Fueling Development: Energy Technologies

for Developing Countries

April 1992

OTA-E-516

NTIS order #PB92-169259

GPO stock #052-003-01279-1
Recommended Citation:

U.S. Congress, Office of Technology Assessment, Fueling Development: Energy Technologies for Developing Countries, OTA-E-516 (Washington, DC: U.S. Government Printing

Office, April 1992).

ii
Foreword

This report examines the delivery of energy services in developing countries and how the

United States can help to improve these energy services while minimizing environmental

impacts, OTA examines the technologies and policies that will enable more efficient use of

energy and the most promising new sources of energy supply. This assessment was requested

by the Senate Committee on Governmental Affairs; the House Committee on Energy and

Commerce and its Subcommittee on Energy and Power; the Subcommittees on Human Rights

and International Organizations and on Africa of the House Committee on Foreign Affairs;

the Subcommittee on International Development, Finance, Trade, and Monetary Policy of the

House Banking Committee; and individual members of the Senate Committee on Environment and Public Works, the House Select Committee on Hunger, and the Congressional

Competitiveness Caucus.

Such extensive congressional interest is certainly warranted. American economic,

political, and environmental self-interest lies in developing healthy relationships with these

present and potential trading partners and allies. Furthermore, the developing world will

require our close attention for decades to come. Based on present trends, 90 percent of the

expected world population growth over the next 30 years will occur in the countries of Africa,

Asia, and Latin America, bringing their population to almost 7 billion. Energy will play an

indispensable role in raising the economic status of these people.

This report builds on the analysis presented in the interim report of this assessment,

Energy in Developing Countries, which OTA published in 1991. The assessment, as a whole,

takes abroad look at energy options and opportunities in the many countries of the developing

world. It finds that there are many valuable lessons that developing countries can learn from

the prior experiences of the United States and other industrial countries.

In the course of this assessment, OTA drew on the experience of many organizations and

individuals. In particular, we appreciate the generous assistance of our distinguished advisory

panel and workshop participants, as well as the efforts of the project’s contractors. We would

also like to acknowledge the help of the many reviewers who gave their time to ensure the

accuracy and comprehensiveness of this report. To all of the above goes the gratitude of OTA,

and the personal thanks of the staff.

u JOHN H. GIBBONS

Director

,,, Ill
Advisory Panel—Energy, Technology, and the Environment

in Developing Countries

Harry G. Barnes, Jr., Chairman

Critical Languages and Area Studies Consortium

Irma Adelman

Department of Economics

University of California, Berkeley

Jeffrey Anderson

Institute of International Finance

Edward S. Ayensu

Pan-African Union for Science and Technology

Gerald Barnes

General Motors

Mohamed T. El-Ashry

World Bank

Eric Helland-Hansen

United Nations Development Programme

Carl N. Hodges

Environmental Research Laboratory

University of Arizona

Donald Jest

Sun Refining and Marketing Co.

Amory Lovins

Rocky Mountain Institute

Mohan Munasinghe

World Bank

Henry Norman

Volunteers in Technical Assistance

Waafas Ofosu-Amaah

WorldWIDE Network

R.K. Pachauri

Tata Energy Research Institute

D. Louis Peoples

Hagler-Bailly, Inc.

Gabriel Sanchez-Sierra

Latin-American Energy Organization (OLADE)

Kirk R. Smith

Environment and Policy Institute

East-West Center

Irving Snyder

Dow Chemical Co.

Thomas B. Steel, Jr.

Private Consultant

Washington, DC

Jack W. Wilkinson

Sun Refining and Marketing Co.

Robert H. Williams

Center for Energy and Environmental Studies

Princeton University

Lu Yingzhong

Professional Analysis Inc. (PAI)

Montague Yudelman

World Wildlife Fund and The Conservation

Foundation

Eugene W. Zeltmann

General Electric

Observer

David Jhirad

Office of Energy, United States Agency for

International Development

NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisory panel members. The panel does

not, however, necessarily approve, disapprove, or endorse this report. OTA assumes full responsibility for the report and the accumcy of its

contents.

iv
OTA Project Staff for Fueling Development

Lionel S. Johns, Assistant Director,

OTA Energy, Materials, and International Security Division

Peter D. Blair, Energy and Materials Program Manager

Project Staff

Joy Dunkerley, Project Director

Samuel F. Baldwin, Assistant Project Director

Paul S. Komor, Analyst

Sharon Burke, Research Analyst Daniel Kumi, Summer Intern

Administrative Staff

Lillian Chapman, Office Administrator

Linda Long, Administrative Secretary

Phyllis Aikens, Secretary

OTA Contributors

Rosina Bierbaum Roger Chin Nina Goldman

Gretchen Kolsrud Karen Larsen Howard Levenson

Edward MacDonald Robin Roy

Contractors

Jack Casazza and Herb Limmer

Casazza, Schultz and Associates, Inc.

Russell deLucia

deLucia and Associates, Inc.

Ashok Desai

National Council of Applied Economic Research

K.G. Duleep and Sergio Ostria

Energy and Environmental Analysis, Inc.

Ahmad Faruqui and Greg Wikler

Barakat, Howard & Chamberlain

Howard Geller

American Council for an Energy Efficient Economy

Theodore J. Gorton

Petroleum Consultant

Donald Hertzmark

Independent Consultant

H. Mike Jones

Independent Consultant

Virendra Kothari

Energy and Environmental Analysis, Inc.

Eric Larson

Princeton University

Karin Lissakers

Columbia University

Arjun Makhijani

Institute for Energy and Environmental Research

Peter Meier, John Lee and Mujahid Iqba1

International Development and Energy Associates

Henry Peskin

Edgevale Associates, Inc.

Judith M. Siegel

Judith M. Siegel and Associates

Vaclav Smil

University of Manitoba
Workshop Participants

Technology Transfer to Developing Countries

September 13,1989

Robert H. Annan

Committee on Renewable Energy Commerce

and Trade

U.S. Department of Energy

Mark Bernstein

Center for Energy and the Environment

University of Pennsylvania

James H. Caldwell

Independent Consultant

Washington, DC

David Curry

U.S. Department of the Treasury

Ghazi Darkazali

Spire Corp.

Robert Ford

U.S. Department of State

Les Garden

U.S. Department of Commerce

Michael Greene

Board on Science and Technology in Development

National Academy of Sciences

Erik Helland-Hansen

United Nations Development Programme

David Jhirad

Office of Energy

U.S. Agency for International Development

Linda Ladis

U.S. Export Council for Renewable Energy

Mark Levine

Lawrence Berkeley Laboratory

Frances Li

U.S. Department of State

Janice Mazer

U.S. Department of Commerce

Mohan Munasinghe

The World Bank

D. Lou Peoples

Hagler, Bailly, Inc.

(formerly Bechtel Power Corp.)

Paul Schwengels

U.S. Environmental Protection Agency

Joseph Sedlak

Volunteers in Technical Assistance

James Sullivan

U.S. Agency for International Development

Franklin Tugwell

Environmental Enterprises Assistance Fund

(formerly Winrock International Institute

for Agricultural Development)

Jack Vanderryn

U.S. Agency for International Development

Frank Vukmanic

U.S. Department of Treasury

Timothy Weiskel

Rockefeller Foundation

Gerald T. West

Overseas Private Investment Corp.

Thomas Wilbanks

Oak Ridge National Laboratory

John W, Wisniewski

Export-Import Bank

Environmental Problems and Priorities

in Developing Countries

April 19, 1990

Michael Adler

U.S. Environmental Protection Agency

Lutz Baehr

Center for Science and Technology in Development

United Nations

Leonard Berry

Florida Atlantic University

Al Binger

Conservation Foundation/Biomass Users

Network

Janet Welsh Brown

World Resources Institute

Lalanath de Silva

Environmental Foundation, Ltd.

Sri Lanka

Clarence Dias

International Center for Law in Development

Paul Dulin

Associates in Rural Development

(continued on next page)

vi
—

John J. Gaudet

Africa Bureau

U.S. Agency for International Development

Robert Goodland

Environment Division

Latin American Division

World Bank

Lupe Guinand

BIOMA

Venezuela

Robert Ichord

Energy & Natural Resources Division

Asia Near East Bureau

U.S. Agency for International Development

Kari Keipi

Environmental Protection Division

Inter-American Development Bank

Ananda Krishnan

Center for Science and Technology in Development

United Nations

Russell Mittermeier

Conservation International

Hind Sadek

WorldWide

Paul Schwengels

U.S. Environmental Protection Agency

Thomas Steel, Jr.

Natural Resources Defense Council

Energy for Transportation in the

Developing World

September 25, 1990

David Greene

Oak Ridge National Laboratory

Martin Bernard

Argonne National Laboratory

Mia Birk

International Institute for Energy Conservation (IIEC)

K.G. Duleep

Energy and Environmental Analysis, Inc.

Asif Faiz

The World Bank

Fred Moavenzadeh

Center for Construction Research and Education

Massachusetts Institute of Technology

Sergio Ostria

Energy and Environmental Analysis, Inc.

Setty Pendakur

School of Community and Regional Planning

University of British Columbia

Gabriel Roth

Private Consultant

Washington, DC

Kumares C. Sinha

Department of Civil Engineering

Purdue University

NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the workshop participants. The workshop

participants do not, however, necessarily approve, disapprove, or endorse this report. OTA assumes full responsibility for the report and the

accuracy of its contents.

vii
Outside Reviewers

Michael L.S. Bergey

Bergey Windpower Co.

Martin Bernard

Argonne National Laboratory

Mia Birk

International Institute for Energy Conservation

Chaim Braun

United Engineers and Constructors

Bob Chronowski

Alternative Energy Development, Inc.

Kurt Conger

American Public Power Association

W.D. Craig

Bechtel Power Corp.

K.G. Duleep

Energy and Environmental Analysis, Inc.

Gautam Dutt

Independent Consultant

Elaine Evans

National Hydropower Association

Asif Faiz

The World Bank

Willem Floor

The World Bank

Gerald Foley

Panes Institute (London)

Howard Geller

American Council for an Energy Efficient Economy

David Greene

Oak Ridge National Laboratory

Toni Barrington

Honda North America, Inc.

Allen R. Inversin

National Rural Electric Cooperative Association

H. Michael Jones

Independent Consultant

Washington, DC

John Kadyszewski

Winrock International Institute for Agricultural

Development

Lars Kristofferson

Stockholm Environment Center

Eric Larson

Princeton University

Barry McNutt

U.S. Department of Energy

Denise Mauzerall

Harvard University

Steven Meyers

Lawrence Berekeley Laboratory

Fred Moavenzadeh

Center for Construction Research and Education

Massachusetts Institute of Technology

Steve Nadel

American Council for an Energy Efficient Economy

William Obenchain

U.S. Department of Energy

Jim Ohi

Solar Energy Research Institute

Tim Olson

California Energy Commission

Sergio Ostria

Energy and Environmental Analysis, Inc.

Ralph Overend

Solar Energy Research Institute

S. Padmanabhan

U.S. Agency for International Development

Setty Pendakur

School of Community and Regional Planning

University of British Columbia

David Pimentel

Cornell University

Steve Plotkin

Energy and Materials Program

Office of Technology Assessment

Glenn Prickett

Natural Resources Defense Council

Marc Ross 

University of Michigan

,,, w{
Gabriel Roth

Independent Consultant

Washington, DC

Chris Rovero

Oak Ridge Associated Universities

Gabriel Sanchez Sierra

Latin-American Energy Organization (OLADE)

Judith M. Siegel

Judith M. Siegel and Associates

D.P. Sengupta

Department of Electrical Engineering

Indian Institute of Science

Kumares C. Sinha

Department of Civil Engineering

Purdue University

Scott Sklar

U.S. Export Council for Renewable Energy

Stratos Tavoulareas

Office of Energy

United States Agency for International

Development

Michael Totten

International Institute for Energy Conservation

Sergio Trindade

SET International, Ltd.

(formerly United Nations Center for Science and

Technology for Development)

Xin Hau Wang

United Nations

Centre for Science and Technology for

Development

NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the reviewers. The reviewers do not, however,

necessarily approve, disapprove, or endorse this report. OTA assumes full responsibility for the report and the accuracy of its contents.

ix
Contents

Page

Chapter I: Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Chapter 2: Energy and the Developing Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 3: Energy Services: Residential and Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 4: Energy Services: Industry and Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 5: Energy Services: Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 6: Energy Conversion Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 7: Energy Resources and Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 8: Issues and Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appendix A: Capital and Life Cycle Costs for Electricity Services . . . . . . . . . . . . . . . . . . . . . .

Appendix B: Electricity Supply Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appendix C: Conversion Factors, Abbreviations, and Glossary . . . . . . . . . . . . . . . . . . . . . . . . .

Index . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17

47

91

145

179

231

261

289

304

312

315
Chapter 1

Overview

Photo credit: U.S. Agency for International Development
CONTENTS

Page

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ENERGY ISSUES IN DEVELOPING COUNTRIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IMPROVING EFFICIENCIES IN RESIDENTIAL, COMMERCIAL,INDUSTRIAL,

AND TRANSPORTATION ENERGY USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Example of Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Impediments to the Adoption of Energy Efficient Technology . . . . . . . . . . . . . . . . . . . . . .

Policy Responses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IMPROVING ENERGY SUPPLY EFFICIENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conversion Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Primary Energy Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Impediments to Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ISSUES AND OPTIONS FOR THE UNITED STATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

3

5

5

5

8

9

9

9

10

11

11

12
Chapter 1

Overview

SUMMARY

Developing countries need energy to raise productivity and improve the living standards of their

populations. Traditionally, developing countries have

addressed their energy needs by expanding the

supply base with little attention to the efficiency of

energy use. This approach is now, however, raising

serious financial, institutional, and environmental

problems. The magnitude of these problems underlines the need for improving the efficiency with

which energy is currently used and produced in

developing countries.

OTA finds that there are major opportunities—

drawing on currently available or near-commercial

technologies-for improving efficiencies throughout the energy systems of developing countries.

These technologies promise to save energy, diminish adverse environmental impacts, reduce life cycle

costs to consumers, and lower systemwide capital

costs. Despite these advantages, efficient technologies may not be rapidly adopted unless technology

transfer is improved and policies and procedures in

donor agencies and the developing countries themselves are designed to remove impediments to their

adoption. There are already promising signs of

greater attention to removal of such barriers, but

much remains to be done.

The way in which developing countries meet their

energy needs directly relates to a number of U.S.

policy concerns. International political stability

depends on steady broad-based economic growth in

the developing countries, which in turn requires

economic and reliable energy services. The developing countries are of growing importance in global

energy markets and global environmental issues:

these countries are projected to account for over

one-half of the increase in global energy consumption over the next three decades with corresponding

increases in their emissions of carbon dioxide, a

major greenhouse gas. Sharply rising demand for oil

from the developing countries contributes to upward

pressure on international oil prices. Developing

country debt, often energy related, affects the

stability of U.S. and international banking systems.

At the same time, developing countries offer the

United States important trade opportunities in their

large and expanding markets for energy technologies.

The United States has a number of programs

influencing the diffusion of energy efficient and

renewable energy technologies in developing countries, The United States could increase its influence

by providing greater leadership in technology transfer, including research, development and demonstration, information dissemination, and training. The

United States could also promote the adoption of

more energy efficient technologies by supporting

policy changes in both lending agencies and developing countries. Finally, the United States could set

a good example of energy efficient behavior at

home.

ENERGY ISSUES IN

DEVELOPING COUNTRIES

Commercial energy consumption in developing

countries is projected to triple over the next 30 years,

driven by rapid population growth and economic

development. Even assuming continued declines in

fertility rates, the population of the developing world

will increase by nearly 3 billion-to almost 7

billion-over the next three decades, stimulating a

sharp increase in demand for energy services.

Securing higher living standards for this growing

population requires rapid economic growth, further

increasing the demand for energy services. This

demand is augmented by structural changes inherent

in the development process, especially urbanization;

the building of the commercial, industrial and

transportation infrastructure; and the substitution of

commercial for traditional fuels. Demand is further

augmented by the rapid rise in demand for consumer

goods—lights, refrigerators, TVs—stimulated by

their lowered real cost, improved availability, and

frequently subsidized energy prices. Even though

per capita commercial energy consumption will

remain well below the levels of the industrial

countries, the more rapid population and economic

growth in developing countries means that their

share of global commercial energy consumption

would rise-horn 23 percent today to a projected 40

percent in 2020.

–3-
4 ● Fueling Development: Energy Technologies for Developing Countries

Efforts to supply energy on this scale face serious

financial, operational, and environmental constraints.

Capital intensive electricity generating stations and

petroleum refineries already account for a large part

of all public investment budgets in developing

countries, with electric utilities taking the lion’s

share. Yet, annual electricity sector investments

would have to double to provide supplies at projected growth rates. A large part of the investment in

energy facilities and in the fuel to operate them must

be paid for in foreign exchange, already under

pressure in many countries. In addition, there is often

a shortage of local currency to pay for energy

development due to inadequate revenues from existing operations. The high cost of developing national

energy infrastructures and of importing energy to

support growing energy demands could, in some

cases, slow overall economic growth.

The energy supply sector in many developing

countries also experiences a wide range of operational problems. These problems raise questions

about the ability of energy supplies to expand

rapidly even if financial resources were available.

Finally, the environmental impacts of rapid supply

expansion could be substantial. The production and

use of both commercial and traditional fuels contribute to the accelerating rates of environmental

degradation now occurring in many developing

countries. Energy trends in developing countries are

also of global environmental concern. These countries are already important contributors to greenhouse gas emissions from fossil fuel use, accounting

for one-quarter of annual global energy sector

carbon dioxide emissions. Deforestation and the

emission of other greenhouse gases, such as methane

and NOX, further raise the share of developing

countries in total global greenhouse gas emissions.

Although per capita levels of greenhouse emissions

from energy use are much lower than in the

industrial countries, the developing countries’ rapid

population and economic growth will increase their

share of total emissions in the future.

The magnitude of these problems underlines the

need for improving the efficiency of energy use and

production in developing countries. Improved efficiencies can moderate the expansion of energy

systems while still providing the energy services

needed for development. Energy efficiencies vary in

the developing world but, on average, appear to be

much lower than in the industrial countries.

While the wide differences in technical efficien-

. cies in reasonably standardized operations, such as

cooking, steel making, and electricity generation,

suggest that dramatic improvements in efficiencies

are possible, factors other than technology also play

an important role in improving efficiencies. Thus, an

energy system may seem technically ‘‘inefficient”

when, in many cases, users and producers are acting

rationally given the framework of resources, incentives, and disincentives within which they make

their decisions. One of the reasons that poor

households use inefficient traditional fuels is that

they lack the financial means to buy more efficient

technologies and fuels. Many industrial processes

are inefficient due to antiquated machinery and

erratic fuel supplies of uncertain quality. The policy

environment that determines this pattern of incentives and disincentives is crucial to the adoption of

new technologies.

The way in which developing countries provide

their energy services is important to the United

States for a number of reasons:

●

●

●

●

International Political Stability. Steady broadbased economic growth in the developing

countries is a prerequisite for long-term international political stability. The provision of

economic and reliable energy services plays a

key role in securing such economic growth.

Humanitarian Concerns. Humanitarian and

equity concerns have long been a core element

of U.S. foreign relations with developing countries. Helping developing countries to meet

their energy needs can play an important role in

assisting low income groups.

Trade and Competitiveness. With the large

trade deficits of recent years and the growing

internationalization of the economy, the United

States has little choice but to pay close attention

to export markets. Many of these will be in the

developing countries. The electricity sector of

developing countries alone is projected by the

World Bank to need a capital investment of

nearly $750 billion during the 1990s. Similarly,

there will be large markets in consumer products such as automobiles, refrigerators, and air

conditioners. The United States faces intense

competition in the increasingly important markets for energy efficient manufacturing processes and consumer products.

Global Environmental Issues. Regional and

global environmental issues such as acid rain,
—

Chapter I-Overview ● 5

●

●

ozone depletion, and global warming are strongly

related to energy production and use. These

issues are becoming of increasing concern to

developing and industrial countries.

Global Oil Markets. The World Energy Conference projects that developing countries will

account for about 90 percent of the increase in

world oil consumption between 1985 and 2020.

This will put significant upward pressure on oil

markets and could lead to both higher prices

and greater volatility, with corresponding impacts on U.S. inflation, balance of trade, and

overall economic performance.

Global Financial Markets. High levels of

developing country indebtedness (a significant

portion of which was incurred in building the

energy sector) affect global capital markets and

the global banking system. This contributes to

the instability of the U.S. and international

money and banking systems.

IMPROVING EFFICIENCIES IN

RESIDENTIAL, COMMERCIAL,

INDUSTRIAL, AND

TRANSPORTATION ENERGY USE

The Potential

This OTA study shows that it is possible to

improve the low technical efficiencies with which

energy is produced, converted, and used in developing countries through the adoption of proven cost

effective technologies. On the demand side, these

include efficient lights, refrigerators, Ca rS and

trucks, industrial boilers, electric motors, and a

variety of new manufacturing processes for energy

intensive industries such as steel and cement.

Moreover, numerous technologies at various stages

of RD&D and commercialization can further increase the efficiency of delivering these energy

services. Widespread adoption of these technologies

could achieve substantial energy savings, while still

providing the energy services needed for development. Capturing these energy savings would help

environmental quality, and ease the burden of high

import bills for the many developing countries that

import most of their energy supplies.

Improved technologies are not limited to the

modem urban sectors of developing countries.

Technology can also provide energy services for the

vast majority of the population of the developing

world that lives outside or on the margin of the

modem economy. In rural and poor urban households, more efficient biomass stoves could both

reduce fuel use and cut back the hazardous smoke

emissions that are a potentially significant contributor to ill-health among women and young children.

Simple motor driven systems for pumping water or

grinding grain can dramatically reduce the burden on

women who now spend several hours per day

performing these physically demanding tasks. Energy efficient pumps, fertilizers, and mechanical

traction (e.g., rototillers and small tractors) can

improve agricultural productivity. Technology also

can boost the efficiency, quality, and productivity of

traditional small scale industry, which accounts for

one-half to three-quarters of manufacturing employment in many developing countries and is an

important source of income for the rural and urban

poor.

The Example of Electricity

The large potential for energy efficient technologies can be illustrated in the electricity sector.

Electricity demand is rising rapidly, by 10 percent or

more annually in many developing countries. Matching this increase in demand with corresponding

increases in electricity generation may not be

feasible for many developing countries due to their

high indebtedness and already strained budgets.

Even if it were possible, such rates of increase would

imply a substantial increase in electricity’s share of

development budgets, to the detriment of other

important development expenditures.

This OTA study, based on conservative estimates,l shows that for a wide range of electricity

using services-cooking, water heating, lighting,

refrigeration, air conditioning, electronic information services, and industrial motor drive--overall

electricity savings of nearly 50 percent are possible

with currently available2 energy efficient technologies (see figure l-l). Further, these technologies

would provide financial savings to individual conlsee app. A for details of assumptions and CXdCUlatiOnS.

2~e one t=~oloninclud~ in ~e su~o titi5 not currently generally av~able is he figh efficiency refrigerator. Refrigerators whh efficiencies

as high or higher have been demonstrated and are for sale in small lots, however.
6 ● Fueling Development: Energy Technologies for Developing Countries

Figure 1 -l—Electricity, Life Cycle Cost, and Capital Cost Savings of High Efficiency

End Use-Equipment in the- Electric Sector- -

Percent

100

80 I

6 0 -

40 -

20 ‘“

o ’

n

665 W ●

1

L-----

)

Electricity use,

watts/capita

— m566

Life cycle, cost

$/capita

—-

I

1

Capital, cost

$/capita

L -] Conventional technology = Energy efficient technology

This figure shows that society-wide (including both utility and end user investments) electricity savings

of about 47 percent, life cycle cost savings of 28 percent, and capital cost savings to society of about 13

percent are possible by investing in energy efficient equipment rather than the standard equipment most

commonly purchased today. The assumed mix of energy services and activity levels corresponds to a

Western European or American standard of living. Primary energy savings are about 2 percent less than

suggested here because of the substitution of gas cooking for part of the electric cooking in the high

efficiency case.

The estimates provided here are probably substantial underestimates of the capital and Iife cycle cost

advantage of energy efficient equipment. The costs of energy supply were substantially underestimated--

system performance, for example, was assumed to be higher than that achieved in virtually any full

service developing country power system. On the end use side, costs were generally overestimated and

savings underestimated. For example, many lowermost energy efficient alternatives-such as insulation

for buildings to reduce heat gain and consequent air conditioner loads-were not included; synergisms

between energy efficient equipment were not considered (e.g., high efficiency equipment gives off less

heat, reducing the load on&r conditioners); and the total cost of these improvements was allocated to

efficiency alone whereas many of the benefits—and often the basis for making the investment-are

unrelated to energy use (e.g., users may invest in improved motor drives to better control manufacturing

processes, and at the same time realize substantial energy savings). Finally, various external costs such

as that of the pollution associated with energy supply equipment were not included.

Details of the calculation and a sensitivity analysis are provided in appendix A at the back of this report.

aW . watt

SOURCE: U.S. Congress, Office of Technology Assessment, 1992.

sumers over the lifetime of the equipment of more

than 25 percent.

It is commonly believed, however, that widespread adoption of energy efficient technologies will

not occur, in large part because of their perceived

high capital costs. This is an important consideration

for poor, heavily indebted countries. The argument

that the capital costs of energy efficient equipment

are too high depends critically, however, on the

frame of reference for considering capital costs. This

OTA study shows that when all the systemwide

financial costs are accounted for, energy efficient

equipment usually can provide the same energy

services to the Nation at a lower installed capital

cost than less efficient equipment (see figure 1-1).

The estimates presented here suggest that over 10

percent of the initial capital investment in the
Chapter l--Overview ● 7

Figure 1-2—Allocation of Capital Investment Between End User and Utility

100

80

60

40

20

0

Percent

Conventional technology

~-1 Utility investment

-.

. . ($277)

I

1 (43%)

11

Efficient technology

~= End use investment

This figure shows that the capital costs of high efficiency end use equipment fall Iargely on the end user

(but the end user still saves money over the equipment’s lifetime) while the required capital investment

by the utility drops substantially (and the total capital investment to society is reduced--figure 1-1 ). This

is the basis for the belief that end use equipment has a higher initial capital cost-it does cost more for

the end user. Redistributing these capital costs so as to reduce the burden felt by the end user (who is

typically extremely sensitive to initial capital costs) could thus allow greater penetration of these highly

advantageous technologies.

SOURCE: U.S. Congress, Office of Technology Assessment, 1992.

electric sector could be avoided by investing in

currently available high-efficiency equipment. With

projected “business as usual” investments in the

electric utility supply sector in developing countries

expected to total $750 billion during the 1990s,

energy efficiency could save substantial capital.

Capital could be saved because the higher initial

cost of efficient end use equipment is usually

outweighed by the savings realized from building

fewer power plants. Taking advantage of opportunities to install energy efficient equipment is particularly important in developing countries because of

the rapid growth in stocks of energy using equipment and the high share of total investment budgets

devoted to increasing energy supplies,

The perception that energy efficient equipment

has a high capital cost results from the way

institutions account for capital costs of energy

supply and end use equipment. Consumers who

purchase end use equipment see the increase in

capital cost of more efficient designs, but not the

decrease in capital costs as fewer power plants are

built in order to provide a given level of energy

service.

Though energy efficiency could result in substantial capital savings, the allocation of investment

between energy supply and end use would need to

change dramatically. Capital investment in electricity supply (borne by the utility) would be cut nearly

in half while that in end use equipment (currently

borne by the end user) would increase by about

two-thirds (see figure 1-2). Such a reallocation of

expenditure patterns is likely to impede adoption of

efficient end use equipment. To overcome these

barriers, institutional changes are needed to enable

decisionmaking on a systemwide basis, and to

initiate innovative mechanisms that focus the financial resources of utilities on the adoption of efficient

end use equipment. A powerful tool for achieving

such a systems approach is Integrated Resource

Planning (IRP--see ch.3), in which energy efficiency investments are explicitly included as an

alternative to capacity expansion. This methodology

297-929 - 92 - 2 - QL : 3
8 ● Fueling Development: Energy Technologies for Developing Countries

is supported by many utilities and public utility

commissions in the United States.

Impediments to the Adoption of

Energy Efficient Technology

Despite the multiple benefits of these energy

efficient technologies, many have not yet been

widely used because of pricing policies, a variety of

market failures, institutional impediments, and technical barriers.

Pricing Policies

Government pricing policies frequently discourage the adoption of energy efficient equipment.

Energy pricing policies have several objectives: the

efficient allocation of resources, social objectives,

reasonable returns to producers, substitution between fuels for national security or environmental

reasons, and industrial competitiveness. Social objectives, including the desire to ensure that household fuels are price-stable and affordable by the

poor, play a major role in pricing policies in

developing countries. Economic objectives, notably

the desire to encourage key strategic development

sectors, are reflected in policies that promote rural

electrification or that keep diesel prices low. As a

result, energy prices in developing countries, particularly for electricity and-in many oil-producing

countries-for petroleum-based fuels, are often set

by the government at well below market value. For

example, the average cost of electricity to consumers

in developing countries is just 60 percent of the cost

of producing it.

Policies that keep key energy prices low, however, can bias the choice of technology away from

energy efficiency. Low prices also may result in

revenues that cannot cover the costs of supplying the

energy, leading to a decline in quality and availability of energy supplies. Though designed to help the

poorer part of the community, energy subsidies may

in fact largely benefit the more affluent classes who

are the heaviest users of commercial fuels.

Market Failures

The diffusion of technology within the developing countries is also impeded by a variety of market

failures. In the residential/commercial sector, for

example, consumers are extremely sensitive to the

frost costs of equipment, and in many cases are not

even the purchasers of the equipment they use. The

contractor who builds the office or the landlord who

rents the housing often purchase the appliances used

in the building and base their choice of appliance on

lowest first cost rather than life cycle operating

costs. The tenants, not the owners, must pay the cost

of operating this inefficient equipment.

In the industrial sector, plant managers’ efforts to

improve energy efficiency can be impeded by

frequent brownouts or blackouts; lack of foreign

exchange to purchase critical components not available locally; and lack of skilled engineers and

managers. Each of these factors can be particularly

disruptive to the utilization of energy efficient

technologies.

Moreover, energy efficiency is often of secondary

interest to industrial firms. Energy is just one, and

often a minor, component of overall corporate

strategy to improve profitability and competitiveness. Energy must compete with other factors—the

financial return, the quality and quantity of product

produced, the timeliness and reliability of the

production equipment, and the flexibility of the

equipment—when investment choices are made and

scarce time of skilled manpower allocated. In many

countries, local industries are protected from competition and therefore have less incentive to lower costs

through the introduction of energy efficient equipment.

Further, because of poor transport infrastructure,

scarcity of capital, and limited ability to bear risk,

manufacturing plants are often much smaller in scale

than their industrial country counterparts. Small

scale manufacturing plants, however, are typically

less energy efficient and require greater capital

investment per unit output to realize the energy

savings that can be achieved in large plants.

In the transport sector, higher first costs of energy

efficient autos, trucks, and motorcycles often deter

consumers from buying them, despite being cost

effective on a life cycle basis. The available infrastructure may strongly influence the choice of

technology as well as the efficiency of its use. Poor

land use planning or ineffective controls, for example, may result in urban sprawl, which in turn leads

to reliance on personal rather than mass transport. A

high degree of reliance on personal transport can

then cause congestion, lower average speeds, and

reduce efficiencies, subsequently increasing demands for capital-intensive highways.
Chapter 1---Overview ● 9

Supply Biases

In the public sector, the multilateral development

banks and bilateral donor agencies influence the

amount and type of technology transferred through

their lending and technical assistance activities. The

bulk of technology transfer activities in these

agencies has been directed to large scale supply

oriented projects—notably major electricity generating facilities including hydroelectricity. The activities and approach of these agencies do not appear to

be well adapted to the special needs of transferring

conservation and small renewable technologies.

The private sector, too, is accustomed to large scale

conventional supply projects.

Technical Barriers

The energy efficient equipment developed in the

industrial countries may not be suited to conditions

in developing countries. Considerable adaptation

may be needed, but manufacturers may not have

adequate funds available for the necessary RD&Despecially when supplying companies are small and

developing country markets are limited and expensive to access. There are also technology gaps.

Technologies important to the rural populace, the

majority of the population in developing countries,

get relatively little attention.

Policy Responses

A number of policies might be adopted throughout the technology transfer process to help overcome

these barriers. These include: increased attention to

technology adaptation; increased training in energy

efficient end use or improved supply technologies;

reforming energy pricing policies to reflect the full

costs to the Nation of supplying energy; taxation of

inefficient equipment; improved information to

consumers; financial incentives (e.g., tax relief or

low-cost loans) to encourage production or purchase

of energy efficient equipment; and efficiency standards. Reforms in energy pricing policies can encourage the purchase of energy efficient equipment, but

prices alone are usually insufficient to overcome the

strong nonprice and institutional barriers to improved efficiency. Energy efficiency standards, innovative financial mechanisms, or other policies

might be used to reinforce price signals.

Changes in regulation of the electricity supply

industry to create closer links between suppliers and

users could overcome a major institutional barrier to

the adoption of efficient appliances. Decisionmaking in the key electricity sector is strongly biased in

favor of supply expansion and typically does not

take a ‘‘systems’ view (see ch.3) of electricity

service. One way to encourage this to happen is

through the use of Integrated Resource Planning

(IRP--see ch.3) in utility decisionmaking. IRP

includes both energy efficiency and energy supply

options in decisions about how to provide energy

services. This contrasts sharply with current procedures that focus on supply options only. Though

straightforward in concept, IRP can, however, be

difficult to implement. Supporting changes in utility

regulation would be required, as well as substantial

complementary education, training, demonstration,

and monitoring of results.

IMPROVING ENERGY SUPPLY

EFFICIENCY

Even with substantial end use efficiency gains,

growing populations and increased economic activity in developing countries will require expansion of

energy supplies. Here, too, available technologies

can improve the efficiency of supplying and converting energy into useful forms and of developing

domestic resources. Improved technologies also can

moderate the environmental effects of energy production.

Conversion Technologies

A number of technologies have the potential to

improve the efficiency and performance of the

energy conversion sector. Given low operational

efficiencies in the electricity sector, technologies for

plant rehabilitation, life extension, system interconnection, and improvements in transmission and

distribution systems often offer higher returns to

capital investment than do new plants. Improvement

of existing systems would have the added advantage

of putting into place a more efficient framework for

future capacity expansion. By the same token,

failure to improve the existing system will be

detrimental to efficient supply expansion in the

future, regardless of technology.

For capacity expansion, fluidized-bed combustion (FBC) has greater tolerance for the low-quality

coal often used in developing countries and can

reduce SO2 and NOX emissions. Advanced gas

turbines, particularly when used in a combinedcycle or steam-injected mode-promise to be one of
10 ● Fueling Development: Energy Technologies for Developing Countries

the most attractive new technologies for electricity

generation in the developing world. Operating

efficiencies can be high, and because they are small

and modular with short construction lead times, gas

turbines are also suited to private power producers

with limited capital.

The relatively small, modular, and safer nuclear

power technologies under development may extend

the market for nuclear power in developing countries. Their cost and performance characteristics,

however, are uncertain. The technical skill requirements, relatively high cost, and ongoing concerns

about waste disposal may also continue to limit the

use of nuclear power in developing countries.

Another important concern is the potential for

nuclear weapons proliferation, which has been

greatly heightened by the recent disclosure of the

relatively advanced status of Iraq’s nuclear weapons

program.

Development of the extensive hydroelectric resources in many countries has already provided large

amounts of power. Large scale hydroelectric development remains problematic, however, due to the

economic and social impacts of large scale projects,

and, in many cases (as in Africa), initial lack of

markets. Smaller scale hydro could overcome some

of these problems.

Stand alone renewable, such as wind turbines

and photovoltaics, are now cost competitive with

diesel generators and grid extension in many situations. Although the role of renewable remains very

limited today, it could expand substantially in the

future as their costs continue to decline. These

technologies are of particular importance in providing high-quality energy sources to rural areas.

Geothermal energy is also available for a select few

countries. A number of technologies offer promise

for the conversion of biomass into improved liquid

and gaseous fuels, if cost effective and sustainable

biomass supplies can be assured (see below). Increased conversion of biomass is particularly promising where there are captive residues, such as in

agroindustry or the forest products industry. Much

more efficient use of the biomass now consumed is

possible as well, through modem bioenergy conversion and utilization technologies.

Cost effective retrofits could improve refinery

efficiencies, and new technologies could permit

small scale and relatively low cost conversion of

methane to methanol.

Primary Energy Supplies

China, India, and several other countries have

large coal resources. China and India, the two

biggest users, plan to expand their coal use considerably. Coal as presently produced and used in these

countries has severe environmental impacts such as

emissions of acid rain precursors and greenhouse

gases, and mining damage to the land and water.

Large scale use also poses major logistical problems

when coal fields are distant from major users.

Substantial improvements in coal mining in India

and China could be achieved through increased use

of high-performance mining and beneficiation technologies currently used in other countries.

The developing world possesses only limited

crude oil reserves, with a reserves/production ratio

of 26 years compared with a worldwide ratio of 43

years. These reserves are concentrated in a few

countries, including Mexico and Venezuela. Onehalf of the developing countries have no discovered

recoverable reserves. The industry consensus is that

the oil reserves likely to be proved in developing

countries will be relatively small. The development

of such fields, while traditionally unattractive to the

major oil companies, is important for the developing

countries themselves-especially the poorer ones. A

number of recent technical developments in oil

exploration and development may reduce risks and

costs, thus making small field development more

attractive than before, and facilitating the entry of

smaller oil companies in developing countries.

These technologies also could aid exploration for

natural gas, a fairly versatile fuel and one that is

environmentally less damaging than coal or oil—

both locally and globally. The reserves/production

ratio for natural gas in the developing world is about

88 years-much more favorable than crude oil.

Natural gas resources are more widely dispersed

among the developing countries than oil. In several

countries, large amounts of developed natural gas

are currently flared because of the lack of infrastructure and organized markets.

Biomass is an important energy resource that

could be better used in most countries. In the

technical arena, several advances have been made to

improve plant productivity in recent years. Fast

growing species, and intercropping and multiple

species opportunities have been identified, physiological knowledge of plant growth processes has
Chapter 1---Overview ● 11

been improved, and there have been breakthroughs

in manipulation of plants through biotechnology.

Crop residue densification increases their energy

content and in some cases can thus reduce transport

and handling costs.

The Benefits

These new energy supply technologies offer

numerous potential advantages:

●

●

●

Modular, Small Scale, and Short Lead Times.

Several of these new supply technologies,

notably advanced gas turbines and many types

of renewable energy technologies, are small

and modular, and can therefore better match

demand growth both in size and construction

time. Conventional coal-fired power plants or

petroleum refineries generally are constructed

in very large units with long lead times-as

much as 10 years or more. The large incremental size of energy supply systems makes it

difficult to match supply to demand. The long

lead times result in large quantities of capital

being tied up in a project for years before the

project becomes productive. Both of these

factors raise costs and increase risks.

Plant Reliability and Performance. Developing countries experience frequent service curtailments, including blackouts, brownouts, and

sharp power surges. Unreliable service means

that industries and offices are unable to operate,

production is lowered, and raw materials are

wasted. Losses can be considerable. Lost industrial output caused by shortages of electricity in

India and Pakistan is estimated to have reduced

Gross Domestic Product (GDP) by about 1.5 to

2 percent. Many consumers—residential, commercial, and industrial-are obliged to invest in

a variety of equipment—voltage boosters,

standby generators, storage batteries, kerosene

lamps-in order to minimize the impact of

disrupted supplies. Improved operating and

maintenance procedures as well as a variety of

new technologies could improve plant reliability and performance.

Rural Energy. Most of the population of

developing countries live in rural areas, the

great majority in poverty and without access to

the services that could increase their productivity and improve their standard of living. Several

of the smaller scale technologies (modern

biomass energy and decentralized renewable)

can bring high quality fuels to rural areas and

thus promote rural development and employment.

Environmental Benefits. Different types of

energy supply may have different environmental impacts over various time periods. For

example, a coal-fired power plant generates air

emissions today with both near-term acid rain

and potentially longer term global warming

impacts, while a nuclear plant has the potential

(though the probability is low) for catastrophic

release of radiation at any time. This, plus the

general lack of knowledge of the environmental

impacts, makes the comparison of different

types of energy supply difficult.

With these reservations, this analysis suggests that among conventional systems, natural

gas generally has the least adverse environmental impacts. Increased emphasis on natural

gas could reduce land disturbances, air and

water pollution, and occupational health hazards compared with coal, and could avoid some

of the problems of large hydro and nuclear.

Modem biomass systems (properly handled)

could also reduce environmental impacts compared to coal or other conventional fuels.

Decentralized renewable generate less air

pollution, and, because of their small scale

incremental nature, may avoid some of the

environmental problems of large scale energy

projects. There is, however, little experience

with large scale use of decentralized technologies to serve as a basis for firm decisionmaking.

Foreign Exchange Saving. New technologies

that develop local energy resources will reduce

energy imports-which currently account for

over 50 percent of export earnings in several of

the poorest countries.

Employment. Decentralized renewable could

stimulate employment. Even though developing countries would, at least initially, import

much of the technology, renewable need

installation and servicing that could create local

jobs. Production of biomass energy can also

create rural employment.

Impediments to Adoption

In practice, a variety of difficulties could impede

use of these energy supply technologies. Many of the

problems in the energy supply sector are not due to

a lack of adequate technology, but rather to the
12 ● Fueling Development: Energy Technologies for Developing countries

institutional structure and procedures. The operating

efficiency of electricity generating equipment and

oil refineries in many developing countries is often

substantially below that of industrialized countries

with similar technology. A number of factors lie

behind this poor performance: official interference

in day-to-day management of the utilities; overstaffing but shortages of trained manpower; lack of

standardization of equipment; limited system integration and planning; distorted pricing structures;

obligations to provide parts of the population with

electricity at less than cost; shortages of foreign

exchange to buy spare parts; and regulatory frameworks that discourage competition. The effective

deployment of technology will therefore depend on

addressing these related financial, policy and institutional issues.

Institutional issues are also important for accelerated oil and gas development. Despite promising

geological prospects, hydrocarbon exploration activity (density of wells drilled) in the developing

countries is much lower than the world average, and

is concentrated in countries where resources have

already been developed. In most developing countries (with the exception of a few large-population

countries, such as Mexico and Venezuela), investment in petroleum exploration and development is

carried out almost exclusively by international oil

companies. Thus, the fiscal and contractual arrangements between country and company need to

include appropriate incentives. These incentives

have traditionally been biased in favor of large, low

cost fields and may need to be changed to encourage

the development of small higher cost fields. Gas

development faces additional obstacles. Unlike oil

markets, gas markets must be developed concurrently with the resource, adding to the start-up costs

and complexity of gas projects. In the past, this has

been a formidable obstacle, but new technologies,

such as small high-performance gas turbines, could

greatly help market development. Even so, gas sold

in local markets does not directly generate the

foreign exchange needed to repatriate profits to

foreign investors.

The introduction of modem biomass energy

technologies encounters different problems. These

include inadequate research, development, and demonstration; direct or indirect subsidies to other

energy supplies that may discourage investment;

high land and infrastructure (notably roads) costs;

and lack of credit, which may not be as readily

available for modern biomass supply systems as for

other more conventional supplies such as coal- or

oil-fired electricity.

The development of large scale, cost effective,

sustainable biomass feedstocks also faces uncertainties. Data on the extent of forest area and the annual

increment of forest growth are sparse and unreliable,

and little is known about the impacts of intensive

biomass development on soils and other environmental assets. Improvements in forest management

are notoriously difficult to achieve, and the introduction of high-yield energy crops together with the

necessary improvements in agricultural practice will

require long-term sustained efforts. Finally, policies

to promote bioenergy could create competition for

land between energy crops for the rich or food crops

for the poor.

ISSUES AND OPTIONS FOR

THE UNITED STATES

Developing countries have been slow to adopt

improved energy end use and supply technologies,

despite the potential advantages, due to the technical, institutional, and economic barriers described

above. Developing countries are, however, demonstrating interest in seeking alternative ways of

meeting the demand for energy services, despite the

difficulties of changing entrenched systems. Increased attention is being given, for example, to

politically sensitive questions such as energy price

reform, improved management, and operations efficiency in state-owned energy supply industries.

Several developing countries are taking steps to

encourage private investment in electricity and in oil

and gas. Many countries have developed capable

energy resource and policy institutions. Progress is

also being made on the environmental front. Although much of the current environmental focus of

developing countries is on local rather than global

conditions, these countries also participate in international resource and environmental protection policy discussion and treaties.

There is also evidence of change in donor

institutions. The bilateral donor agencies and the

multilateral development banks (of which the most

influential is the World Bank) are beginning-often

under pressure from Congress and nongovernmental

organizations —to incorporate environmental planning into their projects, to develop energy conservation projects, and to encourage a larger role for the
Chapter l---Overview ● 13

private sector. This momentum for change offers a

timely opportunity for U.S. initiatives.

A substantial number of U.S. agencies already has

programs that influence the diffusion of improved

energy technologies in developing countries. These

include the Agency for International Development

(AID), the Trade and Development Program, the

Departments of Energy, Commerce, and the Treasury, the Overseas Private Investment Corporation,

the Export-Import Bank, the Small Business Administration, and the U.S. Trade Representative. The

United States exercises additional influence through

membership in international organizations, notably

the World Bank and the regional development banks

and the United Nations programs. A number of U.S.

based industry groups and nongovernmental organizations is also active in this field. These agencies and

organizations cover a wide range of technology

transfer and diffusion activities—-research, development, and demonstration; project loans and grants;

education, training, and technical assistance; information services; policy advice; support for exports

and private investment; and others.

In one sense, the United States already has a

considerable policy infrastructure in place for promoting energy technologies in developing countries.

This policy infrastructure has, however, focused on

supply development, including renewable in recent

years, and is only now beginning to accept efficiency

as an important theme. Further, given the large

number of programs and activities, the question

arises of their cohesion and cooperation to ensure

maximum effectiveness. Efforts have been made to

coordinate at least some aspects of the work of the

different agencies and organizations through both

formal and informal channels. For example, in the

Renewable Energy Industry Development Act of

1983, Congress initiated a multiagency committee

called the Committee on Renewable Energy Commerce and Trade (CORECT) to promote trade in

U.S. renewable energy technologies. Now could be

a good time to examine the extent to which this

model of coordination could be applied to other

relevant areas, such as energy efficiency and the

environment.

Despite the large number of programs and wide

range of activities, the current level of U.S. bilateral

aid for energy is small. USAID grants and other

assistance in the energy sector total about $200

million per year compared with multilateral development bank (MDBs) annual energy loans of $5

billion. The small scale of U.S. bilateral assistance

for energy suggests that the sums available are

currently and will continue to be used to greatest

effect by:

●

●

●

●

●

using limited U.S. bilateral grant monies to

promote technical assistance and institution

building;

including technology transfer in broader bilateral policy discussions, such as debt negotiations;

influencing the activities of the multilateral

development banks;

cooperating with other bilateral donors, lending

agencies, and private voluntary organizations

(PVOs); and

encouraging a wider role for the private sectors

of both the industrial and developing countries.

In this context, the analysis presented below leads to

a series of broad policy options for Congress to

consider. In particular, the following policy areas

merit priority consideration:

devoting additional attention to energy efficiency, the environmental impacts of energy

developments, and the energy needs of the rural

and urban poor in current bilateral and multilateral lending programs;

encouraging energy price reform in developing

countries to stimulate the adoption of energy

efficient equipment and to help finance needed

supply expansion;

providing technical assistance to support Integrated Resource Planning (IRP) and associated

regulatory reform to guide investments in

energy supply and end use projects, particularly

in the electricity sector-this could help developing countries secure the savings potential

illustrated in figure l-l;

providing technical assistance, information,

and training in other potentially significant

areas, such as environmental protection, appliance and industrial equipment efficiency, utility management, and transportation planning;

assisting in institution building, especially for

technology research, development, adaptation,

testing, and demonstration;

encouraging private sector (from both the

United States and developing countries) participation in energy development;
14 ● Fueling Development: Energy Technologies for Developing Countries

●

●

expanding U.S. trade and investment programs—

U.S. energy related exports and investment

have traditionally been an important channel

for energy technology transfer to developing

countries;

making sure that the United States sets a good

example for the rest of the world in energy

efficiency and environmental protection.

Congress has already taken action in several of these

areas—support for IRP, efficient energy pricing, and

consideration of environmental impacts of projects.

In these cases, the primary question may be the

effectiveness of existing interventions rather than

the need to take additional action.

Efficient energy technologies often reduce systemwide capital investment as well as life cycle

operating costs. Under these conditions, redirecting

capital funds from supply expansion to energy

efficiency projects in the MDBs and other financing

institutions would free resources for additional

investment in energy services or other pressing

development needs, Even if all these savings were

reinvested in the energy sector, however, the rapid

rise in demand for energy services will require

substantially more investment than that projected to

be available. The MDBs and other bilateral and

multilateral financial institutions will need, therefore, to continue providing high levels of support,

while at the same time supporting actions (e.g., debt

negotiations, macroeconomic reform, and privatization) to encourage increased private sector participation.

Several of the options for accelerating the adoption of energy efficient technology imply an increase

in bilateral assistance. While increases in bilateral

aid run counter to efforts to control budget expenditures, the share of bilateral aid (particularly in AID)

devoted to energy is low in relation to: total bilateral

expenditures; the share of energy in the aid efforts of

other donors; and the potential importance of

developing countries as markets for U.S. exports of

improved energy technologies. Some redistribution

of expenditures could be considered. The geographical distribution of existing AID energy expenditures,

concentrated in the Near East, may not adequately

reflect the totality of U.S. policy interests.

The diffusion of improved energy technologies in

developing countries and the ways in which the

United States can accelerate this diffusion is a

complicated process involving a number of agencies

and institutions. The principle behind these actions

is, however, simple: energy is not used for its own

sake, but for the services it makes possible. If energy

policy concentrates on the best way to provide these

services, rather than automatically encouraging

increased energy supplies, opportunities expand

dramatically. Though it is not easy for institutions

designed for supply expansion to change to a service

orientation, their interest is growing and the stakes

are high. This analysis provides strong evidence that

such a change could release billions of dollars that

could provide energy services to those who would

otherwise be without, or to finance the many other

economic and social goals of developing countries.

The United States can make an important contribution to this change in policy through its bilateral

programs, its influence on MDB programs, and

through cooperation with other donors. In so doing,

the United States could develop closer partnerships

with the developing countries themselves, who are

increasingly looking for new, more efficient ways to

meet the rapidly growing demand for energy services.
Chapter 2

Energy and the

Developing Countries

Photo credit: U.S. Agency for International Development
Contents

Page

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ANALYTICAL FRAMEWORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

DEVELOPING AND INDUSTRIALIZED COUNTRIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PATTERNS OF ENERGY USE AND SUPPLY IN DEVELOPING COUNTRIES . . . . . . . . . . . .

Energy Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Energy Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Developing Countries in World Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TRENDS IN ENERGY DEMAND IN DEVELOPING COUNTRIES . . . . . . . . . . . . . . . . . . . . . . . .

Factors Increasing Energy Demand . . . . . . . . . . . . . . . . . . . . . . . ....,,. . . . . . . . . . . . . . . . . . . . . . . .

Difficulties in Meeting Energy Demands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ENERGY, ECONOMIC GROWTH, AND ENVIRONMENTAL QUALITY . . . . . . . . . . . . . . . . . .

Energy and Economic Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Energy and the Traditional Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Energy and the Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Greenhouse Gases and Global Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Boxes

17

19

21

22

22

25

26

27

27

29

31

31

33

37

39

43

Box Page

2-A. The OTA Study in Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

2-B. Highlights of the Intergovernmental Panel on Climate Change

1990 Scientific Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Chapter 2

Energy and the Developing Countries

INTRODUCTION

Energy use in the developing countries has risen

more than fourfold over the past three decades and

is expected to continue increasing rapidly in the

future. The increase in the services that energy

provides is necessary and desirable, since energy

services are essential for economic growth, improved living standards, and to provide for rising

populations. But the traditional way of meeting

these energy service needs-primarily by increasing

energy supplies with little attention to the efficiency with which energy is used-could cause

serious economic, environmental, and social problems. For many of the developing countries, much of

the additional energy needed will be supplied by

imported oil, thus further burdening those countries

already saddled with high oil import bills. Similarly,

building dams or powerplants to meet higher demands for electricity could push these nations even

deeper into debt. Energy production and use in

developing countries contributes to local and regional environmental damage, and, on the global

scale, accounts for a substantial and rising share of

greenhouse gas emissions.

The way in which developing countries provide

their energy services is important to the United

States for a number of reasons:

● International Political Stability. Steady broadbased economic growth in the developing

countries is a prerequisite for long-term international political stability. The provision of

economic and reliable energy services plays a

key role in securing such economic growth.

. Humanitarian Concerns. Humanitarian and

equity concerns have long been a core element

of U.S. foreign relations with developing countries. Assisting developing countries to meet

their energy needs can play an important role in

helping low income groups.

. Trade and Competitiveness. With the large

trade deficits of recent years and the growing

internationalization of the economy, the United

States has little choice but to pay close attention

●

●

●

to export markets. Many of these will be in the

developing countries. The developing countries are potential markets for U.S. manufacturers through direct sales, joint ventures, and

other arrangements. The electric power sector

of developing countries alone is projected by

the World Bank to need a capital investment of

nearly $750 billion during the 1990s. There will

similarly be large markets in consumer products such as automobiles, refrigerators, air

conditioners, and many other goods. The United

States faces intense competition in the increasingly important markets for energy efficient

manufacturing processes and consumer products.

Global Environmental Issues. Regional and

global environmental issues such as acid rain,

ozone depletion, and global warming are strongly

related to energy production and use. These

issues are becoming of increasing concern in

developing and industrial countries.

Global Oil Markets. The World Energy Conference projects that developing countries will

account for about 90 percent of the increase in

world oil consumption between 1985 and 2020.

This will put significant upward pressure on oil

markets and could lead to both higher prices

and greater volatility, with corresponding impacts on U.S. inflation, balance of trade, and

overall economic performance. With business

as usual, U.S. demand for imported oil is also

likely to increase dramatically over the same

time period.

Global Financial Markets. High levels of

developing country indebtedness (a significant

portion of which was incurred in building the

energy sector) affect global capital markets and

the global banking system. This contributes to

the instability of the U.S. and international

money and banking systems.

This report (see box 2-A) evaluates ways of better

providing energy services for development. The

analysis examines technologies (hardware, but also

the knowledge, skills, spare parts, and other infrastructure) that permit energy to be used and supplied

1~~ chapter &aw~ heavily on he ~te~repofl of ~5 projwt, us, congress, off& of Technology Assessment, Energy in Developing Countn”es,

OTA-E486 (Washingto% DC: U.S. Government Printing Office), January 1991.

–17-
18 ● Fueling Development: Energy Technologies for Developing Countries

Box 2-A—The OTA Study In Context

The eight Congressional committees and subcommittees that requested or endorsed this study asked OTA to

examine: the potential of new energy technologies to contribute to economic growth while protecting the

environment in the developing countries, and the role of U.S. policy in encouraging the rapid adoption of these

technologies.

OTA responded to this request in two documents, an interim report, Energy in Developing Countries released

in January 1991, and the present final report Fueling Development: Energy Technologies for Developing Countries.

The interim report examines how energy is currently supplied and used in the developing countries and how energy

is linked with economic and social development and the quality of the environment. A major finding was that despite

the low level of energy consumption in developing countries, energy was often produced, converted, and used

inefficiently.

The present report, Fueling Development, builds on the findings of the interim report by ex amining the role

of technology in improving the efficiency with which energy is supplied and used. This final report incorporates

part of the interim report, but readers with more specific interest in patterns of energy demand and supply and its

relation to economic growth and environmental quality are referred to the interim report.

The emphasis in the current report is on improving energy efficiencies in using and supplying energy. The

emphasis on efficiency should not be taken to minimize the importance of economic structure on energy

consumption. Variations in economy wide energy/GDP ratios between countries, and differing experiences over

time, suggest that differences in economic structure do have an important role to play in explaining differences in

energy consumption. These differences are more often related to economic and social policies, and country specific

conditions and endowments, however, than to technology-the focus of this study.

We deliberately take a conservative approach to technology, examining only those that are at present

commercially available or are expected to become commercial soon. This is not to discount the remarkable

improvements in efficiency now on the drawing board, or the new energy supplies whose commercial development

would have revolutionary consequences for all countries of the world. Instead, it recognizes that there is much that

can be done here and now in the developing countries using established technologies, and that poor countries cannot

be expected to take technological risks, especially when they are not necessary.

Given the immediate pressing needs of the citizens of the developing world for energy services, and the vast

potential for improving energy efficiencies with known technologies, it seemed more appropriate to concentrate on

relatively near-term responses. Many of the options—improving efficiencies and moving to cleaner energy and

renewables-will nevertheless contribute to the solution of longer-term issues such as global warming. The basis

for our economic calculations of the cost effectiveness of energy efficient technologies is also conservative,

designed to under- rather than over-estimate the cost advantages of energy efficient equipment.

more efficiently, and the institutional and policy the resources available for their solution. An appremechanisms that determine their rate of adoption.

Based on this analysis, the role of the U.S. Government in promoting the transfer and accelerated

adoption of improved energy technologies to developing countries is examined.

Developing countries vary widely in their socioeconomic development; their patterns of energy use

and supply; and the linkages between their energy

use, economic development, and environmental

quality. Awareness of these factors is an important

first step in developing policies that can effectively

respond to the wide range of conditions found in

developing countries. For example, the problems—

energy or otherwise-faced by a relatively rich and

developed country such as Brazil are different from

those faced by a poor country like Ethiopia, as are

ciation of these differences is necessary for the

realistic assessment of energy technologies.

As background to the subsequent analysis, this

chapter therefore briefly introduces five sets of

issues. First, it describes OTA’s analytic approach.

Second, it examines who the developing countries

are and how they differ from the industrialized

countries and from each other. Third, it reviews how

energy is used and supplied in these countries.

Fourth, it examines the trends in energy use that are

leading to the developing countries’ growing share

in world energy consumption. Finally, it explores

how energy is linked with economic growth and

with environmental quality. Subsequent chapters

examine the extent to which more efficient and cost

effective energy use and supply systems can provide
Chapter 2---Energy and the Developing Countries ● 19

Despite our focussed approach, we were obliged, due to the breadth of the subject and congressional interest

in our considering the whole group of vastly disparate developing countries, to be selective in our coverage. As our

interim report pointed out, most of the energy used in developing countries today is in the residential sector, for

cooking and lighting, and the industrial sector for process heat and electric drive. We therefore emphasize these

sectors and services in our energy service analysis. The third major sector, transport, is quantitatively less important

than the others, but merits attention because of its reliance on oil, and its contribution to urban air pollution. Perhaps

more than the other sectors, however, improvements in the overall efficiency of the transport sector in developing

countries depend primarily on transport and urban planning--rather outside the scope of this report-than pure

technology, though here again there is major scope for improvement. The services provided by electricity warrant

particular attention for a number of reasons; the major share of the electricity sector in development budgets; the

current financial and operational problems faced by the sector; the large bilateral and multilateral aid component

in electricity development that provides the opportunity for leveraging sectoral change; and the large and costly

increases in generation capacity that could be avoided through end-use efficiency improvements.

Oil and gas exploration also are examined in some detail because of the heavy burden imposed by oil imports

for many countries, and the major environmental advantages of gas as a fuel. Because most of the population of

the developing world live in rural areas, we examine the potential for providing the energy needed for rural and

agricultural development-decentralized forms of electricity generation based on locally available renewable

resources, and superior forms of fuel based on biomass.

Many of these issues are common to all developing countries. Certain groups of countries, however, command

particular attention. India and China receive particular emphasis because of the weight of their total energy

consumption, their intensive coal use, and the high energy intensities of their economies. The countries of Africa,

though their commercial energy consumption is very small in global and even in developing country terms, need

special attention because of their acute poverty and often declining living standards. Latin America receives

special mention as well, due to an especially heavy debt burden and strong traditional economic ties to the United

States.

Our treatment of policy options is conditioned by three factors. First, it was not possible to cover in consistent

detail the content of the many U.S. and Multilateral Development Bank activities affecting the transfer of improved

energy technology to developing countries. Second, many of these programs have changed since this project was

started, and are continuing to change. Third, Congress has already addressed or is addressing many of the energy

issues in connection with its interest in environmental quality. Thus the options identify policy issues rather

than providing solutions. Each of the areas identified deserves detailed study before specific options could be

justified.

SOURCE: OffIce of Technology Assessmen6 1992.

the energy services needed for development, thus chooses among these according to such criteria as

moderating increases in energy consumption.

ANALYTICAL FRAMEWORK

The analysis presented in this OTA study has

three important features. First, the analysis focuses

on the services energy provides, rather than on

simply increasing energy supplies. The reason for

this approach is simple. Energy is not used for its

own sake, but rather for the services it makes

possible-cooking, water heating, cooling a house,

heating an industrial boiler, transporting freight and

people. Further, there may be many different means

of providing a desired service, each with its own

costs and benefits. For example, transport can be

provided in a number of ways—by bicycle, motorcycle, car, bus, light rail, aircraft. The consumer

cost, comfort, convenience, speed, and even aesthetics. Within these consumer constraints, a more

efficient car may be preferable to increasing refinery

capacity in order to reduce capital and/or operating

costs, or because of environmental benefits. More

than just engineering and economics must be considered, including social, cultural, and institutional

factors. Such factors are more readily included in a

services framework than in a conventional energy

supply analysis. A flow diagram comparing the

analytical frameworks for energy services versus

energy supplies is shown in figure 2-1.

