the strategy. For

an instance biomass, solar and wind energy resources separately have potential to provide more than the total projected global energy demand by 2050 therefore it make a lot of senses to make renewable energy a strategic rally point. Table 4.1 shows the various renewable energy, their potentials and other useful details.

Biomass Although theoretically harvestable biomass energy potential is on the order of 90 TW, the technical potential on a sustainable basis is on the order of 813 TW or 270450 exajoules/year (UNDP 2004). This potential is 34 times the present electrical generation capacity of the world. It is estimated that by 2025, even municipal solid waste (MSW) alone could generate up to 6 exajoules/year (UNDP 2004). Biofuel The biggest advantage of biofuel as an energy resource is its relatively straight forward transformation into transportation fuels. Biofuels have the potential to replace as much as 75% of the petroleum fuels in use for transportation in the U.S.A. today (Worldwatch Institute 2006). Solar If the irradiance on only 1% of the Earths surface could be converted into electric energy with a 10% efficiency, it would provide a resource base of 105 TW, whereas the total global energy needs for 2050 are projected to be about 2530 TW (F. Kreith , D. Goswami, 2007). Wind The total theoretical potential for onshore wind power for the world is around 55 TW with a practical potential of at least 2 TW (UNDP 2004), which is about two-thirds of the entire present worldwide generating capacity.

Table 4.1 Global renewable energy resources.

(Source : Data from UNDP,2004, Worldwatch Institute, 2006, EPIA, Photovoltoaic Barometer, http://www.epia.org; World Geothermal Power Generation 2001-[blc1]2005,GRC Bulletin, International Energy Annual, USEIA, 2006)

4.2 Energy efficiency and conservation Energy conservation and efficiency as a strategy will definitely go far to solve the future energy challenges. According to the 2004 World Energy Assessment by UNDP, a reduction of 25%35% in primary energy in the industrialized countries is achievable cost effectively in the next 20 years,

without sacrificing the level of energy services. The report also concluded that similar reductions of up to 40% are cost effectively achievable in the transitional economies and more than 45% in developing economies. As a combined result of efficiency improvements and structural changes such as increased recycling, substitution of energy intensive materials, etc., energy intensity could decline at a rate of 2.5% per year over the next 20 years (UNDP 2004). Improving energy efficiency across all sectors of the economy should become a worldwide objective (Energy Commission 2004). 4.3 Hybrid or synergetic energy system This has to do with the application of two or more supplementary forms of energy by a consumer. Conversion of wind energy into a more reliable energy source which is then combined with other forms of energy sources for use in the electric grid of the United States has proven to be more efficient (Tarakia, 2009). For example, in 2005, Wal-Mart opened two experimental stores that use wind turbines, solar PV panels, and a bio-fuel boiler to reduce the consumption of natural resources and the generation of greenhouse gases. The two experimental stores are expected to decrease their energy consumption by 30% to 50% as compared to stores not using any type of renewable energy. According to Wal-Mart, this would reduce the typical store energy cost by $100,000/yr or more, while reducing carbon dioxide emissions by 50,000 to 60,000 lbs/yr. ( Synergistic Power Systems, 2006) Another example is The Home Depot. Since 2003, The Home Depot has been implementing number of changes in their design and construction process for new stores. These new stores use 34 percent less energy than the old Home Depot buildings. And thus, in September of 2005 The Home Depot announced its firm commitment to use renewable energy in all its stores ( Synergistic Power Systems, 2006)

Oyewola et al, performed simulation analysis of hybrid energy using HOMER. The simulation analysis showed that the total electricity production (1,063,094 kWh/year) met the required electrical load (909,717kWh/year) by the combination of 19% PV (200,311 kWh/year), 28% wind turbine (301,903 kWh/year) and 53% by generator (560,880 kWh/year) with excess electricity of 69,196 kWh/year. 4.4 Nanotechnology As part of efforts to resolve global energy issues nanotechnology applications have been identified as very key. According to Ineke (2003), Nanotechnology research can contribute to solving future needs for energy technologies, especially in new generations of solar photovoltaics, the hydrogen economy, more efficient conventional energy production and energy saving for industry as well as consumers. Considering the substantial budgets for research dedicated to nanoresearch including for energy applications, much of this potential is likely to be realized in the coming decades. 4.5 Considerable investment in multi disciplinary research and energy innovation In an attempt to tackle global energy crisis, several educational institutions are getting involve in multi-disciplinary research. David (2008), reported the formation of research laboratories in some universities specifically for energy crisis. He reported that their research covers a wide range of areas ranging from development of efficient, clean and sustainable energy sources that support global economic development, energy supply, delivery, consumption and environmental impact, as well as social, political and economic ramifications. Figure 4.1 shows the trend in investments in energy innovation in the United States of America.

Figure 4.1 Department of energy (DOE) investment in energy innovation between 1978 - 2011

4.6 Gas utilization in Nigeria In addition to the resolution of Nigerian government to be committed to the use of renewable energy sources, gas utilization is also part of strategy to meet local energy demand at affordable cost. 4.7 Emerging technologies in energy industry Emerging technologies towards resolving the energy challenges may include the following innovations:
1. Battery operated Electric cars which Chinese are working frantically at launching very

soon with plants coming up in the US and Finland (Foundation for the future, 2007)
2. Nanotechnology based applications; the efficiencies that are going to permeate through the

entire world on nanotech are extraordinary. For example, a company called Nanosolar, Inc., is developing solar cells using a method that sprays or prints the layers of a solar cell

onto a surface, much the way an ink-jet printer sprays ink onto a page. Nanosolar claims that not only is this process lower in cost than current solar cell manufacturing methods, but the resulting solar cells will be considerably thinner and lighter. The lighter weight will make it easier to cover an entire roof with solar cells (R. Bookers, E. Boysen, 2005). Nanotechnology will also help innovation in storage and distribution system of energy.
3. Algae as feedstock for biodiesel; Algae is much, much better; it produces oils directly. The

biofuels biodiesel is 93 percent energy efficient versus the conventional stuff were doing now, which is about 23 percent energy efficient. (Foundation for Future, 2007)

REFERENCES

CONCLUSION