Second, within this services frameworkthe changes

in how energy is used are traced from traditional

rural areas to their modern urban counterparts. This

progression from the traditional rural to the modern
20 ● Fueling Development: Energy Technologies for Developing Countries

Chapters 3, 4, 5

Energy services

r

End use

equipment

I Ights,

ref r lgerators,

motors, car s

Figure 2-l—The OTA Analytical Framework

Chapter 6

Energy supplies

Transmission

& distribution

elect r ICI t y ,

gas plpel Ines,

unl t tr alns

Conversion

technologies

01 ect r I CI t y

gener at I on,

ref I ner 10s,

biomass t o

e t ha no I

Energy end use analysis

SOURCE: Office of Technology Assessment, 1992.

urban captures well the dynamics of energy use and

how it can be expected to change in the future.

Third, the entire system needed to provide energy

services-from the energy resource to the final

energy service, including production, conversion,

and use-is examined as a whole. This is done in

order to show the total costs and consequences to

society, as well as to the individual, of providing

particular services and how they might be provided

more effectively in terms of financial, environmental, and other costs. For example, increased

lighting services might be met by increasing the

amount of electricity generated, by increasing the

use of more efficient light bulbs and reflectors, or by

a combination of the two, perhaps in conjunction

with daylighting techniques. A systems approach

permits the comparison of efficiency and supply

options in achieving the desired end.

The energy services analysis explicitly identifies

potential institutional problems by highlighting the

gap between what is and what could be. The analysis

thereby recognizes that technology adoption and use

is embedded in an institutional framework that

provides both incentives and disincentives to users,

Chapter 7

Energy resources

Extract ion

technologies

:1 I Id‘ I I I rl g

c o a I IT) I rl I r g

Energy

resources

011, gas,

coal, hydro,

ur an I urn,

biomass ,

~1 1 n(j

—

Energy supply analysis

and largely determines which and how technologies

will be used.

This approach has a number of implications both

for the way technology is used now and for the

adoption of new technologies in the future. Thus, the

energy sector in many developing countries is

frequently characterized as “inefficient” in the

sense that more energy is used to provide a given

service or output than is usual in industrial countries.

In a wider context, however, taking into account the

many other relevant factors (financial, infrastructural, managerial, and institutional) the technology

may well be used to the best of human ability and

often with considerable ingenuity and resourcefulness. In many cases, although energy appears from

the outside to be used inefficiently, energy users may

be acting logically given the framework of incentives and disincentives within which they make their

decisions. It follows, therefore, that the adoption of

a new technology will depend not only on the

intrinsic superiority of the technology itself but also

on whether institutional factors favor its adoption.

The policy environment is of crucial importance to

the adoption of new technologies.

-s report largely follows the definition of “developing’ countries-low-and middle-income countries-used by the World Banlq including all

of the countries of Afric% Latin Americ% and Asi4 excluding Japan. Saudi Arabi% Kuwait and the United Arab Emirates are not included by virtue

of their high per capita income. The World Bank does, however, include as developing countries some East and West European countries, such as Poland,

Hungary, Yugoslavia, Greece, and lhrkey, that qualify as developing countries by virtue of their income levels, bu~ due to their integration with industrial

economies of East and West Europe, do not share other characteristics of underdevelopmen6 and are therefore not included in this OTA report. Where

group averages of general economic and swial indicators are reported directly from the World Development Reporr 1989, these countries are included

in the total. In more detailed analysis, they are excluded, While every effort is made to adhere to these definitions, it is not always possible, especially

when other sources of data with slightly different definitions are used. See, for example, World Bank, WorfdDevefopment Report 1989 (New York NY:

Oxford University Press, 1989), Table 1, World Development Indicators, pp. 164-165.
Chapter 2--Energy and the Developing Countries ● 21

Photo credit: Appropriate Technologies, International.

DEVELOPING AND

INDUSTRIALIZED COUNTRIES

It is difficult to clearly define the group of

“developing nations.”2

If all the countries in the

world are ranked by any widely used development

index (e.g., GDP per capita), there is no distinct gap

in the series that would suggest that those above

were ‘‘rich’ countries, and those below ‘‘poor. ”

Further, as is readily observable, some citizens of

developing countries have standards of living as

high as, or higher than, many citizens of industrial

countries. Indeed, the differences between the rich

and poor in virtually any developing country are

usually more dramatic than the average differences

between developing and industrial countries. Most

of the citizens of developing countries are poor,

however, and it is the weight of their numbers that

produces wide differences in average indicators of

social and economic wellbeing-infant mortality

rates; nutritional intake; access to clean water,

sanitation, and health services; educational attainment; per capita income; life expectancy; per capita

energy consumption3—between the rich and poor

countries.

Differences between rich and poor countries also

emerge in trends over time. The economies of many

developing countries have grown more rapidly than

those of industrial countries over the past century,

but much of this increase has been absorbed by

population growth-leaving per capita Gross Domestic Product (GDP) well below the levels of the

industrial countries.4

The developing countries have, nonetheless, made

rapid progress in improving the quality of life for

their citizens, lagging the industrial countries by no

more than a generation or two in reducing infant

mortality rates (see figure 2-2A) or increasing

average life expectancy at birth. Today, only a few

countries have lower life expectancies at birth than

did the United States in 1900.5 Substantial gains

have also been achieved in providing access to

education and in improving other aspects of the

quality of life. These improvements have been

realized by developing countries at a much earlier

point in economic development (as measured by

per-capita GDP) than was achieved by today’s

industrial countries as they developed economically

(see figure 2-2B). For example, China and Korea

achieved infant mortality rates less than 50 per 1,000

live births at GDPs of about $1,500 per capita

(corrected for $1990 Purchasing Power Parity (PPP)).

The United States did not achieve these rates of

Jl_Jnited Nations Development Program, Humun DeveZopmenf Report 199] (new York NY: Oxford University pre-ss, 1991).

.iFor ~xmple, a -Pie of Su ~geh~~~mn and tie Asian countries found overall annual GDP WOti rata between 1~ and 1987 of 3.8

percent in Latin America and 3.2 pereent in Asi% comprwed to 2.9 percent for the Organization for Bconomic Cooperation and Development (OECD)

countries. (The Latin American and Asian countries, however, were starting from per capita incomes of between one-fourth and one-half that of the

OECD countries.) Population growth rates for the Latin Americau Asian, and OECD countries however, were 2,2 percent, 1.8 percent, and 0.9 percent,

respectively, leaving per capita GDP growth rates of 1.7 percent 1.3 percen~ and 2.1 percent. The annual difference of 0.4 to 0.8 percent in per capita

GDP results in an income differential of 40 to 200 percent over the 87 year time period. See Angus Maddisou The World Economy in the 20th Century

(Paris: Organization for Economic Cooperation and Development 1987).

%e U.S. life expectancy at birth in 1900 was 47.3 years. Today, countries with similar life expectancies include: Mozambique (48), Ethiopia (47),

Chad (46), Malawi (47), Somalia (47), Bhutan (48), Burkina Faso (47), Mali (47), Guinea (43), Mauritania (46), Sierra Leone (42), Yemen Arab Republic

(47), Senegal (48). The weighted average life expectancy at birth for the low-and middle-income developing countries is 63 years. See World Ba& World

Development Report 1991 (New York NY: Oxford University Press, 1991).
22 ● Fueling Development: Energy Technologies for- Developing Countries

Figure 2-2A—infant Mortality Rate Versus Calendar

Year for the United States, Brazil, China, India,

Korea, and Nigeria

Infant mortality rate (per 1,000 live births)

200 ; ‘- .— —

100

50

0

Q‘n Nigeria

India

\

Brazil

China

~

Korea

 Us.

,— r– ~ — ~ — .– -

1900 1920 1940 1960 1980 2000

Year

This figure shows that these developing countries lag the United

States in reducing infant mortality rates by just 1 to 2 generations

or less.

SOURCES: U.S. Department of Commerce, Bureau of the Census,

“Historical Statistics of the United States: Colonial Times to

1970” (Washington, DC: U.S. Government Printing Office);

Bureau of the Census, “Statistical Abstract of the United

States, 1990,” (Washington, DC: U.S. Government Printing

Off ice); World Bank, “Worfd Development Report” (New York,

NY: Oxford University Press), various years.

infant mortality until its per capita GDP was over

$7,000.

Pioneering advances in science and technology,

agriculture, medicine, sanitation, and other fields

have been important contributors to these improvements in the quality of life. Wide differences in these

quality of life indicators between countries with

similar per capita GDPs, however, also emphasize

the important role of social policies and other factors

in realizing such gains.6

Wide differences in economic and social development also exist both within and among developing

countries. A generation of exceptionally fast economic growth in the Newly Industrializing Countries (NICs), principally in Asia, combined with the

slow growth or economic stagnation in some other

countries, principally in Africa, has widened the gap

among developing countries (see figure 2-3). Percapita incomes in the upper middle-income developing countries (e.g., Brazil, Argentina, Algeria, Venezuela, and Korea) are almost 7 times higher than in

the low-income countries.

The income differential reflects important differences in economic structure. In the upper middleincome countries, industry has a much larger share

in total output and agriculture a much lower share.

India and China are exceptions, with atypically large

shares of industry for their relatively low incomes.

The share of the total population living in urban

areas is much lower in the low-income countries. In

several African countries only about 10 percent of

the total population are urban dwellers, whereas in

countries like Brazil, Argentina, and Venezuela,

levels of urbanization (about 80 percent of the

population live in towns) are similar to those in the

industrial countries.

PATTERNS OF ENERGY USE AND

SUPPLY IN DEVELOPING

COUNTRIES

Energy Use

The wide variations in social and economic

conditions between developing and industrialized

countries are also reflected in their energy use. At the

level of final consumption,7 consumers in developing countries used about 45 exajoules (43 quads) of

commercial energy and 16 EJ (15 quads) of traditional fuels, or 61 EJ (58 quads) total in 1985 (see

table 2-l). In comparison, consumers in the United

States used about 52 EJ (49 quads) of energy (again,

not including conversion losses). On a per capita

basis, people in the United States used an average of

215 Gigajoules (GJ, or 204 million Btu) each in

1985, compared to 15,20, and 35 GJ per capita (14,

19 and 33 million Btu) in Asia, Africa, and Latin

America, respectively (see table 2-2).

These wide variations in energy use are also seen

among developing countries. In the upper middleincome developing countries, per capita annual

commercial energy consumption is 12 times higher

~ theme is developed further in a recent publication by the United Nations Development Programme, Human Development Report 1990 (New

York, NY: Oxford University Press, 1990).

mote that this does not include conversion losses. Conversion losses are the energy consumed in converting raw energy (such as coal and crude oil)

to forms (electricity, gasoline) that can be used by consumem. The largest conversion loss is in the electricity sector. ‘Ibtal conversion losses in the United

States account for about 30 percent of total primary energy consumption. Electricity losses account for about 80 percent of that total or onequarter of

total energy consumption.
Chapter 2--Energy and the Developing Countries ● 23

Figure 2-2B—infant Mortality Rates Versus Per Capita

GDP Corrected for Purchasing Power Parity (PPP)

for the United States, Brazil, China, India,

Korea, and Nigeria

Infant mortality rate (per 1,000 live births)

200 ‘- – - “ ‘- ‘--”

T 1

I

““keria \Br=i, \..s.

50; k’

() ~

 –

‘ --T T - T T ‘-

800

Per capita GDP (corrected

T T F- .J

8,000

for PPP, $)

This figure shows that these developing countries have been able

to reduce their infant mortality rates at a much earlier point in their

economic development as measured by per capita income than

did the United States during its economic development. This was

made possible by using the scientific, medical, agricultural, public

health, and other advances pioneered by the industrial countries.

Note that the per capita GDPs have been smoothed-otherwise

the curves shown would reverse themselves during serious

recessions-so that the curves are monotonic along the GDP

axis.

SOURCE: Adapted from figure 2-2A. GDP data corrected by Purchasing

Power Parity (PPP) are from: Angus Maddison, “The Vbrfd

Economy in the 20th Century” (Paris, France: Organization for

Economic Cooperation and Development, 1989); and from

Robert Summers and Alan Heston, “A New Set of International

Comparison of Real Product and Price Levels Estimates for 130

Countries, 1950 to 1985,” The Review of Income and 14balth,

vol. 34, No. 1, March 1988, pp. 1-25.

than in the low-income countries.8 China and India

differ from the other low-income countries, with per

capita consumption of commercial energy more than

3 times higher. Per capita consumption of traditional biomass fuels, on the other hand, is generally

higher in the poorest countries, depending on the

biomass resources available.9

Energy use is typically divided according to end

use sector: residential, commercial, industrial, agricultural, and transport. Tables 2-1 and 2-2 list four

of these. For commercial fuels only, industry is the

largest single end use sector in the developing

countries and accounts for about half of the total. In

comparison, industry accounts for about one-third of

total energy use in the United States. If traditional

fuels are included, the residential/commercial sector

in developing countries often uses as much or more

energy than the industrial sector. Transport accounts

for about 10 percent of all energy use in Asia, but for

20 to 30 percent in both Africa and Latin America.

The principal energy services demanded in developing countries today are cooking and industrial

process heat (see table 2-3-note that unlike tables

2-1 and 2-2, these values include conversion losses).

These services account for 60 percent of total energy

use in Brazil, India, and China. Services provided by

electricity, such as lighting, appliances, and motor

drive, account for about 12 percent of the total, but

their share is rising rapidly. The rapid increase in

demand for electricity and its high cost explain the

emphasis on the electricity sector in this report.

The traditional rural economy relies heavily on

biomass—wood, crop residues, animal dung-for

cooking or heating; and on human and animal

muscle power to grind grain, haul water, plant and

harvest crops, transport goods, run cottage industries, and meet other needs for motive power. These

forms of energy are extremely limited in output and

efficiency. Hauling water from the village well, for

example, can take 30 minutes to 3 hours per

household each day. The same amount of water

could instead be pumped by a motor and piped to the

home at a direct cost in electricity of typically less

than a penny per day.

As incomes grow and access to improved fuels

become more reliable, people are widely observed to

shift from traditional biomass fuels to cleaner, more

convenient purchased fuels such as charcoal, kerosene, LPG or natural gas, and electricity to meet their

energy needs. Modern mechanical drive (electric

motors, diesel engines, etc.), in particular, substitutes for human and animal muscle power throughout the economy and allows dramatic increases in

the output and the productivity of labor.

A correspondingly wide range of technologies are

currently used to provide energy services in developing countries. For example, cooking technologies

include stoves using fuelwood, charcoal, kerosene,

liquid petroleum gas, natural gas, and electricity,

among others, all with different cost and performance characteristics. These technologies vary widely

gworld J3ardq op. cit., footnote 2.

%azil, despite its relatively high income, uses substantial quantities of biomass fuels in modem applications, such as charcoal for steehnaking and

ethanol for cars. This contrasts with the use of biomass in the poorer countries, as a cooking fuel using traditional technologies.

297-929 - 92 - 3 - QL : 3
24 ● Fueling Development: Energy Technologies for Developing Countries

Figure 2-3-Per Capita GDP Corrected for Purchasing Power Parity (PPP) Versus Calendar Year for Eight —

Industrial and Developing Countries.

5,000

Per capita GDP (corrected for PPP, $)

~– --------

.

-1 - 1

/ ’

. +

,

I countries

I

+ I

1, I Range of six

Latin American

t

I countrie s

I Range of

six Asian

I countries

/. I

-t I

I Range of

~ six African

countrie s

500 t

—-r -- -T –— :~––-–- +-- ---– ~—- —-J

1900 1920 1940 1960 1980 2000

Year

This figure shows the change over time in per capita income for the low and high income countries within each of four sets of six countries

for Africa, Asia Latin America, and OECD Groups, or 24 countries overall. Note the large overlap in per capita incomes during the early

part of this century between some of today’s industrial countries and some developing countries. Overtime, today’s industrial countries

made institutional reforms, invested heavily inhuman and physical capital, and made other changes, resulting in their incomes converging

at a high level. The relative success of Latin American, Asian, and African countries in making similarly successful institutional reforms,

human and capital investments, controlling population growth, and making other changes is indicated by their per capita GDPs over time.

SOURCE: Adapted from Angus Maddison, “The Wortd Economy in the 20th Century,” (Paris, Franoe: Organization for Economic Cooperation and

Development, 1989); and Robert Summers and Alan Heston, “A New Set of International Comparisons of Real Product and Price bvels Estimates

for 130 Countries, 1950 to 1985,” The Review of /ncurne and Wea/th, vol. 34, No. 1, pp. 1-25, 1988.

in their energy efficiency. In an open free, for

example, only about 17 percent of the energy

contained in fuelwood goes into cooking. In contrast, in the ‘‘modern” gas stove, about 60 percent

of the energy contained in the gas is used in cooking.

The preponderance of traditional stoves and fuels in

many developing countries suggests opportunities

for increasing efficiencies and therefore providing

more cooking services from the same amount of

energy.

Differences in efficiencies in providing energy

services are also observed in the industrial sector—

industrial process heat, electric or mechanical drive,

and other processes. For example, the two largest

developing country energy consumers, India and

China, currently use roughly twice as much energy

to produce a tonne of steel in their integrated iron

and steel plants as is used in integrated plants in the

United States and Japan.10

Despite these differences in aggregate indicators,

there are strong similarities in energy use among

developing countries within their rural and urban

sectors. Energy use in traditional villages throughout the developing world is fairly similar in terms of

quantity used, source (biomass, muscle power), and

services provided (cooking, subsistence agriculture). At the other end of the scale, energy use by the

economically well off is also reasonably similar

between developing countries. Energy use by this

group in the developing countries is also similar to

industrial country energy use in terms of quantity

used (to within a factor of 2 or 3), source (oil, gas,

coal, electricity), and services provided (electric

lighting and appliances, industrial goods, private

automobiles, etc.). The large differences between

l~ote titthem ~ wide variations ~~eenindivid~ plants, with key plants in India and China performing much better than these averages suggest.

There are also differences in product mix which modify these estimates. See ch. 4 for details.
Chapter 2--Energy and the Developing Countries ● 25

Table 2-l—Total Delivered Energy by Sector, in Selected Regions of the World, 1985 (exajoules)s

Residential/commmercial Industry Transport Total

Commercial Traditional Commercial Traditional Commercial Traditional Commercial Traditional Total

Region fuels fuels b

fuels fuels bfuels fuels bfuels fuels benergy

Africa . . . . . . . . . . . . . . . 1.0 4.0 2.0 0.2 1.5 NA 4.4 4.1 8.5

Latin America. . . . . . . . . 2.3 2.6 4.1 0.8 3.8 NA 10.1 3.4 13.5

India and China . . . . . . . 7.3 4.7 13.0 0.2 2.0 NA 22.2 4.8 27.1

Other Asia . . . . . . . . . . . 1.9 3.2 4.0 0.4 1.9 NA 7.8 3.6 11.3

Developing countries . . 12.5 14.5 23.1 1.6 9.2 NA 44.5 15.9 60.4

United States . . . . . . . . . 16.8 NA 16.4 NA 18.6 NA 51.8 NA 51.8

Table 2-2—Delivered Energy Per Capita by Sector in Selected Regions, 1985

(Gigajoulesa--Includes traditional fuels)

January 1991) p. 49.

developing countries are then in large part due to the

relative share of traditional villagers and the economically well off in the population, and in the

forms and quantities of energy used by those who are

making the transition between these two extremes.

These broad similarities within specific population

sectors imply that it is possible to make generalizations about technology that are applicable to a wide

range of otherwise disparate countries.

Energy Supply

Biomass fuels are probablyll the largest single

source of energy in developing countries (table 2-4),

providing one-third of the total. Coal and oil are the

next largest, providing 26 and 28 percent. Primary

electricity (mainly hydro) and natural gas account

for 7 percent each. Compared with the industrial

world, the share of oil and gas is much smaller and

the share of biomass fuels larger.

The relative shares of these energy sources in the

overall energy supply mix vary significantly across

different regions and countries, due in part to

unequal endowments of energy resources. Coal

supplies about half of the energy requirements for

developing countries in Asia, due largely to high

levels of coal consumption in China and India, Oil

is the major source of commercial primary energy

for most countries of the developing world, India

and China being the notable exceptions. Natural gas

supplies a relatively small fraction of energy in the

developing world, despite a more abundant resource

base compared with oil.

overall, the developing world produces more

energy than it consumes. There are, however, large

disparities between countries. While many countries

have some energy resources, three-quarters of the

developing countries depend on imports for part or

all of their commercial energy supplies (table 2-5).

1 l~e tem 1‘probably’ is ~~ed because dam on biomass fuels we unreliable but tend on tie whole to underestimate the MIIOUDtS USCd,
26 ● Fueling Development: Energy Technologies for Developing Countries

Table 2-3-Per Capita Energy Use by Service in Selected Countries (Gigajoulesa)

Brazil China India Kenya Taiwan U.S.A.

Residential . . . . . . . . . . . . . . . . . . 6.2 11.7 5.5 16.9 8.9 64.9

cooking . . . . . . . . . . . . . . . . . . . 5.3 8.5 5.0 16.4 4.7 3.5

lighting . . . . . . . . . . . . . . . . . . . 0.3 0.4 0.5 0.5 0.7 NA

appliances . . . . . . . . . . . . . . . . 0.6 NA 0.05 NA 3.1 13.ob

Commercial . . . . . . . . . . . . . . . . . 1.5 0.7 0.26 0.4 4.2 45.2

rooking . . . . . . . . . . . . . . . . . . . 0.4 NA 0.13 0.24 1.9 NA

lighting . . . . . . . . . . . . . . . . . . . 0.5 NA 0.05 0.16 0.8 7.2

appliances . . . . . . . . . . . . . . . . 0.6 NA 0.07 NA 1.5 NA

Industrial . . . . . . . . . . . . . . . . . . . . 19.4 13.8 4.1 4.8 39.2 94.1

process heat . . . . . . . . . . . . . . 17.5 10.2 2.7 NA NA 55.8

motor drive . . . . . . . . . . . . . . . 1.6 3.6 1.3 NA NA 20.4

lighting . . . . . . . . . . . . . . . . . . . 0.1 NA 0.05 NA NA NA

Transport . . . . . . . . . . . . . . . . . . . 13.3 1.2 1.3 2.7 11.5 80.8

road . . . . . . . . . . . . . . . . . . . . . , 12.0 0.2 0.8 1.8 1O.1 66.7

rail . . . . . . . . . . . . . . . . . . . . . . 0.2 0.7 0.4 0.2 0.1 2.0

air . . . . . . . . . . . . . . . . . . . . . . . 0.7 NA 0.1 0.7 0.7 11.3

Agriculture . . . . . . . . . . . . . . . . . . 2.1 1.8 0.6 0.5 2.6 2.5

Total . . . . . . . . . . . . . . . . . . . 43.4 27.0 11.7 25.6 67.7 288.0

Countries, OTA-E-486 (Washington, DC: U.S. Government Printing

Supplies (exajoulesa)

Primary Total Total

Coal oil Gas electricity commercial Biomass energy

Oil imports can be a considerable strain on already

tight foreign exchange budgets. In several countries,

particularly in Africa and Central America, oil

imports represent over 30 percent of foreign exchange earnings from exports.

As noted above, a well established energy transition takes place as development proceeds. Biomass

is the primary energy supply for traditional villages

and is normally used in its raw form with virtually no

processing. When rural populations migrate to urban

areas to look for seasonal or full time employment,

they continue to use traditional biomass fuels. As

incomes increase, however, people are gradually

able to purchase processed fuels (when available)

that are more convenient, efficient, and cleaner. This

shift from traditional biomass fuels to purchased

fuels changes the structure of the energy supply

industry. As development takes place, an increasing

amount of processing takes place, notably in the

share of fossil fuels converted into electricity. This

means that the conversion sector--electric utilities,

refineries, etc.—becomes more important as development proceeds.

Developing Countries in World Energy

The developing countries play an important role

in world energy consumption, accounting for about

30 percent of global energy use, including both

commercial and traditional energy (table 2-4). Several developing countries-China, India, Mexico,
Chapter 2-Energy and the Developing Countries ● 27

Table 2-5-Energy Import Dependence in Developing Countries

Country Number of Number of Number of High Medium Low

income countries energy energy importers importers importers

group in groupa

exporters importers (70-100%) (30-70%) (0-3070)

Low-income . . . . . . . . . . . . . . . . . 38 4 34 29 3 2

China and India . . . . . . . . . . . . . . 2 1 1 0 0 1

Lower middle-income . . . . . . . . . 30 10 20 15 3 2

Upper middle-income . . . . . . . . . 10 6 4 2 1 1

Total . . . . . . . . . . . . . . . . . . . . . 80 21 59 46 7 6

a lncludes all countries for which import dependence data are available.

SOURCE: Adapted from World Bank, Wor/d L?eve/opment Report 7989 (New York, NY: Oxford University Press, 1989).

Brazil, and South Africa-are among the world’s

top 20 commercial energy consumers, China alone

accounts for almost 10 percent of the world’s total

commercial energy use.

Three countries-China, India, and Brazil—

together account for about 45 percent of total

developing country consumption of both commercial and biomass fuels. And these countries plus four

more—Indonesia, Mexico, Korea, and Venezuela—

account for 57 percent of the total. At the other end

of the scale are a large number of small countries

that, combined, account for only a small part of

global consumption. Concerns about global energy

use and its implications focus attention on the large

consumers, but the energy needs of the small

developing nations, though of lesser importance to

global totals, are critical to their development

prospects.

The developing countries are becoming increasingly important actors in global energy. Their share

of global commercial energy consumption has risen

sharply in recent years (figure 2-4), from 17 percent

of global commercial energy in 1973 to over 23

percent now. Despite their much lower levels of per

capita commercial energy consumption (figure 2-5),

rapid population and economic growth has meant

that developing countries accounted for one-half of

the total increase in global commercial energy

consumption since 1973.

The rising share of the developing countries in

global commercial energy consumption is widely

predicted to continue. The World Energy Conference projects an increase in their share to 40 percent

by 2020, and similar results are also found in a large

number of other studies.

12 Again, due to rapid

population and economic growth, the developing

countries are projected to account for almost 60

percent of the global increase in commercial energy

consumption by 2020. China alone accounts for over

one-third of this increase. These rising shares are

sufficiently large to have a major impact on world

energy markets. Despite the more rapid rate of

growth in energy consumption in developing countries, however, per capita consumption of commercial energy will continue to be far below the levels

in industrial countries.

TRENDS IN ENERGY DEMAND IN

DEVELOPING COUNTRIES

Factors Increasing Energy Demand

Factors contributing to the rapidly rising energy

consumption in developing countries include population growth, economic growth and structural

change, and declining real costs of consumer goods.

Population Growth

Over the next three decades the population of the

developing world is projected to increase by nearly

3 billion-to almost 7 billion total-while that of

IZAII amlysls of Projection of global Comrmrcid energy consumption over the next 20 years can be found in Allan S. Marine and Leo Schrattefiolz~,

International Energy Workshop: Overview of Poll Responses (Stanford University International Energy projec~ Juty 1989). This analysis reports the

results and assumptions of over 100 projections of global energy consumption and production, and provides the means of the different studies. Not aLl

studies report results for all regions. The coverage is nonetheless a comprehensive indicator of how energy forecasters view the future. They suggest

that the developing countries’ share could rise to over one-third by 2010. Longer term projections in geneml arrive at similar conclusions. For example,

the Environmental Protection Agency’s Emissions Scenarios document, prepared by the Response Strategies Working Group of the Intergovernmental

Panel on Climate Change (IPCC), Appendix Report of the Expert Group on Emissions Scenarios (RSWG Steering Committee, Task A), April 1990,

concludes that, over a wide tange of scenarios, the share of developing countries (Centrally Planned Asi% Africa, Middle East, and South and East Asia)

will increase from a 1985 reference level of 23 to between 40 and 60 percent of global energy in 2100, and that this group of developing countries would

account for between 60 and 80 percent of the total increase in energy consumption over this period. Further, developments in the Third World define

much of the difference between the low and high growth scenarios.
28 ● Fueling Development: Energy Technologies for Developing Countries

Figure 2-4-Commercial Energy Consumption, 1973,

1985, and 2020 (developing nation energy consumption as

a percentage of world total)

Percentage

100

75

50

25

0

I

40%

1973 1985 2020

Year

SOURCE: World Energy Conference, Global Energy Perspective 2000-

2020, 14th Congress, Montreal 1989 (Paris, 1989).

Figure 2-5-Per Capita Commercial Energy

Consumption, 1973, 1985, and 2020

Gigajoules per capita

250

200

150

100

50

0L

1973

J

1985 2020

Year

~ Developing countries ~lndustrial countries

SOURCE: World Enerw Conference, Global Enertw Perspective 2000-

2020, 14th ~ong., Montreal 1989 (Paris,”{ 989). ‘

Organization for Economic Cooperation and Development (OECD) countries13 will increase by only

100 million-to 850 million total. Even assuming

continued decreases in fertility rates (the number of

children expected to be born to a woman during the

course of her life), the population of these countries14 could reach 10 billion or more in 2100 (figure

2-6). Developing countries would then account for

88 percent of the global population. The increase in

population alone in developing countries would

account for a 75 percent increase in their commercial

energy consumption by 2025 even if per capita

consumption remained at current levels.15

Economic Growth

Securing higher living standards for this rising

population requires rapid economic growth, further

increasing the demand for energy services. If energy

consumption were to increase in proportion to

economic growth (ignoring the enormous potential

for improvements in the efficiency of both supplying

and using energy), then an average annual gross rate

of economic expansion of 4.4 percent (including

both economic and population growth) in the

developing countries-as projected by the World

Energy Conference--would represent more than a

fourfold increase in economic activity and commercial energy consumption between now and 2020.

The demand for energy services could be increased

even more by structural changes inherent in the

development process, including:

Urbanization. Urban populations in developing countries are projected to continue rising

rapidly, by more than 100 million additional

people annually during the 1990s. This rapid

growth in urban populations results in rising

transportation energy needs as food and raw

materials, and finished products are hauled

longer distances and as personal transport

needs grow.

Substitution of commercial for traditional

fuels. Traditional biomass fuels such as wood,

crop residues, and animal dung remain today

the primary source of energy for more than 2

billion people, but there is a strong preference

for commercial fuels as soon as they become

available and affordable;

Increased use of energy intensive materials.

Developing countries have a large demand for

energy intensive material such as steel and

cement needed to build commercial, industrial,

and transportation infrastructures (see figure

2-7).

13TIIe OECD counties are Australia, Austria, Belgiuq Canad% DenmarIq Finland, France, Germany, Greece, Iceland, Ireland, Italy, lapu

Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spa.iQ Sweden, Switzerland, ‘hrkey, the United Kingdom, and the United States.

lqRudolfo A. B~atao, Edwd Bos, patience w. Stephens, and My T. VU, Europe, Middle East, andAfi”ca (EA4N) Region population projections,

1989-90 Edition (Washington, DC: World Banlq 1990), table 9.

15A more dewed ~ysis of tie factors driv~g popu~tion ~w~ is given @ Us. Cqyss, Off:ce of Technology Assessmen~ Energy in

Developing Counrn”es, OTA-E-486 (Washington, DC: U.S. Government Printing Office, January 1991).
Chapter 2--Energy and the Developing Countries ● 29

Figure 2-6-World Population Growth 1750-2100 in

Industrial and Developing Regions

Population in billions

12 ~----–- ‘- ‘

— ‘- —---- —

I

I I

10

8

6

4

2

0

1750 1800 1850 1900 1950 2000 2050 210 0

Year

SOURCE: Thomas Merrick, Population Reference Bureau, “World Population in Transition”’ Population i3u//etin, vol. 41, No. 2, April 1986,

update based on United Nations 1989 projections.

Figure 2-7—Per Capita Steel Consumption Versus

GNP for Various Countries

Per capita steel consumption, kg

1,000 : ‘--– ‘

-

7

■

■

‘%J ■ ■

● ■ N

●

m

mm

lm .1

0 5 10 15 20

Per capita GNP (U.S. 1990 $thousands)

The saturation of the steel market at higher income levels as

national infrastructures are developed is readily seen in linear or

logarithmic plots. It is shown herein a semi-log plot so as to better

display both low-end and high-end data. Each data point represents a country.

SOURCE: U.S. Congress, Office of Technology Assessment, Energy in

Devekp’ng Countries, OTA-E486 (Washington, DC: U.S.

Government Printing Of fic@, January 1991).

Accelerated Consumer Demand

Demand for energy services is further augmented

by rapidly rising demand for a wide range of

energy-using appliances. Modern manufacturing

techniques and improved materials have sharply

lowered the real cost of consumer goods—radios,

refrigerators, television—in recent years. For example, the real cost of refrigerators in the United States

has decreased by a factor of 5 since 1950 (see figure

2-8A). Global distribution systems have also increased the accessibility of these appliances. People

in developing countries can thus purchase these

goods at a far earlier point in the development cycle

(as measured by per capita GDP) than did people in

today’s industrial countries (see figure 2-8 B). Further, as women in developing countries increasingly

enter the formal workforce, the demand for (and the

means to purchase) labor- and time-saving household appliances such as refrigerators (to store

perishable foods and thus reduce the frequency of

grocery shopping) can be expected to grow dramatically. The increase in demand for appliances is

further stimulated by frequently subsidized electricity prices.

The increase in consumer appliances is already

creating an explosive demand for energy both

directly to power these goods and indirectly to

manufacture and distribute them. A recent review of

21 of the largest developing countries in Asia, Latin

America, and Africa found electricity use to be

growing faster in the residential than in other sectors

in all but four. Annual growth rates in residential

electricity use averaged about 12 percent in Asian

countries examined, 10 percent in African countries,

and 5 percent in Latin American countries.16 The

rapidly increasing use of these appliances has a

strong impact on the electric power infrastructure

due to the additional demand placed on systems that

are typically already short of capacity. Further, much

of the residential demand comes at peak times—the

most expensive power to generate.

Difficulties in Meeting Energy Demands

Meeting these rising demands for energy services

through the traditional strategy of expanding supplies from large scale conventional energy systems

faces large problems—financial, institutional, and

environmental.

Financial Constraints

Capital intensive electricity generating stations

and petroleum refineries already account for a large

part of all public investment budgets in developing

countries (see table 2-6). Yet according to the U.S.

Ibstephen Meyers et al., ‘‘Energy Efficiency and Household Electric Appliances in Developing and Newly Industrialized Countries, ’ Draft Report

No. LBL-29678, Lawrence Berkeley Laboratory, October 1990.
30 ● Fueling Development: Energy Technologies for Developing Countries

Figure 2-8A—Reduction in the Real Cost of

Refrigerators Over Time in the United States

Real cost of refrigerators, 1989=1.00

1

-

7 4 

-

6

L

1940 ,/

-

,195 0

5

\

0 L-- --- —7— —–—— 1 1 J

0 50 100 150 200 250

Cumulative production volume (millions)

Over the past 40 years, the real price of refrigerators has dropped

by almost a factor of 5. For developing countries, such price

reductions would allow households to invest in refrigerators at a

much earlier point in time than was the case for the United States

and other industrialized countries at a similar level of development.

SOURCE: U.S. Congress, Office of Technology Assessment, Energy in

Developing Countries, OTA-E-466 (Washington, DC: U.S.

Government Printing Office, January 1991).

Agency for International Development (AID), annual power sector investments would have to

double—to $125 billion annually 17-to provide

adequate supplies. This would take up a large share

of the entire projected annual increase in the

combined gross national product (GNP) of the

developing countries, leaving little for other pressing development needs.

In the past, about one-half of all investments in

energy supply have been in the form of foreign

exchange. High levels of debt now make it difficult

for many developing countries to increase their

borrowing from abroad, and capital is likely to

remain tight. 18 A continuing source of difficulty is

capital outflow or ‘‘Capital Flight’ from many

developing countries, particularly the heavily indebted middle income countries.19 Similarly, there is

often a shortage of local currency to pay for energy

development due to inadequate revenues from existing operations. Out of concern for the rural and urban

poor and to aid development of key sectors such as

Figure 2-8 B—Nationwide Refrigerator Penetration

Versus Per Capita GDP Corrected for PPP

Refrigerator penetration, percent

100 r—--- ‘- -

I

80

60

40

20

. Venezuela

Korea

Philippines

●

o ;-4chind ------ , /

T

– —

=———~‘7- ‘–T— T— -’

2,000 20,000

Per capita GDP (corrected for PPP, $)

This figure shows for selected developing countries that a much

higher percentage of households own refrigerators than did

households in the United States at a similar level of economic

development, as measured by purchasing power parity (PPP)

corrected per capita incomes in 1990$. Thus, countries like

Jordan, Korea and Venezuela have refrigerator penetration rates

of around 80 percent with per capita incomes of $3,200 to $5,700,

respectively. In comparison, refrigerator penetration rates of 80

percent did not occur in the United States until per capita incomes

were $10,000.

SOURCE: GDPdata is from: Angus Maddison, ‘The World Economy in the

20th Century” (Paris, France: Organization for Economb Cooperation and Development, 1989); and Robert Summers and

Alan Heston, “A New Set of International Comparisons of Real

Product and Price Levels Estimates for 130 Countries, 1950-

19S5,” The Review of Income and Wealth, vol. 34, pp. 1-25,

1966. Refrigerator penetration data for the United States is from:

Donald W. Jones, “Energy Use and Fuel Substitution in

Economic Development: What Happened in Developed Countries and What Might be Expected in Developing Countries?”

Oak Ridge National Laboratory, ORNL-8433, August 1988;

Refrigerator penetration data for the various developing countries shown is from: S. Meyers, et al., “Energy Efficiency and

Household Electric Appliances in Developing and Newiy lndusttialized Countries,” Lawrence Berkeley Laboratory, LBL29678, December 1990. Note that the per capita GDPs have

been smoothed-otherwise the curves shown would reverse

themselves during serious recessions-so that the curves are

monotonic along the GDP axis.

agriculture, energy prices-including that of kerosene, diesel, and electricity-are often kept too low

to finance the expansion of new facilities.

Institutional Constraints

The power sectors in developing countries frequently experience a wide range of institutional

problems, including excessive staffing, inadequate

IT’rhis ca be co~p~ed to the world Bank @irnate of $75 billion annually that is bebg planned for ~ developing co~~u.

WWarcus W. Brauchli, “Capital-Poor Regions Will Face World of Tighter Credit in the ‘90s, ” Wall Street Journal, June 5, 1991, p. A8.

l~qa Osterkamp, “Is There a Transfer of Resources From Developing to Industrial Countries, ’InterEconomics, Sept./Oct. 1990, p.242-247;

Glennon J. Harriso% ‘Capital Flight and Highly Indebted Countries: An Analytical Survey of the Literature,’Congressional Research Service, Library

of Congress, March 21, 1991; Glemon J. Harrison, “Capital Flight: Problems Associated with Definitions and Estimates,” Congressional Research

Service, Library of Congress, March 21, 1991.
Chapter 2--Energy and the Developing Countries ● 31

Table 2-6—Estimated Annual Energy Investment as a Percentage of Annual Total

Public Investment During the Early 1980s

Over 40°/0 40-30% 30-200/. 20-1 o% 1 o-o%

Argentina Ecuador Botswana Benin Ethiopia

Brazil India China Egypt

Colombia Pakistan Costa Rica Ghana

Korea Philippines Liberia Jamaica

Mexico Turkey Nepal Morocco

Nigeria

Sudan

SOURCE: Mohan Munasinghe, Electric Power Economics (London: Buttemvorths, 1990), p. 5.

management, weak planning, poor maintenance,

deficient financial monitoring, and few incentives to

improve efficiency of operation. This raises questions about the ability of this key sector to continue

expanding rapidly even if financial resources were

available.

Environmental Constraints

On the one hand, modern energy technologies can

substitute cleaner modern fuels for smoky traditional biomass fuels; can improve the productivity of

traditional agriculture and thus slow the expansion

of cultivated lands into tropical forests or other

fragile lands; or can power environmental control

systems such as sewage treatment. In these cases,

modern energy technologies help improve environmental quality. On the other hand, fossil fuel

combustion in modern industry, transport, and

electricity generation causes air pollution—already

often higher in developing country cities than in

most industrial country cities—as well as contaminate water supplies and land. Energy production,

such as hydro-electric or coal mine development,

can cause the loss of agricultural land and displace

local populations.

Energy use in developing countries is also of

global environmental concern (see below for further

discussion). For example, their share of world

emissions of carbon dioxide—the most significant

greenhouse gas—from the burning of fossil fuel is

projected to rise from 25 percent to 44 percent in

2025. 20 If the carbon dioxide impacts of tropical

deforestation are included, the developing countries’

share of world carbon dioxide emissions rises

significantly.

ENERGY, ECONOMIC GROWTH,

AND ENVIRONMENTAL QUALITY

Energy and Economic Development

A two-way linkage exists between energy and

economic development. The process of economic

development strongly influences the amount and

type of energy needed. At the same time, developments in the energy sector affect economic growth.

This linkage raises a potential dilemma. On the

one hand, the rapid rates of economic growth

necessary to provide rising standards of living for

growing populations requires sharp increases in

energy services. The high cost of providing these

services through the conventional route of supply

expansion could, however, divert an excessive

amount of available investment funds to energy, to

the extent of limiting economic growth itself. This

possibility is highly undesirable given current low

and, in some cases, declining living standards in

developing countries.

On the other hand, the inability to supply needed

energy services can frustrate economic and social

development. In many countries, unreliability and

poor quality of energy supplies lead to large costs to

the economy through wasted materials, slowdown or

stoppage of operations, and investment in standby

equipment.

Improving energy efficiencies could help solve

this dilemma. The analysis presented here suggests

that, on a systems basis, energy efficient equipment

can usually provide energy services at lower initial

capital costs. Efficiency improvements could therefore increase the capital resources available for

~rntcrgovcrmenla] panel on climate Change (IPCC), “Emissions Sccwrios, ” Report of the Expert Group on Emissiom Scenarios, April 1990.
32 . Fueling Development: Energy Technologies for Developing Countries

investment in social and economic development.

The adoption of energy efficient technology could

also save foreign exchange, a major constraint in

developing countries. On the supply side, improved

operating procedures and new technologies may

well improve the reliability of energy supplies, and

thus reduce the heavy economic losses caused by

blackouts and brownouts.

While the major focus of this report is on

technologies to improve energy efficiencies in both

energy use and supply, the broader issues of the

energy implications of different development strategies also need to be considered. A detailed analysis

of these issues is beyond the scope of this report, but

some general considerations may serve to indicate

the importance of the energy sector in broader

development goals and strategies.

The traditional route to economic development

has been through rapid industrialization, motivated

either by ‘‘import substitution’ or ‘‘export promotion” considerations. In both cases, the rising share

of industry in total output and the associated sharp

increase in urban populations has led to a rapid rise

in commercial energy consumption.21 Neither strategy appears to be inherently more energy intensive

than the other. Import substitution strategies tend to

begin with low energy-intensity assembly type

operations, but as they expand to include domestic

manufacture of previously imported components—

including in some cases metal fabrication-average

energy intensities rise.

Conversely, energy intensities associated with

export promotion, especially exports based on mining and mineral fuel exploitation, start high, but fall

as countries integrate forward to capture the higher

value added. The export promotion strategy, however, may have indirect benefits on energy efficiency

as the need to compete in foreign markets usually

results in the more efficient allocation of resources

throughout the economy. Furthermore, export promotion provides the foreign exchange earnings

needed to pay for imports of energy efficient

technologies. To the extent that export promotion

strategies lead to more rapid rates of economic

growth, greater opportunities to introduce new, more

efficient energy technology are provided.

Changes in the types of products produced within

the industrial sector, however, can have a sizable

impact on the energy intensity of a country. While

the energy content of most industrial products is

quite small, a few products--chemicals, plastics,

steel, paper, and cement—are conspicuously energy

intensive, and a change in the distribution of

industrial output between these two categories can

impact an economy’s overall energy intensity.

One-third of the 40 percent decline in the U.S.

energy/GDP ratio between 1972 and 1985, for

example, is attributed to structural change in the

industrial sector, notably the relative decline of steel

making; the remainder is due to efficiency improvements. There are similar examples in the developing

countries. About half of the post-1979 decline in

energy intensity in China (which fell by 30 percent

between the late 1970s and the late 1980s) can be

ascribed to limits on the expansion of heavy

industries and the promotion of light manufactures

(e.g., textiles, consumer electronics, processed foodstuffs, and plastics).

2 2

In the era of cheap oil

supplies, countries without domestic energy resources were able to develop energy intensive

industries. In recent years, however, countries have

been generally reluctant to develop heavy industry

based on imported energy.

In adopting industrialization strategies, the developing countries are broadly following the path of the

older industrial countries. This raises the possibility

of ‘leapfrogging’—taking a more efficient route to

economic and social improvement than that followed by the industrial countries, whose progress

was marked by trial and error and constrained by the

need to develop technologies where none existed

before. To some extent leapfrogging is already

taking place. For example, much steel industry

development in the industrial countries took place

before the invention of current energy efficient

techniques. As demand for steel has been slow,

many of these countries have had difficulty modernzlJoy D@er]ey et al., Energy Srrategiesfor Developing Nations (WashirIgtoIL ~: Johns HOPkiIIS University press, 1981).

~see U.S. COngrCsS, OffIce of Technology Assessment Energy Use and the U.S. Economy (Washington, DC: U.S. Government Mtti Off@ J~e

1990); U.S. Department of Energy, Energy Information AdministratiorL Monthly Energy Review, DOE/EIA-0035(91~5 (Washingto~ DC: May 1991);

Ministry of Energy, People’s Republic of - “Energy in China” 1990. The energy intensity went from 13.36 tomes coal equivalent per 10,000 yuan

(tee/l@ Y) in 1980 to 9.48 (tee/l@ Y) in 1989 (constant yuan). lbtal (primary) energy consumption still increased, however, from 603 million tomes

coal equivalent (Mtce) in 1980 to 969 Mtce in 1989, but the economy grew at twice that rate. See also Vaclav Srnil, “ChiM’s Energy: A Case Study, ”

contractor report prepared for the OffIce of Technology Assessment, April 1990.
— .-. .

Chapter 2-Energy and the Developing Countries ● 33

izing their industries. In contrast, the more recently

developed steel industries in South Korea and

Taiwan are based on near state-of-the-art technology

and are more energy efficient.

Although rapid industrialization contributed to

unprecedented rises in standards of living in the

1950s, 1960s, and 1970s, and for some developing

countries even in the 1980s, there is dissatisfaction

in many countries with some of the side effects—

high unemployment as job creation fails to keep

pace with rising populations, unmanageable urbanization, foreign debt, growing dependence on food

imports, persistent poverty, environmental degradation. Further, industrialization based on export

promotion is threatened by rising protectionism.

Together, these factors are leading to consideration

of alternative development paths, giving greater

emphasis to agriculture23 or to light, rather than

heavy, manufacturing as sources of economic

growth.

In such a strategy, it is argued that agricultural

development would generate mutually reinforcing

linkages with the industrial sector. Thus, increases in

farm output would require inputs from the industrial

sector in the form of fertilizers, pumps, tractors, and

other equipment. The growth of agricultural processing industries would add to these demands from

the industrial sector, and also create jobs in rural

areas. Higher rural incomes would, in turn, generate

additional demand for the products of the industrial

sector. This strategy, relying more on raising rural

incomes than past approaches, could have favorable

impacts on income distribution.

Such a strategy could have important implications

for both overall energy intensity and the forms of

energy needed. Economies in which agriculture

accounts for a large share of total economic activity,

tend to have a lower energy intensity .24 Reliable

supplies of efficient, modern fuels for agricultural

processing, operating pump sets, farm transport, and

operating domestic and workshop appliances would

be needed in rural areas. The importance of rural

electrification to rural development has long been

recognized, and major investments have been made

in rural electrification projects, mainly grid extension. Cost and technical improvements in a wide

range of small scale, decentralized technologies

based on renewable forms of energy (see ch. 6) now

offer, in many situations, a more cost effective and

sustainable approach to rural electrification. The

rising demand for liquid fuels and gases stemming

from accelerated rural development could potentially be met through the development of a modern

biomass fuels industry (see ch. 6) which simultaneously could increase farm and rural industry employment and income.

The possibilities of alternative strategies for

economic and social development, and their energy

implications, underline the need to include energy

considerations in development planning. Whatever

development path is chosen, the energy supply

sector is critical for economic development.

Energy and the Traditional Economy

Two-thirds of the developing world’s population—

some 2.5 billion people—live in rural areas25 with

low standards of living based largely on lowresource farming. This type of farming is characterized by high labor requirements, low productivity

~h-rna Adelman “Beyond Export-Led Growt~” WorZd Development, vol. 12, No. 9 pp. 937-949, 1984; John P. Lewis and Valeriam ~ab (eds.),

Overseas Development Council, “Development Strategies Reconsidered” (New Brunswick NJ: Transaction Books, 1986).

~TCI cite an admittedly ex~emeex~ple: tie energy intensity of Denmark is one-third that of Luxembourg--despite their very Simlhw ICVCIS of ~comc

and social development—bccausc Denmark has a large (though highly energy intensive) agricultural sector, while Luxembourg’s small manufacturing

sector is dominated by the steel industry.

ZWorld Bank, World Development Report 1989, op. cit., foomote 2.
34 ● Fueling Development: Energy Technologies for Developing Countries

per hectare and, because of the marginal subsistence,

strong risk aversion. Rural populations have little

access to commercial fuels and technologies and

only limited connection with the modern economy.

Biomass fuels satisfy the heating and cooking needs

of these populations, and muscle power largely

provides for their agricultural, industrial, and transportation energy needs. Although these energy

sources provide crucial energy services at little or no

direct financial cost, they generally have low efficiencies and limited output and productivity levels.

In many areas, biomass supplies are diminishing

due to a host of factors, including population growth

and the expansion of agricultural lands, commercial

logging, and fuelwood use. The poorest rural peoples often have limited access to even these resources and, therefore, must spend longer periods of

time foraging for fuel sources---exacerbating their

already difficult economic position.

Traditional villages are complex, highly interconnected systems that are carefully tuned to their

environment and the harsh realities of surviving on

meager resources.

26 Villages are largely closed

systems. The biomass that is used for fuel is part of

a system that provides food for humans, fodder for

animals, construction materials, fiber for ropes, and

even traditional medicines. Similarly, the bullock

that pulls a plow also provides milk, meat, leather,

and dung for fertilizer or fuel. Changes in any one

part thus affect other elements of village life.

Changes in agricultural practices, for example,

change the amount and type of energy supplies

available. In turn, energy sector developments, such

as rural electrification, can have major impacts on

agricultural practice and income distribution. Making changes in rural systems frequently proves

difficult due to the large risks that changes can pose

to populations living on the margin of subsistence.

Several factors affect the linkages between energy

and the economic and social development of rural

economies:

Seasonality

The seasons affect every aspect of rural life: the

availability of food, fuel, and employment; the

incidence of disease; and even the rates of fertility

and mortality .27 Labor requirements for planting are

seasonally peaked to take advantage of limited

rainfall and other favorable growing conditions.28

Labor requirements to harvest crops are similarly

peaked. Thus, while there may be a large labor

surplus during most of the year, labor shortages

occur during the critical planting and harvesting

seasons. Studies of African agriculture indicate that

labor is “the major scarce resource in food production. ’29 Modern equipment could reduce the high

labor demands during planting and harvesting.30

Although agriculture demands very high levels of

labor during the peak seasons, during the remainder

of the year rural areas experience serious underemployment. In turn, this seasonal unemployment in

rural areas propels a large amount of both seasonal

and permanent migration to urban areas.31 In Africa

and Asia, where the migrants are mostly men,32

more of the burden for subsistence crop production

is shifted to the women who stay behind. Migration

to cities increases pressure on forests, because urban

dwellers generally purchase their wood supplies,

which are likely to be derived from cutting whole

trees, rather than the gathering of twigs and branches

more typical of rural foragers.

~see M.B. Coughenour et al, ‘‘Energy Extraction and Use in a Nomadic Pastoral Ecosystem,’ Science, vol. 230, No. 4726, Nov. 8,1985, pp. 6 19-625;

J.S. Sin~ Uma Pandey, and A.K. Tiwari, “Man and Forests: A Central Himalayan Case Study, ” AMBIO, vol. 13, No. 2, 1984, pp. 80-87; Amulya

Kumar N. Reddy, ‘‘An Indian Village Agricultural Eco,systern-Case Study of Ungra Village. Part II. Discussion, ” Biomass, vol. 1, 1981, pp. 77-88.

27Ro&~ _&rs,~c~d ~Wh~s4 and Arnold Pacey (eds.), seus~~l Dimensions tO Rural l’over~ ~ndon: Frances Pinter Publishers, Ltd.,

and Totowa, New Jersey: Alhmheld, Osmun and Co., 1981); Robert Chambers, “Rural Poverty Unperceived: Problems and Remedies,” World

Development, vol. 9, 1981, pp. 1-19,

nRo~fi Ctim, Richard lm@ws~ and Arnold Pacey (eds.), Seasonal Dimensions to Rural Poverty, op. cit., footnote 27, pp. 10-11.

2gJea~e Koopman Heu “Feeding the Cities and Feeding the Peasants: What Role for Africa’s Women Farmers?” Wor/d Development, vol. 11,

No. 12, 1983, pp. 1043-1055.

m~abhu ~gfi,Yves Bigot ~d Hw p. BfiWa~cr, &m”CUl~ral Mechanization and the Evolution of Farming $stems in Sub-sotiran Afi”co

(Baltimore, MD: Johns Hopkins University Press for the World B@ 1987).

31~c~e1 p+ ~~o, Ecowm”c Deve/op~nt in the Third world (New York NY: ~-,Inc., 1977); Gerald M. Meier, &?ading ]ssues in

Econom”c Development, 4th cd. (New York NY: Oxford University Press, 1984); Scott M. Swintou Peasant Farming Practices and Off-Farm

Employment in Puebla, Mexico (Ithaca, NY: Cornell University, 1983).

szM1c~el p. T~o,Econom”c Det,e/op~nt in the Third world, op. cit., foomote 31, pp. 1$)2-193+ Ndc that in htin &m.Xica more women than

men now migrate.
Chapter 2--Energy and the Developing Countries ● 35

The seasons also affect the availability and

usability of renewable energy resources. During the

rainy season, wood is less easily obtained and more

difficult to burn than during the drier months. In

areas heavily dependent on crop residues for fuel,

shortages at the end of the dry season can force the

use of noxious weeds as substitutes, particularly by

the very poor. 33 Correspondingly, in mountainou s

areas or elsewhere with large seasonal temperature

variations, fuel demands can increase significantly

during the winter.34

Inequities in Resource Distribution and Access

In regions where biomass fuel supplies are

limited-particularly those with dry climates and/or

high population densities—rural people may travel

long distances to collect fuel for domestic use, as

much as 20 miles round trip in some areas under

special conditions. More generally, when wood is

scarce they rely on crop wastes, animal dung, or

other materials as substitutes. Estimates of time

spent foraging range as high as 200 to 300 persondays per year per household in Nepal.35 Foraging is

also heavy work. In Burkina Faso, typical headloads

weigh 27 kg (60 pounds).36 In many regions, women

and children do most of the fuel collection.

Despite these heavy burdens, villagers often

prefer to invest their capital and labor in technologies for income-producing activities rather than in

fuel-conserving stoves or tree-growing efforts.37

Reasons for this investment preference include lack

of cash income, the ability to minimize wood use or

to switch to alternative fuels when wood becomes

scarce,

38 conflicts over ownership of land or trees,

and easy access to common lands. In addition,

villagers often carry out fuelwood collection in

conjunction with other tasks, such as walking to and

from the fields or herding animals. In this case,

collecting biomass resources may prove less burdensome than it appears.39

To the village user, the immediate value of these

fuels outweighs their potential long-term environmental costs.40 In India, for example, a ton of cow

dung applied to the fields produces an estimated

increase in grain production worth $8, but if the dung

is burned, it eliminates the need for firewood worth

$27 in the market.41 The diversion of crop residues

previously used as soil enhancers to fuel use,

however, can over along period of time lead to a loss

in soil fertility. Local fuel shortages often have their

most serious impacts on the most vulnerable groups.

Rural landless and/or marginal farmers may have

little access to fuel supplies, especially when the

market value of biomass rises,42

The Role of Women and Children

Women are particularly affected by biomass fuel

availability as they shoulder the burden of most

domestic tasks, including foraging for fuelwood and

cooking. In many areas they also perform much of

33 Varun Vidyarthi, ‘‘Energy and the Poor in an Indian Village, ”World Development, vol. 12, No. 8, 1984, pp. 821-836.

~Majid Hussain, “Fuel Consumption Patterns in High Altitude Zones of Kashmir and Ladakh,’Energy Environment Monitor (India), vol. 3, No.

2, September 1987, pp. 57-62.

S5J.S. s~g~ um Pandey, and A.K$ Tiw~, op. ~it., footnote 26; Ke& ~s~es@ Energy strategies in Nepal ad Technological ~pfiOfU @(@:

Research Center for Applied Science and Technology, Tnbhuvan University, for the End-Use Oriented Global Energy Workshop, Sao Paulo, Brazil,

June 1984). The World Bank Energy Sector Assessment for Nepal estimated that 16 percent of all labor went for fuelwood and animal fodder coUection.

36E. Ememt, * *~uel Commption ~oW R~~ F~ilies in upper Volta, west Africa, ’ paper p~s~nted at Eighth World Forestry conference, J&w@

Indonesi% 1978.

JWu-un Vidyarthi, ‘‘Energy and the Poor in an Indian Village, ’ op. cit., footnote 33.

38PM O’Keefe and Barry MUIIS1OW, “Resolving the Irresolvable: The Fuelwood Problem in Eastern and Southern Africa, ’ paper presented at the

ESMAP Eastern and Southern Atiica Household Energy Planning Seminar, Hamre, Zimbabwe, Feb. 1-5, 1988.

%ene Tinker, “The Real Rural Energy Crisis: Women’s Time,” Energy Journal, vol. 8, special issue, 1987, pp. 125-146.

‘Geoffrey Barnard and Lars Kristoferso~ Agricultural Residues as Fuel in the Third World (Washington, DC, and London: I%thscan and

International Institute for Environment and Development Energy Information Program, Technical Report No. 4, 1985).

41G.C. Agg~al and N.’r. Sinm ‘‘Energy and Economic Returns From Cattle Dung as ~n~e ~d FueL’ Energy, vol. 9, No. 1, 1984, pp. 87-90;

see also G.C. Aggarwal, ‘‘Judicious Use of Dung in the Third World,”Energy, vol. 14, No. 6, 1989, pp. 349-352; Eric Eckholm et al., FueZwood: The

Energy Crisis That Won’t Go Away (I_xmdon: Earthsca 1984), p. 105; Ken Newcombe, World Bati Energy Department, An Ecowmic Justification

for RuraiAfforestation: The Case of Ethiopia (Washington DC: World Bank+ 1984).

42vmn v@wthi, op. cit., fOOblOte 33.
36 ● Fueling Development: Energy Technologies for Developing Countries

the subsistence agricultural labor.43 As women’s

work often does not produce any cash revenue, they

are limited in their ability to introduce improved

technologies. Improving labor productivity and

energy efficiency in rural areas will thus require

special attention to the role of women.

The migration of men to look for urban work

leaves women to fulfill traditional male roles as well

as their own. In Uttar Pradesh, India, the male to

female ratio in villages is 1:1.4 for the working age

group of 15 to 50 years.44 In Kenya, a quarter of rural

households are headed by women-in Botswana, 40

percent. 45 Yet the remittances of the migrants can

make an important contribution to rural household

finances.

Children, too, play an important role in rural

labor, freeing adults to perform more difficult

tasks. 46 In Bangladesh, for example, children begin

performing certain tasks as early as age 4. By age 12,

boys become net producers-producing more than

they consume--and are nearly as efficient in wage

work as men. By age 15, boys have produced more

than their cumulative consumption from birth, and

by 22 they have compensated for their own and one

sibling’s cumulative consumption.47 The important

role of children in farming helps explain high

fertility rates in rural areas.

The Role of Commercial Biomass

in the Rural Economy

While much biomass is used locally, rural areas

are also the source of substantial amounts of

fuelwood (both firewood and charcoal) used in

towns. 48 This trade pumps significant amounts of

cash into the rural economy and provides muchneeded employment to rural dwellers during nonagricultural seasons. Such marketing networks can

be quite extensive and complex.49

In many countries, people in the poorest areas,

where conditions do not permit expansion of crop or

animal production and natural woody vegetation is

the only resource, depend heavily on sales of

firewood for their income.50 In India, “headloading" (individuals carrying wood to urban markets on

their heads) has become an important source of

income for perhaps 2 to 3 million people.51 Similarly, when crops fail, charcoal production52 or the

cutting of wood from farm hedgerows53 provides

alternatives for earning cash.

The response of rural peoples to fuel shortages

varies widely. Some sell wood to urban markets and

use the lower quality residues themselves. Others

use dung for fuel rather than for fertilizer. In Malawi,

to grow sufficient fuel for household use on the

typical family farm would displace maize worth

perhaps 30 times more; collecting “free” wood

43A 1928 Smey of 140 sub-s~~an ethnic groups found that women “carried a major responsibility for food f-g“ in 85 percent of the cases,

and did all but the initial land clearing in 40 percent of the cases. In contrast, the Muslim custom of Pur@ for example, tends to keep women near their

homes and away from the fields in Bangladesh. See: Jeanne Koopman Heu op. cit., footnote 29; Mead T CairL “The Economic Activities of Children

in a Village in Banglades~” Population and Development Review, vol. 3, No. 3, September 1977, pp. 201-227; Gloria L. Scott and Marilyn Cam, World

Ba~ “The Impact of Technology Choice on Rural Women in Bangladesh+” Staff Working Paper No. 731, Washington DC, 1985.

“ “Man and Forests: A Central Himala 44J.s. sfim, Uma Pandey, md A-K. Tiw~> yan Case Study,” op. cit., footnote 26.

dsworldB- popufa~on Growth and Policies in Sub-Saharan Afi”ca (Washington+ DC: World B@ 1986), P. 39.

461n@d pa~er has not~.~ “Children’s labor, especially daughters’, is usually more signifkant than husbands’ in easing a work bottleneck for

women. ” Ingrid Palmer, “Seasonal Dimensions of Women’s Roles, “ in Robert Chambers, Richard Longhurst, and Arnold Pacey (eds.), Seasonal

Dimensions to Rural Poverty, op. cit., footnote 27,

‘$yM~d T C@ op. cit., footnote 43.

4S~e ~~ue of comemi~~ed fielwo~ and c~o~ ~~ds 10 per~nt of tie gross domestic product in cowties such as BudciIM FZUO, Ethiopi~

and Rwanda and exceeds 5 percent in Liber@ Indonesia, Zaire, Mali, and Haiti. Philip Wardle and Massirno Palmieri, ‘‘What Does Fuelwood Really

Cost?, ” UNASYLVA, vol. 33, No. 131, 1981, pp. 20-23. George F. Taylor, II, and Moustafa Soumare, ‘‘Strategies for Forestry Development in the West

African Sahel: An Overview,” Rural Afn”cana, Nos. 23 and 24, fall 1985 and winter 1986.

@Al~nBefimd, c$~ke@Ne~orks for Forest ~els to Supply Urbancenters h the Sael,’ RuralAfi”cana, NOS. 23 and 24, fdl 1985 and winter

1986.

50J,E.M. Arnold, ‘Wood Energy and Rural Communities,’ NaturalResources Forum, vol. 3,1979, pp. 229-252; Centrefor Science and Environment

The State of India’s Environment 1984-85: The Second Citizen’s Report (New Delhi, India: 1985).

slcen~e For Science and JhVirOIUII~L Ibid., p. 189.

52D.0. Hall and P.J. de Groot, “Biomass For Fuel and Food-A Parallel Necessity, ”draft for Advances in Sokm Energy, Karl W, Boer (cd.), vol.

3, Jan. 10, 1986; Rafiqul Huda Chaudhury, “The Seasonality of Prices and Wages in Bangladesh,” Robert Chambers, Richard I.mnghurst, and Arnold

Pacey (eds.), Seasonal Dimensions to Rural Poverty, op. cit., footnote 27.

sswck J. V~ Den Beld~ ‘‘Supplying Firewood for Household Energy, ’ M. Nurul Islam, Richard Morse, and M. Hadi Soesmtro (cds.) Ruraf Energy

to Meet Development Needs (Boulder, CO: Westview Press, 1984).
Chapter 2-Energy and the Developing Countries ● 37

proves much easier.54 In contrast, aerial surveys of

Kenya have shown that hedgerow planting increases

with population density-demonstrating that villagers respond to the reduced opportunity of collecting

free wood from communal lands by growing their

own.

55

These considerations mean that although people

in rural areas may appear to use energy-as well as

many other resources-in a technically inefficient

manner compared with what is possible with modern

commercial technologies, they use energy efficiently in the broader context given the difficult

constraints of limited resources, technology, and

capital that they face.56 Rather than maximizing

production as is done in modern industrial society,

traditional peoples focus on minimizing risk in the

face of the vagaries of drought and other natural

disasters. In so far as traditional peoples are operating rationally within their decision framework,

changes are required in that framework through the

introduction of external inputs-financial, managerial, material, technical.

Energy and the Environment

Many developing countries are experiencing widespread environmental degradation in both rural and

urban areas.57 Rural areas are experiencing deforestation, desertification, soil erosion (with associated

downstream flooding and siltation), and air pollution. In many urban areas of developing countries,

levels of air pollution far exceed those in industrialized countries. Water supplies, too, are often heavily

polluted.

The role of energy in environmental degradation

is complex. On the one hand, energy, used wisely,

can potentially provide several important environmental benefits in developing countries. For example, greater energy inputs into agriculture in the form

of tractive power, fertilizer, and irrigation, for

example, can substantially improve agricultural

productivities where soils and climates are appropriate, and help slow the expansion of agricultural lands

into tropical forests or environmentally fragile lands

that would otherwise be needed to feed a burgeoning

population. At the same time, however, modern

agriculture can also cause environmental damage:

by overuse of pesticides, herbicides, and fertilizers;

by waterlogging and salinizing irrigated lands; and

by use of these techniques under inappropriate soil

and climatic conditions.58

In addition to providing environmental benefits,

energy production, conversion, and usc also contribute to environmental degradation. Coal mining

disturbs surface lands and waters and may also

cont aminate underground or surface waters if excavated material is not properly managed. Dust and

emissions from coal mining and preparation can

contribute to local air pollution. Oil and gas production and transport can also lead to land disturbance

and water contamination. The combustion of fossil

fuels-in refineries, power stations, and by end

users-contributes to air pollution through adding

sulfur dioxide, particulate, carbon monoxide, nitrogen oxides, and carbon dioxide emissions, leading to

acid rain, urban smog, and potentially global warming. The development of hydro resources can flood

large tracts of land, uprooting people and leading to

loss of forests and wildlife habitat; disrupt the

natural flow of rivers; and contribute to the increased

incidence of debilitating diseases such as schistosomiasis. Nuclear energy has the potential to

release toxic and radioactive materials, and poses

problems of weapons proliferation.

‘D. French, “The Economics of BioEnergy in Developing Countries, ” H. Egneus et al. (eds.), Bioenergy &#. Volume V. Bioencrgy in Developing

Countries (Amsterdam: Elsevier, 1985). It is estimated that 90 percent of all rural households collect all their wood; 10 percent purchase some of their

wood at $0.50/m4 or $0.04/GJ. Urban households buy their wood at a cost of $0. 12/GJ. In contrast, plantation-derived fuelwood can cost $1.50 to

$2.00/GJ. A farmer could plant trees, but the loss of 0.4 hectare of farmland reduces maize production by a total of $125 and profit by $30. In contrast,

trees produced on 0.4 hectare will be worth $6 in 7 years.

sf’p.N. Brad]ey, N. Chavangi, and A. Van Gelder, “Development Research and Energy Planning in Keny%” AMBZO, vol. 14, No. 4-5, 1985, pp.

228-236.

%Notable ~xamples of such studies include: NH.fivindrana~ et al,, An Indian Villqge Agricultural fiosystem--case Study Of Ungra Vi]]age, Pm

I: Main observations, Biomass, vol. 1, No. 1, September 1981, pp. 61-76; Amulya Kumar N. Reddy, ‘‘An Indian Village Agricultural Ecosystern<ase

Study of Ungra Village, Part II: Discussion” Biomass, vol. 1, No, 1, September 1981, pp. 77-88; M. B. Coughcnour et al., op. cit., footnote 26.

57~C jntcractiom betw=n eneru and the envimment are analyz~d in deti~l ~ Ch.s of tie inteti repofl of this project U.S Congress, Office of

Technology Assessment, Energy in Developing Counrries OTA-E-486 (Washington DC: U.S. Government Printing Office, January 1991).

58u,s. Congre.s, office of TechnoloH &SeSSmen[, Enh~nCjng AgrjCu/ture in Afi~~a: A Role for [J,S. De~,clOpmcnt Assistance, OTA-F-356

(Springfield, VA: Nalional Technical Information Service, 1988), Some note, however, that even steep or acid-infertile lands can bc productive over

long periods as shown by the centuries of terraced rice farming in Asia or continuous sugar-cane cropping in the Dominican Republic. Scc Ricardo

Radulovich, ‘‘A View on Tropical Deforestation, ” Nature, vol. 346, No., 6281, July 19, 1990, p. 214.
38 ● Fueling Development: Energy Technologiesfor Developing Countries

Table 2-7—Causes and Consequences of Environmental Degradation in Rural Areas

Consequence Direct cause Underlying cause

Deforestation Shifting agriculture

Less of biodiversity Permanent agriculture

Soil erosion Permanent pasture

Flooding

Commercial logging

Agriculture, ranching, and logging

Use of biomass fuels

Use of forest biomass for fodder

Desertification Agricultural expansion onto fragile lands

Overgrazing

Burning of grasslands

Use of biomass fuels

Climate change

Air pollution Slash and burn agriculture

Burning of grasslands

Salinization and water-logging of irrigated Poor @arming and management

lands Inadequate investment in infrastructure

Population growth

Poverty

Lack of land tenure

Low-level agricultural inputs

Mechanization of agriculture and/or the

consolidation of agricultural lands

Destructive logging, lack of forest

management and protection, poor

reforestation

Increased access to forests along logging

roads for farmers and ranchers

Production for export markets

Fiscal policies and legislation, in part to

promote exports of primary products

due to need for foreign exchange to

service debt.

Inappropriate economic valuations of

natural resources and biodiversity

Inefficient use of fuelwood; overcutting of

fuelwood resources

Shortages and lack of alternative sources

of fodder

Population growth

Poverty

Lack of land tenure

Low-level agriculture and/or the

consolidation of agricultural lands

inefficient use of fuelwood; overcutting of

fuelwood sources

Lack of access to higher quality fuels and

stoves.

Various; not well understood

Population growth

Poverty

Lack of land tenure

Low-level agricultural inputs

Lack of access to high-quality or

alternative sources of fodder

Cheap or free water contributing to

inefficiency

SOURCE: Office of Technology Assessment, 1992.

Energy efficient technologies can moderate these

environmental impacts while providing the energy

services needed for development. An increased role

for renewable energy technologies and natural gas

could also reduce these adverse environmental

impacts.

It is important to note, however, that energy is not

the sole contributor to environmental degradation in

developing countries, especially in rural areas.

Others include population growth, inequitable land

tenure, unsustainable agricultural and forestry practices, industrialization, and government policy (see

table 2-7).

Population pressure is a major cause of environmental degradation in rural areas. As rural populations grow, the demands on the land for food, fuel,

and fodder increase accordingly while, in many

developing countries, the low agricultural productivities of traditional cultivation techniques have

difficulty keeping up. Farmers then face three basic

choices: they can ‘mine’ the land—taking more out

of it than they put in-until the land is exhausted;

they can migrate to new lands--often marginal and

ecologically fragile (the best lands are often already

in use)--or to poor urban areas; or they can increase

the level of (capital-, energy-, and labor-intensive)

agricultural inputs--mechanical traction, fertilizer,

and irrigation—into the land in order to raise yields.
Chapter 2--Energy and the Developing Countries ● 39

The latter strategy could also include higher inputs

of information and management as might be the case

for intercropping, agroforestry, integrated crop-livestock, or other sophisticated agricultural systems.59

When farmers migrate to new lands, woodlands

are cleared for cropland and pastures. Woodlands are

also commercially logged. The use of biomass for

fuel or fodder places further demands on woodlands

and grasslands, particularly in arid regions with high

population densities. Farming, ranching, logging,

and the use of biomass fuels are all necessary if the

people dependent on these resources are to survive.

But these various pressures can also have a variety

of negative impacts: destruction of tropical forests

and biodiversity; desertification; soil erosion and

increased downstream flooding and siltation; and air

pollution-local, regional, and global.

Rapid population growth, along with inadequate

infrastructure and economic and industrial growth

with minimal or inadequately enforced environmental controls, have also led to high levels of

pollution in urban areas. Levels of sulfur dioxide,

particulate, ground-level ozone, and nitrogen oxides often exceed those in industrialized countries,

Major sources include electricity generation, transportation, and industrial production. Greater use of

fossil fuels in the modern, primarily urban, sector

can also lead to environmental degradation and

pollution in the rural areas where fuels are extracted

from the ground and transported to the cities, and

where hydroelectric facilities are sited.

Many have viewed environmental costs--degradation and pollution of the natural resource base-as

the price that must be paid in order to develop

economically.

60 Increasingly, however, others argue

that environmental protection and economic development are tightly interconnected and mutually

supportive. 61 Energy efficiency may allow these

polar positions on economic growth and environmental quality to be sidestepped altogether. As

detailed in this report, energy efficient technologies

usually reduce both initial capital and life cycle

operating costs, contributing to economic growth.

At the same time, energy efficient technologies, by

using less energy to provide a given service, reduce

the adverse impacts of energy production and use

while still providing the energy services needed for

development.

Greenhouse Gases and Global

Climate Change

The environmental impacts described above are

largely limited to the individual countries concerned. Some activities—notably, the production

and use of fossil fuels, deforestation, the use of

chlorofluorocarbons (CFCs), and others--can have

a wider impact, including impacts on the global

climate through the ‘‘enhanced’ greenhouse effect.

These issues have been explored in depth in several

recent publications.62

The ‘‘natural’ greenhouse effect is a wellestablished scientific fact. In the absence of the

natural greenhouse effect, the average surface temperature of the Earth would be –18 °C instead of the

actual +15 °C. This +33 °C increase in average

surface temperature is due to the presence of

naturally occurring greenhouse gases—principally

carbon dioxide, methane, and water vapor. Today,

increases in atmospheric concentrations of these and

other greenhouse gases due to the burning of fossil

fuels, deforestation, the use of CFCs, and other

human-induced changes in the biosphere are leading

to an enhancement of this naturally occurring

greenhouse effect. Table 2-8 lists some of the

leading sources of these greenhouse gases. A recent

review by over 200 leading scientists from 25

WU.S, Congress, Office of Technology Assessment, Ibid.

@clem Tisde]], “sustainable Development: Differing Perspectives of Ecologists and Economists, and Relevance to LDCS, ’ World De}’doprnent,

vol. 16, No. 3, 1988, pp. 373-384.

blworld Commission on Environment and Development, Our Common Furure (New YodL, NY: Oxford Ufivffsity ~~s, 1987).

62u+s$ Congre5S, Office of TW~oloU Ass~smen4 Ctinglng By Degrees: steps to Reduce Greenhouse Gases, OTA-O-482 (Washington, ~: U.S.

Government Printing Office, February 1991); Intergovernmental Panel on Climate Change (IPCC), Meteorological Organization/U.N. Environment

Program, Scientific Assessment of Climate Change, Summary and Repor~ (Cambridge, United Kingdom: Cambridge University Press, 1990); Michael

Grubb, Energy Po/icies and (he Greenhouse Eflect, Volume one: Policy Appraisal, Royal Institute of International Affairs (Aldershot, Hants, UK:

Dartmouth Publishing Company, 1990); National Academy of Sciences et. al., Policy Implications of Greenhouse Warming (Washingto@ DC: National

Academy Press, 1991); World Resources Institute, Greenhouse Warming: Negotiating a Global Regime (Washington, DC: World Resources Institute,

January 1991); William A. Nitze, The Greenhouse Eflect: Formulating u Convention (1.mdon: Royal Institute of International Affairs and Washington

DC: Environmental Law Institute, 1990); Allen L. Hammond, Eric Rodenburg, and William R. Moomaw, ‘‘Calculating National Accountability for

Climate Change, ’ Environment, vol. 33, No. 1, 1991, pp.1 1-15, 33-35; David G. Victor, “How to Slow Global Warming,” Nature, vol. 349, No. 6309,

Feb. 7, 1991, pp.451456.

297-929 - 92 - 4 - QL : 3
40 ● Fueling Development: Energy Technologies for Developing Countries

Table 2-8-Sources of Greenhouse Gases

Greenhouse gas Principal sources

Carbon Dioxide Fossil fuel combustion

Deforestation, land use changes

Cement production

Methane Fossil fuel production (coal mines, oil and gas wells, gas

pipelines)

Fossil fuel combustion

Landfills

Rice cultivation

Animal husbandry

Biomass combustion and decay

Synthetics used in refrigerators and air conditioners

Used in manufacturing processes as blowing agent,

cleaning agent

Fertilizers

Fossil fuel combustion

Biomass combustion

Deforestation and land use changes

Chlorofluorocarbons

Nitrous Oxide

countries concluded that this increase in greenhouse

gas concentrations will raise the average surface

temperature of the Earth (see box 2-B).

Based on current models and under "business-asUsual’ ‘ scenarios, the Intergovernmental Panel on

Climate Change (IPCC) scientists predict that global

mean temperature will increase at a rate of about 0.3

°C per decade during the next century, a rate higher

than that seen over the past 10,000 years. This would

mean a nearly 1 ‘C increase over present day global

average temperatures by 2025 and a 3 ‘C increase by

2100. In addition to increases in mean global

temperature, other effects expected to occur with

global Warming include increases in sea level63 and

shifts in regional temperature, wind, rainfall, and

storm patterns. These, in turn, are expected to

submerge low-lying coastal areas and wetlands,

threaten buildings and other structures, and increase

the salinity of coastal aquifers and estuaries. Such

changes could disrupt human communities and

aquatic and terrestrial ecosystems, and affect food

production and water availability.64 Many developing countries will be particularly vulnerable to these

effects due to their high degree of dependence on

subsistence or low-input agriculture. Some developing countries may also be heavily impacted by

flooding of their low lying lands.

In 1985, according to estimates for the IPCC

Working Group III, developing countries contributed slightly more than one-quarter (26 percent) of

annual global energy sector C02 emissions; threefourths came from the industrialized market countries and the centrally planned European countries

(including the U.S.S.R.). By 2025, with expanding

populations and rapidly increasing energy use,

developing countries are projected by the IPCC to

produce roughly 44 percent of global energy sector

CO2 emissions. Even so, per capita emissions of CO2

will continue to be much lower in the developing

countries compared with the industrial countries.

While the CO2 emissions from the commercial

energy sector are fairly well known, there are large

uncertainties about the contribution of emissions

from traditional fuels, and from deforestation and

other land use changes. Estimates of the CO2

emissions from tropical deforestation differ by a

cs~e KC wor~g ~oup pre~ct~ an average rate of global mean sea level rise of about 6 cm per decade over the next ccmury, 20 cm by 2030

and 65 cm by the end of the century with signifkant regional variations. This increase is primari ly due to thermal expansion of the oceans and melting

of some land ice.

~~tergovermen~ panel on Ctite Change (WCC), World Meteorological Organization/U.N. Environment ROW- ‘ ‘Policym.aker’s Summary

of the Potential Impacts of Climate Change: Report from Working Group II to the IPCC, ” May 1990, p. 8.
Chapter 2--Energy and the Developing Countries ● 41

Box 2-B—Highlights of the Intergovernmental Panel on Climate Change 1990

Scientific Assessment

Several hundred scientists from 25 countries prepared and reviewed the scientific data on climate change under

the auspices of the World Meteorological Organization and the United Nations Environment Program. This

Intergovernmental Panel on Climate Change summarized their findings as follows:

The IPCC is certain that:

. there is a natural greenhouse effect which already keeps the Earth warmer than it would otherw ise be.

. emissions resulting from human activities are substantially increasing the atmospheric concentrations of the

greenhouse gases: carbon dioxide, methane, chlorofluorocarbons (CFCs), and nitrous oxide. These increases

will enhance the greenhouse effect, resulting on average in an additional warming of the Earth’s surface. The

main greenhouse gas, water vapor, will increase in response to global warming and further enhance it.

The IPCC calculates with confidence that:

●

●

Based

●

●

●

●

atmospheric concentrations of the long-lived gases (CO2, N2O, and the CFCs) adjust only slowly to changes

in emissions. Continued emissions of these gases at present rates would commit us to increased

concentrations for centuries ahead. The longer emissions continue to increase at present-day rates, the

greater reductions would have to be for concentrations to stabilize at a given level.

the long-lived gases would require immediate reductions in emissions from human activities of over 60

percent to stabilize their concentrations at today’s levels; methane would require a 15 to 20 percent

reduction,

on current model results, the IPCC predicts that:

under the IPCC Business-As-Usual Scenario, global mean temperature will increase about 0.3 “C per decade

(with an uncertainty range of 0.2 to 0.5 “C per decade); this is greater than that seen over the past 10,000

years. This will result in a likely increase in global mean temperature reaching about 1 “C above the present

value by 2025 and 3 “C before the end of the 21st century.

land surfaces will warm more rapidly than the ocean, and high northern latitudes will warm more than the

global mean in winter.

regional climate changes will differ from the global mean, although confidence in the prediction of the detail

of regional changes is low. Temperature increases in Southern Europe and central North America are

predicted to be higher than the global mean, accompanied on average by reduced summer precipitation and

soil moisture.

global mean sea level will rise about 6 cm per decade over the next century, rising about 20 cm by 2030 and

65 cm by the end of the 21st century.

All predictions are subject to many uncertainties with regard to the timing, magnitude, and regional patterns

of climate change due to incomplete understanding of:

. sources and sinks of greenhouse gases,

● clouds,

. oceans, and

● polar ice sheets.

These processes are already partially understood, and the IPCC is confident that the uncertainties can be reduced

by further research. However, the complexity of the system means that surprises cannot be ruled out.

The IPCC judgment is that:

. Global mean surface air temperature has increased by 0.3 to 0.6 “C over the last 100 years, with the 5

global-average warmest years occurring in the 1980s. Over the same period global sea level has increased

by 10-20 cm.

. The size of this warming is broadly consistent with predictions of climate models, but it is also of the same

magnitude as natural climate variability. Thus, the observed temperature increase could be largely due to

natural variability; alternatively, this variability and other human factors could have offset a still larger

human-induced greenhouse warming. The unequivocal detection of the enhanced greenhouse effect from

observations is not likely for a decade or more.

SOURCE: Intergovernmental Panel on Climate Change, Scientific Assessment of Climate Chunge, Summury and Reporr, World Mc[corologieat

Organization/U.N. Environment Program (Cambridge, United Kingdom: Cambridge University Press, 1990).
42 ● Fueling Development: Energy Technologies for Developing Countries

Table 2-9--Parameters for Key Greenhouse Gases

c o , CHA CFC-11 CFC-12 N90

Atmospheric concentration

Pre-industrial, 1750-1800 . . . . . . . . . . . . .........280 ppmv

Present day, 1990 . . . . . . . . . . . . . . . . . ..........353 ppmv

Current annual rate of change . ..................1.8 ppmv

(0.5%)

Atmospheric lifetime (years) . . . . . . . . . . . . . . . . . . . . . (50-200)a

Global warming potential relative to carbon dioxide

for today’s atmospheric composition:

Instantaneous potential, per molecule.. . ........1

20-year time horizon, per kg . . . . . . . . . . ........1

100-year time horizon, per kg . . . . . . . . . ........1

500-year time horizon, per kg . . . . . . . . . ........1

Contribution to radiant forcing,

1765-1990 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61%

1980-1990 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55%

Reduction required to stabilize

concentrations at current levels. . . . . . . . . . . . . . . . 60-?%

0.8 ppmv

1.72 ppmv

0.015 ppmv

(0.9%)

10

21

63

21

9

2370

15%

15-20%

o pptv

280 ppmv

9.5 pptv

(4%)

65

12,000

4,500

3,500

1,500

2.5%

5%

70-75%

o pptv

484 ppmv

17 pptv

(4%)

130

7,100

7,300

4,500

5.7%

129’0

75-85%

288 ppbv

310 ppbv

0.8 ppbv

(0.25%)

150

270

290

190

4.1%

6%

70-8070

factor of four.65 By various estimates, deforestation

could be the source of between roughly 7 to 35

percent of total annual CO2 emissions. overall, the

available estimates suggest that developing countries currently contribute somewhere between 30 to

55 percent of total global annual CO2 emissions.

Developing countries also account for at least half of

the global anthropogenic generation of two other

important greenhouse gases, methane and nitrogen

oxides. There similarly remain large uncertainties,

however, about the sources and size of these

emissions: for example, about the methane emissions from rice paddies and from animal husbandry.

Controlling emissions can slow potential global

warming. Emission control strategies that countries

could consider today include improved energy

efficiency and cleaner energy sources-strategies

that also often have economic benefits. The expansion of forested areas, improved livestock waste

management, altered use and formulation of fertilizers, improved management of landfills and wastewater treatment, and the elimination of the most

greenhouse active CFCs might also reduce or offset

emissions. Reducing CO2 emissions by 60 percent

or more (see table 2-9) to stabilize atmospheric

concentrations at current levels, however, is a

formidable challenge with today’s technologies. The

United States, for example, would have to reduce per

capita consumption of fossil fuels to less than 10

percent of current levels—a more than 90 percent

reduction-if such an emissions rate were applied

uniformly across today’s global population. On the

other hand, many developing countries would not

currently need to cut fossil fuel use to meet such an

emissions target, but might be constrained were they

to expand fossil fuel use in the future.

Achieving meaningful reductions in emissions

will require unprecedented levels of international

cooperation and must include developing countries.

In addition to the technological challenges for the

energy, agriculture, and industrial sectors, governments of the industrial and developing countries face

challenges in improving and expanding institutional

mechanisms for transferring technologies that can

provide vital energy services while limiting emissions.

—

651ntergovm~en~ Panel on Climate Change (IPCC), World Metefologkd Organiza tion/U.N. Environment Program “Policy rnaker’s Summary of

the Formulation of Response Strategies: Report Prepared for IPCC by Working Group III, ” June 1990, p. 5. IPCC Working Group 1, “Scicndfic

Assessment of Climate Change: Peer Reviewed Assessment for WG1 Plenaq Meeting, May 1990,” Apr. 30, 1990, p. 1-9.
Chapter 2-Energy and the Developing Countries ● 43

CONCLUSION

The magnitude of these problems suggests the

need for new approaches to providing the energy

services needed for economic development. This

report, the final report of this OTA assessment,66

evaluates the role of technology in better providing

energy services for development. By “technology”

this assessment includes not only hardware, but also

the knowledge, skills, spare parts, and other infrastructure that permit equipment to be used effectively. Further, any discussion of technology must

recognize the key role of institutional and policy

considerations, as they frequently combine to provide adverse incentives to improved energy technologies on both the demand and supply side. As shown

in following chapters, however, there is an historic

opportunity to use more efficient energy end use and

supply technologies to meet the growing demand for

energy services in developing counties while at the

same time minimizing financial, environmental, and

other costs.

66~c first ~epo~ was: Us, co~gess, office of Tcchnolog Assessmcn(, Ene~g}I in Develup;ng c~~nfties, OTA-E-486 (W~h@toL DC: U.S.

Government Printing Office, January 1991).
Chapter 3

Energy Services:

Residential and Commercial

.

.*-. .

*M*. b .

Photo crdit: Sam Baldwin
Contents

Page

INTRODUCTION AND SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

COOKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

WATER HEATING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

LIGHTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

REFRIGERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SPACE CONDITIONING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ELECTRONIC EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

BARRIERS TO CONSUMER PURCHASE OF ENERGY EFFICIENT

APPLIANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

POLICY RESPONSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Boxes

47

50

60

63

71

77

82

83

84

88

BOx Page

3-A. Improved Stoves in Developing Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

3-B. Research Needs for Improved Biomass Stoves in Developing Countries . . . . . . . . . . 64

3-C. Development of Electronic Ballasts in the

3-D. Lighting Efficiency Programs in Europe . .

3-E. The Brazilian PROCEL Program . . . . . . . . .

United States and Brazil . . . . . . . . . . . . . . . 71

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

3-F. The Appliance Industry: Obstacles and Opportunities in Manufacturing

Efficient Appliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

3-G. Integrated Resource Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Chapter 3

Energy Services: Residential and Commercial

INTRODUCTION AND SUMMARY

Energy use in the residential/commercial sector of

developing countries typically accounts today for

about one-third of commercial (primarily fossil

fuel-based) energy use and two-thirds or more of

traditional biomass fuel use (see table 3-1). In

traditional rural areas, the primary residential energy

services demanded are cooking, water heating,

lighting, water hauling, grain grinding, and in colder

areas, space heating. Economic and social development foster dramatic changes in each of these energy

services. This can be seen today by tracing how these

energy services change from traditional rural areas

to modern urban areas (see tables 3-2, 3-3).

Traditional rural areas around the world use

biomass fuels—wood, crop residues, animal dung—

in open “three-stone’ fires or simple fireplaces to

cook their food. As incomes grow and access to

improved fuels becomes more reliable, people shift

to purchased fuels such as charcoal or coal,

2

kerosene, LPG (or natural gas) and/or electricity for

their cooking and water heating needs. Lighting

technologies similarly shift with income and fuel

access from open fires to kerosene lamps to electric

lights. Water hauling and grain grinding-back

breaking labor that typically requires several hours

of household labor each day in traditional rural and

many poor urban areas-is largely eliminated in

modern urban areas: water is piped to the proximity

or directly to the household and grain is ground in

commercial mechanical mills before being sold in

the market.

Completely new residential/commercial energy

services are provided in the modern economy as

well. Refrigeration allows long term storage of food.

Electric fans or air conditioners improve personal

comfort even in the hottest and most humid of

climates. Electronic equipment such as televisions

or radios at home and computers at modern offices

provide entertainment and information services.

Together, six energy services account for most

direct 3 residential and commercial energy use in

traditional rural as well as modern urban areas:

cooking, water heating, lighting, refrigeration, space

conditioning, and electronic equipment (see table

3-2). Each of these is examined in detail below. A

variety of other appliances also contribute modestly

to energy use in industrial countries and are likely to

become more important in developing countries in

the future. These include dishwashers, clothes washers and dryers, electric irons, and others. For

example, dish and clothes washers/dryers may

account for as much as 10 percent of household

electricity use in the United States.4

Of particular interest in this chapter are those

services provided by electricity. This focus is based

on the rapid growth in demand for these services and

their high cost. Lighting, refrigeration, air conditioning, and information services are primarily powered

by electricity; cooking and water heating often use

electricity.

The residential/commercial sector in developing

countries has a rapidly growing demand for energy

services, particularly electric services. This demand

is driven by a number of factors, including: rapid

INote tie two distinct m~figS of “commercial” used here. Commercial, as in the residential/commercial sector, refers to commercial

buildings-retail stores, offices, hotels, restaurants, etc. Depending on the data source, it also usually includes government offices, schools, hospitals,

and other public buildings. Commercial, as in commercial fuels, refers to those fuels that are purchased for cash in the marketplace. These fueIs include

primarily coal, oil, gas, and electricity. Although biomass fuels are also sold for cash in public markets in many areas, they are nevertheless often still

counted as a traditional fuel rather than a commercial fuel. This distinction for biomass fuels varies with the data source. Elsewhere in this report,

commercial is also used to refer to those technologies which can be purchased in the market or near-commercial-will soon be available.

Whe intermediate shift to charcoal occurs primarily in areas with a tradition of charcoal use. The shift to coal is primarily in China, parts of IndiA

and a fcw other countries where there are large supplies of coal and limited alternatives. See: U.S. Congress, Office of Technology Assessmen4 Energy

In De\’e/oping Countries, OTA-E-486 (Washington DC: U.S. Government Printing Otllce, January 1991), and Willem Floor, World Bar& personal

communication, 1991.

@nly ~ ~dlrwt~ ~ ener~ use ~ tie resldentl~co~erclal sector is considered her~~t used to power stoves, lights, refrigerators, air conditioners,

etc. Indirect energy us+that used to produce the steel and cement for constructing commercial buildings or to haul gcods sold to the residential

sector—arc considered separately in the industrial and transport sectors.

i~o Ranier, Steve Greenberg, and Alan Me]er, ‘‘The Miscellaneous Electrical Energy Use in Homes, ’ American Council for an Energ> E#icient

Economy, 1990 Summer Study on Energy Eflciency in Buildings (Washington, DC: 1990).

-47–
48 ● Fueling Development: Energy Technologies for Developing Countries

Table 3-l—Total Delivered Energy by Sector, in Selected Regions of the World, 1985 (exajoules)a

Residential/commercial Industry Transport Total

Commercial Traditional Commercial Traditional Commercial Traditional Commercial Traditional Total

Region fuels fuels b

fuels fuelsbfuels fuelsbfuels fuels b

energy

Africa . . . . . . . . . . . . . . . 1.0 4.0 2.0 0.2 1.5 NA 4.4 4.1 8.5

Latin America. . . . . . . . . 2.3 2.6 4.1 0.8 3.8 NA 10.1 3.4 13.5

India and China . . . . . . . 7.3 4.7 13.0 0.2 2.0 NA 22.2 4.8 27,1

Other Asia . . . . . . . . . . . 1.9 3.2 4.0 0.4 1.9 NA 7.8 3.6 11.3

Developing countries . . 12.5 14.5 23.1 1.6 9.2 NA 44.5 15.9 60.4

United States . . . . . . . . . 16.8 NA 16.4 NA 18.6 NA 51.8 NA 51.8

January 1991) p. 49.

population growth, economic growth, and urbanization; the transition from traditional biomass to

modern commercial fuels (made possible by growing access to these energy carriers); and the dramatic

reductions in the real costs of consumer goods—

refrigerators, air conditioners, televisions, etc.—

made possible by modern materials and manufacturing techniques, Further, as women in developing

countries increasingly enter the formal workforce,

the demand for and the means to purchase labor-and

time-saving household appliances such as dishwashers, clothes washers, or refrigerators (to store food

and thus reduce the frequency of grocery shopping)

can be expected to grow rapidly. Factors limiting

appliance penetration include capital and operating

costs, availability, and the lack of electric service,

particularly in rural areas. In Brazil, for example, 90

percent of urban households but only 34 percent of

rural households have electric services

The increase in consumer appliances is creating

an explosive demand for energy both directly to

power these goods and indirectly to manufacture and

distribute them. A recent review of 21 of the largest

developing countries in Asia, Latin America, and

Africa found electricity use to be growing faster in

the residential than in other sectors in all but four

countries. Growth rates in residential electricity use

averaged about 12 percent in Asian countries

examined, 10 percent in African countries, and 5

percent in Latin American countries.6 This rapid

growth is further straining many electric power

systems that are already having difficulty meeting

demand and poses serious financial, institutional,

and environmental problems for developing countries.

The costs and difficulties of meeting residential

electricity needs are particularly high. Much of the

residential load comes during early evening and

contributes to system peak demand; costs of providing peak electricity demand are high as generating

equipment to meet this peak is left largely idle

during other hours and premium fuels are often used.

Residential demand is also spread over many widely

dispersed small users. The cost of serving this

demand is high due to the extensive distribution

system required and because transmission and

distribution losses are proportionately larger due to

both the long transmission distances and the low

voltages the power is supplied at. Finally, electricity

sold to residential consumers in many countries is

subsidized for social and political reasons; this is

compounded by poor billing and collection practices

and by theft.

A European or U.S. level of electricity services,

using today’s most commonly adopted residential

and commercial technologies, requires an annua1

systemwide—including the upstream costs of generating electricity supplies-capital investment of

@llbefio J’j~ -oJ~u~i, “Residen~ Energy r)em~d h BI_Mil by hlcome chss~, ” Energy Policy, vol. 17, No. 3, p. 256, 1989.

bstephen Meyers et ~., “Energy Efficiency and Household Electric Appliances in Developing and Newly Industrialized Countries, ” report No.

LBL-29678 (Berkeley, CA: Lawrence Berkeley Laboratory, December 1990).
Chapter 3--Energy Services: Residential and Commercial ● 49

Table 3-2—Per Capita Primary Energy Use by Service in Traditional and Modern Economies

Traditional Modern

India, 1980 U.S. 1988

Fuel Electricitya

Fuel Electricitya

GJ/cap GJ/cap GJ/cap GJ/cap

Cooking . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 — 1.4 2.7

Water heating . . . . . . . . . . . . . . . . . . . . . 1.9 — 6.0 6.1

Lighting . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.1 — 10.7

Refrigeration . . . . . . . . . . . . . . . . . . . . . . — — 5.7

Space conditioning . . . . . . . . . . . . . . . . . —

—

— 30.9 38.4

Information services . . . . . . . . . . . . . . . . — — 2.4 b C

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . .

—

10.0 0.1 38.3 66.0

Other energy services . . . . . . . . . . . . . . . — — 3.3 4.7

Table 3-3—Per Capita Energy Use by Service in Selected Countries (gigajoules)

Brazil China India Kenya Taiwan Us.

Residential . . . . . . . . . . . . . . . . . .

Cooking . . . . . . . . . . . . . . . . . .

Lighting . . . . . . . . . . . . . . . . . .

Appliances . . . . . . . . . . . . . . . .

Space conditioning . . . . . . . . .

Commercial . . . . . . . . . . . . . . . . .

Space conditioning . . . . . . . . .

Lighting . . . . . . . . . . . . . . . . . .

Appliances . . . . . . . . . . . . . . . .

6.2

5.3

0.3

0.6

0.05

1.5

0.4

0.5

0.06

11.7

8.5

0.4

NA

2.8

0.7

NA

NA

NA

5.5

5.0

0.5

0.05

NA

0.26

0.13

0.05

0.07

16.9

16.4

0.5

NA

NA

0.4

0.24

0.16

NA

8.9

4.7

0.7

3.1

1.0

4.2

1.9

0.8

1.5

64.9

3.5

NA

13.0

38.2

45.2

NA

7.2

NA

NA= Not available or not applicable.

SOURCE: U.S. Congress, Office of Technology Assessment, Energy in Developing Countries, OTA-E-486 (Springfield, VA: National Technical Information

Service, January 1991). Table 3-3 and app. 3-A.

over $200 per person (see figure 3-1).7 For the five

billion people that will be living in developing

countries in the year 2000, an annual capital

investment of over $1 trillion would be required.

This level of investment is 10 times that currently

projected for all electric services in developing

countries, including industry and agriculture. To

meet even a part of these huge capital needs for

energy services as well as to save funds for all the

other pressing needs of development, energy systems must be carefully optimized.

It is now recognized in the industrial countries

that high efficiency technologies for lighting, refrigeration, space conditioning, and other needs are

usually cost effective on a life cycle basis: the higher

initial capital cost of these technologies to consumers is counterbalanced by their lower operating

costs. Equally important for capital constrained

developing countries, high efficiency technologies

dramatically reduce the need for expensive utility

generating plants. When the total systemwide costs--

including both the generation equipment and the end

use appliance—are summed, energy efficient equipment usually allows a substantial reduction in the

total societal capital costs compared to the less

efficient equipment now commonly in use (see

figure 3-l).

7Note tit ~~ do~~ not include all he costs, particu]~ly in he end use sector. See app. A of thiS repOIt fOr details.
50 ● Fueling Development: Energy Technologies for Developing Countries

If the most efficient commercial or near-commercial residential and commercial electricity service technologies were purchased, societies could

realize systemwide capital savings of over 10

percent, operating savings of about 40 percent, and

electricity savings of 60 percent (see figure 3-1 and

app. A at the back of this report) compared to the

conventional technology now in use in the industrial

and developing countries.8 A brief listing of a few of

these improved technologies is given in table 3-4

and appendix A. These capital and operating savings

could then be invested in other pressing development needs. The reduced energy use would also

lessen a host of local, regional, and global environmental impacts. Further cost effective efficiency

improvements are possible beyond the few technologies surveyed below. Developing countries have the

opportunity to leapfrog past today’s industrial countries in their selection of residential/commercial

energy service technologies.

Figure 3-1 does not, however, include the environmental or other costs of energy use. Although

these costs are difficult to quantify, they cannot be

ignored. Rather than choosing the least-cost energy

service on a purely financial basis as in figure 3-1,

even more efficient energy service technologies

could be justified on the assumption that their use

will mitigate some of these as yet unmeasured

external costs. Large scale production will usually

dramatically reduce the premium for these higher

efficiency technologies as well.

Yet consumers generally do not adequately invest

in these technologies due to a variety of market

barriers (see table 3-5). These include a resistance to

the higher cost of efficient appliances. In the United

States, some studies find that this resistance implies

an effective discount rate 10 times actual market

discount rates.9 This extreme sensitivity to the first

cost of a consumer good is likely to be an even more

important constraint in the developing countries.

The critical role of this first cost sensitivity can be

seen in figure 3-lB for the dramatic shift in capital

costs with more efficient end-use equipment from

utilities to consumers.

Implementing high efficiency technologies in the

residential/commercial sector will require institutional changes and reallocation of funds, but probably will not demand significantly higher levels of

technical manpower to put into place. Since much of

the technology is interchangeable-a compact fluorescent lightbulb for an incandescent, an efficient

refrigerator for an inefficient one—a large amount of

technical expertise is not required. There are exceptions, however, including daylighting design in

commercial buildings, which requires training of

architects and building engineers, or training of

construction workers to properly incorporate buildingshell improvements. Some additional work may also

be needed to incorporate design features for handling the widely fluctuating voltages found in

developing countries into electronic ballasts for

fluorescent lights and into adjustable speed electronic drives in refrigerators, building ventilation

systems, or other equipment, or for other adaptations

to developing-country conditions. A variety of these

possible policy responses are summarized in table

3-6.

Public interventions to redress inadequacies of the

marketplace, however, also carry substantial risks. A

few of these difficulties are listed in table 3-7.

There is no shortage of technical opportunities.

The technologies examined here are all currently

commercially available or nearly so. Many more

technologies are at various stages of research,

development, and demonstration, but this chapter

does not attempt to enumerate them. Rather, it

examines the potential of existing or near commercial energy efficient technologies.

COOKING

The most important energy service in many

developing countries today is cooking food. In rural

areas of developing countries, traditional fuels—

wood, crop residues, and dung-are the primary

fuels used for cooking; in many urban areas,

charcoal is also used. More than half of the world’s

people depend on these crude polluting biomass

fuels for their cooking and other energy needs.

8q_’&~e fiwe~ differ ~omew~t from hose show ~ ch. I due to tie exclusion of ~dus~ motors here. This assumes the mix of energy SelViCeS,

technologies, and utilization rates as detailed in app. A.

9HeW Rudemu ~k D. Wvine, and J~es E. Mc~o~‘ ‘me Be~vior of tie Wketfor Energy Efficiency in Residential Appliances hcludkg

Heating and Cooling Equipment, ” The Energy Journal, vol. 8, No. 1, January 1987, pp. 101-124; U.S. Department of Energy, technical support

document, ‘Energy Conservation Standards for Consumer Products: Refrigerators and Furnaces,’ DOE/CE-0277, November 1989; Malcolm Gladwell,

“Consumers’ Choices About Money Consistently Defy Common Sense, ”The Washington Post, Feb. 12, 1990, P.A3.
Chapter 3--Energy Services: Residential and Commercial ● 51

Figure 3-1 A—Total System-Wide Capital and Lifecycle

Operating Costs and Energy Consumption for

Conventional and High Efficiency Residential/

Commercial Energy Service Technologies

400- ‘

- --

300

200

100

0

Capital, $/capita Lifecycle, $/capita

~~~ Air conditioning = Lighting

~~~ Refrigeration _ Cooking

a Power, W/capita

= Water heating

I 1 Information

services

Over a wide range of conditions high efficiency technologies have

a lower system wide capital cost than the conventional technologies because the increased capital cost to consumers is more

than offset by the decreased capital investment required in

upstream electricity y generating plants. Lifecycle operating costs

are lower because the increased capital costs to the consumer are

more than offset by the lower electricity costs to operate the

equipment.

100

80

60

40

20

Figure 3-1 B—Allocation of Capital Costs for

Conventional and High Efficiency Residential/

Commercial Energy Service Technologies

Percent

($210)

~

(60%)

n. - —

($180)

(76%)

(25%)

v Conventional technology Efficient technology

[‘ Utility investment ~d End user investment

I

I

Although the high efficiency technologies have lower system wide

capital costs, they dramatically shift the capital costs from the

utility to the consumer. The high capital cost of efficient equipment

to consumers is the reason why it is not more heavily invested

in-even though it provides net savings to society overall and,

indirectly, to the consumer. Means of reducing this initial capital

cost barrier to the consumer are critical and can be found in table

3-6.

SOURCE: U.S. Congress, Office of Technology Assessment, 1992, See app. A for details of this calculation, including the assumptions and sensitivity

analysis.

Table 3-4—Selected Energy Efficient Technologies

Energy service Technologies/remarks

Residential/commercial cooking ... , . . Improved biomass stoves, kerosene stoves, LPG and gas stoves, microwave ovens. Improved

wood-and charcoal-burning stoves have demonstrated 30-percent savings in the field.

Further development work is needed to make them inherently low emitters of pollutants while

maintaining high efficiencies. As biomass will continue to be the primary fuel for the rural and

urban poor for many years to come, this is a particularly important technology to develop.

Water heating . . . . . . . . . . . . . . . . . . . . . Increased insulation, flow restrictors, traps to prevent thermosyphoning. Solar water heaters can

be very cost effective and perform well in many areas.

Lighting . . . . . . . . . . . . . . . . . . . . . . . . . . Compact fIuorescent bulbs, voltage stabilizing electronic ballasts, high performance reflectors,

task lighting, high efficiency fluorescent lights, high pressure sodium lights, daylighting,

advanced lighting controls, and spectrally selective window coatings.

Refrigeration . . . . . . . . . . . . . . . . . . . . . More and/or improved (aerogel, vacuum, etc.) insulants, improved motor/compressor systems for

small scales, voltage stabilizing adjustable speed drives, load management techniques,

adaptive defrost, two compressor systems.

Space conditioning . . . . . . . . . . . . . . . . . White roofs, planting trees, awnings, roof sprays, spectrally selective window coatings, increasing

insulation and reducing infiltration (while using air-to-air heat exchangers if indoor air quality

becomes a problem), air economizers, adjustable speed electronic drives, updating design

rules for ventilation systems, improved motors/compressors/coils in air conditioners.

information services . . . . . . . . . . . . . . . . CMOS integrated circuits, power management techniques, flat panel displays.

NOTE: Technologies can be viewed as on a spectrum of: C) Commercially available; A) commercially available in industrial countries but needing Adaptation

to the conditions of developing countries; N) Near commercial development, and R) requiring further Research and development. Since most

technologies have variations at many points on this spectrum-for example, compact fluorescent are available, may need further adaptation in

developing countries in some cases, have improved phosphors or other advances near commercial development, and may have more fundamental

advances under research the status of these technologies-C, A, N,R--wiII not be discussed; instead, particular opportunities will be presented.

SOURCE: Off Ice of Technology Assessment, 1992
52 ● Fueling Development: Energy Technologies for Developing Countries

Table 3-5—Barriers to Investment in Energy Efficient Technologies

Technical

Availability y

High efficiency technologies and their needed support infrastructure of skilled manpower and spare parts may not be locally

available. Foreign exchange may not be available to purchase critical spare parts. For the residential and commercial sectors, in

particular, high efficiency technologies need to be marketed in a complete package to allow “one stop” shopping.

Culture

Culture is rarely an impediment to the use of energy efficient technologies, although it is frequently cited as a problem in

disseminating technologies in rural areas. In most cases, the technology itself is found to have significant technical shortcomings

or is unable to meet the multiple uses desired.

Design rules

Conventional design rules often lead to excessive oversizing of equipment--raising capital cost and wasting energy.

Diagnostics

Technologies for measuring the efficiency of equipment, as in energy audits, are often awkward and inaccurate. Some of them may

require shutting down a commercial business or making intrusive measurements, such as cutting holes in pipes or ducts to make

flow and pressure drop measurements.

Infrastructure

The available infrastructure within a developing country may not be able to adequately support a particular high efficiency

technology. This might include an electric power system with frequent brownouts or blackouts that the high efficiency technology

is unable to handle well; dirty fuels that clog injectors; or poor water quality for high performance boilers. The developing country

may also lack a reliable spare parts supply system and trained manpower to ensure adequate maintenance. finally, the existing

infrastructure might impede the implementation of a more efficient technology system. An extensive road system and/or little land

use planning, for example, might slow or stop the development of an efficient mass transport system.

Reliability

Innovative high efficiency equipment may not have a well proven history of reliability, particularly under developing country

conditions, as for other equipment.

Research, development, demonstration

Developing countries may lack the financial means and the technical manpower to do needed RD&D in energy efficient

technologies, or to make the needed adaptations in existing energy efficient technologies in use in the industrial countries to meet

the conditions—such as large fluctuations in power supply voltage and frequency-in developing countries. Technology

development and adaptation is particularly needed in rural enterprises and other activities.

Scale

Energy efficient technologies developed in the industrial countries are often too large in scale to be applicable in developing

countries, given their smaller markets and lower quality transport infrastructure.

Scorekeeping methods

Methods of “measuring” energy savings may not be sufficiently accurate yet for the purpose of paying utilities or energy service

companies for the savings that they have achieved. This must be contrasted with the ease of measuring the power generated or

used. It is a particularly important issue for utilities that usually earn revenues solely on the basis of energy sold and so have little

incentive to assist efficiency efforts.

Technical/managerial manpower

There is generally a shortage of skilled technical and managerial manpower in developing countries for installing, operating, and

maintaining energy efficient equipment. This may not be a significant problem where turnkey equipment is used.

Financial/economic

Behavior

Users may waste energy, for example, by leaving lights on. In some cases, however, this seeming waste maybe done in order to

meet other user needs, such as personal security.

cost

The high initial cost of energy efficient equipment to the end user and the high effective discount rate used by the end user discourage

investment.

Currency exchange rate

Fluctuations in the currency exchange rate raises the financial risk to firms who import high efficiency equipment with foreign

exchange denominated loans.

Dispersed energy savings

Energy efficiency improvements are scattered throughout the residential and commercial sectors and are difficult to identify and

exploit. In contrast conventional energy supplies maybe more expensive, but are readily and reliably identified and employed. This

tends to give planners a supply side bias irrespective of the potential of efficiency improvements.
Chapter 3--Energy Services: Residential and Commercial ● 53

Table 3-5--Barriers to Investment in Energy Efficient Technologies-Continued

Financial accounting/budgeting methods

Commercial accounts for paying energy bills may be separated from accounts for capital investment in more efficient equipment.

Budgets for more efficient equipment maybe rationed, forcing energy eff iciency improvements to compete with each other for scarce

budgeted funds even though the return on investment may be much higher than the overall cost of capital to the firm.

International energy prices

Uncertainty of international energy prices, such as oil, raises risks that price drops will reverse the profitability of investments in

efficiency.

Multiple needs

The multiple roles and needs served by an existing technology may not be adequately met by a new energy efficient technology.

Draft animals, for example, can provide meat, milk, leather, and dung in addition to traction power. They also reproduce. Mechanical

drive only provides traction.

Risk

Particularly in poor rural and urban areas, people are highly risk averse; they have to be if they are to survive through the vagaries

of drought and other disasters. That villagers are risk averse should not, however, be construed to mean that they are technology

averse. A variety of technologies have been adopted very rapidly in poor rural and urban areas.

Seasonality

Rural life is dominated by the seasons, with sharp labor shortages during the agricultural season and serious underemployment

during the rest of the year that rural enterprises can only partly support. Capital investment in efficient agricultural or rural commercial

technologies is relatively more expensive as it must pay for itself during just the fraction of the year it is used.

Secondary interest

Energy efficiency is often of secondary interest to potential users. In industry, for example, efficiency must compete with other

equipment parameters--quality and quantity of product; timeliness, reliability, and flexibility; etc.—as well as other factors of

production when investment choices are made and when the scarce time of skilled manpower is allocated. These are aspects of

overall corporate strategy to improve profitability and competitiveness.

Secondhand markets

Low efficiency equipment may be widely circulated in secondhand markets in developing equipments, either among industries within

developing countries, or perhaps as “gifts” or “hand-me-downs” from industrial countries. Further, users who anticipate selling

equipment into the second hand market after only a few years may neither realize energy savings over a long enough period to cover

the cost premium of the more efficient equipment nor, if secondhand markets provide no premium for high efficiency equipment,

advantage in its sale.

Subsidized energy prices

Energy prices in developing countries are often controlled at well below the long run marginal cost, reducing end-user incentive to

invest in more efficient equipment. Energy prices may be subsidized for reasons of social equity, support for strategic economic

sectors, or others, and with frequent adverse results. On the other hand, however, the low cost of power results in substantial

financial costs to the utilities, providing them a potential incentive to invest in more efficient equipment on behalf of the user.

Threshold level of energy/cost savings

Users may not find a moderate level of energy or cost savings, particularly if spread over many different pieces of equipment,

sufficiently attractive to justify the investment of technical or managerial manpower needed to realize the savings.

Institutional

Bias

There is often a bias towards a small number of large projects, usually for energy supply, than for small projects, usually energy

efficiency, due to administrative simplicity and to minimize transaction costs.

Disconnect between purchaser/user

In a rental/lease arrangement, the owner will avoid paying the higher capital cost of more efficient equipment while the renter/lessor

is stuck with the resulting higher energy bills. Similarly, women in some countries may not have a strong role in household purchase

decisions and may not themselves earn a cash income for their labor, but must use inefficient appliances purchased for them.

Disconnect between user/utility

Even though the total system capital cost is generally lower for energy efficient equipment, it is the user who pays for the more

efficient equipment but only recoups the investment over the equipment lifetime while the utility sees an immediate capital savings.

Information

Potential users of energy efficient equipment may lack information on the opportunities and savings.

Intellectual property rights

Energy efficient technologies may be patented and the royalties for use may add to the initial costs for the equipment.

Political instability

Political instability raises risks to those who would invest in more efficient equipment that would only pay off in the mid-to long-term.

Turnkey system

Turnkey and other package systems are often directly adopted by commercial or industrial operations in developing countries. In

many cases, however, the equipment within these systems is based on minimizing capital cost rather than minimizing life cycle

operating rests.

SOURCE: Office of Technology Assessment, 1992.
54 ● Fueling Development: Energy Technologies for Developing countries

Table 3-6-Policy Options

Alternative financial arrangements

Currently, the capital costs of generation equipment are paid by the utility and the capital costs of enduse equipment are paid by

the enduser. As shown above and in ch. 2, the high effective discount rate of the enduser as well as this separation between utility

and user (or for leased equipment, the separation between owner and user) leads to much lower levels of Investment in end-use

equipment efficiency than is justified on the basis of either total system capital costs or life cycle operating costs. Alternative financial

arrangements to redress this “disconnect” might range from the enduser choosing equipment according to the total life cycle cost

and paying this cost in monthly installments on the utility bill; to the enduser paying a front-end depositor posting a bond to the utility

to cover the life cycle operating costs of the equipment, against which the utility would charge the capital cost of the equipment and

the monthly electricity y bills. Either of these approaches would force the enduser to directly face the total systemwide life cycle costs

of the equipment when purchasing it. See also Integrated Resource Planning, below,

Data collection

The range of opportunities for energy efficient equipment, enduser preferences, and operating conditions are not well known in many

countries. Data collection, including detailed field studies, would help guide policy decisions.

Demonstrations

Many potential users of energy efficient equipment or processes remain unaware of the potential savings or unconvinced of the

reliability and practicability of these changes under local conditions. Demonstration programs can show the effectiveness of the

equipment, pinpoint potential problems, and thereby convince potential users of the benefits of these changes.

Design tools

Computer design tools can be developed, validated, demonstrated, and widely disseminated to potential users.

Direct installation

In some cases, particularly where the cost of energy is subsidized by State operated utilities or where peak loads are reduced, the

direct installation of energy efficient equipment or processes at low-or no-cost by the utility can reduce costs for both the utility and

the user.

Energy audits

Energy audits by a skilled team, either enterprise employees or from the outside--perhaps associated with an energy service

company--can provide highly useful specific information on where energy can be saved. In new pIants or in retrofits, submetering

of equipment in order to maintain an ongoing record of energy use can also be a very useful means of monitoring performance.

Energy service companies

Energy service companies (ESCos)--third parties that focus primarily on energy efficiency improvements within a factory and are

paid according to how much energy they save--can play a valuable role in implementing energy efficiency gains. They can bring

great expertise and experience to bear on the problem, and as their goal is saving energy rather than maintaining production, they

are able to devote greater effort and focus to conservation activities. On the other hand, industry employees are sometimes reluctant

to work with ESCos, believing that they could implement efficiency activities equally well if they had the time; and worrying that any

changes to process or related equipment by the ESCo could disrupt the production line. Generic forms of contracts for ESCo

services to industry need to be developed in order to adequately protect both parties, and pilot programs with ESCo’s can

demonstrate the potential savings by ESCos and their ability to avoid disruption to processes. Compensation for the work done by

ESCos should be based on “measured” energy savings, not on the basis of listing the measures taken, irrespective of their

effectiveness. Utility programs that provide for competitive bidding on energy savings risk paying the enduser and ESCo twice, once

for the energy saved and once for the lower utility bill. This problem can be minimized by appropriately sharing the costs and benefits.

Extension efforts

Extension efforts may be useful at several levels. The efficiency and productivity y of traditional rural industries might be significantly

increased in a cost-effective manner with the introduction of a limited set of modern technologies and management tools. To do this,

however, is extremely difficult due to the small and scattered nature of traditional rural industries and the large extension effort

needed to reach it. Large industry in developing countries has many of the same needs—technical, managerial, and financial

assistance-but can be reached more readily.

Grants

See Direct installation, above.

Information programs

Lack of awareness about the potential of energy efficient equipment can be countered through a variety of information programs,

including distribution of relevant literature directly to the industries concerned, presentation of competitions and awards for energy

efficiency improvements; and others

Integrated resource planning (IRP)

Currently, utilities base their investment budgets on a comparison of the costs of different sources of generating capacity-coal, oil,

gas, hydro, etc.—and the supply option that has the lowest cost for its particular application is chosen. Integrated resource planning

expands this “least cost” planning system to include end use efficiency as an alternative to supply expansion in providing energy

services. If energy efficiency is shown to be the lowest cost way of providing energy services, then under IRP utilities would invest

in energy efficiency rather than new generating capacity.

Labeling programs

The efficiency of equipment can be clearly listed by labels. This provides purchasers a means of comparing alternatives. Measuring

the efficiency of equipment, however, needs to be done in conjunction with standardized test procedures, perhaps established and

monitored by regional test centers, rather than relying on disparate and perhaps misleading manufacturer claims.

Loans/rebates

Loans or rebates from the utility to the purchaser of energy efficient equipment can lower the first cost barrier seen by the user, and

if incorporated in the utility rate base, can also prove profitable for them. On the other hand, users that would have purchased efficient

equipment anyway then effectively get the Ioan/rebate for free--the “free rider” problem. This reduces the effectiveness of the utility

program by raising the cost per additional user involved. This problem can be minimized by restricting the loans/rebates to high

efficiency equipment for which there is little market penetration, or by other means.
Chapter 3---Energy Services: Residential and Commercial ● 55

Table 3-6—Policy Options-Continued

Marketing programs

A variety of marketing tools might be used to increase awareness of energy efficient technologies and increase their attractiveness.

These might include radio, TV, and newspaper ads, billboards, public demonstrations, product endorsements, and many others.

Pricing policies

Energy prices should reflect costs, an obviously highly politicized issue in many countries. Where prices are heavily subsidized, the

introduction of energy efficient equipment might be done in conjunction with price rationalization in order to minimize the price shock

to users. Prices alone, however, are often insufficient to ensure full utilization of cost effective energy efficient technologies. There

are too many other market failures as discussed above. As evidence of this, even the United States has adopted efficiency standards

for a variety of appliances.

Private power

Opportunities to cogenerate or otherwise produce private power have frequently not been taken advantage of because State-owned

or controlled utilities have refused to purchase privately generated power at reasonable costs-many State electricity y boards simply

refuse to take privately generated power; many States impose a sales tax on self-generated electricity; many states decrease the

maximum power available to enterprises with onsite generation capabilities, and then are reluctant to provide back-up power when

cogeneration systems are down. In other cases, well-intentioned self generation taxes intended to prevent use of inefficient

generators by industry penalizes efficient cogeneration. Finally, power is subsidized in many areas, making it difficult for private

power to compete. Changes in laws mandating utility purchase of private power—such as that established by the U.S. Public Utility

Regulatory Policies Act (PURPA) laws-at reasonable rates would allow many of these opportunities to be seized. This should

include establishing generic contracts that provide adequate protection to all concerned parties but that can be readily developed

and implemented.

Protocols for equipment interfaces

The use of power line carriers or other techniques of utility load management will require the development of common equipment

interfaces and signaling techniques.

Rate incentives

See loans/rebates.

R&D: equipment, processes, design rules

Examples of R&D needs are listed in the text. R&D programs might be established at regional centers of excellence in developing

countries, possibly in conjunction with sister research institutes in the industrial countries.

Regional test/R&D centers

Regional centers of excellence are needed to help gather a crucial mass of highly skilled technical manpower at a single site. The

technologies to be developed should focus on those amenable to mass production while maintaining quality control under field

conditions. Researchers and field extension agents should, in many cases, make greater use of market mechanisms to guide

technology development efforts and to ensure accountability.

Scorekeeping: savings/validation

Technologies and software for “measuring” energy savings need to be further developed and their effectiveness validated under

field conditions. This would be a particularly valuable activity at regional centers of excellence.

Secondhand markets-standards

Efficiency labels or standards might be set for secondhand equipment. This might be particularly valuable for such things as

secondhand factories sold to developing countries.

Standards for equipment/process efficiency

Many industrial countries have chosen to largely accept the financial “disconnect” between the utility and the user. Instead of

providing low-cost, easily available capital to the enduser and at the same time incorporating the full life cycle cost of the end-use

equipment in t he initial purchase, many industrial countries are attempting to overcome the economic and energy inefficiency of this

disconnect by specifying minimum efficiency standards for appliances, buildings (residential and commercial), and, in some cases,

industrial equipment.

Tax credits, accelerated depreciation

A variety of tax incentives-tax credits, accelerated depreciation, etc.—to stimulate investment in energy efficient or other desirable

energy technologies might be employed.

Training programs

Training programs are needed in order to ensure adequate technical/managerial manpower. In addition, means of adequately

compensating highly skilled and capable manpower are needed. Currently, skilled manpower—trained at government expense-k

frequently attracted away from developing country governmental organizations by the higher salaries of the private sector. Similarly,

a more clear career path is needed for skilled technical and managerial manpower in efficiency just as utility operations now provide

a career path for those interested in energy supply.

Utility demand/supply planning

Methodologies for integrated supply and demand least-cost planning have been developed by the industrial countries. These should

now be adapted to the needs of developing countries and utility planners and regulators trained in their use.

Utility regulation

Utility regulations that inhibit the generation of private power (see above) or limit the role of the utility in implementing energy

efficiency improvements on t he supply or demand side need to be reevaluated. Means of rewarding utilities for energy saved as well

as energy generated need to be explored (see also scorekeeping). This might include incorporation of energy efficient equipment

into the utility ratebase.

SOURCE: Office of Technology Assess~ent, 1992.

297-929 - 92 - 5 - QL:3
56 ● Fueling Development: Energy Technologies for Developing Countries

Table 3-7—Some Problems of State Intervention

●

●

●

●

●

●

●

●

b

●

●

Individuals may know more about their own preferences and circumstances than the government.

Government planning may increase risk by pointing everyone in the same direction--governments may make bigger mistakes than

markets.

Government planning may be more rigid and inflexible than private decisionmaking since complex decisionmaking machinery may

be involved in government.

Government may be incapable of administering detailed plans.

Government controls may prevent private sector individual initiative if there are many bureaucratic obstacles.

Organizations and individuals require incentives to work, innovate, control costs, and allocate efficiently, and the discipline and

rewards of the market cannot easily be replicated within public enterprises and organizations.

Different levels and parts of government maybe poorly coordinated in the absence of the equilibrating signals provided by the market,

particularly where groups or regions with different interests are involved.

Markets place constraints on what can be achieved by government, for example, resale of commodities on black markets and activities

in the informal sector can disrupt rationing or other nonlinear pricing or taxation schemes. This is the general problem of “incentive

compatibility.”

Controls create resource-using activities to influence those controls through lobbying and corruption--often called rent-seeking or

directly unproductive activities in the literature.

Planning may be manipulated by privileged and powerful groups that act in their own interests and further, planning creates groups

with a vested interest in planning, for example, bureaucrats or industrialists who obtain protected positions.

Governments may be dominated by narrow interest groups interested in their own welfare and sometimes actively hostile to large

sections of the population. Planning may intensify their power.

SOURCE: N. Stern, “The Economies of Development: A Survey,” Economic Journal, vol. 99, No. 397, September, 1989.

Higher incomes and reliable fuel supplies enable

people to switch to modern stoves and cleaner fuels

such as kerosene,l0 LPG, and electricity (and,

potentially, modern biomassll)----a transition that is

widely observed around the world largely irrespective of cultural traditions (see figure 3-2).12 These

technologies are preferred for their convenience,

comfort, cleanliness, ease of operation, speed, efficiency, and other attributes.13

The efficiency, cost, and performance of stoves

alone generally increase as consumers shift progressively from wood stoves to charcoal, kerosene, LPG

or gas, and electric stoves (see figure 3-3). 14

Background data and supporting documentation for

the stoves shown in the figure, as well as for other

stoves, are summarized in appendix A and discussed

elsewhere. l5

loFor exmple, kerosene 1S the predOmirIa13 t household cooking fuel in parts of Asia-35 percent 42 percen~ and 30 percent of urban households in

India, Pakist~ and Sri Lanka, respectively. See: Willem Floor and Robert van der Plas, “Kerosene Stoves: Their Perfo rmance, Use, and Constraints, ”

draft report prepared for the World Bank and U.N. Development program, Energy Sector Management Assistance Program (lVa.shingtorL DC: Mar. 7,

1991).

1 I Modern tec~olo~es cm use bio~s directly or convert it into liquid or gaseous fuels or into electricity with low emissions. See ch. 6 ~d Smuel

F. Baldwin, U.S. Congress, Office of Technology Assessment “Cooking Technologies, ” staff working paper, Aug. 15, 1991.

12cultW~ factors frquendy ~ve been cit~ as a barrier to the adoption of improved wood, Charcoal, or Other StOveS/fUelS. c~~~ factors ~Y PlaY

a role in stove/fuel choice; a wide variety of stoves and fuels have nevertheless been adopted across the full mnge of class, cultural, and income groups

in developing counties, and a strong preference is displayed for superior stoves/fuels such as kerosene, LPG, or electricity. More typically, the reason

why various improved biomass stoves have not been adopted by the targeted developing country group is that the proposed technology did not work

well or did not meet the multiple needs of the user (see box 3-A).

13~ese i55ues, p~lc~wly he problems of smoke pollution ad o~er environmen~ impacts from @aditiod biomass stove.#fuels, the effort ~llkd

to forage for biomass, and the role of women are discussed in a previous O’IA report-U.S. Congress, Office of Technology Assessment, Energy in

Developing Counm’es, op. cit., footnote 2.

IdEven ~ong ~gh efficiency stoves, such m those us~g LPG or gas, here cm be further improverneflts h efficiency. ~ practice, the high efficiency

of gas stoves can bc largely negated when pilot lights are used. Gas stoves that are lit by electric ignition systems (or simply matches) typically use just

half the energy that stoves with pilot tights consume. Higher et%ciency natural gas stoves under development combine advanced ceramic materials and

new designs to augment both infrared and convective hinting in a burner with very low emissions. There are similarly many potential efficiency

improvements in ovens (such as convection ovens), pots used to cook with (such as pressure cookers), and other cooking devices. See Howard S, Geller,

American Council for an Energy Efficient Economy, “Residential Equipment Efficiency: A State of the Art Review,” contractor report prepared for

the Office of Technology Assessment May, 1988; Jorgen S. Norgard, ‘‘Low Electricity Appliances-Options for the Future,’ Elecm”city: Efticient End

Use and New Generation Technologies, and Their Planning Implications (Lund, Sweden: Lund University Press, 1989); K.C. Shukla, J.R. Hurley, and

M. Grimanis, Development of an Eficient, Low NOX Domestic Gas Range Cooktop, Phase II, Report No. TE431 1-36-85, Thenno Eleetron Corp.,

Wal@ MA, for the Gas Research Institute, Chicago, IL, GRI-85/0080, 1985.

15smuel F$ B~dwln, U.S. congress, Office of T~~olo~ Assessment, ‘ ‘Cooking Technologies, ” Wiff working paper, Aug. 15, 1991.
Chapter 3--Energy Services: Residential and Commercial ● 57

Figure 3-2—Choice of Cooking Fuel by Income for Five

Medium-Sized Towns in Kenya

Percent of income group using fuel

100 –

- —

04 ———-—————— —— —,

Low Middle High

Income group

+ Wood + Charcoal *

 - Kerosen e

‘=- Ga s

d Electricity

Many households use more than one fuel depending on the

particular food cooked and the supply and cost of fuel. Note the

shift in fuel choice from wood to charcoal and kerosene, and then

from charcoal and kerosene to gas and electricity. This transition

is very complex and not yet well understood. Factors that affect a

household’s shift to modern stoves and fuels include: household

income and fuel producing assets (land, trees, animals, etc.);

reliability of access to modern fuels; relative cost of traditional and

modern fuels and stoves; level of education of the head of

household; cooking habits; division of labor and control of

finances within the household; and the relative performance of the

stove/fuel.

SOURCE: John Soussan, “Fuel Transitions Within Households,” Discussion paper No. 35, Walter Elkan et. al. (eds.), Transitions

Between Traditional and Commercial Energy in the Third Vtbrid

(Guildford, Surrey, United Kingdom: Surrey Energy Economics

Center, University of Surrey, January 1987).

Efficiencies and costs tell a much different story,

however, when examined from a system, rather than

the individual purchaser’s, perspective. When the

energy losses of converting wood to charcoal, fuel to

electricity, refining petroleum products, and transporting these fuels to consumers, etc. are included,

the system efficiency of delivering cooking energy

by charcoal and electric stoves, in particular, drops

Figure 3-3-Representative Efficiencies and Capital

Costs for Various Stoves

Stove efficiency,

percent

70 ~—

Capital cost,

U. S.$/household

- ~ 80

“7! .“J/l

/ ,,/

// ,! 6 0

./ / ,

,- / ./”

140

I

cost - 2 0

/

,/’

L

/

o -–r–– - ——- -——--

~-— --J ()

TD TA TW TC I W IC KW KP LiG EL

Stove and fuel type

Stoves listed are: (TD), (TA), (TW), (TC)--traditional stoves using

dried animal dung, agricultural residues, wood, and charcoal,

respectively; (lW), (lC)--improved wood and charcoal stoves;

(KW), (KP)--kerosene wick and kerosene pressure stoves;

(LPG)—LPG or natural gas stoves; and (EL)--electric resistance

stove. Efficiencies and capital costs are for the stove alone and do

not include upstream capital costs for producing and delivering

fuel. The range of performance both in the laboratory and in the

field is much larger than that suggested by this figure and is

affected by such factors as the size of the stove and pot, the

climate (wind), the quality of the fuel used, the care with which the

stove is operated, the type of cooking done, and many other

factors. The type of material that the pot is made of is also a

significant factor: aluminum pots are almost twice as efficient as

traditional clay pots due to their better conduction of heat.

SOURCE: Samuel F. Baldwin, “Cooking Technologies,” Office of Technology Assessment, staff working paper; and U.S. Congress,

Office of Technology Assessment, Energy in Develo@g Countries, OTA-E-486 (Washington, DC: U.S. Government Printing

Office, January 1991 ).

precipitously (see figure 3-4).16 These are important

attributes to consider when evaluating the environmental impacts and financial feasibility of different

cooking systems.

As for the efficiency estimates, there are substantial variations between the capital costs for individual stoves and for the entire cooking system. This is

particularly notable in the case of electricity where

16Ac~ ~wl~ and ~perating ~o~~ ~ill “q ~d~ly from these nowvalues amording to loc~ fuel and stove costs, taxes, and Other faCtOrS. AChlid

stove and system eff~ciencies and other performance factors will vary widely according to household size, die~ income, fuel availability, cooking habits,

activity level, seasom and many other factors. Some of these factors also tend to change at the same time stove type is changed. Migrants to urban areas

may simultaneously change their stove and fuel type, family size, diet, etc. Financial savings gained by moving up to more efficient stoves may also

induce greater energy consumption as diet is changed, cooking habits relax, or more food is consumed. For example, estimates are that 15-25 percent

of the savings with improved charcoal stoves will be offset through subsequent, income induced consumption. The systemwide fuel savings achieved

by going from traditional wood stoves to kerosene or LPG stoves also tend to be less than that expected from simply comparing the efficiency of different

stoves as measured in the laboratory. See Donald W. Jones, “Some Simple Economics of Improved Cookstove Programs in Developing Countries, ”

Resources and Energy, vol. 10, 1988, pp. 247-264; Kevin B. Fitzgerald, Douglas Barnes, and Gordon McGranaham World Ba& Industry and Energy

Department, Inter-el Substimtion and Changes in the Way Households Use Energy: The Case of Cookz’ng and k“ghtirrg Behavior in Urban Java

(Washington, DC: World Bank June 13, 1990).
58 ● Fueling Development: Energy Technologies for Developing Countries

70

60

50

40

30

20

10

Figure 3-4-Stove and System Efficiencies

Efficiency, percent

7

o4--–– - , 1 1 ,

~ — -T—.. —T-— 4

TD TA TW TC IW IC KW KP LPG EL

Stove and fuel type

Stove efficiencies are nominal values for the stove alone; system

efficiencies include the energy losses in producing, converting,

and delivering fuel to the consumer. Note particularly the low

system efficiencies for charcoal (TC and IC) and electric (EL)

stoves due to the large energy losses in converting wood to

charcoal and fuel to electricity.

SOURCE: Samuel F. Baldwin, “Cooking Technologies,” Office of Technology Assessment, staff working paper.

the upstream costs of generation, transmission and

distribution, and other facilities are much larger than

the capital cost that the consumer sees for the stove

itself (see figure 3-5).17

There can be, however, a substantial reduction

(depending on relative fuel and stove prices) in both

operating costs and energy use in going from

traditional stoves using commercially purchased

fuelwood to improved biomass, gas, or kerosene

stoves (see figure 3-6). There may be opportunities

to substitute high performance biomass stoves for

traditional ones or to substitute liquid or gas stoves

for biomass stoves.18 Local variations in stove and

fuel costs19 and availability, and in consumer

perceptions of stove performance, convenience, and

other attributes will then determine consumer

choice. Regardless, there are substantial differences

in systemwide capital and operating costs for

different stoves, many of which are not directly seen

by the consumer.

Public policy can help shift consumers toward the

more economically and environmentally promising

cooking technologies as judged from the national

perspective. In particular, improved biomass stoves

may be the most cost effective option for the near- to

mid-term but require significant additional work to

improve their performance (see box 3-A, 3-B, figure

3-7), In rural areas, biomass is likely to be the fuel

of necessity for cooking for many years to come.

Alternatively, particularly in urban areas, liquid

or gas fueled stoves may offer the consumer greater

convenience and performance at a reasonable cost.

Foreign exchange requirements, however, will usually require that stove and system efficiencies be

maximized and that as much as possible of the stove

and other system equipment be manufactured inCountry.

Finally, although past efforts in solar cooking

have generally been disappointing,20 recent work

suggests that solar box ovens may yet offer an

opportunity to meet a portion of cooking needs in

areas with high levels of sunshine and cuisine that is

adaptable to that style of cooking (i.e, boiling or

baking, not frying).

21 The potential of solar cookers

nevertheless remains highly controversial due to

past failures. They remain expensive, bulky, and

fragile; may require changes in cooking practice in

many areas; and materials to repair them with are

often difficult to obtain. Much more extensive field

trials will be needed if the actual potential of newer

designs is to be determined.

ITThc impact of elec~c cooking on the grid can be substantial. For example, more than one-third of electricity consumption in COStil Rica and

Guatemala is for cooking, where about half of all electMied households have electric stoves. Annual electricity consumption for cooking in Guatemala

is roughly 2,500 kilowatt hour (kWh)/year per household compared to 700 kWh/y in the United States. In parts of Asia, electric rice cookers are becoming

a substantial eleclric load. These demands can cause signitleant local problems for the power grid where loads are low and there is little diversified

demand. With larger, more divers~led grids, however, such demands pose fewer difficulties. Further, in some cases such as the use of microwave ovens

for some baking, electric cooking may lower total energy use compued to, for example, baking in a conventional gas oven. Costa Rican and Guatemala

data from: Andrea N. Ketoff and Omar R. Mmera, ‘Household Electricity Demand in Latin America,’ACEEE 1990 Summer Study on Energy Efi’ciency

in Buildings (Washingto~ DC: 1990).

18some ~we tit he biomass not used ~ cooking co~d instead be dive~ed to ~gh efficiency electricity generation or proeixs heat applications.

Backing biomass out of the household sector in this reamer poses significant difficulties in the collection and transport of the biomass to a central facility.

This will be discussed in chs. 5 and 6.

l~e v~ues show we for rcsiden~ stoves. Commercial stoves cfibit s.tiaK &ends, witi a general shift upwards in efficiency and down in cost

per quantity of food cooked due to scale effects. Further, this analysis does not separately consider foreign exchange costs.

mRichani Pinon, “About Solar Cookers, ” Passive Solar Journal, vol. 2, No. 2, 1983, pp. 133-146.

‘l Daniel M. Kammen and William F. Lankford, ‘‘Cooking in the Sunshine, ” Nature, vol. 348, Nov. 29, 1990, pp. 385-386.
Chapter 3-Energy Services: Residential and Commercial ● 59

100

80

60

40

20

0

Figure 3-5-Stove and System Capital Costs

Cost, U.S.$/stove

Syste m

TD TA TW TC IW IC KW KP LPG EL

Stove type and fuel

When system costs are included, electric stoves can be seen to

be particularly expensive. There is a wide range of costs around

these nominal values. Note the logarithmic scale.

SOURCE: Samuel F, Baldwin, “Cooking Technologies,” Office of Technology Assessment, staff working paper.

In the long term (assuming income growth and the

ability to finance imports), the transition to high

quality liquid and gas fuels for cooking is inexorable. 22 With this transition, substantial amounts o f

.

labor now expended to gather biomass fuels in rural

areas may be freed; the time and attention needed to

cook when using crude biomass fuels may be

substantially reduced; and household, local, and

regional air pollution from smoky biomass (or coal)

fires may be largely eliminated. On the other hand,

high quality fuels will increase financial costs to the

individual consumer and, if fuels or stove equipment

are imported, could have significant impacts on

national trade balances and foreign exchange holdings.

The transition to modern stoves and fuels thus

offers users many benefits—reduced time, labor,

and possibly fuel use for cooking, and reduced local

air pollution23—but this transition is also often

sharply constrained due to their frequently higher

250

200

150

100

50

Figure 3-6-Annual Cost of Cooking for

Different Stoves

Annual operating cost, $/stove

,/

/ ‘ -–-

~ –.. - —

() k=+---------+’- : - — ~–

TD TA T W TC IW IC KW KT P LPG E’L

Stove and fuel type

Data points show the cost as estimated from the nominal values.

The gray band suggests the wide variation in costs using any

particular stove depending on local stove and fuel costs, diet, and

a host of other factors.

SOURCE: Samuel F. Baldwin, “Cooking Technologies,” Office of Technology Assessment, staff working paper.

capital and operating costs and uncertain fuel

supplies. Means of lowering capital and operating

costs and ensuring the reliability of supply are

needed if the poor are to gain access to these clean,

high efficiency technologies. Further, this transition

could impose a substantial financial burden on poor

nations.

A large scale transition to LPG, for example,

would require a significant investment in both

capital equipment and ongoing fuel costs. Optimistically assuming that the capital cost of LPG systems

would average $50 per household, including bottling, storage, and transport, the investment would

be roughly 3.5 percent of current Gross National

Product and 20 percent of the annual value-added in

manufacturing for the three billion people in the

lowest income countries.24 The LPG used25 would

be equivalent to one-fourth total commercial energy

consumption today by these countries and would be

~21t maybe possible, however, to use biomass in a domestic gasifying stove or in a central gasification plant from which it is then piped to the household

to generate producer gas for cooking. Examples of this arc discussed in Samuel F. Baldwin, U.S. Congress, Office of Technology Assessment, ‘‘Cooking

Tcchnologics, ’ staff working paper, Aug. 15, 1991.

271t might, however, increase global carbon dioxide cmissions.

~World Bank, WOr/d De},efopment Report 1989 (New York NY: Oxford University ~ess, 1989), tables I and 6

‘

f Assuming a per-capita power rate for cooking with LPG systems of 100 watts. This is comparable to that seen in the United States and about twice

that seen in European countries. It is likely that people in developing countries would continue to eat less processed foods, less restawant food, ~d

probably more grains and so would continue to use somewhat more fuel than that seen in households in the industrialized countrics. Energy use rates

for household cooking in dlffcrent countries arc given in K. Krishna Prasad, ‘‘Cooking Energy, ” paper presented at Worhhop on End Use Focusscd

Global Energy Strategy, Princeton University, Princeton, Ncw Jersey Apr. 21-29, 1982.
60 ● Fueling Development: Energy Technologies for Developing Countries

a significant fraction of their export earnings.26

Significant economic growth and a gradual phase-in

of these technologies are needed if these costs are to

be absorbed.

WATER HEATING

The demand for hot water—for bathing, washing

clothes and dishes, and other uses—is a significant

energy end use in industrial countries and will

become more important in developing countries as

their economies grow. Hot water demand for a single

family in the United States in 1985 was roughly 200

liters/day--40 percent for showers, 25 percent for

clothes washers, 20 percent for dishwashers, and 15

percent for other uses-or about 50 liters per person

each day.27 On average, heating water is the second

largest use of energy, after space conditioning

(heating and cooling), in the U.S. residential and

commercial sectors (see table 3-2).

The use of hot water is also important in

developing countries, even with their generally

warmer climates. For example, electric water heating accounts for 20 to 25 percent of residential

electricity demand in Brazil, Colombia, Ecuador,

and Guatemala.28 In Brazil, instant (rather than

storage) electric water heaters are widely used for

showers. In use, they draw as much as 7 kilowatts

and account for perhaps half of the residential peak

electricity demand in Sao Paulo.29 In a study of six

villages in India, water heating used about one-fifth

as much fuel as cooking.30 A study of households

that used fuelwood in the large urban area of

Bangalore, India, found fuelwood consumption

almost equally divided between cooking and water

heating.31

In many rural and poor urban areas, use of hot

water remains modest today but will generally

increase in the future. There are many technical

approaches to water heating that greatly reduce fuel

consumption and, from the societal perspective, can

reduce capital costs and life cycle operating costs.

The most simple, and perhaps the most readily

applicable in developing countries, is the use of solar

water heaters. These can range from simple devices

that simply hold the water in a container exposed to

the sun, to complex devices that actively monitor

water temperatures and move it into large storage

tanks until it is needed. The fuel demands of these

systems are generally quite l0W.

32

A variety of solar water heating technologies are

now well developed. The 7,400 square meter building in which the Office of Technology Assessment

is housed has a solar system on its roof that provides

all of the hot water and up to 70 percent of the space

heat needed. Solar water heating systems for developing countries can, in principal, be lower in cost

and more efficient than those in the industrial

countries. Complicated and expensive protection

mechanisms used in cold climates to keep the water

from freezing and breaking the system are largely

unnecessary in the warm developing countries. Solar

water heater efficiencies are generally higher in the

developing countries because of the warm outside

temperatures.

Solar water heaters have been put into widespread

use in some countries. There are more than two

million solar water heaters in Japan and 600,000 in

Israel. More than 50 firms manufacture or market

solar water heaters in Turkey; a total area of 19,000

square meters of collectors was installed in 1982.

China has an installed collector area of 150,000

square meters; Kenya has about 19,000 residential

26wor1d B~, world ~eye@~enf Report ]98$) (New York NY: ofiord university press, 1989), tible 5, md converting kilogmrrl Ofl equivalent

to energy at 42 megajoules (MJ)/kg.

z7Amerimn Council for an Energy Efficient Economy, “Residential Conservation Power Plant Study: Phase I—Technical Potential,” Pacific Gas

and Electric Co.

2$~&a N. Ketoffand w R. Masera, “Household Electricity Demand in Latin America,’ ACEEE ~990s~ r Study on Energy Eficiency in

Buildings (Washington DC: 1990).

~StePhen Meyers et ~., Energy Eficiency and Household Eiect~”c Appliances in Developing and Newly Industrialized COU?Wh?S, K@rt No.

LBL-29678 (Berkeley, CA: Lawrence Berkeley Laboratory, December 1990); Alfredo Behrens and Stefano Consonni, “Hot Showers for Energy Rich

Countries, ’’Energy, vol. 15, No. 9, pp. 821-829, 1990.

30ASTRA, “Rm~ Energy Consumption Patterns: A Field Study,” Centre for the Application of Science and Technology to Rural Areas, Indian

Institute of Science, Bangalore, In@ 1981.

3

1 Amulya Kumar N. Reddy and B. Sudhakar Reddy, ‘‘Energy in a StratMed Society,” Economic and Political Weekly, vol. XVIII, No. 41, October

1983, p. 1762.

szFuel may ~rq~~even ~ a wmclimate to supplement .sol~ heating when there is heavy cloud COVCT.
Chapter 3-Energy Services: Residential and Commercial ● 61

Box 3-A—Improved Stoves in Developing Countries

Traditional stoves, with their high levels of smoke and heat, awkward use, and heavy demand for fuel (and its

attendant laborious collection), have long been a central focus of efforts to improve the lives of women in developing

countries. Gandhian organizations developed stoves with chimneys to reduce indoor smoke pollution beginning in

the 1930s. S.P. Raju worked on stove design at the Hyderabad Engineering Research Laboratory and published a

pamphlet, “Smokeless Kitchens for the Millions” in 1953 in which he promised women five freedoms-from

smoke, from soot, from heat, from waste, and from fire risk. Following their own energy crisis in 1973, the Western

World began to perceive corresponding energy problems in developing countries, particularly that of fuelwood use

in traditional stoves and a possible connection between fuelwood use in cooking and deforestation.l

Following the path pioneered in India and elsewhere, a variety of improved stove programs were begun by

western donors and host countries in the mid- to late- 1970s. Program design and technology choice were strongly

influenced by the ‘‘appropriate technology’ movement: local materials were used, designs were kept simple (and

supposedly low-cost), and low-skill labor intensive construction was emphasized both for its own sake and to allow

easy maintenance.

The first generation of woodstoves that resulted from these considerations were typically thick blocks of a sand

and clay mixture; chambers and holes were carved in the block for the fire, for the pots to sit on, and for the smoke

to exit to the chimney. A fire was built under the first pot; the second and subsequent pots were heated by the hot

gases flowing toward the chimney. These were known as “massive multi-pot” stoves (see figure 3-7A).

In many cases, little or no testing was done of these first generation designs before dissemination programs

began. Numerous competing projects were launched—some countries in West Africa had a dozen or more largely

independent stove programs supported by different international nongovernmental organizations, bilateral and

multilateral aid agencies, and domestic organizations. These countries never individually had a critical mass of

technical manpower to do proper design work, perform detailed field evaluations or followup, or conduct careful

economic or social analysis. Operating independently and with little interprogram communication, the same

mistakes were repeated.

When field evaluations of these massive stoves began, serious problems began to surface. Field surveys found

that most users quickly returned to using their traditional stoves; laboratory and field studies alike showed that these

massive stoves often used more fuel and emitted as much smoke into the kitchen as traditional stoves; the stoves

cost users a significant amount of time and effort (and sometimes money) to build; and the stoves were hard to

maintain-they cracked and crumbled easily in the heat of the fire.

Contrary to then accepted wisdom, it appeared that traditional stoves were actually well optimized for the local

materials, pots, and other conditions from many, many years of trial and error. To do better required sustained

technical input in design, quality control in production, careful field testing and followup, and extensive input at

every stage from women users. These factors were missing from nearly all the programs. Improved heat resistant

materials such as metals or ceramics also proved important.

In response to the numerous independent stove programs, their lack of success, and the need for firm

technological underpinnings, efforts were launched in the early 1980s to coordinate these programs and develop

the technological foundations necessary. In West Africa, for example, IBM-Europe and the Club du Sahel asked

Volunteers in Technical Assistance, a private U.S. volunteer organization, to work with CILSS (The Interstate

Committee To Fight Drought in the Sahel-an eight country African organization) in a program funded by USAID

and IBM-Europe, and later by the Netherlands to coordinate disparate technical development and dissemination

efforts. The technical effort showed that, at least under West African conditions, massive stoves typically used

substantially more wood than traditional stoves. Using the principles of engineering combustion and heat transfer,

a ‘‘second generation’ of simple lightweight stoves made of metal or ceramic was developed that achieved fuel

savings in the field of about one-third compared with traditional stoves (see figure 3-7 B). To realize these savings

required that critical stove dimensions be maintained to within a fraction of an inch. In turn, this required that the

IIt is now ~enm~y ~c~ow]~g~ tit u~ of wood for fuel is not US@y a s~ng contributor to deforestation. There We a feW eXUptiOllS,

particularly arid regions where biomass growth is low, or around urban or industrial areas with unusually high levels of fuel demand. See: Office

of Technology Assessment, Energy In Developing Counrries, (Washington, DC: U.S. Government Printing Office, January 1991).
62 ● Fueling Development: Energy Technologies for Developing Countries

Box 3-A—Improved Stoves in Developing Countries--Continued

stoves be “mass-produced” to match standard pot sizes. This was best done at central sites where tight quality

control could be ensured. In comparison to massive stoves that were hand-crafted on site, centralized production

also had the advantages of more rapid production, lower stove and program costs, and ready commercialization.

For the user, the lightweight stoves had the advantage of somewhat more rapid cooking, protection from burns that

are likely when cooking over an open fire, and portability: the stove could be moved across a courtyard to take

advantage of afternoon shade or across town when the household moved.

These stoves have proven popular in the field. A World Bank program to disseminate lightweight metal stoves

in Niamey, Niger, set an ambitious target of 20,000 stoves in 2 years; 40,000 stoves were sold. Similar large-scale

efforts are now underway in Mali, Burkina Faso, and elsewhere.

Other countries have similarly enjoyed considerable success recently with improved stove programs. Some

130,000 improved jiko stoves (which use charcoal rather than wood, as above) with average savings of 15 to 40

percent are now sold annually in Kenya. In China, an estimated 80 million improved stoves had been disseminated

by the end of 1987. In Karnataka State, India, over 100,000 massive stoves have been disseminated, and with careful

technical input and field followup, have also realized savings. Ironically, the widespread failure of the first

generation ‘massive’ stoves discredited stove programs generally and caused many aid organizations to cut back

financial supports just as significant improvements in stove performance were finally being realized with these

second generation lightweight and (in the case of Karnataka State) massive stoves.

Centralized mass production and commercial sale of lightweight stoves has, however, generally shifted the

programmatic focus of remaining stove efforts from traditional rural areas largely outside the cash economy to poor

urban areas. Effective means of addressing rural areas have not yet been developed. Considerable work also remains

to further refine biomass stove designs so as to improve efficiencies and reduce noxious emissions.

SOURCES: S.P. Raju, “Smokeless Kitchens for the Millions, ” Christian Literature Society, Madras, India, 1953, reprinted 1961. Samuel F.

Baldwiq Biomass Stoves: Engineering Design, Development, and Dissemination (Rosslyn, VA and Princeto% NJ: Volunteers in

Technical Assistance and Center for Energy and Environmental Studies, Princeton University, 1986); Kirk R. Smit.hj “Dialectics

of Improved Stoves, ” Economic and Political Weekly, Mar. 11, 1989; Jas Gill, “Improved Stoves in Developing Countries,”

Energy PoJicy, April 1987, pp. 135-144, and Addend- Energy Policy, June 1987, pp. 283-285; Margaret Crouch “Expansion

of Benefits: Fuel Efficient Cookstoves in the Sahel, The VITA Experience, ’ Volunteers in Technical Assistance, Rosslyn, VA, July

1989; H. Mike Jones, “Energy Efficient Stoves In Bast Africa: An Assessment of the Kenya Ceramic Jiko (Stove) Progrq” Oak

Ridge National Laboratory, report No. 89-01, Jan. 31, 1989. “China: County-Level Rural Energy Assessments: A Joint Study of

ESMAP and Chinese Experts,” Activity Completion report No, 101/89; World Bank/UND P, May 1989.

solar hot water heaters; Papua New Guinea has about heaters (see app. A). These comparisons are sumrna8,000.33

The initial capital cost to the individual consumer

is substantially higher for a solar water heater than

for an electric heater.34 When the upstream capital

costs for the electric utility are included, however,

the total capital cost to society is almost 30 percent

greater for the electric water heater than for the solar

water heater. When the total operating costs (capital

plus fuel) to the user are considered, the solar heated

water costs less than one-half that heated by electric

rized in figure 3-8 for electric resistance water

heaters, electric heat pump water heaters,35 and solar

water heaters of comparable performance. Gas or

liquid fueled water heaters can also be compared

with solar water heaters but are not considered here.

The efficiency of hot water systems can also be

improved by: increasing the amount of insulation on

the storage tanks and distribution pipes, and by using

traps to prevent convective loops from carrying heat

away through distribution lines. Low flow shower33 Christopher Hurst, ‘ ‘Establishing New Markets for Mature Energy Equipment in Developing Countries: Experience with Windmills, Hydro

Powered Mills and Solar Water Heaters,’ World Development. VO1.18, N0,4, 1990, pp. 605-615.

w~c ~ompalson here W1ll bc rcs~ic[cd to CICCtriC water heaters. Water heaters using natural gas or other fuels me also widely av~lable and

extensively used in many countries. The fimncial advantages of solar water heating may be largely offset or negated compared to gas or other types of

warm heaters.

~SNotc t~lt in Iagc ~ommercial applications, heat pump water heaters can be coupled with air conditioning loads and can then be more ~onomic under

a variety of circurnstimccs.
.

Chapter 3--Energy Services: Residential and Commercial ● 63

Figure 3-7A—A Massive Multipot Stove

I &L

A broken massive multipot stove is in the foreground. Only one of

the two potholes is in use. A second pot to the side of the massive

stove is supported by two stones and the stove wall. To the rear

are women grinding grain with traditional mortars and pestles.

Site: near Niamey, Niger. Photo credit: Sam Baldwin.

heads and cold water washing of clothes can reduce

the quantity of hot water needed.

LIGHTING

Lighting accounts for only a small fraction of total

national energy use in both developing and industrial countries, typically ranging from about 2 to 5

percent of the total (see table 3-8). Lighting’s share

of electricity use is higher, ranging from about 8 to

17 percent of total electricity use in industrial

countries, 36 with similar shares in developing counFigure 3-7B—A Lightweight Metal Stove

Construction of an improved lightweight stove by a metalsmith.

Site: Ouagadougou, Burkina Faso. Photo credit: Sam Baldwin.

tries. In India, for example, lighting accounts for

about 17 percent of total national electricity consumption and about 30 to 35 percent of the peak

power demand.37

Lighting merits particular attention as it plays a

very important social role in domestic life and in

commerce and industry--enabling activities at night

or where natural lighting is inadequate. As rural

incomes increase, or as people move to urban areas

and gain greater access to modern fuels and electricity, lighting services and the energy used to provide

them increase dramatically.

As shown elsewhere,38 lighting technologies follow a fairly clear technological progression in

performance, efficiency, and cost—going from the

simple open fire, to kerosene wick or pressure lamps,

to the use of electric-powered incandescent or

fluorescent lamps. Consumers’ choices of lighting

technologies largely follow the same progression as

household incomes increase and as electricity becomes available.

The shift to electric lighting is observed everywhere electricity has been made available. In contrast to kerosene lamps or other nonelectric lighting

technologies, electric lighting is clean (within the

home), relatively safe, easy to operate, relatively

efficient, and provides a high quality light.

‘

6 Terry McGowan, ‘‘Energy Efficient Lighting, ’Electricity}: Efticient End [Jse and New Generation Technologies, and Their Planning Implications

(Lund, Sweden: Lund University Press, 1989).

~TAShOk Gadgi] and Gi]beflo De Mti~o Jannu~zi, Consen,ation Po(entia/ of Compact Fluorescent ~mps in India andBrazil, report No. ‘B L-272 10

(Bcrkclcy, CA: Lawrence Berkeley Laboratory, July 1989).

3Ru, s, congress, offl~e of Technology Asscssmcn[, Ene~,gy in ~e},c~opin~ cOUfl(n”e.Y, op. Cit., fOOtflOtC 2.
64 ● Fueling Development: Energy Technologies for Developing Countries

Box 3-B—Research Needs for Improved Biomass Stoves in Developing Countries

The use of biomass resources for fuel contributes to several problems: they generate air pollution--particularly

in village households-and possibly greenhouse gases; l they demand large amounts of time and labor; and in some

areas they can contribute to deforestation.2 Nevertheless, biomass will continue to be the primary cooking fuel for

rural and poor urban areas in developing countries for many years to come. Higher quality liquid or gas fuels are

simply too expensive and too irregular in supply to supplant biomass anytime soon.

Although biomass will continue to be a primary fuel in the mid-term, it may be possible to improve the

performance of biomass stoves significantly. Some successes have already been realized (Box 3-A) but much more

could be done. Significant technical challenges remain to be overcome, however, if clean burning, fuel efficient

biomass stoves are to be developed.

The performance of a biomass stove is the product of several difficult technical tradeoffs. Fuel efficiency is

improved by narrowing the gap between the pot wall and the stove to increase convective heat transfer; by limiting

the flow of air into the stove to increase the average temperature of the combustion gases; by lowering the pot closer

to the fire to increase the fraction of radiant heat from the fire that is intercepted by the pot; and by other means.

But too narrow a gap can choke the fire and greatly increase cooking times; too little airflow into and through the

stove can increase emissions of carbon monoxide and hazardous smoke; and lowering the pot closer to the fire can

prevent complete combustion and greatly increase smoke emissions-this can easily be seen by putting an object

into the flame of a candle. Further, unlike commercial fuels such as kerosene or LPG, biomass fuels vary markedly

in density and form--from grass to logs, in composition, moisture content, and a host of other factors important

in determining combustion characteristics. Combustion of biomass is also extremely complex, involving many

thousands of interacting chemical species. Achieving both high fuel efficiency and low smoke emissions in a cook

stove thus remains a substantial technical challenge.

The technical complexity of this task has several important implications.

First, the technical complexity requires a high level of technical expertise that is often difficult to assemble

given the often small size of existing improved stove projects in developing countries. An alternative approach

might be to form regional centers of excellence in developing countries where a relatively large number of

researchers can be brought together to form the critical mass of skilled manpower that is needed. Such a center would

draw the best manpower and concentrate the research effort, but base selection and continued participation on

peer-reviewed performance. When the technology was developed, these researchers could then return to their

respective regions to direct further development and dissemination efforts.

Such regional centers of excellence could themselves have several important benefits. They would provide an

opportunity to further develop institutional capacity in the developing countries through goal oriented research

focussed on technologies of particular interest in developing countries.

Regional centers of excellence might also offer a means of enhancing the training of scientists and engineers.

Too often, students returning to smaller developing countries with a Masters or Doctoral degree in science or

engineering are expected to immediately play an important role in national research organizations. In contrast, in

the industrial countries, scientists and engineers often spend many years--even after receipt of their

doctorate-working under the tutelage of a more experienced researcher, both as a postdoctoral fellow and as a

member of a research team. Such experience is important. Much of what is required to select a viable approach to

solving a research problem, to direct the research, and to manage the research budget and related administrative

matters is not taught in school; it is instead learned through the modem equivalent of an apprenticeship. A regional

center of excellence would provide budding scientists and engineers more opportunity to learn such skills from

mentors, rather than being expected to learn it all by trial and error on their own.

Regional centers of excellence in developing countries have been successfully developed for agricultural

research, development, and field trials. An example is the International Rice Research Institute. The experience of

these institutions may hold useful lessons for the development of energy technologies.

IM he biomass is used on a sustainable basis, then greenhouse gas emissions are W+3ntidy dklhla ted. In contrastj fossil fiels always

generate greenhouse gases.
Chapter 3-Energy Services: Residential and Commercial ● 65

Second, appropriate technologists have often suggested that technologies must be adapted to a very large extent

to the locality in which they are used and that failure to make such adaptations is a principal cause of failure. In this

context, it is important to recognize that a number of different factors might be adapted, including the underlying

technology, product design, manufacturing process, or means of product dissemination.

The basic technology of a stove or of most other devices will remain largely the same globally. Indeed, the

technical complexity of biomass combustion and the similarities of wood in Latin America, Africa, or Asia suggests

that much of the basic research might be best undertaken at the global level, as long as it was closely coupled to

nearby field trials.

Variations in the practical use of stoves between regions may require some adaptation of the product

design-such as the means of holding pots down when vigorously stirring, modified shapes to hold different types

of pots, etc. Nevertheless, gas and kerosene stoves have been used equally well in the United States, Africa, and

Asia with little or no adaptation of their design.

The choice of fabrication method is more commonly an aspect that might be adapted to local conditions.

Although the maintenance of precise dimensions in stoves will generally require mass production and quality

control techniques, these can be implemented in ways as varied as village metalsmith artisanal production using

standardized templates to automated metal stamping facilities. Similarly, the choice of materials can also be varied

somewhat depending on local conditions, from low quality scrap metal recovered from barrels or wrecked cars to

new high quality steel alloys or ceramics.

Finally, product dissemination methods must be adapted to local conditions if they are to be successful.

Third, past failures in improved stove programs indicate the need to link laboratory research activities with

practical field experience. It is important to avoid the creation of laboratory curiosities with no practical field

application. Means of rewarding researchers that successfully see their work through to full scale commercialization

need to be explored.

Fourth, the complexity of biomass combustion and heat transfer requires close attention to design and quality

control. This is particularly significant because of the importance of the informal artisanal sector in disseminating

such technologies as biomass stoves. Greater effort needs to be made to work with this important sector in terms

of upgrading their production technologies, improving their access to adequate finance, developing better means

of technology transfer, providing training, and other issues,

Finally, the experience with improved biomass stoves has shown the market mechanism to be a particularly

valuable tool in urban areas for weeding out poor technology designs or weighing alternatives through competition.

The market mechanism is not as effective, however, in rural areas largely outside the cash economy, Methods of

adequately meeting the needs in these areas are needed.

SOURCES: Samuel F. Baldwin, Biomass Stoves.’ Engineering Design, Development, and Dissemination, (Rosslyn, VA and Princeton, NJ:

Volunteers Ln Technical Assistance and Center for Energy and Environmental Studies, Princeton University, 1986). Sam Batdwin

et at. ‘‘Improved Woodburning Cookstoves: Signs of Success,” M4BI0, vol. 14, No. 4-5, pp. 280-287, 1985. Dilip R. Ahuj%

‘‘Research Needs for Improving Biofuel Burning Cookstove Technologies, ” Natural Resources Forum, May 1990, pp.125-134;

Kirk R. Srnit.tL Biomuss Fuels, Air Pollution, and Health: A Global Review (New York N?’: Plenum Publishing Co, 1987); K.

Krishna Prasad, E. Sangen, and P. Visser, “Woodburning Cookstoves, ‘‘ in James P. Hartnett and Thomas F. Irvine, Jr. Advances

in Heat Transfer, (New York, NY: Academic Fkess, 1985).

As incomes increase with economic development, The demand for lighting has continued to increase

households begin to buy other appliances—radios, in the industrialized countries over the past 30 years

TVs, fans, refrigerators, and air conditioners. Elec- as incomes have increased. Today, lighting ranges

tricity use for lighting usually continues to increase, from roughly 20 to 100 million lumen-hours per

but is then only a small fraction of total residential capita per year (Mlm-hr/cap-yr) in the industrial

electricity use (see figure 3-9). Electricity use for countries, with most in the range of 25 to 40

lighting in the commercial and service sectors alSO Mlm-hr/cap-yr.

39 In comparison, annual household

grows rapidly as the economy expands. light production in South Bombay, India, varies with

39 Terry McGowan, “Energy Efficient Lighting, ’ Elec[rlctty Ef7iclent End UseandNctil Generation Technologies, and Their Planning Implications

(Lund, Sweden: Lund Uruvcrslty Press, 1988).
66 ● Fueling Development: Energy Technologies for Developing Countries

Figure 3-8-Capital Costs, Operating Costs, and

Electricity Consumption for Electric Resistance,

Electric Heat Pump, and Solar Water Heaters

$/heater

350

1

—>

300

2 5 0

. .

2 0 0

o I

‘

-

~

Electric Heatpump Solar

Water heating technology

. Heater capital ‘ Utility capital

f+ Total capital 4 Operating cost

Capital costs to the individual consumer are substantially higher

for solar water heaters than for electric resistance heaters. When

upstream utility investment is included, however, the capital costs

for solar water heaters are modestly lower than the systemwide

capital costs for electric resistance and heat pump water heaters.

Lifecycle operating costs to the consumer are dramatically lower

for solar heaters than for electric heaters.

SOURCES: See app. A. Cost data for electric resistance water heater and

solar water heater, installed costs, are from Sunpower Solar

Hot Water Systems, Barbados, West Indies, 1990, provided by

Robert van der Plas, World Bank, Washington, DC. Heat pump

water heater data is from Howard S. Geller, “Residential

Equipment Efficiency: A State-of-the-Art Rewew,” American

Council for an Energy-Efficient Economy, contractor report for

the Office of Technology Assessment, May, 1988. See also,

Electric Power Research Institute, “Heat Pump Water Heaters: An Efficient Alternative for Commercial Use, ” Palo

Alto, CA.

household income from about 1 to 3 Mlm-hr/cap-

.40 light production in the commercial sector might yr,

double these numbers. This is equivalent to a light

output level 10 to 30 percent that of the lowest

industrialized countries.

Figure 3-9—Household Electricity Use for Lighting

v. Household Income, Brazil

Electricity use, Brazil (kWh/household-month)

400 ‘—–-—–––—-

r

,.

300 , / ’ 4

I

/“”

200

– ./

//~ ’

100 -- - -- ‘-

1 1 1 —— — - +--—- ——---— -- ‘—-— - --— 0 : “ ‘

– ‘-===

MWU O-2 MWU 2-5 MWU 5-10 MWU 10-20 MWU 20

Income group

* Total electricity 4 Lighting electricity

This graph shows that electricity y use for lighting continues to grow

with income even in a relatively prosperous developing country

such as Brazil. Lighting electricity is, however, only a small fraction

of total household electricity use in this case. MWU are minimum

wage units.

SOURCE: Ashok Gadgil and Gilberto De Martino Jannuzzi, Conservation

Potential of Compact Fluorescent Lamps in India and Brazil

(Lawrence Berkeley Laboratory, Berkeley, CA and Universidade Estadual de Campinas, Brazil: June 23, 1989).

The choice of electric lighting technology has a

strong impact on upstream utility investment, and

this impact is accentuated by lighting’s large contribution to the peak utility load, Incandescent lights

are the least efficient electric lighting technology

and have the highest capital and operating costs (see

figure 3-lOA). Currently, roughly 60 percent of total

lighting electricity used in India is consumed by

incandescent lightbulbs, and a higher fraction of

residential lighting is used in incandescent bulbs.41

In Brazil, some 95 percent of residential lighting is

with incandescents,42 about the same as in the

United States.43

Much more efficient, cost effective lighting technologies are available.44 For example, compact

fluorescent lights with the same light output as an

~c~cula[cd from Gadgd, op. cit., footnote 37.

llAshok Gadgil and Gilberto De Martino Jannuz.zi, op. Cit., footnOte 37.

~~Gllbc~c) Dc ~Ktlno JanIluZZ4i, ~1 al,, < ‘Ene~~ Effi~icnt Lighting in Brazil and India: POtential and ISSUeS of Technology D~fusiow’ APr. 28, 1991,

drafl.

~~Howu~ S. Gcll~r, American Council for an Energy Efficient Economy, ‘‘Residential Equipment Efficiency: A State-Of-The Art Review, ”

contrttctor report prepared for the Office of Technology Assessment, May, 1988. Note, however, that most lighting electricity in the United States is used

in the commcrci,at sector.

~Much *nOre tin just the ~nerm efficiency ~d light output of tie ]ight~g hardware should be considered in practical applications. Lighting hardware

is also characterized by its chromaticity (the color of the light), correlated color temperature (the temperature of a perfect emitter that has the same

chromaticity as the lighting hardware), and color rendering index (how realistic the colors of objects illurnina ted by the light appear to be). Sources:

Robert van dcr Plas and A.B. de Graaff, “A Comparison of Lamps for Domestic Lighting in Developing Countries,” (Washington, DC: World B@

industry and Ener&~ Department, June 1988); Gcncml Electric, ‘ ‘Lighting Application Bulletin: Specifying Light and Color. ”
Chapter 3--Energy Services: Residential and Commercial ● 67

Table 3-8—Lighting as a Share of National Energy and Electricity Use

Energy use for lighting, GJ/cap Percent of national total

Residential Commercial Industrial Total Energy Electricity

Brazil . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.5 0.1 0.9 2.1 14.6

China . . . . . . . . . . . . . . . . . . . . . . . 0.4 NA NA NA NA NA

India . . . . . . . . . . . . . . . . . . . . . . . 0.5 0.05 0.05 0.6 5.1 14.2

Kenya . . . . . . . . . . . . . . . . . . . . . . 0.5 0.16 NA 0.66 2.6 27.2

Taiwan . . . . . . . . . . . . . . . . . . . . . 0.7 0.8 NA 1.5 2.2 6.9

Us. . . . . . . . . . . . . . . . . . . . . . . . . NA 7.2 NA NA NA NA

NA = Not available or not applicable.

SOURCE: U.S. Congress, Off Ice of Technology Assessment, Energy in fJeve/oping Countries, OTA-E-486 (Springfield, VA: National Technieal Information

Service, Washington, DC: U.S. Government Printing office, January 1991 ). Table 3-3 and app. 3-A.

incandescent have an initial capital cost for the lamp

alone that is 20 times that of the incandescent but use

just one-fourth as much electricity and last 10 times

as long.

45 When the longer lifetime of these lamps

and the required capital investment in utility equipment to power these different lights are taken into

account, the total capital cost of compact fluorescent

lighting is half that of incandescent lighting. Further,

the total operating cost—including the cost of the

lamp and the electricity to power it--of the compact

fluorescent is one-third the cost of the incandescent.

These results are summarized in figure 3-10 and are

tabulated in appendix A.46

The high first cost of a compact fluorescent is a

significant deterrent. (Of course, in places where a

light is rarely used—such as a closet–-it makes good

economic sense to use a low cost, lower efficiency

light, see figure 3-10.) The highly subsidized price

of electricity in many developing countries reduces

the consumers perceived benefit of higher efficiency

lights. Making such an investment also poses a

significant risk for the poor if such an expensive

lamp is accidentally broken or stolen.

Utilities in developing countries may directly

benefit by reducing the amount of subsidized power

that they sell. It will often be less costly for the utility

to subsidize the sale of efficient lightbulbs than to

continue to subsidize the cost of electricity, particularly when utilities must finance expensive new

generation capacity .47

If compact fluorescent are to be used in developing countries, special conditions should be taken

into account. For example, conventional core-coil

ballasts may have difficulties where power line

voltage or frequency fluctuations are excessively

large; large overvoltages, for example, could cause

the lamp to burn out prematurely. Electronic ballasts

can be used, however, particularly if modified with

special voltage regulators .48 At the same time, the

electronic ballast raises the lamp efficiency (from

50) to about 60 lumens/watt. In contrast, to make

standard incandescent more robust to the voltage

fluctuations found in developing countries, the

filament is made heavier at the cost of lowering the

efficiency from 12 to typically 10 lumens per watt.49

As many of the applications in developing countries

will be new installations, properly sized and designed fixtures to hold compact fluorescent can be

installed from the beginning, avoiding the difficulty

and expense of retrofitting fixtures that industrial

countries are now encountering.

There are similar opportunities in commercial

buildings, even though they often now use fluorescent lighting. A standard fluorescent tube, not

45~1ces me highly. ~nce~aln due t. ~ ~U1ety of factom, fices (o original equipment man~ac~urers for me PL-13---the Cquiva]ent of a 60 W

mcandcsccnt—are estimated at $7: $3.50 for the 10,000 hour glass element and $3.50 for the 20,000 hour base. Ashok Gadgil and Gilberto De Martino

Januzzi, op. cit., footnote 37.

~)fjcc also: Howard S, Gellcr, ‘‘Electricity Conservation in Brazil: Status Report and Analysis, ’ contractor report prepared for the Office of

Technology Assessment, November 1990; Howard S. Gcller, Eficient Electricity Use: A De}’eloprnent Strategy for Brazil, (Washingto~ DC: American

Council for an Energy Efficient Economy, 1991).

dTA det~]cd discussion of rhesc “Wlous Penpectlves can bc fo~d ~: Ashok Gadgil and Gilbcflo De hh_th10 Januzzi, Op. Cit., fOODIOte 37.

a~ese “O]tagc Iewlators fight & ~ sirnp]e as ~ Zxncr diode or a neon lamp and could add about $1 to the factorY cost of the l~P This could ‘lOw

the lamp to operate while voltages fluctuated around 220 V, from 80 V to 650 V. In contrast, core-coil ballasts can only withstand a 2 percent fluctuation

in frequency and about +/-10 percent fluctuation in voltage, Total factory cost of the lamp with a modified electronic ballast might then be about $12.

Ashok Gad.gil, Lawrcncc Berkeley Laboratory, personal communication, Jan. 23, 1991.

J~Ashok Gadgil, ibid.
68 ● Fueling Development: Energy Technologies for Developing Countries

Figure 3-10A--First (Capital) Cost, Annualized Capital

Cost, and Efficiency of a 60 Watt Incandescent Bulb

and Its Equivalent Compact Fluorescent Bulb

Consumer capital Lamp efficiency.

cost, $ “ Lumens/ watt

16

14

12

10

8

6

4

2

0

P

4’” //; “

Efficiency /’ ,/”

// /’ /’ /“

/’/” / ,’” Initial capital cost

/ /

/ ,/

9 ,

/ –/A

/~’—

8 -

—- — Annual capital cost

—T— –—7—

50

40

30

20

10

0

Incandescent Compact fluorescent

This figure indicates the barrier to buying the compact fluorescent

bulb faced by the first-cost sensitive consumer. It also shows that

the longer lifetime of the compact fluorescent bulb, shown on the

basis of annualized capital cost, largely offsets its higher initial

capital cost.

SOURCE: See app. A for details.

Figure 3-10 B—Annualized Capital Cost for

Incandescent and Compact Fluorescent Lamps,

Upstream Utility Generation, Transmission,

and Distribution Equipment to Power the Lamps,

and the Two Combined to Give the Total Annual

Capital Investment

— Annual capital investment, $

5

4

3

2

1

~ Total annual capital investment

~~

—~

Annual capital cost of utility

>

/ ’ ‘.. .

/“’”” ‘ 9

~ Annual capital cost of bulb

o --————————

Incandescent Compact fluorescent

Lighting technology

The total annualized capital investment declines substantially for

the high efficiency compact fluorescent light bulbs.

SOURCE: Seeapp. A for parameters in thecaseof 4hours of operation per

day. Note that the capital costs do not include switches, interfor

house wiring, etc.

Figure 3-10C—Annual Capital and Operating Costs Figure 3-10D—Cost Effectiveness of Compact

10

8

6

4

—

for Different Lamps - -

Annual cost, $

Total annual operating cost to consumer

“ \ \

~.

~

Total annual capital investment -

9--’ Annual cost of bulb

() I - --– ---------- ---——–— -—T———-

Incandescent Compact fluorescent.

7

6

5

4

3

2

Fluorescent Bulbs Versus Incandescent for

Different Daily Operating Times

Annual savings with fluorescent lamp, $

Annual savings in total operating costs

1+

‘

-

”

– —— -

T —

- —– ‘~ “-

0.25 0.5 1 2 3 4 5 6

Hours of operation per day

The total cost to the consumer decreases substantially for the high As the daily use of a compact fluorescent bulb increases, it is

efficiency compact fluorescent. increasingly cost effective both in terms of systemwide capital

SOURCE: See app. A. costs and total annual operating costs (capital plus fuel). Only for

daily operating times of less than about 40 minutes per day does

the higher initial capital cost of the compact fIuorescent outweigh

savings in electricity costs over the lamps lifetime.

SOURCE: See app. A for parameters.
Chapter 3---Energy Services: Residential and Commercial ● 69

including the ballast, produces 3,150 lumens with a

40-watt (W) input for an efficiency of roughly 79

lumens per watt.50 Through a variety of improvements in design and materials, tubes with efficiencies of more than 95 lumens per watt are now

available.

To operate these lamps, ballasts must be used that

lower their overall efficiency .51 Conventional corecoil ballasts are typically made of aluminum wire

and low quality laminated iron cores and consume

typically 8 to 18 W per lamp. 52 This lowers the lamp

efficiency from about 79 lm/W to about 55-65

lm/W--an efficiency loss of as much as one-third,

High efficiency core-coil ballasts use high quality

materials-iron and copper—to cut ballast losses in

half, to 3 to 4 W per lamp. Electronic ballasts can cut

losses in half a second time, to 2 W, and at the same

time increase the efficiency of the fluorescent tube

itself, improve the quality of the light generated,

reduce sensitivity to voltage and frequency fluctuations, and—for advanced designs—allow the lamp

to be dimmed when, for example, daylighting is

available (see boxes 3-C, and 3-D). The overall

efficiency of a high efficiency tube and an electronic

ballast is over 90 lm/W--about 40 percent higher

than the standard lamp and ballast. If poorly

designed, however, electronic ballasts can generate

power line harmonics that may interfere with other

electronic equipment or increase transmission and

distribution losses somewhat.53 This technology is

now well established in the U.S. market, with annual

sales approaching the two million mark in 1988.54

Reducing the temperature of the lamp 20 °C by

raising efficiency and providing air cooling can also

raise the operating efficiencies of lamps by as much

as 10 percent.55

Efficiency improvements in the lighting systems

of commercial buildings are particularly important

in the newly industrializing countries due to the

rapid growth of this sector. Commercial buildings in

the ASEAN countries-Indonesia, Malaysia, Philippines, Singapore, and Thailand-now consume

about one-third of the total electricity generated in

the region, and of the electricity used, roughly

one-third goes to lighting.56 Lighting’s share of

commercial building electricity use is even higher in

many other countries.

Further efficiency improvements in the lamp

itself are possible .57 In addition, better reflectors and

diffusers can improve direction of the light generated and can allow the number of lamps per fixture

to be reduced. Fixtures in many developing countries are particularly low quality due to the lack of

highly reflective coatings. In Brazil, the combination of high efficiency lamps, ballasts, and fixtures

was found to raise the useful light output of a

fluorescent lamp system by a factor of three (see

table 3-9).58

Better controls, such as occupancy sensors or

photocell controlled dimmers used with advanced

5oB~~ on ~ S@ndtid 4-foot long ~~~1 white fluorescent ~be, wi~ an output of 3,150 l~ens and an input power of 40 W for the lamp and 15-20

W for the balhst. see: Terry McGowarL op. cit., footnote 36; and Gautarn S. Dutt, “End Use Oriented Energy Strategies for Member Developing

Countries (With Speeial Reference to India), ” draft report to the Asian Development Bank, Manila, Philippines, January 1991.

51 Core-coil b~lasts WC Cuent lfiiting i~du~tor~ us~ to prevent high currents from developing in tie IMIIp md burning h out. Without the bdht,

the plasma discharge of the fluorescent lamp---with its negative coefficient of resistance--would support an increasing current and basically turn the

lamp into a miniature arc welder.

s~~e higher ~we is feud for low ~uallty b~lasts operating a single tube. See: Howmd S. Gelkr, Op. Cit. footnote and ‘aum ‘“ ‘Utt’ “End

Use Oriented Energy Strategies for Member Developing Countries (With Special Reference to India), draft report to the Asian Development BManila, Phillipines, January 1991.

jsRudolph R. Verderber, Oliver C. Morse, Francis M. Rubinstei% “Performance of Electronic Ballast and Controls With 34-and 40Watt F40

Fluorescent Lamps,” Transactions on Industtiu/App/ications, vol. 25, No. 6, 1989, pp. 1049-1059; Amory B. Imvins and Robert Sardinsky, The Sfate

of the Arf: Ligh(ing (Snowmass, CO: Rocky Mountain Institute, 1988).

~Verderber, ibid.

55M< Smlnovl[ch e[ ~,, The Energy co~$ema[jo~ Potentja[ Associated Wjth Therrnall~ Efi”cient Fluorescent Ftitures, report No. LBJ--27315

(Berkeley, CA: Lawrence Berkeley Laboratory, June 1989).

5GM.D. Uvinc, J.F. BusckL and J.J. Deringer, ‘‘Overview of Building Energy Conservation Activities in ASEAN,’ paper presented at the ASEAN

Special Sessions of the ASHRAE Far East Conference on Air Conditioning in Hot Climates, Kuala Lumpur, Malaysi% Oct. 26-28, 1989, Lawrence

Berkeley Laboratory, report No. LBL-28639, Berkeley, California.

57~e Comblnatlon of isotopic emlc~ent, N. photon phosphors, and gighc~ ope~tion, ~ong others, IIMy be able to push efficiencies to as high

as 230 lumens/watt. See: Samuel Berman, ‘‘Energy and Lighting, ‘‘ Energy Sources: Conservation and Reneu’ables, (New York, NY: American Physical

Society, 1985).

SSH, Ge]ler, op. cit., fOOtIIOtC 46.
70 ● Fueling Development: Energy Technologies for Developing Countries

electronic ballasts, can help ensure that the light

generated is neither excessive nor in unoccupied

spaces. Finally, the controlled use of daylight,

particularly with falters to keep out unwanted heat,

can dramatically cut lighting needs in buildings.

Combined, the use of a photocell or otherwise

controlled dimmer that adjusts for daylighting or

other lighting can reduce electricity use in many

buildings by perhaps 35 percent or more without

degrading lighting quality or quantity .59 Retrofits of

the lamps and light fixtures at the U.S. Environmental Protection Agency building in Washington,

DC recently allowed it to cut its lighting electricity

use by 57 percent.60

Hardware is, however, only a part of the total

consideration in developing an efficient, attractive

lighting system. Lighting design must also include

such factors as producing attractive displays for

retailers and maintaining high productivity among

office workers—avoiding glare, flicker and hum,

and strobing on computer display screens (for the

time when computers are as prevalent in developingcountry offices as they are today in industrial

countries) while providing sufficient light for employees to work efficiently. For a typical office in

which wages are 90 percent and lighting electricity

is 3 percent of operating costs, it makes little sense

to reduce lighting by one-third-a l-percent savings—

if it lowers worker productivity by 10 percent—a

9-percent cost. On the other hand, overlighting is

also found widely and offers a substantial opportunity for savings. In Brazil, for example, overlighting

of one-third or more has been found in a number of

office buildings surveyed.61

Therefore, along with improved lighting hardware, careful attention is also needed to lighting

design. Considerable savings, for example, may be

possible by carefully and appropriately lighting the

task—i.e., the desk—and reducing background lighting levels. Good lighting is design intensive; the

importance of design should not be minimized.

Design tools need to be further developed and

widely disseminated so that developing countries

can also take advantage of these opportunities.

As in other cases, even the most careful technical

assessment of potential can be blunted when users

fail to clean lamps, leave them running for longer

hours than needed, or—in response to lower monthly

electricity bills-add more lights. In some applications, consumers may also prefer to use incandescent

lights for their warmer color or because the very

short periods of use—such as in a closet--do not

warrant the larger expense of a high efficiency light.

Market costs for all lighting hardware that reflect the

total capital and operating costs—including upstream capital investment in generation, transmission, and distribution facilities-will help to ensure

that all choices of lighting equipment are more

economically rational.

Improvements in lighting efficiency have a synergistic impact on other important uses of electricity

such as air conditioning. In large buildings or

residences cooled by air conditioning, every kW of

lighting power saved cuts the needed air conditioning by as much as one-third kW.62 Together, saving

this 1.3 kW of electrical power reduces, for example,

coal consumption at a rate of 4.5 kW or 0.63

kilograms (kg) per hour.63 Reducing the lighting

load will also reduce the size of air conditioner and

related equipment needed, saving capital costs. Of

course, in the winter the heat generated by lights can

help warm the building and reduce space heating

requirements. This is likely to be less important in

most developing countries.

59Tew McGowm op. cit. foo~ote 36; See&o: Y.J. Huang, B. ThorrL B. RamadW ‘A Daylighting Design Tool For SingaPore B* on ~E-2. IC

Simulations, ‘‘ in Proceedings of the ASEAN Special Sessions of the ASHRAE Far East Conference on Air Condin”oning in Hot Climates, Kua.la Lumpur,

IWdaysi% Oct. 26-28, 1989, Lawrence Berkeley Laboratory, Report. LBL-28639. Of particular importance in implementing effective daylighting

systems is the development of high performance algorithms for controlling the daylighting system and of computer design tools for designing the oftlce

workspace. See: R.R. Verderber, F.M. Rubinstein, and G. Ward, ‘ ‘Photoelectric control of Daylight-Following Lighting Systems, ’ report No. CU-6243

(Palo Alto, CA: Electric Power Research Institute, 1989).

@Mat~ew L, Wald, “E.P.A. I_Jrging Electricity Efficiency, ’ The New York Times, Jan. 16, 1991.

blHoward S. Geller, op. cit., footnote 46.

620ne kw of heat ~put ~to ~ b~l~g from l@ts adds a load of 3,412 BTu~our to tie coolfig load. For an air conditioXl@ unit with an energy

efficiency rati-Btu per hour of cooling capacity divided by watts of electrical input-of 10.0, this demands an additional 3412/10= 341 W or one-third

kW of power for cooling. Because the power required to move air through ducts increases as the cube of the flow velocity, there maybe further energy

savings by reducing the flow rates necessary to cool the building when using efficient lighting.

63A55~ng techfic~ lo5ses ~ ~amfi55ion and dis~bution of 15 percent, a 1.34 kw load requires 1.58 kW of pOWeI to be generated. At an average

generation efficiency of 35 percent, this requires burning 4.5 kW of coal, or 16 MJ/hour. At an average calorific value of 25.58 M.J/kg, this saves 0.63

kg of coal per hour.
Chapter 3----Energy Services: Residential and Commercial ● 71

Box 3-C—Development of Electronic Ballasts in the United States and Brazil

The Department of Energy established a Lighting Research Program at the Lawrence Berkeley Laboratory

(LBL) in 1976. This program was to accelerate the introduction of new energy efficient lighting technologies in the

marketplace. One of the frost technologies targeted was high-frequency electronic ballasts. Data showed that lamps

operated at frequencies above 10 kHz were 15 to 30 percent more efficient; advances in transistor and switching

power supply technologies and reductions in their costs during the 1960s and 1970s made such high frequency

operation both possible and potentially cost-effective.

LBL looked for companies that would share development costs and who, if the project was successful, could

manufacture the electronic ballasts for the marketplace. None of the major manufacturers of conventional core coil

ballasts indicated any interest, but fourteen small entrepreneurial firms responded. LBL selected two firms in 1977.

IOTA engineering proposed a low-cost nondimmable design; Stevens Electronics proposed a sophisticated, higher

efficiency design that could adjustably reduce lamp light output by 90 percent. The first prototypes showed the

15-percent efficiency gain due to higher frequency lamp operation, and saved 10 percent more by reducing losses

in the ballast compared to conventional core coil ballasts—a total efficiency gain of 25 percent. These savings were

then confirmed in field tests in PG&Es main office building in San Francisco. These field trials also provided data

on reliability that was then incorporated into the prototype design.

Despite the success of the trials, major U.S. ballast manufacturers showed little interest. Meanwhile, a number

of small U.S. firms and, beginning in 1980, several foreign firms-Toshiba (Japan) and O.Y. Helver

(Finland)--picked up on the LBL work and began manufacturing solid-state ballasts during 1980-84. In 1984 to

1986, major U.S. manufacturers such as General Electric, GTE, Advanced Transformer, and Universal

Manufacturing entered the market. By 1986, one million solid state ballasts were sold annually in the United States

and sales were increasing 60 percent per year.

The year 1985 witnessed the beginnings of the Brazilian effort to develop and produce solid-state ballasts.

Researchers at the University of Sao Paulo tested potential designs and, with funding from the Sao Paulo State

electrical utility, produced about 50 prototype units in 1986-87 that demonstrated performance comparable to

electronic ballasts produced in industrial countries. The technology was transferred to a private company (Begli)

in 1988 with subsequent scaleup of production and tests to 100 demonstration units, then 350 units, and finally mass

production in 1990.

Several features of this case are important. The United States took the lead in initially developing and proving

the technology. In part based on this work, Brazilian researchers could then move more quickly and with some

confidence that their efforts would result in a workable design. Key elements in Brazil were a capable staff of

research and development scientists and engineers that could effectively adapt a foreign technology to locally

produced components and conditions; critical (and farsighted) early and long-term support from the Brazilian

Government and electric utility; gradual and careful scaleup of production with detailed demonstrations and field

testing; and effective technology transfer—at an early stage—to a private company for production and

commercialization.

SOURCE: Howard Gekler, Jeffrey P. Harris, Mark D. hvine, and Arthur H. Rosenfeld, ‘‘The Role of Federal Research and Development Ln

Advancing Energy Efficiency: A $50 Billion Contribution to the U.S. Economy,” Annual Review of Energy Vol. 12, 1987, pp.

357-395; and Howard S. Geller, “Elecrncity Conservation in Brazil: Status Report and Analysis,” contractor report for the Office

of Technology Assessment, November 1990, and to be published as “Efficient Electricity Use: A Development Strategy for Brazil, ’

American Council for An Energy Efficient Economy, Washington, DC, 1991.

Finally, energy, systemwide capital cost, and ity between the utility and the consumer, substantial

operating cost savings are also possible in street inefficiencies arise in the consumer choice of

lighting and other lighting applications. High pres- end-use technology and in the allocation of capital

sure sodium lamps, for example, have much higher between energy supply and end-use efficiency.

efficiencies than other types of street lighting and,

because of their longer lifetime, have lower mainte- REFRIGERATION nance costs as well.

Refrigerator ownership is at present quite low in

Cost effective lighting technologies are available, most developing countries, but it is increasing

but under the present institutional structure dividing rapidly. This rapid penetration is also occurring at

responsibility for the supply and the use of electric- much lower income levels than was the case in the

2Y 7-~29 - 92 - b - QL:3
72 ● Fueling Development: Energy Technologies for Developing Countries

Box 3-D—Lighting Efficiency Programs in

Europe

Electric utilities in Sweden, Denmark, the Netherlands, and West Germany operated 40 residential

lighting efficiency programs in late 1988/early

1989. These programs provided compact fluorescent lamps (CFLs) to consumers through a variety

of means, including give-aways, rebates, wholesale

discounts, tax breaks by governments, and by

adding small monthly payments for the CFL to the

consumer’s electric bill.

These programs provided more than two million

CFLs to the 4.9 million eligible households, accounting for 80 to 95 percent of all CFLs placed in

use in the residential sector during that time. The

average cost of these programs-including both the

CFL and administrative costs-was equivalent to

about $0.02 per kWh of electricity saved, much less

than the cost of generating electricity. The most

cost-effective programs were those that simply

gave the CFL away for free and thus minimized

administrative costs. By increasing the demand for

CFLs, these programs also lowered the retail price

for CFLs by 20 to 50 percent even after the

programs ended.

Among program participants, two-thirds were

satisfied with the brightness and color of the lamps,

but more than half were dissatisfied with the lamp’s

appearance. Many had trouble fitting the CFLs to

their existing lighting fixtures. Nonparticipants

lacked interest or knowledge of the program,

considered CFL prices excessive, or found the CFL

too large or heavy for their needs. Many of these

technical shortcomings are being addressed by

manufacturers with the development of smaller

CFLs, electronic ballasts, and other improvements.

SOURCES: Evan Mills, Agneta Persso@ Joseph Strahl, “me

Inception and proliferation of European Residential

Lighting EtXcieney Programs,’ in ACEEE 1990

Summer Study on Energy Efficiency in Buildings,

American Council for an Energy Efficient Economy, WashingtorL DC 1990; Evan Mills, “Evaluation of European Lighting Programmed: Utilities

Finance Energy Efficiency,” Energy Poficy, April

1991, pp. 266-278.

United States or other industrial countries due to the

declining real cost of refrigerators as materials and

manufacturing techniques have improved (see figure

3-1 1).

Refrigerators are typically not the first appliance

acquired by a household when it gets electric

Table 3-9-Cost and Performance of Commercial

Lighting Improvements, Brazil

Standarda Efficientb

Performance

Power input . . . . . . . . . . . .

Rated light output . . . . . . .

Useful light output . . . . . . .

Capital costs

Lamps . . . . . . . . . . . . . . . . .

Ballasts . . . . . . . . . . . . . . . .

Reflectors . . . . . . . . . . . . . .

Subtotal . . . . . . . . . . . . . . .

Annualized capital costs . .

Annual energy use

Direct electricity use . . . . .

Air conditioning energyc 

. .

Total electricity use ... , . .

Utility Costsd

Capital investment, . . . . . .

Annualized capital cost . . .

Annual electricity costs . . .

System wide costs

Total annual capital cost. .

Total annual operating . . .

192 W

10800 Im

2260 Im

$ 9.70

$33.3 0

$ 43.00

$ 12.66

507 kWh

142 kWh

649 kWh

$296.00

$23.8 5

$35.7 0

$36.5 0

$48.3 6

60 W

5000 Im

2100 Im

$ 5.80

$ 16.65

$33.95

$56.40

$ 16.60

203 kWh

57 kWh

260 kWh

$118.00

$ 9.51

$ 14.30

$27.6 0

$30.9 0

NA = Not applicable.

a Based on four 40 W tubes with conventional core-coil ballast in a standard

fixture with completely exposed lamps.

b Based on tWO 32 W high efficiency tubes with a mirrored glass reflector.

Useful output is so high because of: 1 )the narrow 32 W tubestrap less light

in the fixture; 2) the mirrored reflector increases useful light output.

c This is the amount of air conditioning power needed to remove the heat

generated by the lights.

d utllity capital costs are set at estimated marginal prices as calculated in

app. A. Electricity prices are set at prevailing Brazilian rates for large

commercial users of $0.055/kWh.

SOURCE: Adapted from Howard S. Geller, “’Electricity Conservation in

Brazil: Status Report and Analysis,” contractor report to the

Office of Technology Assessment, November 1990, tables 15

and 16; published as “Efficient Electricity Use: A Development

Strategy for Brazil,” American Council for an Energy Efficient

Economy, Washington, DC 1991.

service; lights are first, followed by refrigerators or

other equipment depending on household income,

region, and other factors (see figure 3-12). In India,

fans are typically among the frost appliances acquired, followed by televisions and refrigerators. In

Brazil, even relatively poorer, newly electrified

households often have televisions and refrigerators,

as these appliances are comparatively inexpensive

and are available secondhand.64

The refrigerators used in developing countries are

typically half the size of American refrigerators or

less. They are also much less efficient than the best

refrigerators now commercially available. (The average refrigerator used in the United States is

similarly much less efficient than the best available).

~Gad@l and Jannuzzi, op. cit., fOotIlote 37.
Chapter 3--Energy Services: Residential and Commercial ● 73

Figure 3-11 A—Reduction in the Real Cost of

Refrigerators Over Time in the United States

Real cost of refrigerators, 1989=1.00

7 ~ --

- -—— “~

4{ I

o-i – — - ~ – —- ~ ..–.— –~

0 ; o

-

100 150 200 250

Cumulative production volume (millions)

Over the past 40 years, the real price of refrigerators has dropped

by almost a factor of 5 (measured by the consumer price index for

refrigerators divided by either the overall change in consumer

price index or by the GNP deflator). For developing countries,

such price reductions are allowing households to invest in

refrigerators at a much earlier point in time than was the case for

the United States and other industrialized countries at a similar

level of development.

SOURCE: U.S. Congress, Office of Technology Assessment, Energy in

Developing Countries.

In Indonesia, for example, most refrigerators are

assembled locally from imported components and,

in general, do not take advantage of proven energy

efficiency features such as rotary compressors and

increased insulation. 65 In many countries, popular

models still use fiberglass insulation rather than

better polyurethane foam.

The efficiency of refrigerators has improved in

many countries in recent years. In the United States,

energy consumption by the average new refrigerator

dropped from about 1,700 kWh per year in 1972 to

about 975 kWh by 1990, an efficiency improvement

of about 3 percent per year.66 Factors contributing to

this efficiency improvement included:

. The technological push of low cost efficiency

improvements such as shifting from fiberglass

to polyurethane foam insulation, and the use of

more efficient motors, compressors, and heat

exchangers;

Figure 3-11 B—Nationwide Refrigerator Penetration

Versus Per Capita GDP Corrected for Purchasing

Power Parity

Refrigerator penetration, percent

00 T— 1

i‘ordan:oreal ‘Venezue$

40”

/

Philippines

●

20

/+- -

Thailand

Chi n

o “

I

~ –T

2,000 20,000

Per capita GDP (corrected for PPP, $)

This figure shows that a much higher percentage of the developingcountry households shown own refrigerators than did households

in the United States at a similar level of economic development as

measured by PPP corrected per-capita incomes. Note that the

per-capita GDPs have been smoothed--otherwise the curves

shown would reverse themselves during serious recessions-so

that the curves are monotonic along the GDP axis.

SOURCE: GDP data is from: Angus Maddison, ‘The World Economy in the

20th Century,” (Paris, France: Organization for Economic

Co-Operation and Development, 1989); and Robert Summers

and Alan Heston, “A New Set of International Comparisons of

Real Product and Price Levels Estimates for 130 Countries,

1950-1985,” The Retiew of Income and Wealth, vol. 34, pp.

1-25, 1988. See especially the diskettes accompanying the

article. Refrigerator penetration data for the United States is

from: Donald W. Jones, “Energy Use and Fuel Substitution in

Economic Development: What Happened in Developed Countries and What Might be Expected in Developing Countries?”

Oak Ridge National Laboratory, ORNL-6433, August 1988;

Refrigerator penetration data for the various developing countries shown is from: S. Meyers et al., “Energy Efficiency and

Household Electrie Appliances in Developing and Newly industrialized Countries,” Lawrence Berkeley Laboratory, LBL29678, December 1990.

. the market pull generated by a more well

informed public-mandatory efficiency labeling was instituted in 1980--faced with a 40

percent real increase in residential electricity

prices between 1973 and 1984; and

● the regulatory shove of minimum efficiency

standards first adopted in California in 1977

and nationally in 1987.67

The energy consumption of the average new

refrigerator in Brazil similarly dropped by almost 13

percent between 1986 and 1990, a rate of improvecSLee Schipper, “Efficient Household Electricity Use in Indonesia, ” Lawrence Berkeley Laboratory, Draft, January 1989.

66 Association of Home Appliance Manufacturers, “Major Home Appliance Industry Fact Book, 1990191,” Chicago, IL, 1991.

67 Howwd s, Gelter, ~nerg}, ~ficienf App/l~n~~~ (wash~gton, DC: .&nefi~n Cowci] for an Energy Efficient Economy, June 1983); How~d S.

Gcller, American Council for an Energy Efficient Economy, “Residential Equipment Efficiency, ” contractor report prepared for the Office of

Technolo~ Assessment, May 1988.
74 ● Fueling Development: Energy Technologies for Developing Countries

Figure 3-1 2—Electric Appliance Ownership in

Urban Javaj 1988

Penetration by income group, %

1 2 0 —— I

Low Middle High

Income group

.’+ Lights t Iron + B&W/color TV

+ Fan -

4- Refrigerator -4- Water pump

This figure shows the rapid penetration and relative importance

within household purchasing patterns of lights, TVs, irons, fans,

refrigerators, and water pumps. Income groups (share of households) in ascending order are: less than 75,000 Rp/month (24

percent), 75-120 (22 percent), 121-185 (21 percent), 186-295 (14

percent), and greater than 295 (9 percent).

SOURCE: Lee Schipper and Stephen Meyers, “lrnproving Appliance

Efficiency in Indonesia,” Energy Policy, forthcoming.

ment of about 2.5 percent per year (see table 3-10).68

Brazilian manufacturers, however, are unable to

make use of the very efficient motor-compressors in

domestic refrigerators that Brazil manufactures and

exports, as these units cannot readily tolerate the

voltage fluctuations found in Brazil (but substantial

improvements in refrigerator performance are neverTable 3-lo-Progress in Improving the Efficiency of

Refrigerators in Brazil

Electricity consumption (kWh/year)

Year Best Worst Average

1986 . . . . . . . . . . . . . . 440 570 490

1987 . . . . . . . . . . . . . . 440 490 460

1988 . . . . . . . . . . . . . . 440 490 460

1989 . . . . . . . . . . . . . . 335 490 435

1990 . . . . . . . . . . . . . . 335 490 435

For single-door 250 to 300 liter refrigerators

SOURCE: Howard S. Geller, “Electricity Conservation in Brazil: Status

Report and Analysis,” contractor report prepared for the Off ice

of Technology Assessment, August 1990; published as “Efficient Electricity Use: A Development Strategy for Brazil,”

American Council for an Energy Efficient Economy, Washington, DC, 1991.

theless possible).69 In South Korea, energy consumption by the average new refrigerator dropped

by a remarkable 65 percent between 1980 and 1987,

a rate of improvement of about 12 percent per year

(see table 3-1 1).70 The initial costs of achieving

these efficiency gains have generally been small,

and have been more than offset by savings in

electricity bills.

In the United States, the failure of market forces

alone to push the energy efficiency of refrigerators

and other products sufficiently rapidly has led to

enactment of laws mandating efficiency standards

for 13 types of consumer products.71 Different levels

of technology for implementing these standards in

an 18 cubic foot (510 liter)72 top-mount automatic

defrost refrigerator/freezer-the most popular design in the U.S. market with 73 percent of annual

@Howud S. Ckller, op. cit. footnote 46.

G9Howmd Geller, Ibid.

ToStephen Meyers et al., op. cit., footnote 29. Note that these appliances are not strictly comparable in termS Of thek actwd pow~ ~~umption. me

Brazilian and South Korean refrigerators are just half the size of the average American refi-igerator, and the features offered on these refiigeratom differ

significantly, with varying impacts on their energy consumption.

Tl~ese laws ~clude: the Energy Policy and Conservation Act (Public Law 94-163) as amended by the National Energy conservation PO@ Act (PJ-.

95-619), the National Appliance Energy Conservation Act of 1987 (P.L. 100-12), and the Appliance Energy Conservation Amendments of 1988 (P.L.

100-357). Note that although Law 95-619 required standards, the U.S. Department of Energy never issued them. Action has only begun with Laws 100-12

and 100-357. The 13 products covered are: 1) refrigerators and freezers, 2) room air conditioners, 3) central air conditioners and heat pumps, 4) water

heaters, 5) furmces, 6) dishwashers, 7) clothes washers, 8) clothes dryers, 9) direct space heating equipment, 10) kitchen ranges and ovens, 11) pool

heaters, 12) television sets, and 13) fluorescent lamp baltasts. Other products can be included at the discretion of the Secretmy of Energy. See: U.S.

Department of Energy, Technical Support Document: Energy Conservation Stanaivdsfor Consumer Products: Refrigerators, Furnaces, and Television

Sets, report No. DOE/CE-0239 (Washington R : U.S. Department of Energy, November 1988); and U.S. Department of Energy, Technical Support

Document: Energy Conservation Standards for Consumer Products: Refiigerarors and Furnaces, report No. DOE/CE-0277 (Washington DC: U.S.

Department of Energy, November 1989).

TZEfficiency ra~gs formfngerator/freezers me no~y cited in the United States in terms of the rdrigmators adjusted volume, @ven bY ‘e ‘O1we

of interior refrigerated space plus the 1.63 times the interior volume of the freezer compartment. The refrigerator/freezer cited here has unadjusted volume

of 20.8 cubic feet (590 liters).

73u s Dep~ment of Enerm, Technlcai Supporr Document.. Energy conse~ation Standards for Consumer Products: Refrigerators and Furrraces,

. .

op. cit. footnote #71.
Chapter 3-Energy Services: Residential and Commercial ● 75

Table 3-1 l—Progress in Improving the Efficiency of

Appliances Produced in Korea

Refrigerator Room AC Color TV

200 liter 7,100 Btu/hr 14 inch

Year (kWh/year) (Btu/hr-W) (W)

1980 . . . . . .

1981 . . . . . .

1982 . . . . . .

1983 . . . . . .

1984 . . . . . .

1985 . . . . . .

1986 . . . . . .

1987 . . . . . .

672

456

336

312

288

264

240

240

7.6

7.8

8.4

9.0

11.0

11.3

11.3

11.3

82

69

55

57

54

56

62

60

SOURCE: Stephen Meyers et al., “Energy Efficiency and Household

Electric Appliances in Developing and Newly Industrialized

Countries,” Lawrence Berkeley Laboratory, report No. LBL29678, December 1990.

sales73—that does not use ozone damaging (CFCS)

74

(CFC-11, CFC-12) are listed in table 3-12 and

shown in figure 3-13.75 Although this refrigerator is

larger and has more features than those typically

found in developing countries today, it will nevertheless be used here to demonstrate the potential of

energy efficiency improvements because: the size

and variety of features in refrigerators used in

developing countries is increasing and will likely

continue to increase in the future; and the relative

impact of different technical options to improve

refrigerator performance is similar.

The cost of this model refrigerator increases

slowly as its efficiency is improved. Between the

baseline-Technology A—and Technology H, for

example, the energy consumption of the refrigerator

decreases by one-third while its U.S. retail cost

increases by just 12 percent. For consumers, this

modest increase in cost nevertheless appears to be a

very large barrier in practice. Studies of appliance

purchases in the United States have shown that

consumers behave as if there was a discount rate on

refrigerators (and other consumer goods) of more

than 60 percent.76 That is, consumers do not buy

Table 3-1 2—Description of Refrigerator/Freezer

Technology Levels

Level Description

A

B

c

D

E

F

G

H

I

J

K

Baseline-1 8 ft3(20.8 ft3 adjusted volume) refrigerator/

freezer, side wall insulated with 2.2 inches foam in

freezer, 1.9 inches foam in refrigerator; door insulated with 1.5 inches foam in freezer and 1.5 inches

fiberglass in refrigerator; back insulated with 2.2

inches foam; Features include improved thermal

seal gasket, antisweat switch, 4.5 EERa compressor, bottom-mounted condenser, auto-clef rest timer,

10 W evaporator, and 13.5 W condenser fans.

Baseline-Level A plus enhanced evaporator

Level B plus Door Foam Insulation

Level C plus 5.05 EER Compressor

Level D plus 2 inches door insulation

Level E plus more efficient evaporator and

condenser fans

Level F plus 2.6 inches/2.3 inches side

insulation and 2.6 inches back insulation

Level F plus 3.0 inches/2.7 inches side

insulation and 3.0 inches back insulation

Level F plus evacuated panel (K=O.055)

Level I plus two compressor system

Level J plus adaptive defrost

a EER is the Energy Efficiency Ratio measured in terms of BTU/hr cooling

output divided by watts of electrical power input.

SOURCE: Technical Support Document: Energy Conservation Standards

for Consumer Products: Refrigerators and Furnaces (Washington, DC: U.S. Department of Energy, November 1989) publication DOE/CE-0277.

more efficient refrigerators unless the energy saved

pays for its higher first cost in less than about one

and a half years, providing a net savings to the

consumer for the rest of its typical 20-year life.77

Indeed, consumers may often not even consider

energy savings and may rarely actually compute the

potential payback of more efficient models. In

developing countries, higher first costs may prove to

be an even larger barrier in practice, due to the lack

of cash or access to credit.

Every time a consumer purchases a refrigerator,

however, he or she commits the nation as a whole to

a large investment in upstream power generation,

transmission, and distribution equipment.78 PurT4L.E, Manzer, “The CFC-Ozone Issue: Progress on the Development of Alternatives to CFCS, ” Science, vol. 249, July 6, 1990, pp. 31-35.

75~s ~n~ysls is based on Dep~me~t of Energy stand~d re~geration t~fig procedures and simulations. There Me iIldiCatiOIIS bt I.heSe teSdKlg

procedures overestimate the usc of electricity in actual practice by 20 to 25 percent. This suggests that allocations of electricity use in residences may

give too much weight to refrigerators and seriously underestimate certain other uses. See, for example: Michael Shepard, et al., The Stare o~the Ar~:

Appliances, (Snowmass, CO: Rocky Mountain Institute, August 1990).

TGHe~ Ruderman, Mark D. Levine, James E. McMahon, ‘‘The Behavior of the Market for Energy Efficiency in Residential Appliances Including

Heating and Cooling Equipment, “ Errergy Journal, vol. 8, No. 1, January 1987, pp. 101-124; Harry Chernoff, ‘‘Individual Purchase Criteria for Energy

Related Durables: The Misuse of Life Cycle Cost, ’ Energy Journal, vol. 4, No. 4, October 1983, pp. 8 1-86; Malcolm Gladwell, “Consumers’ Choices

About Money Consistently Defy Common Sense, ’The Washington Post, Feb. 12, 1990, p. A3.

77 Avemge llfet~es for refrigerators in the United States we 19 ye.ars. See: U.S. Department of Energy, Technical Support Document.” Energy

conservation Standards for Consumer Products.” Refrigerators and Furnaces, op. cit., footnote #71.

78Note t~t this applic5 Prlmily t. Where new ~ves[men[s must be ~de or exisfig quipment is being retired and must be replaced.
76 ● Fueling Development: Energy Technologies for Developing Countries

chasing an inefficient refrigerator at a slightly lower

cost to the consumer commits the nation to a larger

investment in utility equipment. The total capital

investment required per refrigerator is shown in

figure 3-13. Although the cost to the consumer for

the refrigerator increases, the total capital cost

including the cost of electricity generating equipment decreases through technology “I’ and remains

slightly lower for the most efficient technology

considered than for the baseline technology-which

is still better than the technology found in most

developing countries.

Similarly, the total operating cost to consumers

(including the discounted first cost of the refrigerator

and the cost of electricity) decreases steadily as the

efficiency of the refrigerator is increased (see figure

3-1 3). Thus, purchasing the most efficient refrigerators examined here saves the consumer money over

the lifetime of the appliance and saves the Nation

both initial capital investment and fuel costs to

power the refrigerator. This can free capital for

investment in other critical development needs.

Yet further improvements are possible. The improvements listed in table 3-12 were chosen based in

large part on whether or not U.S. appliance manufacturers could implement them in a 3 year period-by

1992/93. Over a longer time span, additional cost

effective improvements may be possible.79 In fact,

more efficient commercial designs have already

been developed. One U.S. company80 now makes

and commercially sells in small lots a refrigerator/

freezer (18.5 ft3 adjusted volume) that uses just 280

kWh/yr 81--just over half the energy used by the

most efficient design listed in table 3-12 and figure

3-13 (costs are high, however). Further improveFigure 3-13A—Retail Costs and Energy

Consumption for Technology Improvements

in Refrigerators

Refrigerator Energy

10002$ -

800 ~

600 i

400

200

o-I

A

\Energy consumption

.

‘——___ .-

-—. .—

consumption,

kWh/yr

‘T ’0 0 0

I

/’”.. 1 600 —-——— ‘ . - —–-— -— 1

‘=-_——

Projected developing-country retail cost

(100% retail markup from factory cost) 400

200

T— –T— .–T ~–––—– —. , —––. ~ , 0

B C D E- F G H I J K

Technology

Projected developing country retail costs are assumed to be

marked up by 100-percent from the factory cost for each

technology. This 100 percent markup is somewhat lower than the

retail markups assumed by Lawrence Berkeley for the United

States, but was chosen to be more representative of retail

overheads in developing countries. Retail costs do not include any

additional markup for taxes or tariffs.

SOURCE: See table 3-12 and app. A.

ments are also possible using better insulation—

including various types of vacuum insulation,82

electronic adjustable speed drives,83 and other changes.

Much of the potential improvement in refrigerator

performance can be achieved without resorting to

high efficiency motor/compressor systems.84 This is

of interest in developing countries where large

voltage fluctuations may limit the use of high

efficiency motors.

7gsm, forewple: David B. Goldstein, peter M. Miller, and Robert K. Watsou ‘Developing Cost Curves for Consumed Energy in New Refrigerators

and Freezers: Demonstration of Methodology and Det.ailed Engineering Results, ’ Natural Resources Defense Council, San Francisco, CA, and American

Council for an Energy Efficient Economy, Washington DC, Jan. 15, 1987.

SOSU Frost Co.,~a~, CA, cited in Michael Shephard et al., The State of the Art: Appliances (Snowmass, CO: Rocky MomtitiKI ~stitUte, AuWst

1990).

81Note tit ~s is he ~ompmy tat pr~~w-not tie s@n&d Dep~ent of Energy tat pr~~m~for 70 % ambient temperat~es; at a high

90 OF ambient temperature, the energy consumption is 365 kWh/yr. The refrigerator is also not strictly comparable to the other ones listed because it

is manual rather than automatic defkxt.

82Extensive rese~h is now be@ done on soft vacu~ p~els con-g powder, ~rogels,~d tid vacuum panels, among OdlerS. see, fOr eXUIlple,

Michael Shepard et al. The State of the Art: Appliances (Snowmas s, CO: Rocky Mountain Institute, August 1990).

BSS. zub~, V. B~el, and M. Arshad, ‘capacity Control of Air Conditioning Systems by POWer~vWerS, “Energy,vol. 14, No. 3,1989, pp. 141-151.

Msee: us, Dep~ment of ~era,t=~c~ support d~~~~ ‘ ‘Energy Conservation S@da,rds for consumer Products: Refrigerators, ~XIXti,

and Television Sets, ’ report No. DOE/CE-0239 (Washington DC: U.S. Department of Energy, November 1988); and U.S. Department of Energy,

technical support documen~ “Energy Conservation Standards for Consumer Products: Refrigerators and Furnaces, ” Report No. D03XE-0277

(Washingto% DC: U.S. Department of Energy, November 1989); and David B. Goldsteb Peter M. Miller, and Robert K. Watso% “Developing Cost

Curves for Conserved Energy in New Refrigeratons and Freezers: Demonstration of Methodology and Detailed Engineering Results,’ Natural Resources

Defense Council, San Francisco, CA and American Council for an Energy Efficient Economy, Washington DC.
Chapter 3-Energy Services: Residential and Commercial ● 77

Figure 3-13B—Refrigerator Retail Cost, Utility

Capital Investment To Power the Refrigerator,

Total System Capital Investment, and Total

Annual Operating Costs for Different

Refrigerator Technologies

Annualized cost, $

150 ‘-- ‘

- ‘--- -

- 

–

-.. . .

100

50

I oral annual operating costs

Total refrigerator system capital investment — — — ,~”

,,- -—-

Refrigerator cost ——,.- -“

—— -.—- - —

, –— -———. - Utility capital investment — -———=. —

04 .T

ABC DE FGHI JK

Technology

This diagram shows that the total capital cost-including both the

retail cost of the refrigerator in the developing country and the

capital cost of utility investment in generation, transmission, and

distribution equipment--decreases slightly with more efficient

refrigerators until technology “E” is reached, whereupon it

increases slightly. Technology “A” represents a more efficient

refrigerator than most of those now sold in the U.S. market. Total

annual operating costs, including the annualized capital cost of

the refrigerator and the cost of electricity to power it, decrease with

more efficient technologies until Technology “l” is reached. The

total annual operating cost even with the most efficient and

expensive refrigerator, technology “K", however, is substantially

lower than that for the baseline technology ‘(A”.

SOURCE: See app. A.

In this situation, electronic adjustable speed

drives (ASDs) (see ch. 4) offer several additional

opportunities, particularly as advances increase their

reliability and reduce their cost. First, the ASD could

be used to buffer fluctuations in line frequency and

voltage and allow higher efficiency motors/

compressors to be used. Second, if standard protocols can be agreed on, these ASDs could, at little

additional cost, be programmed to be controlled by

high frequency signals sent by the utility over the

power lines or by other means. The utility, for

example, might use this technique to cycle off a

certain fraction of the refrigerators for short periods

Table 3-13-Commercial Refrigeration Efficiency

Improvements

Technology Energv savings

Glass doors . . . . . . . . . . . . . . . . . . . . . . . . . . 40-50%

Strip curtains ... , . . . . . . . . . . . . . . . . . . . . . 10-20% and more

Parallel unequal compressors . . . . . . . . . . . 13-27%

Variable speed compressor control . . . . . . . NA

Evaporative pre-coolers . . . . . . . . . . . . . . . . 8-1 1% depending

on climate

floating head pressure control . . . . . . . . . . 2-15%

SOURCE: A. Usibelli et. al., “Commercial-Sector Conservation Technologies,” Lawrence Berkeley Laboratory Report No. LBL-18543.

in order to prevent blackouts or brownouts when

large utility generating plants failed or peak demand

was excessive. Such techniques are already in use in

the United States with air conditioners and have

proven cost effective even with retrofits. If such

systems could be built into new refrigerators at little

or no cost, this might be a useful means of improving

power reliability in developing countries.85

Large cost-effective reductions in energy consumption are also possible with commercial refrigerators, particularly in the retail food industry. The use

of glass doored rather than open refrigerator cases;

improved glass doors and door seals (and the

subsequent elimination of antisweat heaters); improved compressors; improved display lighting; and

other improvements can significantly reduce electricity consumption (see table 3-13). Improvements

primarily in the compressors of grocery store refrigeration systems alone have demonstrated overall

electricity savings of about 23 percent and reduced

peak demands by 30 percent.86

SPACE CONDITIONING

Space conditioning includes heating, cooling, and

ventilating residential and commercial buildings in

order to create more comfortable conditions. Space

heating is important only in a few colder or

mountainous areas in developing countries. An

example is Northern China: nearly one-fifth of

China’s total annual coal and 5 percent of China’s

annual biomass consumption is used for space

heating.87 Residences rarely have any insulation and

sss~uel F. Baldwin, ‘ ‘Energy Efficient Electric Motor Drive SystemS, ” Electricity: Eficient End Use and New Generation Technologies, and Their

Planning [mplicafi’ons (Lund, Sweden: Lund University Press, 1989).

86D,H. w~ker ~d G.1. De~g, Super~rkefRef~”geration Modeling andFie/dDe~ns~afion, Rport No. CU-6268, (pa10 Alto, CA: Electric Power

Research Institute, 1989).

s7Vaclav Smil, “China’s Energy, ” contractor report prepared for the Offke of Technology Assessment, 1990.
78 ● Fueling Development: Energy Technologies for Developing Countries

often have large gaps around doors and windows.88

Indoor temperatures in these homes are controlled

not by a thermostat or by comfort requirements, but

by fuel supply—and fuel, though cheap, is scarce. In

Kezuo county, Northeast China, for example, average indoor temperatures are near the freezing point

during the winter, compared to average outdoor

temperatures of –3 °C to –5 oC with lows of –25 °C.

Additions to coal supply, more efficient stoves, or

better wall insulation would thus result mainly in

comfort improvements and not in energy savings.

Many developing countries have temperate climates year around that require little space heating or

cooling. In Latin America, examples include Mexico

City, Sao Paulo, Caracas, and Buenos Aires.89

Nevertheless, large amounts of electricity may still

be used for ventilation in the commercial buildings

that use mechanical ventilation systems. Even with

Sao Paulo’s temperate climate, for example, roughly

20 percent of the total electricity use in all commercial buildings is for air conditioning; when buildings

with central air conditioning are considered alone,

air conditioning accounts for half of energy use.90

Proper design of the air handling system—fans,

ducts, controls, etc.—and careful choice of components can substantially lower both capital investment and/or energy consumption in these systems .91

These issues are examined in chapter 4 within the

broader context of electric motor drive systems.

In hotter climates, air conditioning systems are

desirable but are now found only in the highest

income households in developing countries.92 In

contrast, most people in the United States who need

it have air conditionering and, on a national average

(including cool regions and buildings without air

conditioning), use about 1,400 kWh per person per

year to cool residential and commercial buildings.93

Figure 3-14—Appliance Ownership in South Korea

Units per 100

160 ---— —–––

1404

2 0

o ’

1-

1975

A TV

,-} Fan

households

1980 1985

Calendar year

Refrigerator +

* Air +,.

{J

- d“.

- - -t

.

-4

J

1990

Clothes washer

Rice cooker

conditioner

This figure shows the rapid increase in ownership of various

appliances in Korea.

SOURCE: S. Meyers et al., “Energy Efficiency and Household Electric

Appliances in Developing and Newly Industrialized Count ries,”

Lawrence Berkeley Laboratory, LBL-29678, December 1990.

The use of air conditioning or other cooling

techniques is likely to grow rapidly in importance in

most developing countries,94 and may eventually

dominate electrical energy use in the residential/

commercial sector in the hottest and most humid

countries. Already, active space ventilation by

electric fans has become popular in many areas

where there is reliable electric service and costs are

affordable. In Korea, household fans have increased

rapidly in number to the current level of 1.5 per

household (see figure 3-14). Electric fan ownership

in Beijing, China jumped from 47 percent of

sgRobert M. Wiflshafter, ‘ ‘Energy Conservation Standards for Buildings in -,’Energy, vol. 13, No. 3, 1988, pp. 265-274; Robert M. Wirtshafter

and Chang Song-ying, ‘‘Energy Conservation in Chinese Housing, ’Energy Policy, April 1987, pp. 158-168.

89 Andrea N. Kctoff and Omar R. Masera, “Household Electricity Demand in Latin America, ”American Council for an Energy Eficient Economy,

1990 Summer Study on Energy Eficiency in Buildings (Washingto~ DC: American Council for an Energy Efficient Economy, 1990),

~Howard S. Geller, op. cit., footnote 46.

91J. B~ie Graham, “AirH~dling,’ Technology Menu for Efj?cient End Use of Energy: Volume I, Movement of Material, Environmental and Energy

Systems Studies, Lund University, Lund Sweden, 1989.

92Jayant sa~ye and Stephen Meye~t ‘ ‘Energy Use in Cities of the Developing Countries,“ Annual Review of Energy (Palo Atto, CA: Annual

Reviews, Inc., 1985)

gJAdapted from Paul D. Holtb~rg, et ~., Ba~~line projection Data Book: ]99] Edition of the GRI Baseline Projection of U.S. Energy SUpply ad

Demand to 2010, Gas Research Institute, Washington, DC 1991.

~A1l 50 of~e hottest cities in tie world we in tie develop~gwor]d+e hottest is Djibouti, with an average WMNMI high temperature of 113 ~. None

of the 50 coldest cities in the world are in the developing world (V. Showers, World Facts and Figures New York NY: John Wiley and Sons,

1979]).
Chapter 3---Energy Services: Residential and Commercial ● 79

households in 1981 to 77 percent in 1984.95 Households are effectively restrained from using electric

air conditioning, however; electricity tariffs increase

sharply for usage sufficient to support an air

conditioner.

96 On the other hand, one-in-five households in Rio de Janeiro, Brazil, now has an air

conditioner and typically uses 600-800 kWh/yr. In

coastal Mexico, those with air conditioners typically

use about 1,800 kWh/yr due to the long cooling

season and the low efficiency of their systems.97 In

Thailand, air conditioning is projected to become the

dominant demand over the next decade (see table

3-14).

In hot/humid climates with low quality construction of homes, electricity use for air conditioning can

be much greater than these estimates if the desire for

cooling is to be fully satisfied. A study of uninsulated concrete block homes in southern Florida

found an average of nearly 8,200 kWh used per year

for cooling, or 4.14 kWh per square foot of living

space in the house. 98 Uninsulated concrete block

construction is common in much of the developing

world,

There are a variety of ways that ventilation/

cooling needs can be met. First, external heat gain by

the building can be minimized. Shade trees; 99

awnings that allow windows to receive indirect light

but minimize the entry of direct sunlight that would

heat the room; l00 exterior or interior shades; reflective or tinted coatings101 on windows;102 insulated

Table 3-14—Estimates of Electricity y Consumption,

Bangkok

Annual

Power Usage consumption

Appliance (w) (hours) (kWh)

Color TV . . . . . . . . . . . 79 2,014 159

Refrigerator . . . . . . . . . 109 5,760 628

Rice cooker . . . . . . . . . 1,149 230 264

Clothes washer . . . . . . 1,567 91 143

Air conditioner:

Window . . . . . . . . . . 1,815 1,442 2,617

Central . . . . . . . . . . 2,257 1,564 3,530

Ceiling fan . . . . . . . . . . 77 2,061 159

Water heater . . . . . . . . 4,418 54 239

SOURCE: Load Forecast Working Group, 1989, Thailand, as cited in:

Stephen Meyers et al., “Energy Efficiency and Household

Electric Appliances in Developing and Newly Industrialized

Countries,” Lawrence Berkeley Laboratory, report No. LBL29678, Decemkr 1990.

windows; 103 light colored roofs; roof sprays; and

wall and roof insulationl04 can each cut building heat

gain. Natural ventilation and use of the ground for

cooling can also be effective.

Many of these techniques are used in traditional

building styles and have proven highly effective.105

Increasing urbanization and the use of commercial

building materials have made some of these traditional practices less practical and less popular,

however. Cramped urban areas often have fewer

shade trees and less opportunity for natural ventilation, while suffering higher temperatures due to the

urban ‘ ‘heat island’ effect. Sheet metal has often

95J, Satiyc, A. Ghirardi, and L. Schippcr, “Energy Demand in Developing Countries: A Sectoral Analysis of Recent Trends,” Annual Re\’iew of

Energy (Palo Alto, CA: Annual Reviews, Lnc., 1987), pp. 253-281.

‘J. Sathaye et al., “An End Use Approach to Development of Lxmg Term Energy Demand Scenarios for Developing Countries, ” report No.

LBL-25611 (Berkeley, CA: Lawrence Berkeley Laboratory, February 1989). Prices increase several times for usage above 80-100 kWh/month.

gT~drea N. Ketoff and Omar R. hhera, “Household Electricity Demand in Latin America, ” ACEEE 1990 Summer Study on Energy Eficiency in

Buildings (Washington+ DC: 1990).

~8Damy S. Parker, ‘ ‘Monitored Residential Space Cooling Electricity Consumption in a Hot Humid Climate: Magnitude, Variation and Reduction

From Retrofits,” ACEEE 1990 Summer Study on Energy Eficiency in Buildings (Washingto% DC: 1990).

W.S. Department of Interior, National Park Service, Plants/People/undEnvironmental Quality, (Washington DC: U.S. Government Printing Office,

1972).

looAlad~ Olaay and Victor Olgyay, So/ar Con~o/ ad Shading f)~ices, (princeto~ NJ: Princeton U~verSl~ P1’eSS, 1957).

10 IOtiercoatings ofp~lcula interest Me spec~~ly selective coa~gs tit allow visible fight to enter but keq infrared light out; photocbomic COatingS

(like sunglasses) that become darker as light intensity increases; therrnochromic coatings that become darker as temperatures increase; and

electrochromic coatings whose transrnissivity can be adjusted using an applied voltage.

lo~claes Goran Graqvist, *‘Energy Efficient Windows: Options with present and Forthcoming Technology, ‘‘ Electricity: Efi”cient End Use andNew

Generation Technologies, and Their Planning Implications (Lund, Sweden: Lund University ?kss, 1989).

103 Ashok Gadgil et al., “Advanced Lighting and Window Technologies for Reducing Electricity Consumption and Peak Demand: Overseas

Manufacturing and Marketing Opportunities, ’ report LBL-30389 (Berkeley, CA: Lawrence Berkeley Laboratory, Mar. 29, 1991).

104~sulat10n must be Si=d s. fiat it op~es the tiadeoff between g aining heat from outside versus losing internal heat to the outside.

IOsLim Jee Yuan, “Traditional Housing: A Solution to Hopelessness in the Third World: The Malaysian Example,” The Ecologist, vol. 18. No. 1,

1988, pp. 16-23; Mehdi N. Bahadori, “Passive Cooling Systems in Iranian Architecture, ’ Scientific American, vol. 238, 1978, p. 144-154; R.K. Hill,

‘‘Utilization of Solar Energy for an Improved Environment Within Housing for the Humid Tropics,’ Division of Building Research, CSIRO, Victoria

Australia 1974.
80 ● Fueling Development: Energy Technologies for Developing Countries

replaced thatch in urban as well as many rural

areas-it is more durable, but also leads to higher

interior temperatures. Good design in residential as

well as in commercial construction can capture the

cooling benefits of the above techniques while

providing the durability and performance of modern

construction materials. Simulation studies of good

commercial building design in Brazil found that air

conditioning electricity use could be reduced 60 to

75 percent by the use of these and other design

features compared to conventional buildings.106

Even retrofits can be highly cost effective in some

cases. Putting reflective plastic film on windows to

cut heat gain, for example, can pay for itself in some

climates in less than 2 years.107

Second, internal heat gains could likewise be kept

low. This is accomplished in part by using the most

energy efficient appliances-lights, refrigerators,

ventilation fans, electronic equipment. Each unit of

energy saved by using more efficient appliances can

also reduce cooling energy requirements-where air

conditioning is used—by 0.2 to 0.4 units of energy.

Third, high efficiency mechanical cooling equipment can be used. Variable-pitch fans and variable

speed motor drives can increase the efficiency of

ventilation equipment by one-third.108 Direct and

indirect evaporative coolers and absorption chillers

can also be effective in some climates. Air-to-air

heat exchangers can reduce heat loss/gain of ventilation air brought in from outside.l09 Gas fried

absorption chillers and engine driven chillers can be

useful on large buildings.

Conventional electric powered air conditioning

equipment is also increasing in efficiency and

becoming more widely available. Between the late

1970s and mid- 1980s, air-and water-cooled centrifugal chillers in the United States improved their

energy efficiency ratings from averages of 7.5 to a

Figure 3-15A—Annualized Consumer, Utility, Total,

and Consumer Operating Costs for Different Levels of

Air Conditioner Efficiency Rating (SEER)

Annualized cost, $

1,200 ‘-

T ‘

‘-—7

I

1,000 ‘- ‘ ----- Annual operating cost

800<

600 ~-—.— Annualized total system capital cost

I

~—..——. AI

400 & _- Annualized consumer capital cost I

---

‘~ N

2 0 0“-–-—- -

----– -‘- ‘r~—– j

Annualized utility capital cost ‘1

0 +–- ——-,-—---——--- -— -- —7 —–————––~

6 8 10 12 14

Air conditioner efficiency rating, SEER

This figure shows that the annualized cost of more efficient air

conditioners increases for consumers but the corresponding

annualized cost of utility generation, transmission, and distribution

equipment to power these air conditioners falls a little faster for the

assumed intensity of use. The total annual operating costs for the

consumer decrease substantially with the more efficient air

conditioner.

SOURCE: See app. A for the 8,000 kWh annual cooling power case.

best of 10 and from 13 to a best of 17-19, respectively. 110 Electronic adjustable speed drive systems have proven very effective in air conditioning

units, reducing energy use by 25 percent over

conventional fixed speed systems. Adjustable speed

AC systems now account for over half the Japanese

air conditioning market with sales of more than one

million units annually. 111 In addition to large energy

savings, advantages of these adjustable speed systems include: better capacity control; better temperature and humidity control; longer lifetime; reduced

maintenance; and others. As discussed above for

refrigerators, the use of an electronic adjustable

speed drive in an air conditioner may also allow the

use of higher efficiency motors where voltage and

106How~d s. Geua, op. cit., footnote 46.

107A west window cm@up t. 200 Btu~ ~r square f~t in tie late ~~n~n. A r~mtive p~tic f“ for windows Cm reduce this hat gdll by

80 percent at a cost of $2.00 per square foot. This saves 23 W of air conditioning power for a system with an SEER of 7.0 (0.8x20W7=23 W). If there

are 3 hours of sun on this window for 6 months of cooling season per year, then it saves 3x182x0 .023kWx$0.09/kWh=$ 1.13/year. Window gain md

costs for plastic f~ from: American Council for an Energy Efficient Economy, “Residential Conservation Power Plant Study: Phase I—Technical

Potential.” op. cit. footnote #27.

IOgS~uelF.Baldw@ “E.nergyEfficientE l~tric Motor Drive Systems, ’ Electricity :EficientEnd Use andNew Generation Technologies, and Their

P/arming Implications (Lund, Sweden: Lund University Press, 1989).

l~wmdVfie, 4 IAir.To-Ak Heat Exchangers and the Indoor Environment, ” Energy vol. 12, No. 12, 1987, pp. 1209-1215.

llOHoward S. Geller, “Commercial Building Equipment Efficiency: A State-Of-The-Art Review, ” contractor report prepared for the Office of

Technology Assessment May 1988.

111s. Zubti, V. B&el, M. Arshad, “capacity Control of Air Conditioning Systems by Power hwerters, ” Energy, vol. 14, No. 3, 1989, pp. 141-151.
— ..——.. -.—

Chapter 3-Energy Services: Residential and Commercial ● 81

Figure 3-15B—Cost Effectiveness of an Efficient

Air Conditioner for Different Levels of

Annual Usage

Annual savings with efficient A/C, $

500 “

400

300

200

100

14/6 -

Annual savings in total operating costs .-

.

/ ‘“

,.. 14/8 “ -

. -

, ,- / ,, 14/6

1

. ., ,,- 14/8 , -

0 “

.< --- . . .

Annual savings in .- ---

-100 + systemwide capital costs,

o 10 20 30

Annual A/C capacity utilization, percent

This figure shows that the cost effectiveness-both systemside

capital costs and total (capital plus power) operating costs--of an

efficient air conditioner increases as annual usage increases.

Shown is the comparison of a high efficiency SEER 14 air

conditioner with one that has a low SEER of 6 and one that has an

average SEER of 8. For the high efficiency air conditioner to cease

being cost effective on a Iifecycle basis, it must be used at less

than 10 percent of its annual capacity (this does not directly

translate into annual days of cooling due to air conditioner

cycling). Air conditioner costs do not include taxes or tariffs.

SOURCE: See app. A for parameters.

frequency fluctuations in the power line would

otherwise cause the high performance system to stall

and burn out. Other possible improvements include

larger heat exchangers, improved control systems,

occupancy sensors, and others.112

The range of efficiencies of air conditioners now

available in the United States is quite large, For

room air conditioners, the average energy efficiency

rating (EER) is 8 with a best of 12; for central air

conditioners, the average sold in 1988 had an SEER

(seasonal EER) of 9 with the best on the market at

16.9—nearly twice as efficient as the average.113

High efficiency systems are, or could be, available

in most developing countries. The most efficient

room air conditioner sold in the United States in

1989 was assembled in Brazil using an imported

rotary compressor. If such rotary compressors were

similarly used in air conditioners sold in Brazil, they

could reduce electricity consumption by 20 to 40

percent.

As shown in figure 3-15, the capital cost to

consumers for more efficient air conditioners rises

significantly. From a societal perspective, however,

this increased cost to consumers is usually (depending on the amount of cooling time, etc.) offset by the

decrease in the cost of utility generation, transmission, and distribution equipment needed to power it.

For systems in hot and/or humid areas that operate

more of the year, the total system capital cost

significantly decreases for more efficient systems. 114

The total annual operating cost to the consumer also

decreases for the more efficient system.

Similarly, in the commercial sector, numerous

technologies have been developed to reduce the

energy consumption of space cooling; some of these

are listed in table 3-15.115 Although they do not save

much energy directly, 116 thermal storage systems

can store ‘ ‘cold’ ‘ in building concrete walls, in

water, in ice, or in other media during the night for

use during the heat of the day. This reduces the peak

load on electric utilities, reducing the need for

expensive peaking capacity.

Although improvements in the air conditioner

itself usually reduce capital costs and life cycle

operating costs, building insulation, shading devices, insulating windows, and numerous other

improvements described above can often be even

more cost effective. For example, high efficiency

windows

117 can reduce annual heat gain by a

building in, for example, Thailand by an average of

some 180 kWh per square meter of window at an

1 Izstephcn Meyerset al., ‘‘EnergyEfficiency and Household Electric Appliances in Developing and Newly Industrialized Countries,’ draft report No.

LBL-29678 (Berkeley, CA: Lawrence Berkeley Laboratory, October 1990).

113~encm COWC1l for an Energy Efficient fionomy, The Most ~~e~gy ~ficie~f Appfia~ces: I$l@ fO 1990 Edition ~ashingto~ ~: AnleriCtUl

Council for an Energy Efficient Economy, 1990).

1 lqNote tit ~s ~lted decr~~e in ~a~it~ cost ~i~ operating time is based on the ~ghly co~e~ative assumption hat tie Capital COSt Of e]&tfiCity

generating equipment is considered only when it is being used to power the air conditioner, while the capital cost of the air conditioner is fixed irrespective

of operating time. See app. A at the back of this report for details.

115A. Usibelli et al., “Commercial Sector Conservation Technologies, ” report No. DE-AC03-76SFOO098 (Berkeley, CA: Lawrence Berkeley

Laboratory, February 1985); American Gas Associatio~ “1988 Commercial Gas Cooling Fact Sheet and Market Assessment Summary,“ issue brief

1988-15 (Arlington, VA: Nov. 4, 1988).

I ICIII fact, hey could increase total energy consumption.

1 IT~gon filled, spec~~ly selective double pane window.
82 ● Fueling Development: Energy Technologies for Developing Countries

Table 3-15-Commercial Space Cooling Equipment Technologies

Percent reduction in

Technology cooling energy demand

High efficiency mechanical cooling

Small, air cooled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Water cooled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Absorption chiller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part load COP improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gas fired absorption chillers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , .

Adjust evaporator/condenser temperatures. . . . . . . . . . . . . . . . . . . .

Outside air economizers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Direct and indirect evaporative cooling . . . . . . . . . . . . . . . . . . . . . . .

Cooling tower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Off peak ice/chilled water storage . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Mass storage and night venting. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dessicant cooling systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Roof insulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Light-colored roofs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Roof-spray cooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Heat removing light fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Air-to-air heat exchangers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20-50

10-25

10-50

15-30

100

3-1o

15-80

5-50

0-1o

0

NA

NA

NA

NA

NA

NA

NA

of electricity

depending on climate

depending on climate

but reduces peak load

Percent reduction in

Technology ventilation energy demand

Variable air volume systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-80

Fan shutoff during unoccupied hours . . . . . .,, ......,, .. .,,,,. 60

Motion/sensor control of ventilation . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-40

Energy efficient motors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-11

Variable speed electronic motor drives . . . . . . . . . . . . . . . . . . . . . . . 10-40

NA =Not available.

SOURCE: A. Usibelli et al., “Commercial-Sector Conservation Technologies:’ Lawrence Berkeley Laboratory,

LBL-18543, February 1985.

incremental cost of $7 per square meter, compared

to conventional uncoated single pane glass. For

typical air conditioner efficiencies, this avoids the

use of 60 kWh of electricity per year for cooling.118

Corresponding annualized capital costs are an incremental $0.56 for the high efficiency window, which

is offset by a four times greater capital savings of

$2.20 in reduced investment in utility generation,

transmission, and distribution equipment, not including the smaller air conditioner this makes

possible. Similarly, building insulation can be extremely cost effective.119

ELECTRONIC EQUIPMENT

Electronic equipment has become a significant

consumer of power in the commercial sector of

industrial countries in recent years as personal TUs

computers, photocopiers, facsimile machines, and

others have gained importance. Studies in the United

States have found miscellaneous loads on receptacles within offices—primarily due to the use of

various types of electronic equipment-to range

from 9 to 24 W per square meter of office floor space

(W/m2) with an average of 17 W/m2. The corresponding power demand for lighting was 19 W/m2

.

A second case study in the United States found

lighting loads in an office building to average 16

W/m2 from 8am to l0 pm during weekdays and drop

to near zero at night and on weekends, while office

equipment averaged 12 W/m2 during the day, but

only dropped to 6 W/m2 at night and on weekends as

much of it was left on—usually unnecessarily. A

study in Australia similarly found a range going as

high as 66 W/m2 with an average of 15 W/m2

.

120

Electronic equipment such as televisions and stereos

are also important end uses for electricity in the

home. Although the corresponding demands for

power by electronic equipment are currently far

lower than this in developing countries, these loads

118Ash& Gadgil et d., “Advanced Lighting and Window Technologies for Reducing Electricity Consumption and Peak Demand: Ovemas

Manufactiuing and Marketing Opportunities, ’ report No. LBL-30389 (Berkeley, CA: Lawrence Berkeley Laboratory, Mar. 29, 1991).

119sec, for ~xaple: Kuwait ~sti~te for Scientilc Res~cb Econo~”cs Of Tfier~/ I~U/atiO~ in Hof climates @uWait, AUgUSt 1982).

1zOL. Norford et ~., ‘‘Electricity Use In Information Technologies, “ Anrmal Review of Energy, vol. 15, 1990, pp. 423-453.
Chapter 3-Energy Services: Residential and Commercial ● 83

Table 3-16-Energy Use by Display Technologies

Approximate power demand

Display watts/cm 2

Monochrome CRTs . . . . . . . . . . . . . . . . . . . . 0.06

Color CRTs . . . . . . . . . . . . . . . . . . . . . . . . . . 0.13

LCD, nonbacklit . . . . . . . . . . . . . . . . . . . . . . . 0.004

LCD, backlit . . . . . . . . . . . . . . . . . . . . . . . . . . 0.03

Electroluminescent . . . . . . . . . . . . . . . . . . . . 0.02

Plasma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.02

SOURCE: L. NorfordeL al., ”Electricity Useln Information Technologies:’

Annua/ Rew”ew of Energyr vol. 15, pp. 423-453, 1990; Michael

Shepard, “The State of the Art: Appliances, ” Rocky Mountain

Institute, Snowmass, CO, 1990,

can be expected to markedly increase in the future.

Appropriate planning in developing countries for

efficient electronic equipment now could save

substantial capital investment in the electric supply

sector in the future.

Electronic equipment is usually chosen on the

basis of performance and cost rather than on its

electric power requirements. In recent years, however, the proliferation of high performance, low

power equipment such as laptop computers makes it

possible to also consider energy consumption when

choosing electronic equipment. The power requirements of this equipment is substantially reduced

through a variety of means—the use of CMOS 121

integrated circuits, liquid crystal displays (see table

3-16), and various power management techniques.

Measured electric power consumption for some of

the most popular types of electronic equipment are

given elsewhere.122

A variety of energy efficiency improvements in

electronic equipment may quickly pay for themselves--

both from the society perspective of systemwide

capital investment and from the consumer perspective of life cycle cost. Improvements in the energy

efficiency of TVs in South Korea is shown in table

3-1 1; cost and efficiency data for modest efficiency

improvements in color TVs in the United States are

shown in tables 3-17 and 3-18. Table 3-18, for

example, shows that a 2-percent increase in factory

unit costs of more efficient color TVs can yield

energy savings of up to 17 percent, Corresponding

calculations of systemwide capital and life cycle

costs are shown in appendix A.

Much larger improvements may be possible. For

example, laptop computers use less than one-tenth

the power of desktop machines. Although the

current premium of as much as $500 or more for a

laptop compared to a desktop could only be justified

on the basis of systemwide capital costs or life cycle

costs if the machine were left on virtually 24 hours

per day123 (as some offices do), many of these energy

saving design features could be incorporated into a

desktop machine at much lower costs. Timers or

occupancy sensors could also reduce this energy

consumption significantly.

BARRIERS TO CONSUMER

PURCHASE OF’ ENERGY

EFFICIENT APPLIANCES

Energy efficient appliances are often highly cost

effective: their higher initial cost is more than offset

by lower electricity bills over their lifetime. Further,

the higher initial cost of efficient appliances to

consumers ignores the upstream cost savings in

capital equipment to generate the power needed to

operate them. From a system and societal perspective, energy efficient appliances often cost less in

capital and less to operate. Yet consumers frequently

fail to take advantage of these opportunities. A

variety of reasons for this have been summarized in

table 3-5; a few of these issues are presented

below: 124

●

●

●

Consumers may not have access to information

about the costs and benefits of energy efficiency,

Consumers often do not have market access to

high efficiency appliances.

In many cases, consumers may effectively

require savings of greater than a certain threshold value before they will make the effort to

I 2 l~Mos “,canj~ c~~plemcntq Metal Oxide semiconductor

122L. Norfotd ct al., ‘ ‘Electricity Use In Information Technologies, ’ Armud Rc~’ie}t’ of Encr<qy, vol. 15, 1990 pp. 423-453.

l~~For exmple, ~omp~lng ~ laptop ~om~umlng 16 W to a desktop AT computer using 166 W, the difference in Power cons~Ption ‘f 150 w‘s an

annual upstream capital cost of about $50 and an annual electricity consumption of $120. Over a 5 year period at a 7-pereent real discount rate, these

costs k~vc a present value of about $700, or $200 more than the premium on the typical namcbrand laptop today.

1 Msourccs: u S, Deptimcnl of Encrn Te[.hnic.a/ S14pp[jrl D()<14nlenl. Energv Conser\ralion Srandurdsfhr Consumer produ~-ts.” ‘cfri&’eratOrs and

Furnaces, report No, DOE/CE-0277 (ff~ashington, DC: U.S. Government Printi& Office, November 1989). Henry Ruderrmn, Mark D. Izvinc, and

James E, McMahon, “The Behavior of the Market for Energy Efflcicncy in Residential Appliances Including Heating and Cooling Equipment, ’ The

Ener,qj .lournal, vol. 8, No, 1, January 1987, pp. 101- 124; Malcolm Gladwcll , $ ‘The Washington Po.Yr, Feb. 12, 1990, p. A3.
84 ● Fueling Development: Energy Technologies for Developing Countries

●

●

●

Table 3-17—Power Demand by Color TVs

Power (watts)

Size (inches) White Black Standby Annual energy consumption

13’’-14” . . . . . . . . . . . . . . . 69 42 0.0 122 Mechanical off/on

13”-14” . . . . . . . . . . . . . . . 69 48 4.9 161 kWh electronic off/on

19”-20” . . . . . . . . . . . . . . . 100 60 4.4 205

26’’-27” . . . . . . . . . . . . . . . 134 87 6.2 284

SOURCE: U.S. Department of Energy, “Technical Support Document: Energy Conservation Standards for Consumer

Products: Refrigerators, Furnaces, and Television Sets,” National Technical Information Service, Springfield, VA, November 1988, see p. 3%0, table 3-28.

Table 3-18-Cost and Efficiency Data for 19-20 inch Color TV Sets

Level Design option Factory unit cost Energy consumption

o Baseline (100/60W) . . . . . . . . . . . . . . . . . . . . . . $158.00 205 kWhr/yr

1 Reduce standby power to 2W. . . . . . . . . . . . . . $160.15 184

2 Reduce screen power by 5 (93/55W) , . . . . . . . $161.45 176

3 Increase display efficiency (91/53W) . . . . . . . . $161.75 171

Baseline: Electronic tuning with standby power of 4.4 W; white picture/black picture of 100 W/60 W.

SOURCE: U.S. Department of Energy, “Technical Support Document: Energy Conservation Standards for Consumer

Products: Refrigerators, Furnaces, and Television Sets,” National Techniud Information Service, SDnnafield, VA, November 1988, see p. 3~0, table 3-29.

locate and purchase a more efficient appliance.

Individually these savings may be small, but to

society overall they may sum to a very large

benefit. Higher efficiency appliances may also

have an excessively large premium-they might

be loaded with unnecessary extras or be used to

subsidize the cost of less efficient models.

Consumers--even when they are aware of the

advantages of higher efficiency appliances—

tend to be extremely sensitive to the first cost

of an appliance. In developing countries, this

sensitivity to frost cost may be even greater:

consumers may simply not have access to the

additional capital needed for a more efficient

appliance.

Consumers may have their electricity costs

heavily subsidized. On average, the cost of

electricity to consumers in developing countries is just 60 percent of the cost of producing

it.

125

Consumers are often not the ones who purchase

the appliances that they use. The ‘building

contractor or landlord often purchase the appliances used in the building and base their choice

on lowest first cost rather than life cycle

operating costs. Their tenants, not they, must

,-

pay the cost of operating this inefficient equipment.

Consumers do not directly see the high upstream cost of capital equipment to power their

inefficient appliances. While consumers face

high interest rates, utilities can borrow at

commercial (or better) interest rates over typically a 30-year period.

Many consumers purchase secondhand goods

where energy efficiency information is unavailable, and efficiency is not usually considered.

Correspondingly, consumers who plan to sell

their used appliances, knowing that they cannot

get a premium for a more efficient appliance,

may initially choose a less efficient design.

Together, these market failures or inefficiencies

pose a powerful barrier to the rapid adoption of more

efficient residential and commercial energy technologies.

POLICY RESPONSES

Numerous policy responses have been used in

both industrial and developing countries to deal with

the market failures listed above and in table 3-5. A

variety of these policy responses are summarized in

125A. ~S~ye~, w~r]d B* ~dus~andfier~ Dep~@ ‘ ‘Review of El~trici~ ‘Ihriffs inDevelOpingcOuntrieS Dtig the 1980s,’ hdustry

and Energy Department working paper, Energy Working Paper No. 32, November 1990.
Chapter 3--Energy Services: Residential and Commercial ● 85

Box 3-E—The Brazilian PROCEL Program

The Brazilian Government established PROCEL--a nationwide electricity conservation program-within

Eletrobras—the national utility holding company—in 1985. PROCEL funds or otherwise supports activities at

utilities, universities, private manufacturers, and elsewhere within Brazil. These activities include:

. Research and Development—more energy-efficient technologies-refrigerators, lights, motors, controls,

etc.;

. Education and information programs-testing the efficiency of equipment and labeling it in the marketplace,

conducting energy audits of industries and commercial buildings, and promoting energy efficiency through

publications and public events;

. Financial Assistance and Direct Installation programs-providing low-interest loans or directly installing

more efficient equipment, such as street lights; and

. Setting standards for equipment efficiency—such as refrigerators (a 5-percent annual increase in average

efficiency is now required for new models produced between 1994 to 1998 on top of the best performance

currently achieved), and lights (standard incandescent are to be phased out in favor of more efficient

incandescents and compact fluorescent, among other improvements).

Total cumulative funding of PROCEL reached $20 million by 1990 with perhaps an equal amount from State

and local utilities and other organizations. The more than 150 projects funded had resulted indirect savings of 1,000

gigawatt/hour/yr (GWh) by 1989, allowing utilities to defer at least $600 million in new generating capacity. This

is a return some 15 times greater than total investment.

As a result of these successes, the PROCEL program was planned to expand to nearly $35 million in funding

during 1990. Even this large sum is less than 1 percent of current annual utility investment. Long term goals are

to save 10 percent of national electricity use by 2000 and 14 percent by 2010, equal to 88 Terawatt/hour (TWh)-the

equivalent of nearly half of total Brazilian electricity consumption in 1988.

SOURCES: Howard S. Geller and JoseR.Moreira,‘‘Brazil’s National Electricity Conservation Program (Procel): Progress and Lessons,’ paper

presented at the Conference, “DSM and the Global Environment” Apr. 22-23, 1991, Arlingto~ VA.; and Howard S. Geller,

‘‘Efficient Electricity Use: A Development Strategy for Brazil,’herican Council for An Energy Eftlcient Economy, Washingto~

DC, 1991.

table 3-6, and a few of them are discussed in more tant role in adapting these technologies to local

detail below. One should carefully note, however,

some of the potential problems of State intervention

in the marketplace (see table 3-7). Examples of

policies that have been implemented in Brazil are

discussed in box 3-E.

The United States and other industrial countries

could take the lead in developing efficient technologies, offering large scale markets within which

manufacturing costs can be brought down, and in

generally proving both the concept and the potential

for savings (see box 3-F).

If these technologies are Frost developed and

proven in industrial countries, widespread distribution of information to potential developing country

users is then more readily possible and networks for

distributing the technologies can be more easily

established. In many cases, however, some local

adaptation of the technology may be necessary—

such as making the technology more robust in the

presence of large voltage fluctuations. National or

regional centers of excellence might play an imporconditions or in developing new technologies (see

box 3-B). Such centers have played a central role in

improving agricultural productivities in many developing countries and are particularly noted for their

role in the ‘ ‘green revolution.

Regional or national centers of excellence might

also perform such tasks as establishing standard

methodologies for measuring and comparing equipment efficiency; developing ‘‘scorekeeping’ techniques for determining energy savings in the field;

collecting data; conducting field energy audits or

extension; and other activities, in addition to technology adaptation or more basic research, development, and demonstration.

These activities may be made easier by following

the lead of the industrial countries, but they can also

be done independently of the industrial countries.

Brazil, Korea, Taiwan, China, and a number of other

countries have shown the potential for independent

energy efficiency activities.
86 ● Fueling Development: Energy Technologies for Developing Countries

Box 3-F—The Appliance Industry: Obstacles and Opportunities in

Manufacturing Efficient Appliances

The appliances sold in developing countries vary from finished goods imported from overseas, to “kits”

assembled from mostly imported components, to largely locally manufactured components and finished products.

The terms under which these appliances are made vary as widely, from wholly owned foreign subsidiaries, to

products made under license to foreign firms, to small local entrepreneurs with few foreign components or

technological inputs. Limits on the efficiency of locally assembled or manufactured appliances may range from

inability to get license agreements at sufficiently attractive terms to high import duties.

One of the most effective means of improving appliance efficiency is to work with manufacturers directly. In

many developing countries, manufacturers produce appliances based on technology many years behind the

state-of-the-art found in the industrial countries: they are often able to get this obsolete technology at relatively low

cost from leading-edge manufacturers who, in turn, could not earn much additional return on the technology except

by selling or licensing it to developing countries where markets maybe less discriminating. In some cases, import

tariffs may prevent the use of high efficiency components or equipment at the (unrecognized) cost of even greater

imports of utility generating equipment.

By assisting licensing of high-efficiency technologies, by joint ventures, or by other means including

adjustment of import duties on high efficiency components, developing countries might gain better access to these

technologies and substantially reduce total systemwide capital requirements when utility investment is considered.

Joint ventures between international and Thai manufacturers have enabled them to improve the energy efficiency

of their refrigerators, but import tariffs largely prevented the use of high efficiency rotary compressors until 1990.

The drive to manufacture for export markets has also played an important role in the Thai effort to improve the

quality and efficiency of the refrigerators and other appliances that they manufacture.

Governments and research institutes can also work directly with domestic manufacturers. Funding from the

State utility enabled researchers at the University of Sao Paulo to develop high efficiency solid state ballasts for

fluorescent lights and transfer the technology to a private company for manufacturing (box 3-C). The Brazilian

Procel program has worked with private manufacturers to establish voluntary energy efficiency protocols for

refrigerators, lamps, ballasts, and motors.

SOURCES: S. Meyers et al., “Energy Efficiency and Household Electric Appliances in Developing and Newly Industrialized Countries,”

Lawrence Berkeley Laboratory, LBL-29678, December 1990; Howard S. Geller and Jose R. Moreir~ ‘ ‘Brazil’s National Electricity

Consewation Program (Procel): Progress and Lessons, ” paper presented at the Conference, ‘‘DSM and the Global Environment,’

Apr. 22-23, 1991, Arlingto4 VA.

Many, if not most, energy efficient technology higher prices, the cost of energy services to consumdevelopment activities are best done by the private

sector. These can be done either independently—

spurred by national initiatives--or as joint ventures

or in other forms of partnerships between manufacturers in the developing and industrialized countries.

Means of encouraging these partnerships need to be

explored.

In many developing countries, electricity prices

paid by residential and commercial users are far

below supply costs, with the difference made up by

government subsidies. Raising prices would encourage the adoption of energy efficient appliances, as

well as improving the government budgetary situation. Raising electricity prices, however, is a difficult political issue, High efficiency equipment may

offer a way out of this dilemma. If more efficient

equipment could be introduced at the same time as

ers need not increase nearly as much, if at all.

Higher prices alone are often insufficient to

ensure full utilization of cost effective energy

efficient technologies because of the market failures

described in table 3-5. Even the United States, where

electricity prices are much closer to long run supply

costs, has reinforced the price effect with mandatory

efficiency standards for a variety of appliances.

Finally, and perhaps most importantly, means of

better reflecting total societal costs in consumer

investment decisionmaking could be explored. Currently, the capital costs of generation equipment are

paid by the utility and the capital costs of end-use

equipment are paid by the end user. As shown above,

the high implicit discount rate of the end user as well

as this separation between utility and user (or for

leased equipment, the separation between owner and
Chapter 3--Energy Services: Residential and Commercial ● 8 7

Box 3-G—Integrated Resource Planningl

Conceptually, Integrated Resource Planning2 (IRP) is straightforward. Planners rank by cost all the different

energy supply and energy end use technologies that might be used to provide an energy service, and implement them

beginning with the lowest cost opportunities. Thus, various electricity supply technologies such as conventional

coal plants, steam-injected gas turbines, and combined-cycle plants are compared with each other and with end-use

technologies such as compact fluorescent lights, adjustable speed electronic drives for motors, and increased

insulation in buildings to reduce air conditioning loads. Of all the different possibilities, the lowest cost options are

chosen for investment.

The manner in which energy institutions are organized, however, has not encouraged the implementation of

integrated resource planning. Under the traditional regulatory framework found in most countries, utilities are in

the business of selling energy supplies, not energy services. Each kiloWatthour (kWh) sold by an electric utility

increases gross earnings, no matter how much it costs to generate; conversely, each kWh saved by using an energy

efficient technology decreases earnings, no matter how little it cost to implement.3 Similarly, displacing utility

generated power with purchases of power from nonutility sources such as industrial cogeneration usually reduces

utility earnings. These considerations often hold even where electricity costs are heavily subsidized-the State

simply replenishes utility funds while utility managers and workers are rewarded in terms of job security, increased

salaries or staffs, etc. for the amount of electricity generated, irrespective of its cost and usefulness.

In contrast, Integrated Resource Planning changes the regulatory framework in order to encourage utilities and

others to implement the least-cost demand and supply options, Among other changes, regulators allow utilities to

earn income based on the net benefits from investments in energy efficiency improvements. This focuses the

financial, managerial, and technical skills of the utility on some of the market failures on the demand side (table

3-E) and helps realize some of the most important policy responses (table 3-6), especially the capital cost-related

ones.

Factors that should be considered in IRP programs include: providing appropriate financial rewards for utilities

to support efficiency improvements as well as supply-decoupling utility profits from the number of kWh sold—in

order to minimize the overall cost of supplying energy services; ensuring that the startup costs of the IRP program

and the administrative complexity and overheads are kept to a minimum; developing adequate methods for

‘‘measuring’ savings (also known as scorekeeping); avoiding the ‘‘free rider’ problem and others.

Numerous utilities in the United States have begun to implement Integrated Resource Planning Programs. In

developing countries, the efforts in IRP have generally been much more limited to date. One exception, however,

is the PROCEL program in Brazil (see box 3-E). Shown in figure 3-16 is a supply curve of the equivalent cost of

energy of different end-use technologies in Brazil. Based on such a supply curve, the utility planner can tailor

programs to maximize the utility return-on-investment in energy efficiency improvements.

ISoWces ~d t%rther reading: David Moskovitz, “Profits and Progress Through Least-Cost Ptanning,” National Association of

Regulatory Utility Commissioners, Washington DC, November, 1989; Jonathan Koomey, Arthur H. Rosenfeld, and Ashok Gadgil,

‘‘Conservation Screening Curves to Compare Efficiency Investments to Power Plants,” Energy Policy, October 1990, pp. 774-782; Thomas B.

Johansson, Birgit Bodhmd, and Robert H. Williams, Electricity: Efi”cient End-Use and New Generation Technologies and Their Planning

Implications, (Lund, Sweden: Lund University Press, 1989); Howard S. Geller, “Efficient Electricity Use: A Development Strategy for Brazil, ’

contractor report for the Office of Technology Assessmen4 (Washington DC: American Council for an Energy Efficient Economy, 1991);

Proceedings: 5th National Demand-Side Management Conference, Electric Power Research Institute, Palo Alto, CA. report CU-7394; 1991;

P. Herman, et. al., “End-Use Technicat Assessment Guide, volume 4: Fundamentals and Methods, ” Electric Power Research Institute EPRI

CU-7222, vol. 4, April 1991, Palo Alto, CA; Linda Berry and Brie I-&t, ‘‘The U.S. DOE hast-Cost Utility Planning Program, ’ Energy, vol.

15, No. 12, pp. 1107-1117, 1990; Glenn Zorpette, “Utilities Get Serious About Efficiency, “ IEEE Spectrum, May 1991, pp. 4243.

201hcr names asscxiataj with Integrated Resource M arming include Least Cost Planning and Demand Side Management. Least Cost

Planning has sometimes been taken to mean only comparisons of energy supply options, with no comparisons with end use options. Demand

side management commonly examines end-use options, with no comparisons with energy supply options.

3Adapted from David Moskovitz, Op. Cit., fOOtIIOte 1.

297-929 - 92 - 7 - QL: 3
88 ● Fueling Development: Energy Technologies for Developing Countries

0.05

0.04

0.03

0.02

Figure 3-16-Electricity Efficiency Supply Curve,

Brazil, 2010

Cost of saved energy ($/kWh)

Fo“h+-’”

PI

0! 1 1 ———r—

0 20 40 60 80 100 120

Savings potential (TWh/yr)

This curve shows the equivalent cost of saving energy for various

improvements in the energy efficiency of end-use technologies.

(1 ,14,15)-improvements to residential and commercial (residential/

commercial) refrigerators and freezers; (2)-more efficient industrial furnaces and boilers; (3,1 3) more efficient res/com air

conditioning; (4,17) more efficient residential electric water heating; (5,1 9) more efficient industrial motors and adjustable speed

drives; (6)--miscellaneous industrial improvements; (7) more

efficient industrial electrochemical processes; (8,9,10,1 1,12,

16,1 8,20)-various improvements to residential, commercial,

industrial, and public lighting.

SOURCE: Howard S. Geller, Efficient E/ectria’ty Use: A Development

Strategy forBrazi/, contractor report for the Office of Technology

Assessment (Washington, DC: American Council for An Energy

Efficient Economy, 1991).

user) leads to much lower levels of investment in

end-use equipment efficiency than is justified on the

basis of either total system capital costs or life cycle

operating costs.

A powerful tool to redress this “disconnect” is

Integrated Resource Planning (see box 3-G). If

utilities planned on a systemwide energy services

basis, they could use resources that would otherwise

have been devoted to expanding capacity to financing efficient appliances. Examples of such innovative financing approaches might range from the end

user choosing equipment according to the total life

cycle cost and paying this cost in monthly installments on the utility bill; to the end user paying a

front-end deposit or posting a bond to the utility to

cover the life cycle operating costs of the equipment,

against which the utility would charge the capital

cost of the equipment and the monthly electricity

bills. Either of these approaches would force the end

user to directly face the total life cycle costs of the

equipment when purchasing it.

CONCLUSION

This review of energy efficient and/or alternative

technologies for the residential and commercial

sectors shows that substantial reductions in society

wide capital costs, life cycle operating costs, and

energy consumption are possible. Achieving these

savings will require, however, significant longterm

efforts and institutional changes to overcome a

variety of market and institutional failures (see table

3-5). Many approaches to these failures are possible

(see table 3-6). The United States can help in this

effort (see ch. 8) by accelerating programs of

research, development, and demonstration of energy

efficient technologies, by providing technical assistance and training in both technology and institutional change, and by setting an example.
Chapter 4

Energy Services:

Industry and Agriculture
Contents

Page

INTRODUCTION AND SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Small Scale Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Modern Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

Agriculture . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MOTOR DRIVE SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Motor Drive System Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Motors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pumps and Fans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjustable Speed Drives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pipes and Ducts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MODERN INDUSTRIAL PROCESSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cement . . . . . . . . . . . . . . . . . . . . . .. .. .. .. ... ... ...O... . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pulp and Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .

Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IMPROVING THE EFFECTIVENESS OF MATERIAL USAGE . . . . . . . . . . . . . . . . . . .

BARRIERS TO ENERGY EFFICIENCY IMPROVEMENTS IN INDUSTRY . . . . . . .

Small Scale ... ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

National Infrastructures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Available Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

POLICY RESPONSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Capital Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

AGRICULTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Irrigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Traction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Box

103

103

104

107

108

112

115

117

117

117

123

127

129

130

132

132

133

133

133

134

134

135

136

136

137

140

141

Box Page

4-A. Agricultural Energy Use in Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
—. — .

Chapter 4

Energy Services: Industry and Agriculture

INTRODUCTION AND SUMMARY

The industrial sector is growing rapidly in many

developing countries and is a key element in their

drive for economic development and modernization.

Between 1980 and 1989, annual growth of the

industrial sector averaged 8.7 percent for the low

income countries and 3.8 percent for the middle

income countries. There was wide variation within

these averages, however, ranging from a 5 percent or

worse annual decline in production for Bolivia,

Liberia, and Trinidad and Tobago to over 10 percent

annual growth for China, South Korea, Indonesia,

and several others.1

The industrial sector typically consumes 40 to 60

percent of total commercial fossil energy used in

developing countries (see tables 4-1 to 4-3);2 it also

makes heavy use of traditional biomass fuels, often

traded in commercial markets. For example, biomass fuels supply up to 40 percent of the industrial

energy used in Indonesia, 28 percent in Thailand, 17

percent in Brazil, and similarly large fractions in

many other countries.

3 Per capita industrial energy

consumption in the developing world is 5 to 10

percent of the U.S. level (see table 4-2).

A significant portion of industrial energy is used

technically inefficiently, with serious economic and

environmental impacts. Improving overall performance of the industrial sector, not just the efficient use

of energy, will be necessary if these countries are to

compete in world markets and to provide a high

standard of living for their citizens.

The industrial sector of developing countries

includes a broad range of firms in size and sophistication. At one end of the spectrum are small

traditional firms,4 largely located in rural areas,5

which use relatively energy inefficient and low

productivity manufacturing technologies. These small

manufacturing enterprises may, however, be operating efficiently in the broader economic context,

given the available inputs of capital, labor, and

materials. 6 High transport and marketing costs and

small market size may prevent larger, more technically efficient firms from competing effectively with

these traditional cottage industries. Over time, a few

smaller companies grow into medium, and/or large

ones as the transport infrastructure improves and

incomes rise-increasing the size of markets and

providing economies of scale that turn the advantage

to larger firms,7 At this end of the spectrum are large

modern fins, often with multinational parent companies, that have globally competitive manufacturing capabilities.

Small Scale Industry

In many developing countries today, one-half to

three-quarters of manufacturing employment is in

small scale establishments; the remainder is divided

more-or-less evenly between medium and large

operations. 8 Small scale industry supplies onefourth to one-half or more of manufacturing gross

domestic product (GDP).9 Much of the employment

in the small traditional and primarily rural industries

is based on seasonal labor available during the

nonagriculturally active times of year; typically a

fourth to a third of rural nonfarm employment is for

lwor]d Bank, JVor/d Development Report, 1990 (New York, NY: Oxford University Mess, 1990), pp. 180-181.

QJayant Sathaye, Andre Ghirardi, and Lee Schipper, ‘ ‘Energy Demand in Developing Countries: A Sectoral Analysis of Recent Trends, ” Annual

Re>’ieu’ of Energ>, vol. 12, 1987, pp. 253-281, table 5.

3J~y Du~erlcy et ~1,, Energy ~tTategieSfor Developing coMn~ieS (&~~ore,~:Johns Hopfins University Press, 1981), p. 265.

4A vwle~ of deflfitlons and tcms me ~S~ for sm~l Scale indust~, including: household, cottage, micro, tiny, small, and others. Some Of these temls

are used with distinct meanings according to the number employed, the location of the enterprise, and its assets. See Carl Liedholm and Donald Mead,

“Small Scale Industries in Developing Countries: Empirical Evidence and Policy Implications, ” Michigan State University International Development

Paper No. 9, Department of Agricultural Economics, East Lansing, Michigan, 1987.

sHcrc, ~al ~eam loc~ltics wl~ 20,000 Pmple or less. Sec Cml Liedho~ and Donald Mead, Ibid.

6Th1s is based on a social benefit.cost a~ysis ra~er ~n tot~ factor productivity. Ibid. SCC p. 68, ff.

7Dennis Andcrsom ‘ ‘Small Industry in Developing Countries: Some Issues, ’ World Bank Staff Working Paper No. 518, 1982.

~Ibid. See tables 1 and 2.

~Carl Li~holm and Donald Mead, Op. cit., foo~ote 4.

–91–
92 ● Fueling Development: Energy Technologies for Developing Countries

Table 4-l-Total Delivered Energy by Sector, in Selected Regions of the World, 1985 (exajoules)s

Residential/commercial Industry Transport Total

Commercial Traditional Commercial Traditional Commercial Traditional Commercial Traditional Total

Region fuels fuels b

fuels fuelsb

fuels fuels bfuels fuels b

energy

Africa . . . . . . . . . . . . . . . 1.0 4.0 2.0 0.2 1.5 NA 4.4 4.1 8.5

Latin Americac . . . . . . . . 2.3 2.6 4.1 0.8 3.8 NA 10.1 3.4 13.5

India and China . . . . . . . 7.3 4.7 13.0 0.2 2.0 NA 22.2 4.8 27.1

Other Asiad . . . . . . . . . . 1.9 3.2 4.0 0.4 1.9 NA 7.8 3.6 11.3

Developing countries . . 12.5 14.5 23.1 1.6 9.2 NA 44.5 15.9 60.4

United States . . . . . . . . . 16.8 NA 16.4 NA 18.6 NA 51.8 NA 51.8

SOURCE: U.S. Congress, Office of Technology Assessment, Energy in Developing Countries, OTA-E-486 (Washington, DC: U.S. Government Printing Office,

January 1991) p. 49.

Table 4-2-Delivered Energy Per Capita by Sector in Selected Regions, 1985 (Includes traditional fuels, In gigajoules)

Residential and

Region Commercial Industry Transport Total

Africa. . . . . . . . . . . . . . . . . . . . . . . 11.8 5.2 3.5 20.5

Latin America . . . . . . . . . . . . . . . . 12.7 12.5 9.7 34.9

India and China . . . . . . . . . . . . . . 6.7 7.3 1.1 15.1

Other Asia . . . . . . . . . . . . . . . . . . 7.2 6.2 2.7 16.1

United States . . . . . . . . . . . . . . . . 69.8 68.5 77.5 215.8

NOTE: These estimates do not include conversion losses in the energy sector, and underestimate the quantity of traditional fuels used compared to that

observed in field studies. In Latin America, an alternative set of estimates are, left to right, 8.2 GJ, 13.3 GJ, 9.9 GJ, 31.4 GJ (Gabriel Sanchez-Sierra,

Executive Secretary, Organization Latino America de Energia, Quito, Ecuador, personal communication, July 15, 1991.)

SOURCE: U.S. Congress, Office of Technology Assessment, Energy h Developing Countries, OTA-E-466 (Washington, DC: U.S. Government Printing

Office, January 1991).

Table 4-3-Per Capita Energy Use by Service in Selected Countries (gigajoules)

Brazil China India Kenya Taiwan Us.

Residential . . . . . . . . . . . . . . . . . . 6.2 11.7 5.5 16.9 8.9 64.9

cooking . . . . . . . . . . . . . . . . . . . 5.3 8.5 5.0 16.4 4.7 3.5

lighting . . . . . . . . . . . . . . . . . . . 0.3 0.4 0.5 0.5 0.7 NA

appliances . . . . . . . . . . . . . . . . 0.6 NA 0.05 NA 3.1 13.0”

Commercial . . . . . . . . . . . . . . . . . 1.5 0.7 0.26 0.4 4.2 45.2

cooking . . . . . . . . . . . . . . . . . . . 0.4 NA 0.13 0.24 1.9 NA

lighting . . . . . . . . . . . . . . . . . . . 0.5 NA 0.05 0.16 0.8 7.2

appliances . . . . . . . . . . . . . . . . 0.6 NA 0.07 NA 1.5 NA

Industrial . . . . . . . . . . . . . . . . . . . . 19.4 13.8 4.1 4.8 39.2 94.1

process heat . . . . . . . . . . . . . . 17.5 10.2 2.7 NA NA 55.8

motor drive . . . . . . . . . . . . . . . 1.6 3.6 1.3 NA NA 20.4

lighting . . . . . . . . . . . . . . . . . . . 0.1 NA 0.05 NA NA NA

Transport . . . . . . . . . . . . . . . . . . . 13.3 1.2 1.3 2.7 11.5 80.8

road . . . . . . . . . . . . . . . . . . . . . . 12.0 0.2 0.8 1.8 10.1 66.7

rail . . . . . . . . . . . . . . . . . . . . . . 0.2 0.7 0.4 0.2 0.1 2.0

air . . . . . . . . . . . . . . . . . . . . . . . 0.7 NA 0.1 0.7 0.7 11.3

Agriculture . . . . . . . . . . . . . . . . . . 2.1 1.8 0.6 0.5 2.6 2.5

Total . . . . . . . . . . . . . . . . . . . . . . . 43.4 27.0 11.7 25.6 67.7 288.0

NA = Not available or not applicable.

~his is the combined total for appliances and lighting.

SOURCE: U.S. Congress, Office of Technology Assessment, Errergy In Developing Countries, OTA-E-486 (Washington, DC, U.S. Government Printing

Office, January 1991).
Chapter 4--Energy Services: Industry and Agriculture ● 93

Photo credt: Appropriate Tiwhnologies, International

Some small scale rural industries, such as pottery-makingj

are frequently owned or staffed by women.

manufacturing. 10 This is an important source of

income and employment for the rural and poor urban

sectors. 11 Small scale industry also provides important inputs into larger scale industries-particularly

in Asia—and into other key sectors such as agriculture.

Traditional rural industries include: crop processing activities; beer brewing; textiles and garment

production; carpentry, masonry, and other construction; leatherworking and shoemaking; brick and

pottery production; blacksmithing; and many others.

These activities are often divided along tribal, class,

or family lines and skills are usually passed along

through the equivalent of apprenticeships.

Small industry in developing countries does not,

however, mean exclusive use of traditional fuels.

Many small shops use electric welding equipment,

for example, and others would follow suit if

electricity were available. The provision of modern

fuels and power, such as electricity, offers significant opportunities to improve the productivity and

quality of small manufacturing operations. On the

other hand, many shops that work on modern

equipment, ranging from autos to electric motors,

often use the most primitive means and fuels

available to perform the work. Shops that rewind

electric motors, for example, often simply burn the

windings off in an open fire rather than in a

temperature controlled oven. This has potentially

serious impacts on the performance of the motor

after it is rewound.12

A key concern of the commercial establishment is

fuel supply reliability: this has often led establishments, particularly those further from urban centers,

to prefer firewood over more modern fuels.13 Establishments that use wood in large volumes may also

realize cost savings over modern fuels such as

kerosene and liquified petroleum gases (LPG),

particularly when they are imported.

The energy efficiency of traditional industry can

be low (see table 4-4). The introduction of modern

engineering analysis, design, and technology—

including modern diagnostic instrumentation and

analysis tools—into the traditional sector offers

significant opportunities for improving the efficiency of traditional industry and improving product

quality while minimizing capital investment. There

are numerous examples. Principles of engineering

combustion and heat transfer have been used to

improve the energy efficiency of traditional stoves

used for brewing beer, heating water for dyeing

cloth, or other process heat needs.14 Modern

downdraft kiln designs have been introduced in

West Africa and other regions to improve the energy

efficiency of firing traditional clay pots and other

goods. At the same time, these kilns can substanl~DetiS ~derson and Mark Leiserso~ ‘ ‘Rural Nonfarm Employment in Developing COUrWrkS,’ Economic Development and Cultural Change 28,

No. 2, 1980, table A2, p. 245; cited in Donald W. Jones, Oak Ridge National Laboratory, “Energy Requirements for Rural Development’ Report No.

ORNL-6468, June 1988. Measurements of this employment are very sensitive to the timing of the survey, how employment is defined, and the

rcsponsivcncss of those interviewed. Under-reporting of nonfarm household employment is cornmo~ in some African countries it is reportedly as high

as 40%. Dennis Anderson, ‘‘Small Industry in Developing Countries: Some Issues, ”World Bank Staff Working Paper No. 518, 1982.

11 ‘Rural Small-Scale Industries and Employment in Africa and Asia,’ Ed. Enyinna Chuta and S .V. Sethuraman, International Labor Office, Genev%

1984; Harold Lubcll and Charbcl Zarour, “Resilience Amidst Crisis: The Lnformal Sector of Dakar,” International Labour Review, vol. 129, No. 3,

1990, pp. 387-396.

IzSmucl F, Baldwin and Emilc FinlaY) “Energy-Efficient Electric Motor Drive Systems: A Field Study of the Jamaican Sugar Industry, ” Center

for Energy and Environmental Studies, Princeton University, Working Paper No. 94. February 1988. Note that the oven must be carefully temperature

controlled as WCII if damage to the windings is to be avoided.

13M, Macauley, M. Naimuddin, P.C. Agarwal, and J. Du*crlcy, “Fuelwood Use In Urban Areas: A Case Study of Raipur, India, ” The Energy

Journaf, vol. 10, No. 3, July 1989, pp. 157-180.

14smuel F, B~dwln, Bjomd~$ ,’$fo},e~,. ~ng~neering ~e~ign, De}efopmenf, and ~i$~eminaf~o~ (Arlington, VA ~d princcto~ NJ: VOhl13ttXrS ill

Technical Assistance and Center for Energy and Environmental Studies, 1986).
94 ● Fueling Development: Energy Technologies for Developing Countries

Table 4-4-Efficiency of Fuel Use In Traditional (Developing Countries) and Modern

(Industrial Countries) Commercial and Industrial Operations

Estimated efficiency of

Estimated efficiency of modern technology

Activity Location traditional technology in U.S.

Cooking . . . . . . . . . . . . . . West Africa 15-1970 50-60%

Beer brewing . . . . . . . . . . Burkina Faso 15-17 79”

Burkina Faso 0.3-0.7

Tobacco drying . . . . . . . . . Tanzania 0.5 (36%)b

Tea drying . . . . . . . . . . . . . Tanzania 2.9 NA

Baking . . . . . . . . . . . . . . . . Sudan 12-19 43

India 16.0 NA

Guatemala 3.0 NA

Fish smoking . . . . . . . . . . . Tanzania 2-3 NA

Brick firing . . . . . . . . . . . . . Sudan 8-16 6-11

India 6.4 NA

Uganda 5-1o NA

Foundry work ., . . . . . . . . Indonesia 3.0 40

tially improve the quality of the firing and reduce

losses due to breakage.

15 Air-to-air heat exchangers

for traditional foundry processes—such as melting

scrap aluminum to cast pots-could recuperate

perhaps a hundred times as much waste heat as

would be required to power the small hand- or

electric-driven blower powering the heat exchanger. 16

A variety of technologies for both traditional and

modern industry are listed in table 4-5.

Small firms often face substantial obstacles to

improving the efficiency of their operations, including energy use. These include: inadequate access to

credit; internal lack of technical and managerial

skills; inadequate infrastructure-roads, water, electricity; poor access to raw materials; poor access to

markets; and sometimes systematic opposition by

larger, better established, and better politically

connected formal industry. Some of these barriers

are summarized for both small and large industry in

table 4-6 and possible policy responses are listed in

table 4-7.17

There are numerous technical opportunities for

improving the efficiency of energy use in small scale

industry in developing countries. Financial, technical, and managerial extension efforts will be needed

to realize these opportunities, a difficult task given

the highly dispersed, small scale,

nature of this sector.

Modern Industry

Energy use by the small scale

and informal

sector, though

significant in many developing countries today, is

likely to decrease in the future as a percentage of

total industrial energy use. Much of the growth in

industrial energy use will instead be in large scale

energy intensive materials, such as steel and cement,

needed to develop a modern economy. Such industries will be the primary focus here.

ISIn West ~~ca, for ex~ple, these products have traditiomlly been freed on open bonfires with correspondingly large energy losses, ~gh brekge

rates and low quality.

16A55@ng a fm efficiency of 40 Perwnt; ~d including be ener~ losses ~ ~nvefifig fiel to elec~ci~ or food to muscle drive. See: %muel F.

Baldw@ op. cit., footnote 14.

ITs= Cml Li~olm and Domld Mead, op. cit., footnote 4. Hubert SC~tZ, ‘‘Growth Constraints on Small Scale Manufacturing in Developing

Countries: A Critical Review, ” World Development, vol. 10, No. 6, pp. 429-450, 1982; Hernando de Soto, The Other Path: The Invisible Revolution

in the Third World (New Yorlq NY: Harper & Row, 1989); Robert N. Gwynne, New Horizons? Third World Indusrn”alization in an International

Framework (New York NY: John Wiley & Sons, 1990); Dennis Anderson, op. cit., footnote 7; Harold Lubell and Charbel Za.rour, op. cit., footnote 11;

G. Norcliffe, D. Freeman, and N. Miles, “Rural Industrialisation in Keny&” Enyirma Chuta and S.V. Sethuraman (eds.), Rural Snrull-Scale Industries

in Afi’ca and Asia (Geneva: Intermtional Labour Organisatiom 1984).
Chapter 4--Energy Services: Industry and Agriculture ● 95

Table 4-5—Selected Energy Efficient Technologies for the Industrial Sector

Energy service Technologies and remarksa

Traditional technologies

The application of modern technologies and techniques to traditional technologies is a key area. So-called appropriate technology,

however, has generally failed to accomplish much due to the general lack of highly skilled scientists and engineers in the efforts,

the excessive emphasis on using traditional or local materials, and other factors.

Motor driven systems

High efficiency motors, pumps, fans, etc., electronic adjustable speed drives, optimized pipe, duct, etc. dimensions. Standardized

testing is needed to compare performance on a uniform basis. Motors, etc. must also be properly maintained: with proper

lubrication, adjustments to gears, belts, etc., maintaining phase balance of input electric power, etc. Improved design tools for

sizing and controlling equipment needed. Standard protocols needed to incorporate load management techniques into

adjustable speed drive.

Efficient process heat systems

Using waste heat recovery systems, including heat exchangers and vapor recompression systems; steam system improvements,

including increased insulation, steam traps, desuperheating plant steam as needed, and plugging leaks; monitoring heat

exchanger fouling; maintaining and upgrading furnaces--adjusting burners and excess air, preheating air intake, etc.; insulating

steam lines, furnaces, etc.; improved combustion controls; and many other technologies and techniques. Particularly important

is scaling down these technologies for use in smaller scale developing-country plants; and selectively adapting these

technologies for developing-country conditions--where labor is lower cost, but may be less well trained for handling advanced

equipment.

Processes

High efficiency industrial processes are at all stages of development. Particular attention needs to be given to directing and adapting

this research to developing-country needs, taking into account: the lower labor costs and the scarcity of capital; the less well

developed infrastructure (i.e., the frequent voltage fluctuations); the lower avaiIabiIity of highly-skilled technical and managerial

manpower; and in some cases, the relatively less reliable maintenance infrastructure (i.e., making particular types of automatic

controls desirable where they can prevent damage due to irregular maintenance).

Cogeneration

High pressure steam turbines, engines, gas turbines. Improved cogeneration technologies coming available include steam injected

gas turbines, and others.

Equipment testing procedures, standards, and diagnostic equipment

Regional test centers for establishing uniform standards and testing equipment to it could be established. Diagnostic equipment and

procedures need to be adapted to developing-country conditions.

Efficient design rules and design software

Research, development, and field verification needed for design rules in sizing and controlling plant and equipment

Advanced materials

High performance materials can dramatically reduce the volume of energy-intensive materials required. Particularly important for

developing countries are high performance structural materials such as cements, steel, and plastics.

Quality control and just-in-time inventory control

Reduce defects and rework, material handling, and inventory costs; and improve productivity.

SOURCES: Office of Technology Assessment; K.E. Nelson, “Use These Ideas to Cut Waste,” Hydrocarbon Processing, March 1990; Julio R. Gamba, David

A. Caplin, and John J. Mulckhuyse, “industrial Energy Rationalization in Developing Countries,” World Bank, Johns Hopkins University Press,

Baltimore, MD, 1986; U.S. Department of Commerce, National Bureau of Standards Handbook 115, “Energy Conservation Program Guide for

Industry and Commerce,” September 1974.

Modern large scale industries in developing energy used by industry (see tables 4-8 to 4-10 and

countries are modeled after their counterparts in figure 4-1) and the total energy used to produce these

industrialized countries but are often operated at materials will increase rapidly as developing counsignificantly lower efficiencies.18 A few energy ties build their national infrastructures of roads,

intensive materials-steel, cement, chemicals (espe- buildings, industry, and power. For example, steel

cially fertilizer), and paper—account for much of the production in developing countries increased at an

18De~11~ ~evlew~ of enerfl Comewation ~ ~dus~al plants cm & fo~d fi: Julio R. G~ba, David A. Caplin, and JOhU J. Mulckhuyse, ]?tdUStrkI/

Energy Rationalization in Developing Countries (Baltimore, MD: Johns Hopkins University Press, 1986).
96 ● Fueling Development: Energy Technologies for Developing Countries

Table 4-6-Barriers to Investment in Energy Efficient Technologies

Technical

Availability

High efficiency technologies and their needed support infrastructure of skilled manpower and spare parts may not be locally

available. Foreign exchange may not be available to purchase critical spare parts. For the residential and commercial sectors,

in particular, high efficiency technologies need to be marketed in a complete package to allow “one stop” shopping.

Culture

Culture is rarely an impediment to the use of energy efficient technologies, although it is frequently cited as a problem in

disseminating technologies in rural areas. In most cases, the technology itself is found to have significant technical shortcomings

or is unable to meet the multiple uses desired.

Design rules

Conventional design rules often lead to excessive oversizing of equipment-raising capital cost and wasting energy.

Diagnostics

Technologies for measuring the efficiency of equipment, as in industrial energy audits, are often awkward and inaccurate. Some of

them may require shutting down a production line or making intrusive measurements, such as cutting holes in pipes or ducts to

make flow and pressure drop measurements.

Infrastructure

The available infrastructure within a developing country may not be able to adequately support a particular high efficiency

technology. This might include an electric power system with frequent brownouts or blackouts that the high efficiency technology

is unable to handle well; dirty fuels that clog injectors; or poor water quality for high performance boilers. The developing country

may also lack a reliable spare parts supply system and trained manpower to ensure adequate maintenance. Finally, the existing

infrastructure might impede the implementation of a more efficient technology system. An extensive road system and/or little land

use planning, for example, might slow or stop the development of an efficient mass transport system.

Reliability

Innovative high efficiency equipment may not have a well proven history of reliability, particularly under developing-country

renditions, as for other equipment.

Research, development, demonstration

Developing countries may lack the financial means and the technical manpower to do needed RD&D in energy efficient

technologies, or to make the needed adaptations in existing energy efficient technologies in use in the industrial countries to meet

the conditions-e. g., large fluctuations in power supply voltage and frequency-in developing countries. Technology

development and adaptation are particularly needed in rural industry and other activities.

Scale

Energy efficient technologies developed in the industrial countries are often too large in scale to be applicable in developing

countries, given their smaller markets and lower quality transport infrastructure.

Scorekeeping methods

Methods of “measuring” energy savings may not be sufficiently accurate yet for the purpose of paying utilities or energy service

companies for the savings that they have achieved. This must be contrasted with the ease of measuring the power generated

or used. It is a particularly important issue for utilities, which usually earn revenues solely on the basis of energy sold and so have

little incentive to assist efficiency efforts.

Technical and managerial manpower

There is generally a shortage of skilled technical and managerial manpower in developing countries for installing, operating, and

maintaining energy efficient equipment. This may not be a significant problem where turnkey equipment is used.

Financial and economic

Behavior

Users may waste energy, for example, by leaving lights on. In some cases, such seeming waste maybe done for important reasons.

Bus drivers in developing countries often leave their engines on for long periods, at a significant cost in fuel, in order to avoid

jumpstarting their vehicle if the starter is broken, or to prevent customers from thinking (if the engine is off) that their vehicle is

broken and going to a competitor whose engine is running.

cost

The high initial cost of energy efficient equipment to the end user and the high effective discount rate used by the end user discourage

investment.

Currency exchange rate

fluctuations in the currency exchange rate raises the financial risk to firms who import high efficiency equipment with foreign

exchange denominated loans.

Dispersed energy savings

Energy-efficiency improvements are scattered throughout the industrial and other sectors and are difficult to identify and exploit. In

contrast conventional energy supplies may be more expensive, but are readily and reliably identified and employed. This tends

to give planners a supply side bias irrespective of the potential of efficiency Improvements.

Financial accounting and budgeting methods

Factory accounts for paying energy bills may be separated from accounts for capital investment in more efficient equipment. Budgets

for more efficient equipment may be rationed, forcing energy efficiency improvements to compete with each other for scarce

budgeted funds even though the return on investment in efficiency maybe much higher than the overall cost of capital to the firm.
Chapter 4--Energy Services: Industry and Agriculture ● 97

International energy prices

Uncertainty of international energy prices, such as oil, raises risks that price drops will reverse the profitability of investments in

efficiency.

Multiple needs

The multiple roles and needs served by an existing technology may not be adequately met by a new energy efficient technology.

Draft animals, for example, can provide meat, milk, leather, and dung in addition to traction power. They also reproduce.

Mechanical drive only provides traction.

Risk

Particularly in poor rural and urban areas, people are highly risk averse; they have to be if they are to survive the vagaries of drought

and other disasters. That villagers are risk averse should not, however, be construed to mean that they are technology averse.

A variety of technologies have been adopted very rapidly in poor rural and urban areas.

Seasonality

Rural life is dominated by the seasons, with sharp labor shortages during the agricultural season and serious underemployment

during the rest of the year that rural industry can only partly support. Capital investment in efficient agricultural or rural industrial

technologies is relatively more expensive as it must pay for itself during just the fraction of the year it is used.

Secondary interest

Energy efficiency is often of secondary interest to potential users. In industry, for example, efficiency must compete with other

equipment parameter--quality and quantity of product; timeliness, reliability, and flexibility; etc.-as well as other factors of

production when investment choices are made and when the scarce time of skilled manpower is allocated. These are aspects

of overall corporate strategy to improve profitability and competitiveness.

Secondhand markets

Low efficiency equipment may be widely circulated in secondhand markets in developing equipments, either among industries within

developing countries, or perhaps as gifts or hand-me-downs from industrial countries. Further, users who anticipate selling

equipment into the second hand market after only a few years may neither realize energy savings over a long enough period to

cover the cost premium of the more efficient equipment nor, if secondhand markets provide no premium for high efficiency

equipment, gain advantage in its sale.

Subsidized energy prices

Energy prices in developing countries are often controlled at well below the long run marginal rest, reducing end user incentive to

invest in more efficient equipment. Energy prices may be subsidized for reasons of social equity, support for strategic economic

sectors, or others, and with frequent adverse results. On the other hand, however, the low cost of power results in substantial

financial costs to the utilities, providing them a potential incentive to invest in more efficient equipment on behalf of the user.

Threshold level of energy and cost savings

Users may not find a moderate level of energy or cost savings, particularly if spread over many different pieces of equipment,

sufficiently attractive to justify the investment of technical or managerial manpower needed to realize the savings.

Unstable and/or low energy prices

Oil prices, in particular, have been volatile in recent years. This poses the risk that investments in other energy supplies will become

uneconomic if the price of oil drops.

Institutional

Bias

There is often a bias towards a small number of large projects, usually for energy supply, than for small projects, usually energy

efficiency, due to administrative simplicity and to minimize transaction costs.

Disconnect between purchaser and user

In a rental or lease arrangement, the owner will avoid paying the higher capital cost of more efficient equipment while the rentor or

lessor is stuck with the resulting higher energy bills. Similarly, women in some countries may not have a strong role in household

purchase decisions and may not themselves earn a cash income for their labor, but must use inefficient appliances purchased

for them.

Disconnect between user and utility

Even though the total system capital cost is generally lower for energy efficient equipment, it is the user who pays for the more

efficient equipment but only recoups the investment over the equipment lifetime while the utility sees an immediate capital

savings.

Information

Potential users of energy efficient equipment may lack information on the opportunities and savings.

Intellectual property rights

Energy efficient technologies may be patented and the royalties for use may add to the initial costs for the equipment.

Political instability

Political instability raises risks to those who would invest in more efficient equipment that would only payoff in the mid-to long-term.

Turnkey systems

Turnkey and other package systems are often directly adopted by commercial or industrial operations in developing countries. In

many cases, however, the equipment within these systems is based on minimizing capital cost rather than minimizing Iifecycle

operating costs.

SOURCE: Office of Technology Assessment, 1992.
98 ● Fueling Development: Energy Technologies for Developing Countries

Table 4-7—Policy Options

Alternative financial arrangements

Currently, the capital costs of generation equipment are payed by the utility and the capital costs of end use equipment are payed by

the end user. The high effective discount rate of the end user as well as this separation between utility and user (or for leased

equipment, the separation between owner and user) leads to much lower levels of investment in end use equipment efficiency than

is justified on the basis of either total system capital costs or Iifecycle operating costs. Alternative financial arrangements to redress

this “disconnect” might range from the end user choosing equipment according to the total Iifecycle cost and paying this cost in

monthly installments on the utility bill; to the end user paying a front-end depositor posting a bond to the utility to cover the Iifecycle

operating rests of the equipment, against which the utility would charge the capital cost of the equipment and the monthly electricity y

bills. Either of these approaches would force the end user to directly face the total Iifecycle costs of the equipment when purchasing

it. See also Integrated Resource Planning.

Data collection

The range of opportunities for energy efficient equipment, end user preferences, and operating conditions are not well known in many

countries. Data collection, including detailed field studies, would help guide policy decisions.

Demonstrations

Many potential users of energy efficient equipment or processes remain unaware of the potential savings or unconvinced of the reliability

and practicability of these changes under local conditions. Demonstration programs can show the effectiveness of the equipment,

pinpoint potential problems, and in so doing convince potential users of the benefits of these changes.

Design tools

Computer design tools can be developed, validated, demonstrated, and widely disseminated to potential users.

Direct installation

In some cases, particularly where the cost of energy is subsidized by State operated utilities or where peak loads are reduced, the direct

installation of energy efficient equipment or processes at low-or no-cost by the utility can reduce costs for both the utility and the user.

Energy audits

Energy audits by a skilled team, either factory employees or from the outside-perhaps associated with an energy service Co.--can

provide highly useful specific information on where energy can be saved. In new plants or in retrofits, submetering of equipment In

order to maintain an ongoing record of energy use can also be a very useful means of monitoring performance.

Energy service companies

Energy service companies—third parties that focus primarily on energy efficiency improvements within a factory and are paid according

to how much energy they save--can play a valuable role in implementing energy efficiency gains. They can bring great expertise

and experience to bear on the problem, and as their goal is saving energy rather than maintaining production, they are able to devote

greater effort and focus to conservation activities. On the other hand, industry employees are sometimes reluctant to work with

ESCos, believing that they could implement efficiency activities equally well if they had the time; and worrying that any changes to

process or related equipment by the ESCo could disrupt the production line. Generic forms of contracts for ESCo services to industry

need to be developed in order to adequately protect both parties, and pilot programs with ESCos can demonstrate the potential

savings by ESCos and their ability to avoid disruption to processes. Compensation for the work done by ESCos should be based

on “measured” energy savings, not on the basis of listing the measures taken, irrespective of their effectiveness. Utility programs

that provide for competitive bidding on energy savings risk paying t he end-user and ESCo twice, once for the energy saved and once

for the lower utility bill. This problem can be minimized by appropriately sharing the costs and benefits.

Extension efforts

Extension efforts may be useful at several levels. The efficiency and productivity of traditional rural industries might be significantly

increased in a cost-effective manner with the introduction of a limited set of modern technologies and management tools. To do this,

however, is extremely difficult due to the small and scattered nature of traditional rural industries and the large extension effort

needed to reach it. Large industry in developing countries has many of the same needs--technical, managerial, and financial

assistance--but can be reached more readily.

Grants

See “Direct installation,” above.

Information programs

Lack of awareness about the potential of energy efficient equipment can be countered through a variety of information programs,

including distribution of relevant literature directly to the industries concerned; presentation of competitions and awards for energy

efficiency improvements.

Integrated resource planning (IRP)

Currently, utilities base their investment budgets on a comparison of the costs of different sources of generating capacity--coal, oil, gas,

hydro, etc.-and the supply option that has the lowest cost for its particular application is chosen. Integrated Resource Planning

expands this “least cost” planning system to include end use efficiency as an alternative to supply expansion in providing energy

services. If energy efficiency is shown to be the lowest cost way of providing energy services, then under IRP utilities would invest

in energy efficiency rather than new generating capacity.

Labeling programs

The efficiency of equipment can be clearly listed by labels. This provides purchasers a means of comparing alternatives. Measuring

the efficiency of equipment, however, needs to be done in conjunction with standardized test procedures, perhaps established and

monitored by regional test centers, rather than relying on disparate and perhaps misleading manufacturer claims.

Loans or rebates

Loans or rebates from the utility to the purchaser of energy efficient equipment can lower the first cost barrier seen by the user, and if

incorporated in the utility rate base, can also prove profitable for them. On the other hand, users that would have purchased efficient

equipment anyway then effectively get the loan or rebate for free--the “free rider” problem. This reduces the effectiveness of the

utility program by raising the cost per additional user involved. This problem can be minimized by restricting the loans or rebates to

the highest efficiency equipment for which there is little market penetration.
Chapter 4--Energy Services: Industry and Agriculture ● 99

Marketing programs

A variety of marketing tools might be used to increase awareness of energy efficient technologies and increase their attractiveness.

These might include radio, TV, and newspaper ads, billboards, public demonstrations, product endorsements, and many others.

Pricing policies

Energy prices should reflect rests, an obviously highly politicized issue in many countries. Where prices are heavily subsidized, the

introduction of energy efficient equipment might be done in conjunction with price rationalization in order to minimize the price shock

to users. Prices alone, however, are often insufficient to ensure full utilization of cost effective energy efficient technologies. There

are too many other market failures as discussed above. As evidence of this, even the United States has adopted efficiency standards

for a variety of appliances.

Private power

Opportunities to cogenerate or otherwise produce private power have frequently not been taken advantage of because State-owned

or controlled utilities have refused to purchase privately generated power at reasonable costs-many State electricity y boards simply

refuse to take privately generated power; many States impose a sales tax on self-generated electricity; many states decrease the

maximum power available to industries with onsite generation capabilities, and then are reluctant to provide back-up power when

cogeneration systems are down. In other cases, well-intentioned self generation taxes intended to prevent use of inefficient

generators by industry penalizes efficient regeneration. finally, power is subsidized in many areas, making it difficult for private

power to compete. Changes in laws mandating utility purchase of private power-such as that established by the U.S. Public Utilities

Regulatory Policy Act laws—at reasonable rates would allow many of these opportunities to be seized. This should include

establishing generic contracts that provide adequate protection to all concerned parties but that can be readily developed and

implemented.

Protocols for equipment interfaces

The use of power line carriers or other techniques of utility load management will require common equipment interfaces and signaling

techniques.

Rate incentives

See “Loans or rebates.”

R&D: equipment processes, design rules

Examples of R&D needs are listed in the text. R&D programs might be established at regional centers of excellence in developing

countries, possibly in conjunction with sister research institutes in the industrial countries.

Regional test and R&D centers

Regional centers of excellence are needed to help gather a critical mass of highly skilled technical manpower at a single site. The

technologies to be developed should focus on those amenable to mass production while maintaining quality control under field

conditions. Researchers and field extension agents should, in many cases, make greater use of market mechanisms to guide

technology development efforts and to ensure accountability y.

Scorekeeping: savings and validation

Technologies and software for “measuring” energy savings need to be further developed and their effectiveness validated under field

conditions. This would be a particularly valuable activity at regional centers of excellence.

Secondhand markets-standards

Efficiency labels or standards might be set for secondhand equipment. This might be particularly valuable for such things as

secondhand factories sold to developing countries.

Standards for equipment and process efficiency

Many industrial countries have chosen to largely accept the financial “disconnect” between the utility and the user. Instead of providing

low-cost, easily available capital to the end user and at the same time incorporating the full Iifecycle cost of the end use equipment

in the initial purchase, many industrial countries are attempting to overcome the economic and energy inefficiency of this disconnect

by specifying minimum efficiency standards for appliances, buildings (residential and commercial), and, in some cases, industrial

equipment.

Tax credits, accelerated depreciation

A variety of tax incentives-tax credits, accelerated depreciation, etc.—to stimulate investment in energy efficient or other desirable

energy technologies might be employed.

Training programs

Training programs are needed in order to ensure adequate technical or managerial manpower. In addition, means of adequately

compensating highly skilled and capable manpower are needed. Currently, skilled manpower-trained at government expense--is

frequently attracted away from developing-country governmental organizations by the higher salaries of the private sector. Similarly,

a more clear career path is needed for skilled technical and managerial manpower in energy efficiency just as utility operations now

provide a career path for those interested in energy supply.

Utility demand and supply planning

Methodologies for integrated supply and demand least-cost planning have been developed by the industrial countries. These should

now be adapted to the needs of developing countries and utility planners and regulators trained in their use.

Utility regulation

Utility regulations that inhibit the generation of private power (see above) or limit the role of the utility in implementing energy efficiency

improvements on the supply or demand side need to be reevaluated. Means of rewarding utilities for energy saved as well as energy

generated need to reexplored (see also scorekeeping). This might include incorporation of energy-efficient equipment into the utility

ratebase.

SOURCE: Office of Technology Assessment, 1992.
100 ● Fueling Development: Energy Technologies for Developing Countries

Table 4-8—Energy Consumption in Industry,

China, 1980

Final energy use

Sector Exajoules Percent

Basic metals (iron and steel) . 2.38 25.7

Chemicals (fertilizer) . . . . . . . 2.23 24.1

Building materials (cement,

brick, tile) . . . . . . . . . . . . . . 1.44 15.6

Pulp and paper . . . . . . . . . . . . 0.25 2.7

Machine building . . . . . . . . . . 0.82 8.8

Textiles . . . . . . . . . . . . . . . . . . 0.64 6.9

Food, beverages, tobacco . . . 0.38 4.1

Other . . . . . . . . . . . . . . . . . . . . 1.12 12.1

Total . . . . . . . . . . . . . . . . . . 9.26 100.0

SOURCE: China: The Energy Sector, World Bank Country Study, Washington, DC, 1985.

Table 4-9-Energy Consumption in industry, India,

1985/86

Coal Oil Electricity b Total

Sector PJa PJ PJ PJ

Paper. . . . . . . . . . . . . .

Chemicalsc 

. . . . . . . . .

Cement . . . . . . . . . . . .

Primary metals . . . . . .

Textiles ... , . . . . . . . .

Food . . . . . . . . . . . . . .

Subtotal . . . . . . . . . . . .

Total industry . . . . .

26.0

5.3

106.0

232.0

23.6

NA

393.0

683.0

NA

87.2

5.7

19.3

22.1

12.2

147.0

207.0

4.1

21.9

6.1

25.2

13.2

2.8

73.0

194.0

30.1

114,4

117.8

276.5

58.9

15.0

613.0

1,084.0

overall average rate of 7.3 percent between 1974 and

1982—significantly faster than the 5 percent rate of

overall gross national product (GNP) growth.19 At

higher incomes, however, consumption of steel

levels off as the market saturates (see figure 4-2). A

similar trend has been found for a wide variety of

materials.20 A more detailed analysis has shown that

Figure 4-l-Final Energy Intensity Versus

Manufacturing Value Added for Brazilian

Manufacturing Industries in 1980

Tonnes of oil equivalent per million Cruzeiro$

45 (constant 1980 Cruzeiro$)

4 0 -~

Non-ferrous and other metals (7.8)

+Ceramics (5.0)

3 5 - “

-Cement (6.9)

3 0 -

25-

Iron and steel (20.3)

20-

+

Non-metallic minerals (4.6)

15-

10“

5 -

0 1 , , , —– T ——

0 10 20 30 40 50 60 70 80 90 100

Contribution in percent

The number displayed for each bar is the sector’s contribution to

total final energy use in Brazilian manufacturing, in percent.

SOURCE: Jose Goldemberg et al., Energy for Deve/oprnent (Washington,

DC: Worfd Resourees Institute, 1987).

at about U.S.$2,000 per capita GDP, both the

production and the consumption of energy intensive

materials largely saturates-the elasticity of production and consumption with GDP is near zero.21 This

point of saturation is, however, still a long way off

for most developing countries.

Although consumer goods such as electric lights,

refrigerators, televisions, and automobiles are less

energy intensive to assemble than basic materials,

large amounts of energy are nevertheless used in

their manufacture. Most of this energy is for low

temperature process heat and electricity to power

motors driving pumps, fans, compressors, conveyors, and machine tools .22 The consumption of

consumer goods is also increasing rapidly in developing countries, aided by their declining real cost

IQ~w-imY. Metier and OSCar de Bmyn Kops, World B- ‘‘Energy Efficiency in the Steel Industry with Emphasis on Developing COllXIhieS, ’

World Bank Technical Paper No. 22, 1984; and World Bank, WorldDevelopmentRepon 1990 (New Yor~ NY: Oxford University Press, 1990), indicator

tables 1 and 26. Note that steel production however, is concentrated in a few countries.

~obert H. Williams, Eric D. Larsoq and Marc H. Ross, “Materials, Affluence, and Industrial Energy Use,’ AnnualReview ofEnergy, vol. 12,1987,

pp. 99-144. Simply pu4 there is a limit to the number of steel/cement intensive cars, refrigerators, buildings, roads, bridges, pipelines, etc. that a person

needs. Eventually, consumption levels tend to plateau at replacement levels. When these wants for basic materials are fulfiile~ people tend to spend

incremental income on higher value-added materials-such as those with a highquality ftish-or on less material intensive but higher value added

consumer goods. It is important to recognize these trends so as to not overestimate future demands for these energy-intensive materials.

Ll~n M. shout, ‘‘Ene~-btensive Mtetis! ‘‘ Ashok V. Desai (cd.), Patterns of Energy Use in Developing Counm”es (New Delhi, India: Wiley

Eastern Limited, 1990), pp. 106-107.

22~e ~mition from an ~onomy f~~sed on heavy ind~q pr~ucfig enqy intensive rnattis such ss steel and cement to ~ economy tbt

concentrates on the manufacture of consumer goods can have a profound impact on the overall energy intensity of the economy.
Chapter 4-Energy Services: Industry and Agriculture ● 101

Table 4-10-Per Capita Primary Industrial Energy Use

in The United States

U. S., 1980s

Fuel Electricitya

Industry (GJ/cap)

By subsector:

Primary metals . . . . . . . . . . . . . 10.1

Chemicals . . . . . . . . . . . . . . . . 11.1

Refining . . . . . . . . . . . . . . . . . . 23.5

Stone, clay, glass, cement . . . 3.3

Pulp and paper . . . . . . . . . . . . 9.2

Food . . . . . . . . . . . . . . . . . . . . . 3.4

Textiles . . . . . . . . . . . . . . . . . . . 0.9

Machinery b . . . . . . . . . . . . . . . . 3.0

Subtotal . . . . . . . . . . . . . . . . 64.5

Other industry . . . . . . . . . . . . . 2.5

By service:

Motor drive . . . . . . . . . . . . . . . NA

Lighting and other . . . . . . . . . . NA

Electrolytic . . . . . . . . . . . . . . . . NA

Boilers. . . . . . . . . . . . . . . . . . . . 28.6

Process heat . . . . . . . . . . . . . . 17.0

Feedstocks . . . . . . . . . . . . . . . 21.4

6.1

6.3

1.9

1.5

3.9

2.0

1.2

5.1

28.0

3.1

21.7

2.9

4.4

NA

2.2

NA

with new materials and improved manufacturing

techniques (see ch. 2).

There are numerous opportunities to reduce the

energy intensity of delivering industrial goods and

their corresponding services (see table 4-5). Further,

at least for electricity using technologies, these

efficiency improvements generally lower both the

total installed capital costs viewed from a societal

perspective—factory investment plus upstream utility or other energy supply investment-as well as

the life cycle operating cost for the user. These

society wide financial advantages are shown in

figures 4-3a and b together with the sharp shift in

capital cost from the utility to the end user. Means of

easing these capital costs to the user are needed if

these high efficiency technologies are to be adopted

and society to realize their financial and environmental advantages. These efficient technologies can

also provide significant improvements in plant

productivity, quality, and competitiveness.

Among the many opportunities for improving

industrial energy efficiency, three are singled out

here. It is important to view these opportunities,

Figure 4-2-Per Capita Steel Consumption Versus

GNP for Various Countries

Per capita steel consumption, kg

1,000 j

I

o 5 10 15 20

Per capita GNP (U.S. 1990 $thousands)

The saturation of the steel market at higher income levels as

national infrastructures are developed is readily seen in linear or

logarithmic plots. It is shown herein a semilog plot so as to better

display both low-end and high-end data. Each data point represents a country.

SOURCE: U.S. Congress, Office of Technology Assessment, Energy in

Developing Countries, OTA-E-486 (Washington, DC: U.S.

Government Printing Office, January 1991).

however, not as simple retrofits or equipment

upgrades, but rather as one facet of the larger drive

to modernize the industrial sector.

First, there are numerous opportunities to improve

the energy efficiency of existing and new electric

motor drive systems in industry. These include the

use of motors designed for energy efficiency; the use

of mechanical or electronic adjustable speed drives

in order to match the speed of the motor to the load

it is driving; improved pumps, fans, and other driven

equipment; and improved design methods for properly sizing and interconnecting the many complicated components of a complete motor drive system.

Motor drive will be a key focus here due to the

importance of the electric sector in developing

countries.

Second, there are a variety of ways in which

specific manufacturing processes can be made more

energy efficient. These are examined below for four

industries-steel, cement, chemicals (fertilizer), and

pulp and paper. These measures include housekeeping, retrofits of existing plants, and the establishment of state-of-the-art or advanced processes in

new plants. Efficiency opportunities include the use

of waste heat. Low temperature waste heat can be

used in-plant to preheat materials; it can be used
102 . Fueling Development: Energy Technologies for Developing Countries

Figure 4-3A—Total Systemwide Capital and Life Cycle

Operating Costs and Energy ‘Consumption -

for Conventional and High Efficiency

Industrial Motor Drive Technologies

Percent

$110) $194) 300)

Capital, Life cycle, Energy use,

$/capita $/capita W/capita

Lti Conventional technology ~ Efficient technology

Over a wide range of conditions high efficiency technologies have

a lower systemwide capital cost than the conventional technologies because the increased capital cost to consumers is more

than offset by the decreased capital investment required in

upstream electricity y generating plants. Life cycle operating costs

are lower because the increased capital costs to the consumer are

more than offset by the lower electricity costs to operate the

equipment.

SOURCE: U.S. Congress, Office of Technology Assessment, 1992. See

app. A for details of this calculation, including the assumptions

and a sensitivity analysis.

outside of plant in neighboring industry or perhaps

for district heating schemes in regions with cold

weather such as northern China. High temperature

waste heat can also be used in (or generated by)

cogeneration systems. The focus here will be on the

equipment and processes themselves.

Third, energy intensive materials can be used

more effectively than at present. Smaller quantities

of higher performance materials, such as high

strength steel alloys, can often be substituted for

larger quantities of lower performance materials.

Materials can be more extensively recycled and

products reused or remanufactured. Quality control

as well as such techniques as near-net shape

processing in producing basic materials or finished

consumer goods can play an important role in saving

energy by reducing the amount of scrap and reworking that is necessary.

Although the basic technologies remain the same,

other factors—raw materials, capital, labor, techniFigure 4-3B—Allocation of Capital Costs for

Conventional and High Efficiency Industrial

Motor Drive Technologies

Allocation of capital costs, percent

100- ($110)

[

(11%)

‘ \

8 0 -

\

~. \ \

~.

6 0 -

4 0 -

(89%) (73%)

20““

o L1——.._—–—L --- – 1-— -- .– - –-...– L

Conventional technology Efficient technology

[ ‘1 Utility investment ~ Consumer investment

Although the high efficiency technologies have lower system wide

capital casts, they dramatically shift the capital rests from the

utility to the industrial or agricultural user. The high capital cost of

efficient equipment to consumers is the reason why it is not more

heavily invested in-even though it provides net savings to society

overall and, indirectly, to the consumer. Means of reducing this

initial capital cost barrier to the consumer are critical.

SOURCE: U.S. Congress, Office of Technology Assessment, 1992. See

app. A for details of this calculation, including the assumptions

and a sensitivity analysis.

cal and managerial manpower, political, trade regimes, and many others-vary dramatically between countries. These cases range from informal

rural cottage industries, to protected nationalized

industries with little external technical input, to

subsidiaries of multinationals that have access to the

best technologies available.23 This wide range of

conditions and capabilities requires a similarly wide

range of policies in order to respond appropriately.

When considering various efficiency options, it is

important to consider the time scales involved. At a

sustained rate of growth in the industrial sector of 8

percent annually, 24 the manufacturing plant that

exists now in a country will constitute less than half

of the total manufacturing plant of the country in 10

years and less than one-fourth in 20 years. Housekeeping and retrofits of existing plants may be

important over the short term for energy savings and

for instilling a consciousness about the importance

of energy savings. With such rapid growth, however,

~Depending on local conditions and corporate strategic plans, however, the corporation may not make use of the best technology it has available.

24~e average amu~ *0* rate of ~d~~ fi tie 1OW income economies ~~~n 1965 and 1988 was about 8.8 percent. S=: World Ba& World

Deve(opmenr Report 1990 (New York NY: Oxford University Press, 1990), indicator table 2.
Chapter 4-Energy Services: Industry and Agriculture ● 103

housekeeping and retrofits will play a much less

significant role in saving energy over the longer term

than ensuring that new investments are targeted

towards high efficiency state-of-the-art plants or

even the adoption of advanced manufacturing processes. The choice of targeting existing plant and

equipment or new investments for energy efficiency

will then depend on the complex tradeoffs of the

potential gains versus the limited manpower and

capital that can be invested.

On the other hand, the industrial sector is growing

at a much slower rate in many other countries,

particularly Africa and Latin America. In these

areas, retrofits of existing plant and equipment must

be emphasized-especially where capital constraints

inhibit modernization generally .25

There are a variety of barriers to improving the

energy efficiency in the industrial sector of developing countries. Some of these barriers as well as

potential policy responses are summarized in tables

4-6 and 4-7.

Agriculture

Relatively little commercial energy is used directly in the agricultural sector, ranging from less

than 1 percent of the national total in the United

States to perhaps 5 to 8 percent of the national totals

in developing countries such as Brazil, China, India,

and Kenya. The developing countries, however, will

need to increase energy intensive inputs-fertilizer,

irrigation, improved crop varieties, and animal or

mechanical traction-into agriculture if they are to

keep up with their rapid population growth.26 The

agricultural sector is particularly important for the

role it plays in improving the living standards of the

rural poor.

The efficiency of many agricultural operations

can be improved. These include improvements in

pumping systems, mechanical traction, and in the

production and application of chemicals such as

fertilizers (discussed under industry). There are also

many opportunities for decentralized power production through the use of renewable (see ch. 6) or for

improving or changing the task itself-such as using

drip irrigation or even going to advanced agroforestry or other agricultural techniques. A considerable effort to provide extension services will be

necessary, however, if these opportunities are to be

realized by the highly dispersed agricultural sector.

MOTOR DRIVE SYSTEMS27

Traditional industry, agriculture, transport, and

household activities rely primarily on human and

animal muscle for mechanical power. When only

muscle power is available, many hours can be spent

on ‘‘enabling’ activities, such as hauling water or

grinding grain, rather than on more directly economically productive activities. Productive industrial or

agricultural activities themselves are sharply limited

by the low efficiency and output of muscle power. If

the productivity of people in developing countries is

to be increased, modern motor drive technologies

and supporting infrastructures must be made available at affordable costs. As these technologies are

adopted, energy use--especially electricity-will

increase rapidly.

The efficiency, convenience, and high degree of

control of electric motors provide dramatic efficiency and productivity improvements in industry,

agriculture, and other sectors. 28 This led to a rapid

transition in the industrialized countries from water

and steam powered drive to electric drive in the early

1900s (see figure 4-4); the electricity intensity of

industry continues to increase today in industrialized

as well as developing countries.

Electric motor drive today consumes an estimated

58 to 68 percent of the electricity used in the United

States and even more in the industrial sector alone.

Motor drive is similarly important in developing

countries (see tables 4-11 to 4-14). Electric motors

~GabrieI Sanchez-Sierra, organization LatinoAmericana de Energia, personat CorMnuniHtion, JtdY 15, 1991.

zG~e ~crcase in Cncrg use will be somewhat 1ess for integrated agroforestry or other advanced sustainable @cultu~ approaches.

JT~cipal sowces for this section are: Samuel F. Bddw~, ‘‘Energy-Efficient Electric Motor Drive Systems, “ Thomas B. Johansson, Birgit Bodhmd,

and Robert H. Williams (eds. ), Electricity: Eficient End-Use andNew Generation Technologies, and Their Planning Implications (Lund, Sweden: Lund

University Press, 1989, pp. 2 1-58), used with permission; Samuel F. Baldwin, ‘ ‘The Materials Revolution and Energy Efficient Electric Motor Drive

Systems, ” Annual Review of Energy, vol. 13, 1988, pp. 67-94, used with permission from the AnnuuZ Review of Energy, vol. 13, copyright 1988 by

Annual Reviews, Inc.; and Samuel F. Baldwin, ‘

(Energy-Efficient Electric Motor Drive Systems, ” Princeton University, Center for Energy and

Environmental Studies, Working Papers No. 91, 92, 93, and 94, February 1988.

28 Samuel F. Batdwi& ‘The Materials Revolution and Energy Efficient Electric Motor Drive Systems, ’ Annual Review of Energy, vol. 13, 1988, pp.

67-94; W.D. Devine, Jr., “Historical Perspective on Electrification in Manufacturing, ” S. Schurr and S. Sonenblum (eds.), Electricity Use: Productive

Eficiency and Economic Growth (Palo Alto, CA: Electric Power Research Tmtitute, 1986).

297-929 - 92 - 8 - QL : 3
104 ● Fueling Development: Energy Technologies for Developing Countries

Figure 4-4--Percentage of Manufacturing

Mechanical Drive From Water Power,

Steam Engines, and Electric Motors by Year

Manufacturing mechanical drive (percent)

100

80

60

40

20

0

< y

\

“\ d’ ‘“. \

\ /’ \

.

1870 1880 1890 1900 1910 1920 1930 1940

Year

~ Electric motors ‘+- Water

‘* Steam engines

SOURCE: Samuel F. Baldwin,’ The Materials Revolution and EnergyEfficient Electric Motor Drive Systems,” Annua/ Review of

Energy, vol. 13, 1988, pp. 67-94.

are the workhorses of modern industrial society.

They run home refrigerators; drive office air conditioners; power industries’ pumps, fans, and compressors; and keep cities’ water supplies flowing.

Significant efficiency improvements are possible

in electric motors and the systems that they drive.

These gains in energy efficiency usually reduce the

total systemwide—including both the end user and

the upstream utility--capital investment required as

well as the life cycle operating costs for the user.

These improvements will be discussed herein terms

of the overall design and performance of motor drive

systems and the performance of individual components.

Motor Drive System Design

Electric motor drive systems are often large and

complex, involving numerous interacting components. The most common types of motor drive

systems in industry include pumps, fans, compressors, conveyers, machine tools, and various rollers,

crushers, and other direct-drive systems (see table

4-14). A pumping system is shown in figure 4-5

together with the efficiencies and net useful energy

remaining at each point along the system.

Figure 4-5-Energy Losses in an Example Electric

Motor-Driven Pumping System in the United States

Fraction of input coal energy remaining

100

80

60

4 0

20

[

generation (33%)

Transmission and distribution (90%)

i

() +——-T---- ‘T—–—-T—-—-—T-– .-

 -

01234567 8

Point along the pumping system

This figure shows the useful energy remaining at each stage of a

pumping system. The values in parentheses are the efficiencies

of the particular device at each stage.

SOURCE: Samuel F. Baldwin, ’’Energy-Efficient Electrii Motor Drive Systems,” Thomas B. Johansson, Birgit Bodlund, and Robert H.

Williams (eds.), Ekctricity; Efficient EnoWse andNew Generation Txhnologies and Their Planning Implications (Lund,

Sweden: Lund University Press, 1989) pp. 21-58.

Motor driven pumps, fans, and other system

components are usually deliberately designed to be

oversized, that is, to have excess capacity .29 These

components are often oversized partly because it is

difficult to predict system flow rates and friction

factors accurately in advance, and to allow for the

effect of the buildup of deposits on duct and pipe

walls over time. Motors are oversized to handle

starting electrical, mechanical, and thermal stresses,

particularly with high-inertia loads; to provide a

safety margin for the worst-case load over their

lifetimes; and occasionally to handle plant expansion or perhaps to be widely interchangeable within

the plant. In developing countries, oversizing motors

is often important for preventing motor stall and

possible burnout when the line voltage drops. More

generally, these system components are oversized

because the increased energy and capital costs to the

end user are perceived to be less than the risk of

equipment failure. In manufacturing, for example,

average electricity costs in the United States are just

2.8 percent of the value-added;30 the cost of motor

non tie o~er ~nd, pipes and ducts are often undersized to reduce capital costs.

‘M. Ross, “Trends in the Use of Electricity in Manufacturing, ” IEEE Technology and Society, vol. 5, No. 1, March 1986, pp. 18-22
Table 4-11—lndustrial Electricity End Use in Brazil, 1984

Fraction of subsector total for each end use (percent)

Percent of total industrial Process Direct ElectroIndustry electricity consumption Motor heat heat chemical Light Other

Nonferrous metals . . . . . . . . . . . . . . . . . .

Iron and steel . . . . . . . . . . . . . . . . . . . . .

Chemicals . . . . . . . . . . . . . . . . . . . . . . . .

Food and beverage . . . . . . . . . . . . . . . . .

Paper and pulp . . . . . . . . . . . . . . . . . . . .

Mining and pelletization . . . . . . . . . . . . .

Textiles . . . . . . . . . . . . . . . . . . . . . . . . . . .

Steel alloys . . . . . . . . . . . . . . . . . . . . . . .

Ceramics . . . . . . . . . . . . . . . . . . . . . . . . .

Cement . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total a 

. . . . . . . . . . . . . . . . . . . . . . . . . .

20.9

12.4

11.9

9.0

6.5

5.6

5.3

4.8

3.9

2.7

17.0

100.0

32

1

79

6

87

50

89

7

65

91

76

49

1

NA

5

78

8

NA

4

NA

NA

NA

2

10

35

98

4

16

2

49

1

92

34

6

16

32

32

NA

9

NA

NA

NA

NA

NA

NA

NA

NA

NA

1

1

3

1

3

1

5

1

1

3

5

2

NA

NA

NA

3

NA

NA

1

NA

NA

1

1

NA

Table 4-12—Projected Electricity Consumption in India by Sector and End Use, 1990

(percent of total national electricity use)

Industrial process Space conditioning

Motor Process Cooling/ Appliances Other

Sector Total a

drive Electrolysis heat Lighting ventilation Heating Refrigeration Other miscellaneous

Residential . . . . . . . . . . . . . . . 13.0

Urban . . . . . . . . . . . . . . . . . 10.4

Rural . . . . . . . . . . . . . . . . . . 2.6

Commercial . . . . . . . . . . . . . . 11.2

Agriculture . . . . . . . . . . . . . . . 18.4

industrial . . . . . . . . . . . . . . . . . 54.8

Primary metalsb . . . . . . . . . 17.2

Chemicals . . . . . . . . . . . . . 13.8

Textiles . . . . . . . . . . . . . . . . 10.2

Coal, cement . . . . . . . . . . . 6.8

Secondary metalsc

. . . . . . . 3.4

Paper . . . . . . . . . . . . . . . . . 3.4

Railway traction . . . . . . . . . . . 2.6

Motor drive . . . . . . . . . . . . . . . 61.4

NA

NA

NA

NA

18.4

33.4

6.4

8.8

7.8

5.8

1.5

3.0

2.6

54.4

NA

NA

NA

NA

NA

10.8

6.9

3.6

NA

NA

0.2

NA

NA

NA

NA

NA

NA

NA

NA

5.5

3.0

0.1

0.4

0.5

1.4

0.1

NA

NA

4.2 3.5 NA 1.5 1.0 2.9

2.9 2.9 NA 1.2 1.0 2.4

1.3 0.5 NA 0.3 NA 0.5

4.8 1.6 1.5 0.4 0.8 2.1

NA NA NA NA NA NA

5.1 NA NA NA NA NA

0.9 NA NA NA NA NA

1.3 NA NA NA NA NA

2.1 NA NA NA NA NA

0.4 NA NA NA NA NA

0.2 NA NA NA NA NA

0.3 NA NA NA NA NA

NA NA NA NA NA NA

NA 5.1 NA 1.9 NA NA

SOURCE: Ahmad Faruqui, Greg Wilder, and Susan Shaffer, “Application of Demand-Side Management (DSM) To Relieve Electriaty Shortages in India,” contractor report prepared for the Off ice

of Technology Assessment, April 1990.
106 ● Fueling Development: Energy Technologies for Developing Countries

Table 4-13—Electricity Consumption (GWh/year) by Service for 24 Industries in Karnataka, India (1984-85)

Process Lights Share

Industry Motors heat Electrolysis cooling Total (percent)

Aluminum . . . . . . . . . . . . . . . . . . .

Primary steel . . . . . . . . . . . . . . . .

Fertilizer, . . . . . . . . . . . . . . . . . . .

Paper . . . . . . . . . . . . . . . . . . . . . .

Cement . . . . . . . . . . . . . . . . . . . . .

Secondary steel . . . . . . . . . . . . . .

Ferro alloys , . . . . . . . . . . . . . . . . .

Caustic soda . . . . . . . . . . . . . . . .

Graphite . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . .

Share (percent). . . . . . . . . . . . . .

43.4

61.6

206.9

193.4

185.6

68.6

3.4

13.3

7.3

783.6

45.2

0.0

233.6

0.0

0.0

0.0

113.2

118.8

0.0

33.9

499.5

28.8

343.0

0.0

0.0

0.0

0.0

0.0

0.0

95.6

0.0

438.6

25.3

1.57

4.83

1.17

1.05

1.18

1.42

0.22

0.48

0.99

12.90

0.70

387.9

300.0

208.1

194.5

186.8

183.2

122.5

109.4

42.1

1,735.0

100.0

22.4

17.3

12.0

11.2

10.8

10.6

7.1

6.3

2.4

100.0

SOURCE: AmulyaKumarN. Reddy,etal., “AD evelopment-Focussed End-Use-Oriented Energy Scenario forKarnataka: Part 2—Electricity:’ Department

of Management Studies, Indian Institute of Science, Bangalore, India.

Table 4-14—Disaggregation of Electricity Consumption (GWh/yr) by Motors for 24 Industries in Karnataka,

India (1984-85)

Shaft Material Shares

Industry power Compressors Pumps Fans Refining handling Agitating Total (percent)

Aluminum . . . . . . . . . . . . . 1.4

Primary steel . . . . . . . . . . . 34.9

Fertilizer . . . . . . . . . . . . . . 2.3

Paper . . . . . . . . . . . . . . . . 48.5

Cement . . . . . . . . . . . . . . . 97.6

Secondary steel . . . . . . . . . 44.4

Ferro alloys . . . . . . . . . . . . 0.8

Caustic soda . . . . . . . . . . . 0.4

Graphite . . . . . . . . . . . . . . 4,1

9.9

13.6

164.2

4.7

13.7

6.4

0.8

3.0

0.3

21.5 8.3 0.0

6.0 0.0 0.0

39.0 0.0 0.0

66.5 9.2 53.2

10.5 58.3 0.0

11.4 0.0 0.0

0.2 1.7 0.0

6.6 2.5 0.0

0.7 0.0 0.0

1.1

6.3

1.4

3.5

5,6

6.5

0.0

0.3

2.2

1.2

0.0

0.0

7.7

0.0

0.0

0.0

0.4

0.0

43.4

61.6

206.9

193.4

185.6

68.6

3.4

13.3

7.3

5.5

7,9

26.4

24,7

23.7

8.8

0.4

1.7

0.9

SOURCE: Amulya Kumar N. Reddy, et al., “A Development-Focussed End-Use-Oriented Energy Scenario for Karnataka: Part 2—Electricity,” Department

of Management Studies, Indian Institute of Science, Bangalore, India.

failure and unplanned shutdown of the entire process

line can be a much more severe penalty .31

The intent of this design process is understandable

and reasonable. Manufacturers, design engineers,

and users all want to ensure that the system can meet

the demands placed on it at every stage of the

process. Although oversizing can provide direct

safety margins for equipment, it can have unintended negative side effects. For example, when

each successive element of a drive system is sized to

handle the load presented by the previous component plus a safety margin, oversizing can quickly

become excessive and require throttling valves on

pumps or throttling vanes on fans to limit flow. In

addition, many systems need variable outputs. Space

heating and cooling, manufacturing, municipal water

pumping, and most other motor drive loads vary

with the time of day, the season, and even the health

of the economy—such variations can be quite large.

Traditionally, throttling valves or vanes have been

the principal means by which flow is controlled.

This is, however, an extremely inefficient means of

limiting flow. It is analogous to driving a car with the

gas pedal floored, and then controlling the car’s

speed with the brake. Other systems of control,

however, have generally been too expensive, less

reliable, frequently difficult to control, or are themselves inefficient. Even simple approaches, such as

turning a motor on and off to limit output—as with

a home refrigerator-results in significant (if unseen) energy losses.

The direct and indirect energy losses due to such

control strategies include part load operation, poor

SIAD Little, ~ct, Energy EflcienO an~E/e~~ri~ Motors, US Dep~ment of co~~ce Repofi No. NTIS PB-259 129 (Springfield, VA: National

Technical Information Service, 1976). ”
—

Chapter 4--Energy Services: Industry and Agriculture ● 107

power factor, throttling losses, excess duct or pipe

friction, and pump or fan operation off the design

point, among others. Standard engineering design

rules, together with manufacturing safety margins,

sometimes automatically lead to significant inefficiencies of this type, of which the user may be

unaware. Industrial and commercial pumps, fans,

and compressors, for example, have estimated average losses of 20 to 25 percent or more due to

throttling or other inefficient control strategies

alone.32 The losses of complete systems can be much

greater than this, as shown in figure 4-5. The largest

single loss is in the process of electricity generation,

but additional substantial losses take place at every

stage throughout the system.

Motors

The efficiency of standard electric motors is often

significantly lower in developing countries than in

industrialized countries due to the use of lower

quality materials in motor construction and improper techniques in maintenance, repair, and rewind (see figure 4-6).33

High efficiency motors are readily available in

industrial countries and are sometimes available in

developing countries, but in some cases cannot be

used because of the poor quality of the electric power

available. In Brazil, for example, the largest manufacturer of smaller motors exports more efficient

models than those sold at home. These motors,

comparable in efficiency to standard motors in the

United States, often cannot be used in Brazil due to

the excessive variation in the power line voltage. If

the line voltage drops too much, the motor can stall

and possibly burn out. Electronic Adjustable Speed

Drives (ASDs) could buffer such voltage fluctuations, allowing use of the higher efficiency motor

and providing significant energy savings (see below).

Typical costs for one class of standard and high

efficiency electric motors in the industrial countries

are shown in figure 4-7.34 An industrial motor,

Figure 4-6-Efficiency of Electric Motors in the

United States, Brazil, and India

Motor efficiency, percent

[

80- ‘

L- ,+. w

75

x ,,’-

70 ,,, /

65 - ‘ ~

 -

~ ~ ~ ~

 T T ‘--– ‘T -

~ ‘ 7 ~ ‘T

1 10 100

Electric motor size, hp

‘-- Brazil –t Brazil high - Indi a

standard efficiency manufacturer

eff Iclency

0- India field - U.S. high 4> U.S. high

test efficiency efficiency

SOURCE: U.S. Congress, Office of Technology Assessment, Energy In

Developing Countries, OTA-E486 (Washington, DC: U.S.

Government Printing Office, January 1991).

however, can use electricity worth perhaps four

times its capital cost annually .35 Thus, from the user

perspective even the relatively small efficiency

gains of high efficiency motors can quickly pay for

their increased capital costs, particularly in a new

installation or in replacing a damaged motor.

The benefits of improved motor efficiency are

even more pronounced from the system perspective.

In this case, the total capital costs of the system—

including the upstream capital investment in utility

generation, transmission, and distribution equipment along with the cost of the electric motor—

decrease with improved motor efficiency (see figures 4-8a and b), Not only are total system capital

costs reduced by using more efficient motors, but the

substantial utility fuel use and operating costs are

avoided. Total annual operating costs to users are

also lower.

3zsmuc1 F, Baldw@ ~ ‘EnerU.Efficient Electric Motor Dfive SYStems~’ Thomas B. Johansson, Birgit Bodlund, and Robert H. Williams (eds.), op.

cit., footnote 27; William J. McDomld and Herbert N. Hickok ‘‘Energy Losses in Electrical Power Systems, ” IEEE Transactions on Indus~

Applications, vol. IA-21, No. 4, 1985, pp. 124-136.

?jsmuel F. B~dwln and Emlle F1~ay, op. cit., foo~ote 12 ~ p~cu]~, when motors Me rewo~d hey we sometimes simply put On an Open f~e

to burn the insulation off the windings rather than putting them in temperature controlled ovens. This can damage the insulation between the core

laminations and leads to greater losses.

.M~e ~lt horsepower (hp) is used here ra~er man kw in order to distinguish between kW of input dtX@iC pOWer and @ of output s~t Power. One

horsepower is equal to 0.7457 kW.

~soperatlng 5,~0 ho~s per yea at 7Dpercent load, a 9@percent efficient motor amually consumes 2,9~ km per hp. At $0.OT~~~s costs $*N

In comparison, motors cost roughly $50/hp.
108 . Fueling Development: Energy Technologies for Developing Countries

Figure 4-7—Efficiency and Cost of Standard and

Energy Efficient Motors in an Industrial Country

Motor efficiency, % Motor capital cost, $/hp ~Oo

100

High efficiency

9 5 - ~-25 0

9 0 -

Motor

‘ ‘‘Cy~’-200

~

Standard

8 5 - / , ‘ 150

,/ ‘.

8 0 - “

/ “

75 ~

~>~:.?z:~::0

Standard

—.

70 L -—— T– –T —- T r TT —- ——-— ~ –~ ~-~–.~.— — o

1 10 100

Motor size, hp

This figure shows that for all sizes of motors, high efficiency

models have a higher capital cost than standard models. This

additional capital cost generally decreases as motor size increases. Note that these values are given per horsepower of

motor capacity. Large motors will cost more in total, but less per

unit capacity.

SOURCE: Marbek Resouree Consultants, Ltd., ’’Energy Eff ieient Motors in

Canada: Technologies, Market Factors and Penetration Rates,”

Energy Conservation Branch, Energy, Mines and Resourees,

Canada, November 1987. See app. A of this report for details.

Small but highly cost effective efficiency gains

are also possible in many cases by increasing the size

of the cables ruining to the motor and making other

improvements in power system equipment.36 For

example, national standards for electrical cable sizes

are often based on minimizing fire hazard rather than

energy use. Larger cables are even safer because

they have lower electrical resistance and generate

less heat. These same characteristics can also enable

larger cables to often quickly pay for themselves in

reduced electricity costs to the user alone, not

including the substantial upstream benefits of reduced system capital costs.37 Other improvements in

motors 38 and motor operating conditions39 are possible that can provide small but highly cost effective

energy savings. New technologies are also becoming available, such as high performance permanent

magnet motors, that allow further improvements in

efficiency. w

Plant engineers in many countries, however, may

have a difficult time choosing between high efficiency motors offered on the market as measured

efficiencies vary substantially according to the test

standard 41 used (see table 4-15). In general, the

Japanese test standard suggests higher efficiencies

than the European standards, and the European

standard gives higher values than the North American. Thus, a motor purchased from Japan could have

a higher reported test efficiency but a lower actual

efficiency than a similar motor purchased from the

United States due to the difference in testing

methodologies. This variation might correspondingly play a role in market competitiveness for

different fins. It suggests a need for international

efficiency testing protocols, probably best administered in regional test centers in both developed and

developing countries.

Pumps and Fans42

Pumps and fans are, overall, the most common

motor driven equipment.43 In principle, equipment is

chosen so that the optimal efficiency is matched to

the operating conditions. In practice, there are

numerous design complications due to oversizing,

~wfl~ J. McDonald and Herbert N. Hickolq “Energy Imsses in Electrical Power Systems,” IEEE Transactions on Industry Applications, vol.

IA-21, No. 4, 1985, pp. 803-819.

B~tioV B, IAWinS et. al., The State of the Art: Drivepower (Snowmas s, CO: Rocky Mountain Institute, April 1989).

380f p@CulM interest iS minimizing core damage due to excessive temperatures when motors are rewound and improving operating motor

maintenance such as lubrication etc.

390f p~c~~ ~terest my~~pmv~g fie ~wer factor, reducing vol~ge fluct~tions on tie l~e, ~~cingthr(x-piM.w power, ~d controlling

line harmonics,

@sauel F. 13aldwiq ‘Energy-Efficient Electric Motor Drive systems,’ Thomas B, Johansson, Birgit Bodlun& and Robert H. Williams (da.), op.

cit., foomote 27; Amory B. Lovins et. al., The State of the Art: Dn’vepower (Snowmas s, CO: Rocky Mountain Institute, April 1989).

dlNote tittie word ~ Cs@n~dT here refers to he testing rne~odologyus~ to rn~~e motor pelfoww. It does nOt ~ a particular level of

performance required by law or other codes.

dz~e use of tie tem ‘Cf~s ” here is intended to include ind~ti blow~s.

43~p~and fam me be pmfww here. me consideration for compressors are similar, with the exception m Whm I@W adjus~ble s@

drives the larger static pressure that compressors work against make it more dillkult to optimally match the performance map of the compressor to the

system load curve across a wide range of operating conditions. Conveyer systems for solid materials also use substantial amounts of electricity in industry,

A brief review of potential eftlciency improvements in their design can be found in: William E. Biles, “Solicts Conveying,” Technology Menu for

Eficient End-Use of Energy: Volume 1: Movement of Material (Lund, Sweden: Environmental and Energy Systems Studies, Lund University Press,

1989).
Chapter 4--Energy Services: Industry and Agriculture ● 109

Figure 4-8A—Standard and High Efficiency Motor

Capital Costs Including Motor and Upstream Utility

Equipment To Power It

Total system capital cost, $/hp

145 ~- ‘- —--- ‘

-- — -– –-——-—– 7

Figure 4-8B—Standard and High Efficiency Motor

Operating Costs Including Both Annualized Motor

Capital Investment and Annual Electricity Costs

Total annual operating cost, $/hp

350 r-— ‘— -

115

105

k.

+

‘*

+. * Standard

* ‘- *

%

95 ‘ ‘ ~• - 7 7 T,-- T T T r r

- -

1 1

—

‘––—’

1 10 100

Motor size, hp

This figure shows that for all sizes of motors considered, total

system capital costs are lower for high efficiency motors. Note that

these values are given per horsepower of motor capacity. Large

motors will cost more in total, but less per unit capacity.

SOURCE: U.S. Congress, Office of Technology Assessment, 1992. See

app. A for details.

I ‘% “ ‘%-. Standard

275 k ‘- *-+.

250

“%% ‘%.

-Y, ++ -

-+--+. .+- -4 + A +–N+-

High efficiency “ + --+ +

225 ] , --- - 1—1 - r 7 - 1 - T7 T , T

J

1 10 100

Motor size, hp

This figure shows that for all sizes of motor considered, total

annual operating costs are lower for high efficiency motors. Note

that these values are given per horsepower of motor capacity.

SOURCE: U.S. Congress, Office of Technology Assessment, 1992. See

app. A for details.

Table 4-1 5—Comparison of Efficiency Testing Standards for Motors

Full-load efficiency (percent)

Standard Motor size 7.5 hpa

20 hpa

CSA C390 . . . . . . . . . . . . . . . . . . 80.3%. 86.9%

NEMA MG-1 . . . . . . . . . . . . . . . . 80.3 86.9

IEC 34-2 . . . . . . . . . . . . . . . . . . . . 82.3 89.4

JEC-37 . . . . . . . . . . . . . . . . . . . . . 85.0 90.4

Motor size 5 hpb10 hpb20 hpb75 hpb

IEEE 112B . . . . . . . . . . . . . . . . . . 86.2% 86.9% 90.4% 90.0%

IEC 34-2 . . . . . . . . . . . . . . . . . . . . 88.3 89.2 91.4 92.7

JEC 37 . . . . . . . . . . . . . . . . . . . . . 88.8 89.7 91.9 93.1

throttling, and other practices that move the system

operating point away from the optimal efficiency.

Many pumps are also poorly designed and built,

resulting in far lower efficiencies than technically

and economically possible. Figure 4-9 shows the

wide scatter in measured performance of new pumps

in the United States. Factors that lower intrinsic

pump efficiency include: excessive friction due to

rough surfaces, poorly finished edges, and poorly

shaped contours of the pump surfaces; interred

leakage of fluid; and friction in the bearings and

seals. Corresponding means of improving efficiencies include smoother and more carefully contoured

internal surfaces; tighter tolerances;44 and higher

quality bearings. Further efficiency gains are often

possible by operating the pump at a higher speed.

Many of these efficiency improvements are possible

at little cost.

Similar considerations apply to fans where large

efficiency gains are likewise possible by choosing

amen ~mp~g d~ water, e[c, or m~ed p~se materials, larger tolerances may be preferable despite tie efficiency Pe~tY.
110 . Fueling Development: Energy Technologies for Developing Countries

Figure 4-9—Actual New Pump Efficiencies at the Design Point,

United States, 1970s

I N, = 2.000

—

1 . ● ● ✎ “-S

1 ●

●

● ● , 0

‘::””.;-WF “.:.”

●

●

● ● ✍ ✌

‘o . ● ,

,0 ●

●

●

.0 ●

I I I I

50 100 500 1,000 6,000 10,000

Capacity, gallons per minute

Note the wide scatter in efficiencies below what is expected in good design practice, as indicated by the

solid lines for different pump speeds.

SOURCE: U.S. Department of Energy and Arthur D. Little, Inc., C/assifimtion ar?d Evacuation of Hectrk Motors and

Pumps, Report No. DOE-CS-0147 (Springfield, VA: National Technical Information Serviee, February

1980).

more efficient designs, operating them close to their backwardly curved fans are essentially interchangedesign point, and by other means. Ranges for peak able with forwardly curved fans, but are typically10

fan efficiencies are shown in table 4-16; many fans to 20 percentage points more efficient at a roughly

do not come close to these values. In some applica- 15 percent cost premium. Fan and air handling

tions, of course, the highest efficiency designs efficiencies are particularly important in commercial

cannot be applied .45 Of particular note is that buildings, where up to half of the electricity use

ds~wer efficie[~cy fans might be used, for example, to handle corrosive gases or gases with erosive pticles such m tiose com off a ~ce.
— ———.

Ckapter 4--Energy Services: Industry and Agriculture . 111

Table 4-1 6-Estimated Maximum Total Efficiencies for

Assorted Fan Designs

Peak efficiency

Type range (percent)

Centrifugal fans:

Airfoil, backwardly-curved . . . . . . . . . . . .

Modified radial . . . . . . . . . . . . . . . . . . . . . .

Radial . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pressure blower . . . . . . . . . . . . . . . . . . . .

Forwardly curved . . . . . . . . . . . . . . . . . . .

Axial fans:

Vaneaxial . . . . . . . . . . . . . . . . . . . . . . . . . .

Tubeaxial . . . . . . . . . . . . . . . . . . . . . . . . . .

Propeller . . . . . . . . . . . . . . . . . . . . . . . . . .

79-83

72-79

69-75

58-68

60-65

78-85

67-72

45-50

SOURCE: J. Barrie Graham, “Fans,” Technology Menu For Efficient

End-Use of Energy, Volume 1: Movement of Material, Environmental and Energy Systems Studies, Lund University, Lund

Sweden, 1989.

occurs in air handling systems for building heating,

cooling, and ventilation.46

Many pumps and fans are also poorly maintained

and efficiencies can decrease markedly over time

due to wear. One study of 84 large pumping systems,

primarily in pulp and paper mills in Sweden and

Finland, found that wear alone had reduced average

pump efficiencies by 14 percentage points compared

to their original performance.47

Improvements in a pump or fan have a large

upstream multiplicative impact due to the losses in

transmission and distribution (typically 15 percent

in developing countries), motors, couplings, and

other equipment between the pump/fan and the

utility (see figure 4-5), An example of the very large

potential upstream capital and operating cost savings that are possible by improving pump or fan

performance are shown in table 4-17. On an annualized basis, upstream utility capital cost savings are

nearly 10 times greater than the incremental cost of

the improved motor and pump/fan. Operating costs

of the less efficient system increase this differential

even more. Two factors give rise to this huge

leverage: the multiplicative effect of the energy

losses noted above; and the much greater capital cost

per unit energy supply/demand for utility equipment

than for the motor/pump system.

Despite these potential savings, users of pumps/

fans have often not paid particular attention to pump

or fan efficiency. There are many reasons for this:

Pump/fan performance is difficult to measure in the

field and requires special equipment and effort,48

and it can require cutting holes in pipes or ducts as

well as even shutting down a process line. Many

users are unaware of the potential savings. Users are

not directly exposed to and do not consider the utility

investment requirements that result from their

choice of pump or fan. In some cases, industrial

users’ electricity rates are subsidized (although

industrial users often pay full price or even cross

subsidize the residential, commercial, or agricultural

sectors). Finally, industrial investment decisions are

often shifted away from energy efficiency improvements due to tax structures; tariffs on imported high

efficiency equipment (even though that may result in

greater imports of expensive utility generating

equipment); and internal financial accounting controls. For example, accounting procedures may use

a limited capital improvements budget wherein

projects compete against each other for a limited

pool of funds rather than against an external market

interest rate determined rate-of-return criteria.

In addition, many users, unaware of the large

potential energy savings, justifiably place very high

premiums on the proven reliability of a certain type

of pump/fan and its manufacturer; on minimizing

spare parts inventories and simplifying maintenance; and on timely delivery of spares. For

example, users are often unwilling to switch to a

different manufacturer to get a few percent higher

efficiency pump/fan for a specific application when

their regular manufacturer’s offerings do not provide

a high efficiency pump/fan in that flow and pressure

range. Many pumps/fans are incorporated in other

equipment by Original Equipment Manufacturers

‘J. Barrie Graham, ‘‘ Fans,” Technology Menu For Efi”cient End-Use of Energyp Volume 1: Movement of Material (h.md, Sweden: Environmental

and Energy Systems Studies, Lund University Press, 1989); “Fans: A Special Repo~’ Power, Septcmber 1983; Scott L. Englander, “Ventilation

Control for Energy Conservation: Digitally Controlled Terminal Boxes and Variable Speed Drives, ” Princeton University, Center for Energy and

Environmental Studies, Report No. 248, March 1990.

dTEric D. ~on and Lars J. Nilssom ‘‘Electricity Use and Efficiency in Pumping and Air Handling Systems,’ paper presented at ASHRAE

Transactions, June 1991 ASHRAE Meeting, Indianapolis, IN.

~For exmple, t. ma~ure pump efficiency rquires that the motor power input tO the pump and me pump power output (flow of liquid ~d Pressure

drop) be measured. To measure the motor power input to the pump in the field requires the use of power meters and tachometers. To measure the flow

and pressure drop across a pump requires flow meters and pressure g~uges and is usually an invasive procedure. For more informatiorL see: Samuel F.

Baldw@ “Energy-Efficient Electric Motor Drive Systems, ’ Princeton University, Center for Energy and Environmental Studies, Working Papers No.

91,92, 93, and 94, February 1988.
112 . Fueling Development: Energy Technologies for Developing Countries

Table 4-17-Capital and Energy Savings With Improved Pumps

Standard pump system Efficient pump system

Annual Annual

Power capital Power capital

Efficiency output cost Efficiency output cost

percent kW dollars percent kW dollars

Generator . . . . . . . . . . . . . . . . — .

17.4

T&D . . . . . . . . . . . . . . . . . . . . . 85% .

14.8

Motor . . . . . . . . . . . . . . . . . . . . 90% —

13.3

Pump . . . . . . . . . . . . . . . . . . . . 7570 —

10.0

Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investment in motor/pump . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annual capital savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annual electricity savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

—

$3,250

$ 107

.

$ 110

$3,467

—

—

—

85%—

94%

—

80%

—

15.6

—

13.3 —

12.5

—

10.0

—

—

$2,936

$12 1

$13 2

$3,189

$ 36

$ 278

$ 540

presented at the June 1991 ASHRAE Meeting, Indianapolis, IN.

SOURCE: Office of Technology Assessment, 1992.

(OEMs) and sold as a package; lowest first cost, not

energy efficiency, is usually the primary concern of

an OEM.49

As for the case of electric motors, these considerations suggest the need for careful, standardized

testing of new pump/fan efficiencies; ongoing monitoring of pump/fan performance in the field; wide

dissemination of both new and field measured

performance of pumps/fans; and finding a means of

incorporating potential utility capital savings in the

considerations of the industrial end user.

Adjustable Speed Drives

Adjustable speed drive (ASD) technology allows

a significant change in system design and operation.

In contrast to the conventional practice of oversizing

systems, using constant-speed motors to drive them,

and throttling excess flow with vanes or valves,

ASDs and their associated sensors and controllers

allow precise matching of motor speed to load. This

can significantly improve overall system efficiencies both directly and indirectly. Further, this

flexibility may allow design rules that lead to

extreme oversizing to be relaxed, potentially reducing capital investment in some system components

by the end user.

ASDs offer a number of other benefits as well.

They often increase equipment lifetimes:

. by avoiding the back-pressures generated by

conventional throttle valves or vanes used to

limit the output of pumps or fans;

49u.s. Dep~ent of Energy and Arthur D. Little, kc., ‘‘Classification and Evaluation of Electric Motors and Pumps, ’ Report No. DOE/CS-0147

(Springtleld, VA: National Technicaf Information Service, 1980).
Chapter 4---Energy Services: Industry and Agriculture . 123

. by permitting constant lubrication of bearings—

in contrast to equipment operated in an on-off

mode;

. by allowing operation at reduced speeds; and

● by permitting slow, controlled starts to reduce

electrical stresses on motors, transformers, and

switchgear, and to reduce mechanical stresses

on motors, gears, and associated equipment.

Other ASD advantages include:

●

●

●

●

isolation of the motor from the power line,

which can reduce problems caused by varying

or unbalanced line voltage;

a ‘‘ride through’ capability if there is a power

failure for a few cycles;

operation at higher speeds than the 60-Hz line

frequency allows; and

easy retrofits to existing equipment.

Finally, and perhaps most importantly:

. ASDs often provide better control over manufacturing processes or in other equipment than

conventional systems can achieve, improving

process and product quality.

This description may suggest that ASDs are

hi-tech devices applicable only in advanced manufacturing plants in industrial countries. In fact, ASDs

are likely to become ubiquitous and offer significant

opportunities in developing countries--by buffering

line voltage fluctuations, reducing systemwide capital costs, reducing user operating costs, reducing

energy use, and improving the manufacturing process, among others.

Adjustable-speed drives are being successfully

used in numerous applications today in OECD

countries and their use could be extended to

developing countries. In industry they are used in

boiler fans in chemical plants, utility plants, packaging equipment, glass-blowing machines, cement

factories, and many others. In commerce they are

used in commercial refrigeration systems, heating,

ventilation, and air conditioning (HVAC) systems

for buildings, and other applications. In residences,

they are used in air conditioning and heat pump

systems .50 Several hundred thousand ASDs have

now been sold in the United States.

Individual case studies have documented energy

savings of 30 to 50 percent in fan and boiler

feedpumps, 20 to 25 percent in compressors, 30 to 35

percent in blowers and fans, 20 to 25 percent in

pumps, 25 to 35 percent in central refrigeration

systems, and 20 percent in air conditioning and heat

pumps.

51 Of course, ASDs do not provide savings in

constant-speed full load applications, so national

energy savings will be less than might be calculated

by assuming universal adoption at the above efficiencies.

The capital costs of ASDs have declined some 7

to 12 percent in real terms over the past 4 years52 and

are likely to continue slowly declining with improvements in ASD technology, manufacturing

processes, and as further economies of scale and

learning in manufacturing are achieved.53 Figures

4-10a, b, and c show current capital costs for ASDs,

and the corresponding total system capital costs

(including those of the utility) and life cycle

operating costs.54 At the low end of the size scale (a

fraction of a horsepower (hp)--not shown), the cost

of mass produced ASDs used with residential heat

5oDe~fl~ fis~gs of references for each of t,hese cases are given in Samuel F. Baldw@ “Energy-Efficient El@ric Motor Drive Systems, ’ ‘rho~s

B. Johanssom Birgit Bodlund, and Robert H. Williams (eds.), op. cit., foomote 27.

SIDe~~ listings of tiese case studies can be found in Bddti Ibid.

szEI-ic D. won and bS J. Nilssoq ‘‘Elecrncity Use and Eftlciency in Pumping and Air Handling Systems, ’ paper presented at ASHRAE

Transactions, June 1991 ASHRAE Meeting, Indianapolis, IN.

53 Costs ~~ not decl~e ~ rapidly as hey ~ve for o~er el~~onics tec~ologies, however. For e-le, much of the dHUIMtiC decline in cost ad

performance increases in the computer industry are possible because individual transistors on integrated circuits can be scaled down in size with no loss

of function (actually, there is a gain in performance as higher system operating speeds are then possible). Computer circuits handle information and there

is no inherent lower limit on the amount of energy needed to carry a bit of inforrnationj at least down to inherent circuit noise. In contrastj ASDS handle

large amounts of power-up to thousands of kilowatts-in order to drive a motor. lb handle these powers requires large quantities of very high quality

electronic materials, primarily silicon, and the quantities of materiat required cannot be scaled down as they can for a computer circuit. This greatly slows

the pace at which costs can be reduced. For smaller loads such as refrigerators and air conditioners, however, power mosfets may allow the entire ASD

to be fabricated on a single chip. This would allow significant cost rcxiuctions in this size range as fabrication yields improved.

~Additio~ de~s on ASD capl~ costs cm be fo~d ~: Power E]ec@onics Appli~tions cater, Directory Adjustable Spe~Drives, second t!ditiOIl

(kilo Alto, CA: Electric Power Research Institute, 1987); and Everett B. Thrner and Charles LeMone, ‘‘Adjustable-Speed Drive Applications in the Oil

and Gas Pipeline Industry, ” IEEE Transactions on Industry Applications, vol. 25, No. 1, pp. 30-35, 1989. In large sizes, e.g., 750 hp and above, ASD

capital costs can be less than $100/hp at the low-cost end; at sizes of 5,000 hp and above, ASD capital costs approach $5@60/hp at the low-cost end

and $100/hp at the high-cost end.
114 ● Fueling Development: Energy Technologies for Developing Countries

pumps and other appliances is reportedly down to

$25/hp ($33/kilowatt) .55

Systemwide financial considerations—including

the cost of the ASD and the avoided utility capital

investment-were recently applied in Canada. In

that case, an ASD was chosen to drive a coal slurry

pipeline rather than relying on a conventional

throttling valve for control. The reason for this

choice was simple. The cost to the company of the

3,500 hp (2.6 megawatts) ASD equipment and

installation was Can$800,000; to raise the capacity

of the local supply system to power the less efficient

throttle controlled design would have cost the

company Can$1,000,000 even including a capital

cost sharing arrangement with the local utility and

would have delayed the project 4 months. The

company chose the ASD over the less efficient

throttle valve to avoid those upstream costs and

delays. 56

ASDs will also be used increasingly in household

and commercial refrigeration and air conditioning

systems due to their efficiency and other advantages.

By modifying the design of these ASDs and

establishing standard protocols, direct implementation of load management techniques via power-line

carriers or other means may then be possible at very

low marginal costs. For example, circuitry to detect

a power-line carrier signal and then to turn down or

turn off a refrigerator or air conditioner could be

incorporated directly into its ASD. Time-of-day

electricity cost controls could be similarly implemented. Simple on-off load management techniques

are already used in large scale systems in the United

States and Europe. Southern California Edison, for

example, has 100,000 air conditioners in a load

management program networked via a VHF-FM

radio system. Despite the high cost of establishing

the system—approximately $120 per participating

household just for the control devices, their installation, and marketing-benefits have been almost 4

times greater, Further, the program has been very

Figure 4-10A—Capital Costs for Electric Motors

and ASDs Alone

Capital cost, $/hp

600 I

400

1

\

N,

300 “\\\

“. ASO I

100

}

~– .– -— –-

—-’--. .

= 

,

Motor

7

() +- ~ ‘- r ‘T T ‘T T T T T —-——–—T–-, ~ ~.~

I

5 50 500

ASD and motor size, hp

This does not include utility investment nor additional engineering

costs for designing and emplacing the ASD beyond those for the

motor alone. These engineering rests can greatly increase the

cost of an ASD system; with extensive experience, however,

these additional engineering costs should be readily reducible.

Note that these rests are given per horsepower of capacity. Large

units will cost more in total, but less per unit capacity.

SOURCE: Capital rmsts for ASDS are from Steven Nadel et. al., Energy

Efficient Motor Systems: A Handboak on T&nology, Programs, and Policy Opportunities (Washington, DC: Ameriean

Council for an Energy Efficient Ecanomy, 1991).

well received; just 1.8 percent of the participants

have withdrawn voluntarily. These techniques allow

a substantial reduction in peak utility loads with

corresponding savings.

ASDs do have some drawbacks. In particular,

ASDs can distort the shape of the normal voltage

waveform in the power grid.57 This distortion can

reduce the efficiency of motors, transformers, and

other equipment. It can also interfere with computers, communications, and other equipment. Techniques are available to control this problem and

further work to lower the costs of control is ongoing.

With proper design up front-as opposed to onsite

remediation after installation-harmonic control is

relatively low cost and straightforward. Many OECD

countries have established legislation limiting the

distortion allowable from ASDs and related devices

55steve Grce~&~g ~t. ~., Tech~o[ogy A$$~$S~e~t:AdjuStab[e.Speed~otors andMotorDrives (Residential ad Commercial Sectors) (Berkeley, CA:

Lawrence Berkeley Laboratory, 1988).

scFra~ A. Dewinter and Bti~ J. Kedrosky, “The Application of a 3,500-hp Variable Frequency Drive for Pipeline Pump Control, ” ZEEE

Transactions on Industry Applications, vol. 25, No. 6, 1989, pp. 1019-1024.

571n more tW~lc~ te rn, ASDs me no~~ el~~onic devices tit Cm inject ~OniCS hto me pOW~ he. cOLlV@f313 that USe @TktOR3 CZU.lSt3

line notching-a brief short circuit that sends the line voltage abruptly to zero at that point. Furthermore, the current drawn is closer to a square wave

than a sine wave. Converters that use diode bridges draw current in a periodic pulse and also cause distortion of the line voltage. A six-step inverter will

generate characteristic harmonics at nK+/-l = 5,7,11,13,17, . . . times the line frequency, each with maximum theoretical amplitudes equal to

(l/harmonic) of the fundamental. Twelve-step inverters carL in principle, significantly reduce the generation of harmonics, but in practice system

reactance and converter phase shifts somewhat reduce their advantage.
Chapter 4--Energy Services: Industry and Agriculture ● 115

Figure 4-10B—System Capital Costs for a Motor (Plus

Utility Investment to Power It) and for an ASD/Motor

(Plus Utility) System

Total system capital costs, $/hp

2,000 T ‘- - ‘—---—- h

- - - Motor plus utility

-————-—— — —. .

=.

1,500- -. .

.- ———— - —— ——

ASD and motor plus utility

1,000 +

I

() “ ~ • 1 T

T -

‘T T

—

‘ “ ‘ ‘ ‘ “ ‘ r ‘

5 50 500

ASD and motor size, hp

When upstream utility capital costs are included, the more efficient

ASD/Motor system has lower capital costs than less efficient

motors (plus utility) alone.

SOURCE: Office of Technology Assessment, 1992. See app. A for details.

and much of this analysis should be readily transferable to developing countries.58

The total electricity savings possible by the use of

ASDs is not yet well understood and more research

is needed. Total savings will depend on a variety of

factors including the rate of cost reduction of ASDs

and corresponding market penetration, and the types

of part- or variable-loads driven. Further, the individual savings achieved may depend on the development of new engineering design rules that fully

exploit the opportunities presented by ASDs.

Pipes and Ducts

Pipes, ducts, and related fittings make up the final

part of pump/fan systems, channeling the liquid or

gas to where it is to be used. Appropriate design of

a pipe/duct system can provide substantial energy

savings in many applications.

In a pipe/duct system, energy is used to lift the

liquid—water, petroleum, chemicals--or gas and to

overcome friction in the pipe/duct and its fittings

Figure 4-10C—Annualized Operating Costs for Motor

and ASD/Motor Systems

Annualized operating costs, $/hP

350 ~---–Mo~~;3tem

——.—

300

250L

150 J

100 I

() .- —,

5

.

– ’ \———- — —

-------

-= ——

ASD system -

- 1

‘T 7 T T - TTT 1 . 1 TT50 500

ASD and motor size, hp

More efficient AS D/motor systems have lower annualized operating costs than less efficient motors alone.

SOURCE: Office of Technology Assessment, 1992. See app. A for details.

(including the throttling valve, if any). The energy

required to lift the liquid/gas cannot be changed, but

energy losses due to fiction and related effects can

be dramatically reduced by increasing the diameter

of the pipe/duct, by using smoother pipe,59 and by

careful choice and spacing60 of the fittings used. The

energy savings achievable must be balanced against

the various costs associated with a smoother or

larger pipe or duct. In a building, increased pipe and

particularly duct size can have substantial costs

associated with it—by increasing the space needed

between floors or reducing usable space. In industry,

the costs are more often limited to the increased

capital costs of the pipe/duct and related components

alone. In theory, many cost related factors could be

included in the analysis to determin e the optimum

pipe/duct diameter--capital costs for the pipe/duct,

fittings, support structure, pump/fan, and motor;

taxes and insurance; and energy savings. In practice,

the analysis usually considers only the increased

capital and O&M costs of the larger pipe/duct versus

the energy savings.61

MFor ~ brief ~evlew of ~s p~~blem ad v~ous mtlo~ smdards for harmonic distortion from ASDS, see Samuel F. B~d@ “EnergY-Efficient

Electric Motor Drive Systems, ” Thomas B. Johansson, Birgit Bodlund, and Robert H. Williams (eds.), op. cit., footnote 27.

sqFor ~xample, tie ffiction factor for commerci~ steel pipe is 30 ties linger than tit for tie same diameter pvc plastic pipe. The impact Of a larger

friction factor on energy use varies, however, with pipe diameter, flow rates, and other factors.

@~opcr spacing can reduce losses by as much as 30 to @ percent.

~lEric D. ~son and Lars J. NdSSOn, “Electricity Use and Efficiency In Pumping and Air-Handling Systems, ” paper presented at the American

Society of Heating, Refrigerating, and Air Conditioning Engineers Meeting, June 23-25, 1991; Nicholas P. Cheremisinoff, “Piping,” Technology Menu

for E“ciem End-Use of Energy (Lund, Sweden: Environmental and Energy Systems Studies, Lund University Press, 1989).
116 ● Fueling Development: Energy Technologies for Developing Countries

Figure 4-11 A—Reduction in Energy Required To Pump

a Liquid Through a Pipe as a Function of Pipe Diameter

Annual electricity cost, $thousands

80 ~ I

“’—------ +. -

c) 1 -–-– ----- T

-—. - —1

0.1 0.2 0.3 0.4 0.5

pipe diameter, meters

Assumptions: 6-meter static head; 30-meter friction head for 200

mm pipe diameter; 500-meter pipe; 90 I/s flow.

SOURCE: Nicholas P. Cheremisinoff,’’ Piping,” TAno/ogy Menu For

Efficient End-Use of Energy, Volume /: Movement of Materia/

(Lund, Sweden: Environmental and Energy Systems Studies,

Lund University Press, 1989).

Figure 4-11B—Annualized Capital Cost of Pipe,

Electricity Cost, and Sum of the Pipe Capital Cost

and Electricity Cost

Annual costs, $thousands

80 ] I

:, [ ]

20

1

Total costs –--,---

‘\ ‘

Capital cost ~!

of pipe ->-;- - -Electricity costs.

— — —— ———

0~––-.—–————--—–——–

0.1 0.2 0.3 0.4 0.5

Pipe diameter, meters

SOURCE: Nicholas P. Cheremisinoff,’’ Piping,” T~no/ogy Menu For

Effident End-Use of Energy, Volume /: Movement of Material

(Lund, Sweden: Environmental and Energy Systems Studies,

Lund University Press, 1989); and app. A of this report.

If, instead, the total system capital costs are

considered—including the motor, pump, and upstream utility investment, then the optimum pipe/

duct size will normally be increased compared to the

case where only pipe capital and operating costs are

considered. This is shown in figures 4-1 la, b, and c.

The change in the optimum diameter shown in figure

4-11C may seem small, but it reduces electricity use

Figure 4-11 C—Annualized Total System Costs

Annual costs, $thousands 80 ~—— .~. --—

60

40

‘),

!!,

\\$

i

Capital costs only, pipe, \ pump, motor, utility

‘\i

~ }~

Electricity costs,

pipe capital cost I,, i

\\\ I

Electricity & pipe, pump,

\ motor capital cost I

I

\

20

\\‘+

=.

I

t

I o – 

-—-—–———-–

.__. –—-– .—

0.1 0.2 0.3 0.4 0.5

Pipe diameter, meters

This figure shows annualized total system costs for three different

types of system accounting: 1) capital rests only, including the

pipe, pump, motor, and utility generation, transmission, and

distribution equipment; 2) capital costs of the pipe only plus the

cost of electricity; 3) capital costs of the pipe, pump, and motor

plus the electricity costs to operate the system. Arrows indicate

the minimum total cost for the three cases indicated.

Different discount rates and electricity prices can shift these

various optimum points to higher or lower diameters. In general,

however, the optima are relatively insensitive to changes in these

parameters. For example, varying discount rates from 7 to 21

percent and electricity y costs from $0.03 to 0.09 moved the optima

from a low of 0.20 meter to a high of 0.30 meter. Over this same

interval, electricity use varied by a factor of more than 3.

SOURCE: U.S. Congress, Office of Technology Assessment, 1992; see

also app. A.

by one-third. It is also worth noting that, on all three

accounting systems, the total cost is relatively flat

from 0.2 meters to 0.5 meters. Over this same range,

however, electricity use drops by a factor of 5 at the

factory, or nearly 6 at the utility when transmission

and distribution (T&D) losses are included.

Similar considerations apply to ducts. For building ventilation systems, new computerized design

tools are being developed that minimize life cycle

costs—including duct, fan, motor, and other capital

costs, along with electricity costs. Compared to duct

systems designed with today’s conventional methodologies, case studies with these new design tools

find total life cycle cost savings of roughly 20 to 50

percent and electricity savings of 25 to 55 percent at

an increase in capital costs of 5 to 10 percent,

depending on the particular parameters. Alternatively, for the same energy use, capital costs could be

reduced by 20 percent or more compared to conven-
Chapter 4--Energy Services: Industry and Agriculture . 117

tional designs.62 Adjustable speed drives, high

efficiency motors, and improved fans can provide

additional savings, as outlined above.

Systems

These various opportunities for reducing electricity use are summarized in table 4-18. Just 4 percent

of the input coal is converted to useful energy (to

overcome static pressure drop) at the end of the

piping, and losses are spread throughout the system.

Thus, in this particular case, saving 1 unit of energy

in piping system losses can save up to 25 units of

energy worth of coal. ASDs achieve the greatest

individual savings, and do so by eliminating shaft

coupling and throttle valve losses, and by raising

pump efficiencies by operating closer to the design

point. Increasing the pipe diameter by 25 percent

also offers large savings due to the high friction

losses of this particular system and due to the great

leverage such reductions have upstream in the

system.63

Repeating the calculations for two-thirds flow

gives similar savings: the increased throttling losses

and reduced pump efficiency are roughly counterbalanced by decreased piping losses. For this

particular system, combining all of the various

improvements listed leads to electricity savings of

some 65 percent (see table 4-18). Capital savings,

however, would depend on the tradeoff between

increased pipe size and decreased utility, motor, and

pump size (see figure 4-1 1). The number of industrial or other systems in which such large savings can

be found, however, is unknown but there are

nevertheless many cases where reduced capital

costs, reduced life cycle costs, and substantial

energy savings are possible.

Many other motor drive system improvements are

possible, 64 including the use of power factor correction capacitors or other devices, amorphous magnetic materials in distribution transformers and

motor cores, and permanent magnet motors. For

example, in India it has been estimated that power

factor correction capacitors could reduce electricity

demand for one-fifth the cost of building new

supply .65

MODERN INDUSTRIAL

PROCESSES

This section examines four large industries: steel,

cement, pulp and paper, and chemicals (specifically

fertilizer production). These industries are particularly important due to their role-especially steel

and cement—in building national infrastructures of

roads, buildings, and factories, and due to their very

high energy intensities (see figure 4-1).66 Other

important industry-related energy issues, particularly the cogeneration of heat and electricity, are

examined in chapter 6.67

Steel

Developing countries such as China, India, and

Brazil devote about 20 percent—about the same as

the OECD countries68--of industrial commercial69 energy consumption to steel production. The

top 10 producing countries account for about 90

percent of the crude steel made in the developing

world; many other developing countries produce

little or no steel.

Overall steel production has been increasing by a

little over 7 percent per year in the developing

countries (with a wide variation among individual

countries), while remaining relatively constant in the

industrialized countries (see figure 4-2). At current

@Robert J, Tsal, ‘‘ Ducking,’ Technology A-fenu& E“”cient End-Use of Energy (Lund, Sweden: Environmental and Energy Systems Studies, Lund

University Press, 1989).

63~~ does not, however, t~e ~to a~ou~t c~nges in pup or motor efficiency, etc. It al.so does not provide for tie complex tradeoffs hl (Xpi@l

costs for larger pipe (less the smaller motor and pump) versus the energy savings.

.wsmuel F, B~d~$ ‘Energy-Efficient Electric Motor Drive SYstems) ‘‘ Thomas B. Johansson, Birgit Bodhmd, and Robert H. Williams (eds.), op.

cit., footnote 27.

csInter-Mi~stcri~ Working Group, subcommittee reports, “Report on Utilisation and Conservation of Energy, ” India, 1983.

&Due t. tie ~omplefi~ of ~ese ~dus~es and tie wide varie~ of tecfic~ approaches (depentig on me ptiCllkXXEitiOMi CkCUmS~nCeS Of aCCess

to technology, capital, raw materials, trade policy, and a host of other factors), however, this will necessarily be a brief survey of these industries rather

than an indepth examination.

67s= ~so, us+ Con&es5, Office of Tec~ology Assessment, Indusrria/ and Commercld c~generan”on, O’rA-E-192 ~aswgto~ ‘c: ‘“so

Government Printing Office, February 1983).

68 MaW1W Y, Metier and Oscar de Bmyn Kops, op. Cit., fOO~Ote 19.

@Commercial-p rimarily fossil or hydroelectric-energy as opposed to traditional biomass fuels used in many rural industries.
118 . Fueling Development: Energy Technologies for Developing Countries

Table 4-18-Hypothetical Savings for Various Pumping System Configurations

Baseline Efficient system

effa

rmnb

eff rmn

University Press, 1989).

rates, steel production by developing countries will

overtake that in the industrialized countries early in

the next century. Developing countries are unlikely

to use as much steel per capita as industrial countries

did at their peak, however, as the performance of

steel has increased substantially and there are now

other lower cost and less energy intensive materials

that can substitute for steel in many applications.

The energy efficiency of steel production in the

developing countries varies widely. In some cases,

it has significantly lagged that of the industrialized

countries. Integrated steel plants in India and China

currently use, on average, 45 to 53 gigajoules (GJ)

(43 to 50 million Btus) per tonne of crude steel

produced; 70 integrated steel plants in the United

States and Japan use half as much energy. Some

developing countries have made significant strides

to reduce overall energy use in steel production. The

Brazilians, for example, cut energy consumption

from 34 GJ to 27 GJ per tome of crude steel between

1975 and 1979 and the South Korean steel industry

is among the most efficient in the world.71

There are seven major processes in conventional

steel production :72 preparation of the ore, production

of coke, ironmaking, steelmaking, casting (or primary finishing), forming (or secondary finishing),

and heat treating .73 The corresponding energy use of

each process is listed in table 4-19 for a state-of-thev~e~e ~Wes d. not provide for ~erences in product mix, etc. For example, China produces much more cmt iron ~ does tie Ufited Smtes.

Key plants in Indi4 Ch@ and elsewhere are often more efficient than these averages would suggest. In China, for example, energy use in key plants

has been estimated at about 20 percent higher than that for the United States, if differences in the product mix are accounted for and the much more

complex shaping and heat treating work done in the United States is ignored. If these differences in shaping and heat treatment are included, key Chinese

plants use about one-third more energy than U.S. plants. Marc Ross and Liu Feng, “The Energy Efficiency of the Steel Industry of China,” Energy,

vol. 16, No. 5, 1991, pp. 833-848.

TIMafice Y. Metier ~d OSCU de Bruyn Kops, op. cit., footnote 19; Sven Eketorp, “Energy Considerations of Classical and New Iron- and

Steel-Making Technology,’ Energy, vol. 12, No. 10/1 1, 1987, pp. 1153-1168,

72u.s. Con~e5s, Office of Technolo~ Assessment, I~u$~ia/ Energy Use, OTA.&198 (Sp-leld, VA: Natioti Technical Information SeIvice,

June 1983).

73~s list is, of co~se, oversimplfled. hong o~er sfipl~lcations, it does not include such ~po~nt developmen~ m secondary metdUrgy, etC.

and it artificially divides the steelrnaking and primary ftishing steps which with the use of continuous casting, might more logically be listed as one

process.
Chapter 4--Energy Services: Industry and Agriculture Q 119

art steel mill using cost effective, commercially

proven technologies. At each stage, different processes may be employed-depending on local resources and capabilities, and the type of steel being

produced—with different impacts on capital expenditures and energy consumption. These alternative

processes, particularly the direct use of coal for

producing iron and advanced casting and forming

techniques for steel, may dominate the industry in

the future. The discussion here will nevertheless

follow the conventional process flow chart.

Ore Preparation

Ore is prepared by crushing and grinding it, and

then agglomerating it by pelletizing/sintering processes into marble sized pieces that can be fed into a

blast furnace. More energy efficient agglomeration

processes have been developed, some of which also

improve pellet quality .74

Coking

Heating coal to temperatures of 1,650 to 2,000‘F

for 12 to 18 hours boils off its volatiles and leaves

coke, a fairly pure (80 to 90 percent) carbon. The

coke serves three purposes within the blast furnace:

as fuel to heat and melt the ore/iron; to physically

support the ore; and as a chemical reducing agent. To

meet these needs requires coke that has a low

impurity/ash content and that is physically strong.

The efficiency of converting coal to coke has

improved substantially in recent years. In the United

States, for example, the energy used to produce a

metric tonne of coke declined from 7.0 gigajoules

(6.7 million Btus) in 1980 to 4.1 GJ (3.9 million

Btus) by 1989.75 More efficient processes are

becoming available. For example, the traditional

process for stopping the chemical reactions in the

coke ovens was to quench the coke with water and

vent the steam into the atmosphere. A much more

efficient technique is dry coke quenching, in which

the hot coke in the ovens is cooled by circulating a

nonoxidizing gas through it to stop the chemical

reactions and at the same time to capture the heat

Table 4-19—Energy Consumption in IISI Reference

Steel Plants

BF/BOFa DRI/EA b Scrap/EAF

GJ/tcsc GJ/tcs GJ/tcs

Ironmaking . . . . . . . . . 13.8 11.7 NA

Coke oven , . . . . . . . 1.6 NA NA

Sintering . . . . . . . . . 1.4 NA NA

BF . . . . . . . . . . . . . . 10.6 NA NA

Steelmaking . . . . . . . . -0.01 5.5 4.8

Casting d . . . . . . . . . . . 0.4 0.3 0.3

Forming . . . . . . . . . . . . 2.8 2.3 2.3

Other . . . . . . . . . . . . . . 1.1 0,2 0.2

Total . . . . . . . . . . . . 18.1 20.0 7.6

from the coke to generate steam or electric power.

This process also improves coke quality and reduces

environmental emissions.76 Dryquenching is in use

in India and other countries.

Charcoal is used in place of coke in roughly

one-third of Brazilian ironmaking due to a lack of

local coking coal and the lower cost of charcoal. In

1985, about 25 million tomes (t) of wood with an

energy content of 0.45 exajoules (EJ) (or 0.43 Quad)

were converted to charcoal in Brazil, primarily for

use in metals production. Between 1974 and 1986,

improved reforestation techniques and improved

forestry productivity improved forestry yields by 3.5

times, while improvements in the blast furnaces

lowered the specific consumption of charcoal from

3,4 m3

/t to 2.6 m3/t of hot metal.77 A large portion of

the wood used for charcoal, however, is obtained by

clearing natural forests, rather than fuelwood plantations, with significant environmental impacts. This

T~Ex~p]cs of improved pcllctizln~slnlerlng Processes include the MTU (Michigan Technological University), COBO (cold bond~g)~ and pe~d~

processes for agglc}mcration, and various waste heat recovery schemes in the sintcring process. See Sayed A. Azimi and Howard E. Lmwitt, U.S.

Department of Energy, < ‘The U.S. S[eel Industry: An Energy Perspective, ” Report No. DOE/RL/01830T55 (Springfield, VA: National Technical

Information Service, January 1988).

TsEnergctlcs, Inc., rcpo~ for the U.S. Department of Energy, ‘‘Industrial profiles: StCCl, ” Report No. DE-AC01-87CE40762 (Springfield, VA:

National Technical Information Service, December 1990).

7fiJonathon P. Hicks, ‘ ‘The Search for a Cleaner Way to Make Steel, ” The Ne~t York Times, Mar. 21, 1990, p. D7.

TTFrancisco ~n~ Lcal and Benoni TOITCS, “The Iron and Steel Industry in Brazil, ” Irorrmaking and Steelmaking, vol. 17, No. 1, 1990, pp. 1-7.

297-929 - 92 - 9 - QL :3
120 ● Fueling Development: Energy Technologies for Developing Countries

has caused considerable controversy over the use of

charcoal for ironmaking in recent years.78

Ironmaking

Blast furnaces are most often used to convert iron

ore to metallic iron. In this case, iron-bearing

materials are fed into the top of the blast furnace

together with limestone/dolomite and coke for fuel.

Heated air (and sometimes additional fuel) is blown

into the blast furnace from the bottom. The coke (and

possibly other fuel) burns in the hot air blast to heat,

chemically reduce, and melt the iron as it descends

through the furnace. The limestone/dolomite combines with impurities in the iron to form a slag that

floats on the molten iron and can be removed. Blast

furnace efficiencies have been improved by a variety

of means, including the use of ‘‘top pressure

recovery turbines’ to generate typically 8 to 15

megawatts of power using the pressure and heat

from the blast furnace (see table 4-20).

A number of efforts are underway to directly

produce iron with coal, rather than with coke. These

processes would lower capital costs—by one-half to

two-thirds compared to a similar sized 0.5 million

metric tonnes per year plant, and by perhaps a third

compared to a conventional plant six times larger—

by avoiding coke ovens and, in some cases, agglomeration facilities. They would be more flexible,

allow smaller scale operations, and would reduce

environmental impacts. Energy requirements for

these systems, however, range from about 13.3 GJ/t

(12.6 million Btu/t) of hot metal for three-stage

systems to as much as 30 GJ/t (28.4 million Btu/t)

for single-stage systems. The low end of these

energy requirements is about a 10-percent improvement over typical conventional blast furnaces and

about 5 percent better than can be achieved with the

best cost effective coke-based blast furnace technology available today. The high end has, however,

much higher energy intensities than conventional

best practice technologies today. Several of the

systems make extensive use of electricity and thus

suffer the conversion losses of fuel to electricity in

generation and also carry a substantial additional

capital cost for the generating facilities.79 Coal based

process plants are in operation in South Africa

producing 300,000 tons per year. 80 These capital

savings and other advantages may push direct

coal-based processes into a dominant role in the steel

industry of the future.

High quality iron ore can also be directly reduced

to metallic iron (DRI) using natural gas. Direct

reduction accounted for 85 percent of production in

Venezuela 81 and 26 percent of Mexican production

in 1986;82 and for all of Indonesia’s production.83

Although direct reduction only accounts for 5

percent of Indian production, current construction

will triple DRI capacity over the next several years.84

There are also several DRI facilities in Africa.85

Following direct reduction, the sponge iron is then

converted to steel using electric arc furnaces.

Steelmaking

Steelmaking refines the pig iron produced in the

ironmaking process. In steelmaking, chemical elements such as phosphorus, sulfur, and silicon are

reduced and removed from the melt, and elements

such as nickel, chromium, and other alloying agents

are added to give the steel its desired properties.

Three types of furnaces are used to produce

steel—the open hearth furnace, the basic oxygen

furnace, and the electric arc furnace. The open hearth

furnace is now outmoded—with higher capital costs,

greater energy use, and lower productivity than the

basic oxygen furnace-and is being phased out in

most countries. By 1986, Korea and Taiwan had no

production from open hearth furnaces, Brazil produced just 2.4 percent of its steel with open hearth

TsFr~ ~ke~an and pa~o Eduardo Fel-nandes de Alrneida, ‘ ‘Iron and Charcoal: The Industrial Fuelwood Cfik in MiMS Gaais, ’ ~~ergy policy,

vol. 18, No. 7, September 1990, pp. 661-668; Anthony B. Andersom ‘‘Smokestacks in the Rainforest: Industrial Development and Deforestation in the

Amazon Basiq” IVorMDevelopmenr, vol. 18, No. 9, 1990, pp. 1191-1205.

T9R,B. s~~ ~d M.J+ Corbetc c{C~&Ba~ed honrnaking,” Ironmaking and Steelmaking, vol. 14, No. 2, 1987, pp. 49-75.

“’COREX Comes Onstream,” Iron Age, March 1990, p. 35.

SIC. Bo&wo@ “ne Iron and Steel Industry in Venezuela, ’ lronmaking and Szeelmaking, vol. 16, No. 1, 1989, pp. 1-3.

6Z~ga~sation for ~ono~c Coowration and Development, The Role of Technology in Iron und Stee/ Developments (pfis, France: Orgtisation

for Economic Cooperation and Development 1989).

83H.K. Lloyd, “Steelrnaking and Iron Ore Smelting in Indonesia,” Ironmaking and Steelmaking, vol. 15, No. 2, 1988, pp. 53-55; T Ariwibowo and

Souren Ray, “Indonesia’s Only Integrated Steel Plant—Krakatau Steel,” Iron and Steel Engineer, January 1988, pp. 56-59.

‘Amit Chatterjee, ‘‘The Steel Industry in Lndia,” Ironmaking and Steehnaking, vol. 17, No. 3, 1990, pp. 149-156.

SSI ‘me Emergence of an African Iron and Steel hdus~,’ Ironmaking and Steelmaking, vol. 16, No. 6, 1989, pp. 357-361.
Chapter 4--Energy Services: Industry and Agriculture . 121

Table 4-20-Energy Conservation Opportunities and Costs in the Steel Industrya

furnaces, Mexico 12 percent, and Venezuela 18

percent. The share of steel produced in open hearth

furnaces in India dropped to 68 percent by 1982/83

and to 47 percent in 1986/87, and is scheduled to be

rapidly phased out after 1995. In China, open hearth

furnaces accounted for only about one-quarter of

production in 1988.86

Today’s modern integrated plants—taking iron

ore to finished steel—generally use basic oxygen

furnaces (BOF). This process refines steel by

blowing oxygen into the furnace to produce an

intense chemical reaction.

Electric arc furnaces (EAF), which are used

primarily to recycle scrap steel and to a lesser extent

for DRI--have become increasingly important in

recent years and are particularly attractive to developing countries because EAF-based minimills are

economic at smaller scales than integrated plants

using basic oxygen furnaces, and are less capital and

(if the energy embodied in scrap is not included) less

energy intensive per unit output. The drawbacks of

EAF minimills include a limited set of products that

can be produced—although this is changing with the

development of thin slab casting;87the relatively

high cost of electricity to power the arc furnaces

(there is also a high upstream capital cost for

generating plants); and the dependence on scrap

(which may be in short supply in developing

countries in the future) or on DRI.88 Numerous

minimills (including EAF and other operations)

using steel scrap

89 have been established in developing countries. Korea and Taiwan each have about 50

minimills; Mexico has about 15;90 and India and

Brazil have over 150 each.91

The efficiency of EAFs can be improved by

preheating scrap before it is fed into the furnace

using the waste heat from the furnace,92 by the use

of ultra high power (UHP) electric arc furnaces, and

BbEnergy and Environmental Analysis, ~c., “Conserving process Heat in Primary Industries of India and Ch@’ contractor report prepared for the

Office of Technology Assessment, August, 1990; Arnit Chatterjee, op. cit., footnote 84; Organisation for Economic Cooperation and Development, op.

cit., footnote 82.

87 M1c~el sc~wder ~~d wal~ia Konrad, ‘‘Nucor: Rolling Right Into Steel’s Big Time,’Business Week, No. 3188, Nov. 19, 1990, pp. 76-79.

ssMafice Y. Meunier and Oscar de Bruyn Kops, op. cit., fOOtOOte 19.

89R. Berlekamp, ‘‘Scra~A Raw Material in Worldwide Demand for Steelmaking, “ Ironmak”ng and SteeImaking, vol. 17, No. 2, 1990, pp. 83-88.

An interesting case study of scrap recovery can be found in: Mary Anne Weaver, ‘‘Great Ships Go To the Boneyard on a Lonely Beach in Pakistan,”

Smithsonian Magazine, vol. 21, No. 3, June 1990, pp. 3040.

~Organisation for monomic Cooperation and Development, op. cit., foomote 82.

91~1t c~(terjee,op. Clt,,foo~o[e 84; Fr~cisco ~nna Lea] ad Benoni Torres, Op. cit., footnote 77.

92say~ A A~mi ad HoW~d E. Lowitt, U.S. Department of Energy) “The U.S. Steel Industry: An Energy Perspective, ” Report No.

DOE/RL/O1830-T55 (Springfield, VA: National Technical Information Service, January 1988).
122 ● Fueling Development: Energy Technologies for Developing Countries

by other means.93 UHP furnaces shorten the cycle

time and correspondingly improve furnace productivity and reduce energy use due to the shorter period

at high temperature.94 At the same time, however,

UHP furnaces have higher power demand. This can

put added strain on utilities that are already often

short of capacity. Indeed, from 1976 to 1986, steel

minimills in India were supplied with just 38 percent

of the power they would need to be at full

production.95

Energy use in many steel minimills in developing

countries is much higher than that in the industrial

nations. For example, the energy consumption in

Indian minimills is typically 600 to 900 kilowatthours (kWh)/t versus as low as 400 kWh/t elsewhere. Many of the steel operations in developing

countries, however, are unable to take advantage of

proven energy conserving and productivity enhancing technologies due to their small scale and

inadequate infrastructure. The average size of minirnills in India is typically below 15 tomes capacity,

compared to 80 to 300 tonnes elsewhere. At such

small scales, the capital costs for scrap preheater

and other technologies increase rapidly per unit

output.

Casting

Casting or primary finishing includes casting and

initial rolling of the steel into slabs for flat sheets,

and blooms (rectangular) or billets (square) for

structural shapes and bars. Ingot casting is done by

pouring the liquid steel into molds to form ingots

before reheating and initial rolling. Continuous

casting pours the liquid steel directly into its

semifinished shape, eliminating the intermediate

steps of ingot casting and reheating.

Continuous casting has rapidly come to dominate

the steel industry because it significantly lowers/

eliminates capital investment for the stripper, reheating (soaking pit), and primary rolling mill;

substantially reduces energy use (by 400 to 1,400

million joules (MJ)/tonne or 380 to 1,325 thousand

Btus); gives a typically 5 to 10 percent or greater

increase in yield—less metal must be scrapped as

waste with corresponding energy savings-at often

higher quality; and reduces emissions associated

with ingot casting and heating.96 As of 1986, several

developing countries had higher shares of continuous casting than the United States (55 percent>

Korea 71 percent, Taiwan 88 percent, and Venezuela

71 percent; was comparable-Mexico 54 percent; or

—Brazil 46 percent.97 was slightly lower This capacity was largely developed in just a 10-year time

period, from the mid-1970s to the mid-1980s. In

contrast, all crude steel in integrated plants in India

was ingot cast until 1982-83; only 10 percent of steel

production was continuous cast as of 1986-87.

Similarly, in China about 15 percent of steel was

continuously cast by 1988.98

Other advances (at various stages of development) in casting offer even greater potential capital

and energy savings, and productivity improvements.

These include: thin slab casting;99 thin strip casting;

100 net shape casting; and spray steel.101

Forming

Forming or secondary finishing transforms the

steel into its final shape through a series of reheating,

hot rolling, and cold rolling steps. Overall, hot

rolling of strip, cold reduction, and finishing operations each consume about 125 kWh/t. Hot rolling

thin cast strip to cold-rolled gages in an inert

atmosphere could eliminate a series of scale re93L.L. Teok “Electric&c F~ce Technology: Recent Developments and Future Trends, ” Ironmaking and Steelmaking, vol. 16, No. 5, 1989, pp.

303-313; Dick Hurd and John Kollar, “A Growing Technology in Electric Steelmaking,” Electric Power Research Institute Center for Materials

Production, Carnegie Mellon Research Institute newsletter, Pittsburgh PA, January 1991.

‘Sven Eketorpe, “Electrotechnologies and Steelmaking,’ Thomas B. JohanssorL Birgit Bodlund, and Robefi H. Williams (eds.), E/ecrriciry:Eficient

End-Use and New Generation Technologies and Their Planning Implications (Lund, Sweden: Lund University Press, 1989), pp. 261-296.

gstit Chtterjee, op. cit., footnote $4.

~Say~ A. ~~ and Howard E. Lowitt, op. cit., footnote 92.

gTorgatisation for ~ono~c Cooperation and Development, OP. cit., foornote 82.

gBEnerD ad Environmen~ AIdy51S, hlC., Op. Cit., fOO@Ote 86.

99~c~el Sctioeder and Wdecia Ko~d, “Nucor: Rolling Right Into Steel’s Big Time, ” Business Week, No. 3188, Nov. 19, 1990, pp. 76-79.

l~sayed A. Azimi and Howard E. Imwitt, op. cit., footUOte 92.

1OIGW McWilliams, “A Revolution in Steelmakm“ g?” Business Week, No. 3179, Sept. 24, 1990, pp. 132-134.
Chapter 4--Energy Services: Industry and Agriculture ● 123

moval, cleaning, and annealing steps and ultimately

save 50 to 100 kWh/t.102

Heat Treating

After secondary finishing, the steel is again

reheated and then allowed to cool slowly in order to

relieve the stresses built up in the steel in the above

rolling processes. This improves the strength and

ductility of the final product. Heat treatment has also

seen considerable efficiency gains in recent years. In

the United States, energy consumption of heating

and annealing furnaces dropped by nearly one-third

between 1980 and 1989.103 Continuous annealing

and processing systems can further reduce energy

use by about 460 to 700 MJ/tonne (440 to 660

thousand Btu) by combining five cold rolling batch

processes into one.

By employing all currently cost-effective technologies, energy consumption in integrated steel mills

can be reduced to about 18 GJ/tonne (17 million

Btu), and to about 7.6 GJ/tonne (7.2 million Btu) in

scrap fed electric arc furnaces (see table 4-19). The

best steel mills in the world approach these levels of

efficiency, including Japanese, U. S., South Korean,

and others. Countries such as Brazil, Venezuela, and

other industrializing countries are not far behind;

while India and China have a considerable ways to

yet go to reach these levels of efficiency.l04

In the future, the steel industry could change

dramatically from the above, particularly with the

widespread introduction of processes for the direct

production of iron from coal, greater use of electric

arc furnaces, and extensive use of thin slab casting

or other such techniques.

Cement

The cement industry typically consumes 2 to 6

percent, and sometimes more, of the commercial

energy used in developing countries.105 The use of

cement is expected to increase rapidly as national

infrastructures of roads, bridges, and buildings are

Table 4-21—Average Energy Intensities of Building

Materials

Energy intensity

Material (MJ/kg)

Concrete aggregate . . . . . . . . . . . . . . . . . . . 0.18

Concrete . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8

Brick and tile. . . . . . . . . . . . . . . . . . . . . . . . . 3.7

Cement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9

Plate glass . . . . . . . . . . . . . . . . . . . . . . . . . . 25.0

Steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.0

SOURCE: Mogens H. Fog and Kishor@ L. Nadkarni, “Energy Efficiency ancl

Fuel Substitution in the Cement Industry with Emphasis on

Developing Countries,” World Bank Teehnieal Paper No. 17,

Washington, DC, 1983.

developed. Considerable effort is now being devoted

to developing higher performance cements to ensure

that this huge investment in infrastructure lasts a

long time.

106 Despite the energy intensity Of Cement

production, it is one of the least energy intensive

construction materials when in its final form of

concrete/aggregate (see tables 4-21, 4-22).

The value of cement is quite low compared to its

weight. Because of this and because the raw

materials for cement—limestone, various clay minerals, and silica sand—are widely available, cement

is usually produced relatively near its point of use.

In the United States, the maximum range for truck

shipments of cement is about 300 km. In developing

countries, where the transport infrastructure is less

well developed, economical transport distances are

often less. In China, for example, 150 to 200 km is

the typical limit of transport; if transport over longer

distance is needed, the construction of a new cement

plant in the local area will be considered.107 Thus, as

a result of inadequate transport infrastructures,

cement plants are often small and relatively inefficient.

The energy required to produce cement varies

widely with the type of production process (see

figure 4-12), quality of raw materials, plant management, operating conditions, and other factors. The

performance of cement plants in developing coun10ZW,L. Robefl~, El~~c power Rese~ch~titute, po~,er Utilization in F/arf’recessing o~Stee/, R~ort No. EM-5996 (PdO~tO, CA: Ekctic POwer

Research Institute, January 1989).

1°3Encrgetics, Inc., op. cit., footnote 75.

lc@Ener~ and Environmental Analysis, Inc., Op. Cit., fOO~Ote 86.

IOsMogens H. Fog and Kishore L. Nadkarni, “Energy Efficiency and Fuel Substitution in the Cement Industry With Emphasis on Developing

Countries, ” World Bank Technical Paper No. 17, 1983.

106 For exmple, high Pefiomnce cement5 ~e being developed at the Center for the Science ~d TeChnOlOgy of Advanced Cement-Based ‘tetids!

Northwestern University, Evanston, IL.

IOTLi Taoping, “Ccment Industry in Chim, ” Rock Products, Febmary 1985, p. 32.
124 . Fueling Development: Energy Technologies for Developing Countries

Table 4-22—Energy Intensities of End Products Using Alternative Building Materials, MJ/m2

Structure Concrete Steel Asphalt Brick

Building wall. . . . . . . . . . . . . . . . , 400 NA NA 600

Bridge . . . . . . . . . . . . . . . . . . . . . . 4,000 8,000 NA NA

Roadway ... , . . . . . . . . . . . . . . . 800 NA 3,000 NA

NA = Not available or not applicable.

SOURCE: Mogens H. Fog and Kishore L. Nadkarni, “Energy Efficiency and Fuel Substitution in the Cement Industry with Emphasis on Developing Countries,”

Wo~d Bank Teehnical Paper No, 17, Washington, DC, 1963.

tries also varies widely. Many plants approach the

efficiency of the best in the industrialized countries,

depending on when they were built and the conditions under which they are operated. Others show

significant inefficiencies-using 25- to 50-percent

more energy than efficient plants of the same type

and with the same quality of raw materials input.108

The manufacture of cement involves three basic

processes: the mining and preparation of the raw

materials; clinker production; and finish grinding.

Portland cement typically accounts for most of the

cement in use. It consists of limestone (calcium

carbonate), silica sand, alumina, iron ore, and small

quantities of other materials. These materials are

quarried, crushed, and mixed together, and are then

processed at high temperatures--l,500 °C—in a

large rotary kiln to produce marble sized pellets

known as clinker. These pellets are then ground into

a fine powder and mixed with gypsum for use as

cement.

The two primary manufacturing processes are

known as the wet and the dry processes. In the wet

process, water is added to the raw materials so that

the material fed into the kiln is a slurry. The wet

process has been largely abandoned in recent years

in favor of the dry process. In the dry process, the

material fed into the kiln is a dry powder. Refinements in the dry process in recent years have

focussed on making better use of the waste heat from

the kiln to dry and preheat the material fed into the

kiln-the preheater and precalciner processes. These

have led to significant improvements in the overall

energy efficiency of cement production. The relative

fuel use of the wet and dry processes, however, differ

considerably, with the dry process using somewhat

.-

more electrical energy and substantially less thermal

energy.

Electricity use in cement production has increased

in recent years due to the shift to the dry process, the

use of more environmental controls, and more

extensive use of preheater, which require large fan

systems working at high pressure drops. The move

towards higher strength cements in recent years has

also required additional electricity use in order to

more freely grind the clinker.109 On the other hand,

less cement may be needed if higher strength types

are used, reducing total energy consumption.

Regardless of the process, typically 80 to 85

percent of the total energy used in cement production is for high temperature processing. The rest is

largely for grinding or related steps. A variety of

different fuels are used in cement production,

including, oil, coal, gas—together accounting for

about 70 percent of the total energy used, and

electricity-accounting for about 30 percent of the

total energy used (on a primary energy basis).ll0 In

addition, Brazil has made extensive use of charcoal,

and biomass gasifiers have been used in Finland (see

ch. 6).111

The energy used in producing cement varies

widely by country, depending primarily on what

fraction of total cement production is done by the

more energy efficient dry process. In 1980, the U.S.

cement industry used about 5.86 GJ (5.6 million

Btus) per tome of cement, compared to 3.45 GJ (3.3

million Btus) per tonne for Japan and West Germany. The U.S. cement industry was then half wet

process compared with 5 percent wet process in

West Germany. Many developing countries are

lo8Mogens 1+. Fog and Kishore L. Nadkarni, op. cit., footnote 105. See figure 5-1, P. 39.

109 Stew~ wr. Tre~ou~ck and ~ex ~sh~lovich, ‘ ‘Energy and Environment comid~atio~ for he Cement Indushy, ’ paper presented at the Energy

and the Environment in the 21st Century conference, Mar. 26-28, 1990, Massachusetts Institute of Technology, Cambridge, MA.

llOStew@ WT. Tre~ou~ck and ~ex ~sh~ovic~ ~id.

I i l-uLWt~em * ~B1owss G~~lcation As a Fuel Supply for Lime Kilns: Description of Recent Installations, ’ Tappi Jow~l, vol. 70* No. 7, J~Y

1987, pp. 77-80.
Chapter 4--Energy Services: Industry and Agriculture . 125

making rapid strides to improve the efficiency of

their cement plants. Turkey, Tunisia, and the Philippines use the wet process for less than one-quarter of

their cement production, with corresponding energy

savings. 112 In Brazil, use of the @process increased

from 20 to 80 percent of production between 1970

and 1987.113

Similarly, most recent capacity additions in India

have been the dry process. This resulted in the wet

process share of the total dropping from about 70

percent in 1970 to 37 percent in 1984. The average

kiln size in India has also increased; and large kilns

tend to be more efficient than small ones. In the

1970s, the average wet process kiln size was around

400 tonnes per day and new kiln capacity for the dry

process averaged about 750 tonnes per day. In the

1980s, new dry process capacity has averaged 1,800

tonnes per day, comparable to industrial countries.114 Most Indian cement capacity is in large

plants, totaling some 55.4 million tonnes per year

capacity in 1988/89 spread over 96 plants operated

by 49 companies. About 84 percent of this capacity

is privately held. During the 1980s, mini-cement

plants have also been established to make use of

small and scattered limestone deposits and to meet

local demands.

Energy costs are a large part of the total production cost for cement; consequently there is a

significant push to save energy. In India during

1983/84, energy costs were about 44 percent of total

production costs for wet process plants and 39

percent of the total for dry process plants. In

response, 10 large scale plants have been or are

being converted from the wet process to the dry

process in recent years, and precalcinators have been

installed on 35 kilns in 23 plants. A variety of other

improvements are also being made, including the

extensive installation of instrumentation to monitor

processes and automatic controls to improve control

and product quality; improved refractory materials

Figure 4-1 2—Energy Consumption for Alternative

Cement Production Systems

Wet

Semiwet (preheater)

Semidry (preheater)

Dry (long rotary kiln)

Dry (4-stage preheater)

Dry (+ precalciner)

+— 7 —— —- 7-– . - T i

0123456 7

Energy consumption, MJ/kg of clinker

_ Minimum ,-. ‘-~ .4 Evaporation ~- Waste ~a~/

dust

K= Cooler f-—~ Wall losses

exhaust

SOURCE: Mogens H. Fog and Kishore L. Nadkarni,’(Energy Eff iciency and

Fuel Substitution in the Cement Industry with Emphasis on

Developing Countries,” World Bank Technical Paper No. 17,

1983.

on the kilns; waste heat recovery systems; improved

grinding equipment; and cogeneration equipment.115

Factors that contribute to the low efficiency of

Indian cement production include low quality coal

and limited, poor quality (variable voltage and

frequency) electricity supply from the State utility

grid. To compensate, the cement industry had

installed 545 megawatts (MW) of captive generation

capacity by 1988/89 with another 100 MW under

construction. l16

Cement production in China reached 145 million

tonnes in 1985. Of the 366 rotary kilns in use, 235

used the dry process. Of these, 33 had preheater and

11 had precalcinators. Cogeneration systems were

used on about 50 of these kilns. There were also

more than 4,000 vertical shaft kilns in use in 1985,

providing about two-thirds of the total output of

cement. Vertical shaft kilns are used primarily by

smaller cement plants and can have lower efficiencies.117 Average capacity of Chinese vertical shaft

kilns is about 30,000 tomes/year. *18

l12Mogens H. Fog and Kishore L. Nadkarni, op. cit., footnote 105, see figure 5-1, p. 39.

1 IJHoward S. Gellm and David Zylbersztajq ‘‘Energy Intensity Trends in Brazil, ” Annual Review of Energy, vol. 16, 1991, pp. 179-203.

I lbEnergy md Environrnent~ .kudysis, be., Op. Cit., fOOtIlOte 86.

1 lsEnerW and Env~oDen~ ~ysi~, ~c., op. ~it., foo~ote 86. Repfled ov~all energy efficiencies of tie ~dian cement industry, however, haVC

not improved much over the time period 1978-79 to 1983-84. Ministry of Industry, Bureau of Industrial Costs and Prices, Government of India “Reporl

on Energy Audit of Cement Industry, ” Studies on the Structure oftfie Industrial Economy, vol. 14 (New Delhi, M~ch 1987).

1 lbEnergy ~d Environmental Analysis, kc., Op. Cit., fOO~Ote 86.

1 ITEnerg and Envfio~en~l ~ysis, Inc., op. cit., foo~ote 86. me da~ list~ ~, however, somewhat conmadicte.d by that Of the ~liti ~pOfi:

Li Taoping, op. cit., footnote 107. The data in the report by Taoping are also inconsistent internally, so have not been included here.

118D$F. Stewm and B M~e@, ‘‘Swategles for M= fig Ta~~a’s Fut~e C~ent N~ds,” Nafura/Resources Forum, November 1989, pp. 294-302.
126 ● Fueling Development: Energy Technologies for Developing Countries

Although they have been largely abandoned in the

industrial countries, vertical shaft kilns are used

widely in China and might be practical in other

countries. These plants offer lower installed capital

costs and thus can serve smaller, dispersed markets.119 On the other hand, the energy efficiency of

vertical shaft kilns is typically low but potentially

could be improved; and the product quality is often

uneven due to poor distribution of raw materials

within the kiln and interactions with the walls of the

kiln. These problems might be redressed with further

development and would allow more widespread use

of this system.120

The Tanzanian cement industry was producing at

just 22 percent of rated capacity by 1984, compared

to 100 percent or better just 10 years earlier. Factors

contributing to this decline in performance included:

●

●

●

●

the lack of foreign exchange resulting in the

frequent nonavailability of critical spare parts

and other equipment when needed, resulting in

delays and even complete shutdowns;

inadequate industrial infrastructure resulting in

long delays in making repairs at the few local

workshops capable of doing the work;

transport shortages and bottlenecks in providing raw materials; and

shortages of skilled manpower in designing,

constructing, and maintaining the plant and

equipment. 121

Substantial efficiency improvements above that of

today’s dry process are still possible. The grinding

process, for example, is very inefficient, variously

estimated at 2- to 5-percent efficient in breaking

clinker apart into fine powder, the remainder goes

into heat and vibration. A variety of improvements,

including better separation and grinding equipment,

and improved controls have reportedly raised grinding efficiencies by as much as 40 percent in some

cases (see table 4-23).122

Similarly, there are numerous potential improvements in the high temperature processing of cement

Table 4-23-Technology Improvements in Grinding

Average Potential

energy savings

Technology (percent)

High efficiency classifiers . . . . . . . . . . . . . . . . .

Roller mills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Controlled particle size distribution. ., . . . . . . .

Advanced mill internals . . . . . . . . . . . . . . . . . . .

Separate grinding of components . . . . . . . . . . .

Computer control . . . . . . . . . . . . . . . . . . . . . . . .

High performance sensors, including on

kiln exhaust . . . . . . . . . . . . . . . . . . . . . . . . . .

Nonmechanical comminution . . . . . . . ... , . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

20

27

5

5-1o

15

NA

NA

40

NA = not available or not applicable.

SOURCE: Stewart W. Tresouthick and Alex Mishulovich, “Energy and

Environment Considerations for the Cement Industry,” Energy

and the Environment in the 21st Century, March 26-28, 1990,

Massachusetts Institute of Technology, Cambridge, MA.

(see table 4-24). These efficiency improvements can

reduce total system capital costs as well as operating

costs. Other energy conservation opportunities include waste heat recovery, cogeneration, and the use

of ASDs on kiln fan motors and other motor driven

equipment. 123

Many cement plants operate with minimal environmental controls and poor quality raw material

inputs can further impede cleanup. For example, the

use of coals with high ash contents leads to poor

combustion in some cases and consequently generates a high carbon monoxide content in the exhaust

gases coming off the kiln. These gases will trip

safety mechanisms in electrostatic precipitators to

prevent an explosion, resulting in the venting of

large amounts of dust. Properly functioning controls

can, however, provide substantial benefits. For

example, a typical rotary kiln without any dust

controls can lose 110 to 125 kg of dust per tonne of

clinker processed, or equivalently, an efficiency loss

of11 to 12 percent of the kilns output. Capturing this

dust translates directly into a productivity increase

I IgSanjay sw$ ‘s@ versus ~ge ~ tie ~di~ Cement Indus&y-David and Goliath Hand-In-Hand, ’ Marilyn Carr (cd.), Sustainable Industrial

Development (London: Intermediate Technology Publications Ltd., 1988), pp. 128-150.

120D.F. Stewm, * *options for cement ~duction ~ papua New Gu~ea: A Study in Choim of Technology, ‘‘ WorldDevelopment, vol. 13, No. 4,1985,

pp. 639-651.

121D.F. Stewti and B. Muhegi, op. cit., footnote 118.

lzzstew~ WI. Tmsoutick and Alex Mishulovicb op. cit., footnote 109.

123 TOER. NilssoQ Bengt Simer, ad ola V. Volde% ‘ ‘Op~zed ~oduction ~d Energy Comervatioq’ IEEE Transactions on IndusrryApplication,

vol. M-22, No. 3, 1986, pp. 442-445.
Chapter 4--Energy Services: Industry and Agriculture ● 127

Table 4-24—Technology Improvements

in Pyroprocessing

Average potential

energy savings

Technology (percent)

Computer control . . . . . . . . . . . . . . . . . . . . . . . .

Fluidized-bed reactor. . . . . . . . . . . . . . . . . . . . .

Relaxed alkali specification . . . . . . . . . . . . . . . .

Low pressure-drop preheater . . . . . . . . . . . . .

Advanced sensors. ., . . . . . . . . . . . . . . . . . . . .

Advanced preheater/precalciner, . . . . . . . . . . .

New mineralogical content of clinker . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3-1o

10-30

2-4

5

2-5

5-1o

5-30

NA

NA = Not available or not applicable.

SOURCE: Stewart W. Tresouthick and Alex Mishulovich, “Energy and

Environment Considerations for the Cement Industry,” Energy

and the Environment in the 21st Century, Mar. 26-28, 1990,

Massachusetts Institute of Technology, Cambridge, MA.

for the plant.124 In modest quantities cement dust

does not, however, cause particular damage to soils

around the plant.

Pulp and Paper

Between 1961 and 1986, world paper production

increased from about 78 million to 203 million tons

annually. Developing countries produced about 16

percent of 1986 world paper output, Eastern Europe

and the Soviet Union produced about 8 percent, and

the remainder was produced in the OECD countries.

Annual production in the developing countries,

however, increased at an annual rate of about 7.3

percent between 1961 and 1980; in contrast, annual

production in the industrial OECD countries increased at just 2.8 percent between 1971 and

1980.125 At these rates, paper production by developing countries will overtake that of the industrialized countries by roughly 2020.

In the OECD countries in 1981, paper was the

fourth largest industrial energy user, ranking behind

iron and steel, chemicals, and petrochemicals, but 126 Pulp and paper produc- was just ahead of cement.

tion is relatively less important in developing

countries today due to the low rate of usage, but it is

likely to become increasingly important in the

future. In addition, the pulp and paper industry has

the potential to become a significant generator of

electricity for developing countries through the use

of cogeneration systems supplied by captive waste

products, especially bark and black liquor.

Papermaking typically consists of five process

steps: wood preparation; pulping; bleaching; chemical recovery; and papermaking, The products produced include high quality writing and magazine

paper, newsprint, tissue paper, cardboard, and various types of building construction papers.

Wood preparation consists of removing the tree

bark and chipping the wood into small pieces.

Pulping breaks apart the fibrous components of the

wood into a form useful for making paper, This can

be done through a variety of means. Most often

chemical processes are used, but mechanical or other

means are also employed perhaps 20 percent of the

time. Each pulping process has certain advantages

and disadvantages in terms of the quality, strength,

cost, yield, and other attributes of the resulting paper

produced. The residue from the chemical pulping

process, i.e., the components of the wood that are not

converted to pulp, is known as black liquor and is a

large source of energy. Bleaching is often used to

whiten the pulp before making paper (but is not

necessary for paperboard and some other products).

The papermaking process deposits the bleached pulp

fibers in a sheet on a screen, drains and presses the

water from it, and dries the sheet.127 Table 4-25 lists

energy consumption in pulp and paper mills in a

variety of countries.

Table 4-26 compares energy use by paper mills

using today’s current mix of technologies for the

United States, state-of-the-art paper mills, and advanced technologies. Substantial reductions in energy use are possible. Many of the technical

improvements also lead to improved product quality. For example, improved presses (e.g., the extended nip press) used to squeeze the water out of the

124 Sanjay s~~ op. cit., footnote 119.

lzs~drcw J, Ewing, ‘Energy Efficiency in the PUlp and Paper Industry With Emphasis on Developing Countries, ’ World Ba* Tec~c~ paper No.

34, 1985; and “ 1986-87 The World’s Pulp, Paper, and Board Industry: Production and Trade, ” Pulp and Paper International, July 1988, pp. 50-51.

l~b~ tie OECD ~ounwies in 1981 tie indus~al energy use rankings were: stee]—174 InilliOIl (OIXS Oil ~ulvdent (mtoe); chemical*12s ‘toe;

pctrochcrnicals- 122 mtoc; pulp and paper—58 mtoc of commercial energy purchased, but probably twice this amount was consumed by this sector,

the remainder coming from the use of waste products generated by the mill~such as bark and other materials; cement--49 mtoe. Source: Andrew J.

Ewing, Ibid.

127For a more dc~l~ description, sm.

~ U.S. Congress, Office of Technology Assessment, Industrial Energy Use, OTA-E-198 (Springfield, VA:

National Technical Information Service, June 1983).
128 . Fueling Development: Energy Technologies for Developing Countries

Table 4-25-Energy Consumption in Selected Pulp and Paper Mills

Coverage Average energy consumed

No. of Percent of Purchased Total

Country mills production GJ/tp GJ/tp

Colombia . . . . . . . . . . . . . . . .

Turkey . . . . . . . . . . . . . . . . . . .

India . . . . . . . . . . . . . . . . . . . .

Pakistan . . . . . . . . . . . . . . . . .

Indonesia . . . . . . . . . . . . . . . .

Thailand . . . . . . . . . . . . . . . . .

Average . . . . . . . . . . . . . . . . .

OECD average . . . . . . . . . . . .

4

7

4

5

15

1

NA

NA

80

89

13

90

38

25

NA

NA

34.6

45.7

79.4

56.3

33.2

20.3

38.3

19.8

50.3

NA

112.0

59.7

50.3

25.4

54.0

30.0

Table 4-26--Energy Use by Alternative Paper Production Technologies, United States

Specific energy use, GJ/tona

Process 1988 average State-of-the-art Advanced technology

Wood preparation . . . . . . . . . . . . 0.48 0.40 0.40

Pulping . . . . . . . . . . . . . . . . . . . . . 10.53 7.29 6.90

Bleaching . . . . . . . . . . . . . . . . . . . 3.27 2.44 2.20

Chemical recovery. . . . . . . . . . . . 7.93 5.04 3.75

Papermaking . . . . . . . . . . . . . . . . 15.18 10.30 8.40

Auxiliary. . . . . . . . . . . . . . . . . . . . 3.41 3.12 3.12

Total . . . . . . . . . . . . . . . . . . . . . 40.80 28.60 24.80

SOURCE: A. Elaahi and H.E. Lowitt, ‘The U.S. Pulp and Paper Industry: An Energy Perspective,” April 1988, U.S.

Department of Energy, Office of Industrial Programs, Report No. DOHRU01830-T57; Energeties, Inc.

“Industry Profiles: Paper,” U.S. Department of Energy, Office of Industrial Technologies, D_mber 1990.

paper before drying, both reduce energy use by well. Energy savings in the pulping process of 28

reducing the amount of water that must be evapo- percent by using such enzymes compared to merated and also improve fiber-to-fiber bonding, result- chanical pulping have been demonstrated in Sweing in a sheet with higher strength. Alternatively, the den. 128

same strength could be maintained while using

lower grade-and less energy intensive-pulp. A

large amount of electrical energy can be saved

through the use of improved motor drive systems.

Similarly, much of the process heat can be recovered

through the use of various types of heat exchangers

and recuperators, and through vapor recompression

systems. The use of enzymes derived from wood rot

funguses rather than traditional chemical or mechanical pulping might save a large amount of energy as

Of equal importance to conservation efforts within

the plant is that the pulp and paper industry can

greatly increase the amount of energy produced from

its waste products. The typical pulp and paper

operation has three principal waste streams that can

provide energy: hog fuel, black liquor, and forest

residues. Hog fuel is the bark, sawdust, and other

scrap produced in reducing logs to feedstock for the

pulping process. Hog fuels could supply about 3 GJ

128A. EIWad H.E. Lowitt, U.S. Department of Energy, OffiCe of Industrial pro-, ‘‘TheU.S. Pulp and Paper Industry: A.n Energy Perspective,’

Report No. DOE/RL/0183(kT57, April 1988.

1Z9AS me~ur~ at one pulp mill in Sweden.
—

Chapter 4---Energy Services: Industry and Agriculture ● 129

(2.8 million Btu) per tonne of pulp produced

(GJ/tp). 129 Black liquor, from the chemical pulping

process, averages an energy content of about 13 GJ

(12.3 million Btu) per tome of pulp. Other residues

are currently left in the forest when harvesting the

trees. A portion of these forest residues might be

collected, but the long term impact this would have

on forest soils would need to be examin ed closely.

If fully recovered, the estimated energy content of

forest residues would be about 25 GJ/tp (23.7

million Btu/tp). Combined, these energy resources

total some 41 GJ/tp (38.9 million Btu/tp).130

Most kraft pulp mills (which use the chemical

process resulting in the production of black liquor)

currently use black liquor for cogenerating steam

and electricity onsite. High efficiency steam injected

gas turbine or combined cycle technology (see ch. 6)

might be able to generate as much as 4,000 kWh of

electricity per ton of pulp produced if all of the hog

fuel, black liquor, and recoverable forest residues

were used. Onsite needs today are typically about

740 kWh/tp of electricity plus some 4,300 kg/tp of

steam, with the potential for significant reductions

as discussed above. This would leave a substantial

amount of power that could be sold to the grid. At

$0.09/kWh, the saleable electricity (in excess of

plant requirements) would have a value of some

$230, equal to half the value of the pulp sold.131

Current and future research opportunities include

the utilization of black liquor (physical, chemical

and combustion properties), biological pulping,

process monitoring and control, impulse drying of

paper, advanced waste heat recovery, and others.132

Chemicals

The chemicals industry is extremely complex,

involving the production of thousands of products in

numerous competing processes. Moreover, the feedstocks and energy inputs into the chemical industry

are often the same. Because of this complexity, the

following discussion will be limited solely to the

production of nitrogen based fertilizers, and will also

serve as a transition to the discussion on the use of

energy in the agricultural sector. More detailed

reviews of energy use in the chemicals industry can

be found elsewhere.133 Finally, the use of electricity

in the chemicals industry is dominated by pump, fan,

compressor, and related mechanical drive needs.

The above discussion of motor drive is directly

applicable to these uses.

As of 1980, the energy used to produce fertilizers

was about equal to all the commercial energy uses in

the agricultural sector of the developing countries

(not including China). Nitrogen fertilizers account

for almost three-fourths of the energy consumption

in the fertilizer sector, and nearly one-fifth is for

packaging, transportation, and field application. The

remainder is for phosphates (5 percent) and potash

(3 percent). The production of nitrogen fertilizers is

particularly energy intensive, and so will be the

focus here.134

Nitrogen fertilizers are made primarily from

ammonia. Energy use to produce ammonia has

dropped from about 80 GJ/tonne (76 million Btu/t)

of ammonia in the early 1940s to about 40 GJ/t (38

million Btu/t) for the average plant in the mid- 1970s,

to as low as 33 GJ/t (31 million Btu/t) today. The

theoretical limit is about 21 GJ/t (20 million Btu/t);

the practical limit has been estimated at about 28.5

GJ/t (27 million Btu/t). The fuel component of this

total energy consumption is usually provided by

natural gas, which serves both as a feedstock and as

a fuel. Currently, about 80 percent of world ammonia production is done by chemically reforming

natural gas. The (externally purchased) electric

power component of this total energy consumption

dropped from about 800 kWh/tonne in the early

1960s to about 20 kWh per tonne in the early 1980s.

This large drop in electricity usage was made

possible by the transition from reciprocating com130Efic D. ~son, “prospects for Biomass-Gasifier Gas Tbrbine Cogeneration in the Forest Products Industry: A Scoping Study,” Princeton

University, Center for Energy and Environmental Studies Working Paper No. 113.

13 IEfic D. ~~o% < ‘B1~ma~s.Gasifier/Gm-~bine Applications in tie PuIp and Paper Industry: ~ Initial Strategy for Reducing Elec~c utfi~ COZ

Emissions,” paper presented at the Conference on Biomass For Utility Applications, Electric Power Research Institute, Tampa, FL, Oct. 23-25, 1990;

Eric D. Larso~ “Prospects for Biomass-Gasifier Gas Thrbine Cogeneration in the Forest Products Industry: A Scoping Study, ” Mmton Ufivmsiw,

Center for Energy and Environmental Studies Working Paper No. 113.

l~~A El~ and H.E. Lowitt, op. cit., footrlote 128.

133u,s. Congess, Office of T~~olo~ Assessment, op. Cit,, foo~ote 127; Energetic, ~c. for tie U.S. Dq~ment of Energy, OffIce of kdustial

Technologies, ‘ ‘Industry Profiles: Chemicals, ” Contract No. DE-AC01-87CE40762, December 1990.

l~ARoger Heati, John Mulckhuyse, and Subrahrnanyan venkalar~~ ‘‘The Potential for Energy Efficiency in the Fertilizer Industry, ’ World Bank

Technical Paper No. 35, 1985.
130 . Fueling Development: Energy Technologies for Developing Countries

Table 4-27—Efficiency Improvements in Nitrogen Fertilizer Production

Capital cost

Energy savings ($millions)

Purge gas recovery . . . . . . . . . . . . . . . . . . . . . . . . .

Synthesis convertor . . . . . . . . . . . . . . . . . . . . . . . .

Molecular sieves . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power recovery turbines . . . . . . . . . . . . . . . . . . . . .

Combustion air preheater . . . . . . . . . . . . . . . . . . .

Surface condenser cleaners. . . . . . . . . . . . . . . . . .

Carbon dioxide removal . . . . . . . . . . . . . . . . . . . . .

Use of flare gas . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Feedstock saturation . . . . . . . . . . . . . . . . . . . . . . .

1.8 GJ/mt

1.12 GJ/mt

0.6 GJ/mt

10 kWh/mt

1 GJ/mt

NA

NA

NA

0.6 GJ/mt

$1.4

$1.8

$0.35

$3.5

NA

$0.15

NA

pressers to centrifugal compressors and the extensive use of cogeneration from the high pressure

steam.135 Many more efficiency improvements are

still possible as shown in table 4-27.

In many cases, pollution control measures in

fertilizer plants have simultaneously allowed increases in production and reductions in energy use.

Purge gas recovery and recycling, for example,

captures hydrogen lost from the synthesis process,

reducing fuel use and the need for compression.

Typical savings are 1.8 GJ/t (1.7 million Btu/t) of

ammonia at an installed cost of $1.4 million. These

units are now standard in new plants. For a typical

1,000 tonne per day plant, some 600,000 GJ (570

billion Btu) would be saved annually. Over a 20-year

plant lifetime, savings would total 12.6 million GJ

(12 trillion Btu), at a discounted cost of about

$0.25/GJ ($0.26/million Btu) in US$1990. New

design methods, such as pinch technology for heat

exchanger networks in chemical plants, also offer

both energy and capital savings in new plant

designs. Pinch technology, for example, realizes

average energy savings in new plant designs of 40

percent.136

IMPROVING THE EFFECTIVENESS

OF MATERIAL USAGE

The energy required to deliver industrial goods

and services can often be lessened by using existing

material more effectively or by changing the types of

materials used.

Smaller quantities of higher performance materials can often be substituted for larger quantities of

lower performance materials. The tensile strength of

steel was increased by four times between 1910 and

1980, for example, allowing large reductions in the

quantity of steel required in any particular application. 137 Plastics are being substituted for metal in

many auto body parts-reducing weight and improving fuel efficiency, reducing industrial energy

use, and improving corrosion resistance and durability. 138

Materials can be more extensively recycled.

Significant amounts of energy can be saved by

recycling steel, aluminum, glass, paper, and other

materials (see table 4-28). Even greater savings may

be possible if, rather than melting down and

recasting the material, the material can be used in

exactly the same form as before—for example, if

glass bottles are of a standard size and shape and can

be simply washed out and reused. On the other hand,

the increasing mixture of different materials, such as

the use of plastics in automobile bodies, complicates

recycling efforts if recyclability is not designed

in. 139

Extensive recycling is already done in developing

countries through both informal and formal markets.

In West Africa, for example, artisans routinely melt

}35fiid.

136cam ozgen et. al., ‘‘Designing Heat-Exchanger Networks for Energy Savings in Chemical Plants,’ Energy, vol. 14, No. 12, 1989, pp. 853-861.

]3T~ono~c co~~~lon for E~ope, EVO/U~i~~ ~f(~e Speclfi.c c~n~~~pti~n of Sree/ (New York NY: United Nations, 1984).

136A de~led review of ~vmc~~tefi.s is given in: U.S. Congress, office of T~~olo~ Assessmen~ Advance~Materia/~ by Desigrt, o~-E-35 1

(Washingto% DC: U.S. Government Printing OffIce, June 1988).

IJg~ese issues are being examined in a forthcoming report from the U.S. Congress, Office of Technology Assessment Materials Technology:

Integrating Environmental Goals With Product Design.
Chapter 4-Energy Services: Industry and Agriculture ● 131

Table 4-28—Energy Intensity of Primary and Recycled Materials

Primary Recycled Savings

GJ/mt GJ/mt (percent)

Aluminum . . . . . . . . . . . . . . . . . . . . . . . . . 242-277 9.9-18.7 92-96

Glass . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8 12.3 31

Paper

Newsprint . . . . . . . . . . . . . . . . . . . . . . . 51.6 40.4 22

Printing paper... . . . . . . . . . . . . . . . . 78.8 50.5 36

Tissue paper..,.. . . . . . . . . . . . . . . . 79.7 34.3

Liner board . . . . . . . . . . . . . . . . . . . . . 16.8 42.2 (-151)

Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . NA NA 92-98

Solvents . . . . . . . . . . . . . . . . . . . . . . . . . . 27.9 4.7 83

Steela . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 7.6 58

NA-notavailable ornot applicable; mt= metric tonne.

aSeetable 4-19.

SOURCE: U.S. Congress,Offiee ofTechnologyAssessmen4 “FacingAmeriea’sTrash:What NextForMunieipal Solii

Waste?” OTA-O-424 (Washington, DC: U.S. Government Printing Office), October 1989; Energetic, Inc.,

“Industry Profiles: Waste Utilization,” U.S. Department of Energy, Office of Industrial Technologies,

DE-AC01-87CE40762, Deeember 1990.

down scrap aluminum and cast it into pots. In turn,

aluminum pots perform much better than traditional

fired clay pots for cooking. They provide significant

energy savings due to their higher thermal conductivity and they rarely break--costing someone their

supper. Improved (higher efficiency) biomass stoves

(see ch. 3) are commonly made of recycled metal,

culled from wrecked cars or oil drums. As the

economies of developing countries grow, these

informal recycling efforts may need additional

incentives and/or capitalization to continue at a high

level.

The quantity of energy intensive materials consumed can also be reduced by the use of energy

efficient technologies. If energy is used efficiently,

fewer power plants are needed. A typical coal-fried

power plant might require 2,000 GJ (1,900 million

Btu) of energy intensive construction materials per

MW of capacit y

140 --the equivalent of its entire

power output for a month. 141 Similarly, if buses,

light rail, or other systems substitute for automobiles, then both the cement needed to build the road

and the steel needed to build the cars can be reduced

per passenger-kilometer or freight-tonne-kilometer.

Lightweight fuel efficient automobiles use less

materials to construct and require fewer steel- and

concrete-intensive refineries.

Quality contro1142 can play an important role in

saving energy by reducing the amount of scrap and

reworking that is necessary. For example, in the

early 1980s Ford Motor Co. rejected as much as 8 to

10 percent of the flat-rolled steel it obtained from

U.S. producers such as Bethlehem Steel. This has

since been lowered to 1 percent. 143 In India, modernization of the Rourkela steel plant is expected to

raise the yield of liquid steel to steel slabs from 79

percent currently to 92.5 percent.l44 This alone will

reduce energy consumption per unit of steel output

by 17 percent.

Quality control is also important in assembling

consumer goods. Factories that use outmoded methods of mass production (as opposed to lean production)--

in which products are primarily inspected for defects

after they are built—typically expend a quarter of

l’$OJyoti K.p- * ‘Capital Goods for Energy Development: power Equipment fOr Develop~g coun~es? “AnnualReview ofEnergy, vol. 11, 1986,

pp. 417-450.

141Note, for exmple, tit tie addltio~ ~tefi~ in a refrigerator wdl not pfi~ly be energy inte~ive steel+ xcept perhaps for a huger h~t

exchanger-but low density insulation with a correspondingly low energy-intensity. Thus the savings in materials by building fewer power plants are

generally not offset by increases in material demands by the end-user.

ld~Genlcfi TaWchi and Don c~us~g, “Robust Quality,” Harvard Business Review, vol. 68, No. 1, January-February 1990, pp. 65-75; Raghu N.

Kackar, “Taguchi’s Quality Philosophy: Analysis and Commentq, ” Quality Progress, December 1986, pp. 21-28; Thomas B. Barker, “Quality

Engineering by Design: Taguchi’s Philosophy, ’ QuaZity Progress, December 1986, pp. 3242; Daniel E. Whitney, “Manufacturing By Design, ”

Harvard Business Review, vol. 66, No, 4, July-August 1988, pp. 83-91.

ldJEnergetics, Inc., op. cit., footnote 75; ‘‘Quality, ” Business Week, No. 3002, June 8, 1987, p. 131

l~~t Chatterjee, op. cit., footnote 84.
132 . Fueling Development: Energy Technologies for Developing Countries

their effort on finding and fixing mistakes in the

assembled products. Thus, a quarter of the time and

labor, and a similar share of the energy expended is

not used to produce goods, but rather to rework

goods that were not built correctly the first time.145

Statistical process control and just-in-time (JIT)

inventory control can dramatically reduce these

losses.

JIT inventory control contributes to reducing

inventories and the amount of material handling

required in a plant. In a conventional mass production factory, large inventories are kept on hand to be

used as needed by the assembly line. This requires

large amounts of handling and storage space in order

to store these components when they frost arrive at

the assembly plant and to then retrieve them when

needed by the assembly line. JIT eliminates this

extra handling as well as reduces the need for

expensive (and material intensive) storage areas.

European automobile assembly plants, for example,

keep 10 times as large an inventory of spare parts,

more than 3 times the area for repairing defects in

assembled cars, and one-third more total space per

output than Japanese auto assembly plants that have

fully adopted just-in-time assembly and other elements of ‘‘lean’ production.146

Similar savings from lean production have been

achieved in many other industries, from air conditioners to microwave ovens. The resulting savings

are substantial in terms of reduced inventory costs,

plant capital costs, improved labor productivity,

improved product quality, and as a bonus, reduced

energy consumption. Such savings are particularly

important where there is a shortage of working

capital and interest rates are high.147 Finally, quality

in the form of improved product lifetimes can reduce

the frequency with which the product must be

replaced.

These improvements in manufacturing--statistical process control, just-in-time inventory control,

etc.—are necessary if a country is to be competitive

in world markets. Such techniques can also provide

substantial energy savings.

BARRIERS TO ENERGY

EFFICIENCY IMPROVEMENTS

IN INDUSTRY

A number of factors limit the efficiency, productivity, and performance of industrial operations in

developing countries. These are summarized in table

4-6 and a few selected cases are discussed below.

Plant managers and others are often making substantial efforts to improve energy efficiency, but are

laboring under highly adverse conditions. As examples, manufacturing plants are often too small to be

optimally efficient; available technologies are often

low quality or obsolete; national infrastructures are

often inadequate; the plant may lack foreign exchange to purchase critical components not available locally; and there is generally a lack of skilled

technicians, engineers, and managers.

Small Scale

Iron and steel plants, cement plants, paper mills,

and other industrial operations in developing countries are often much smaller than those in the

industrialized countries due to:

●

●

●

o

For

smaller markets;

poor transportation infrastructures that limit the

cost effective distance for transport;

reduced capital costs and associated risks;

the benefits (in labor-rich developing countries) of often greater employment per unit

output.

example, the average U.S. paper mill has an

annual capacity of approximately 100,000 tons; the

average Latin American mill has a capacity of

18,000 tons; in Africa 9,000 tons, and in Asia

(except Japan) 5,000 tons.148 These small plants

require significantly more energy per unit output

because of scale effects. In addition, the small size

of these industries increases the cost of installing

more energy efficient equipment per unit energy

saved. These small mills must also often meet the

full range of products demanded in a developing

country, while using relatively less production

145cw PO% 4’Q~i~,” Business Week, No. 3002, June 8, 1987, p. 131.

146JmeS p. wowc~Da~el T. JonM, and D~el Roos, The Muchine Thur Changed The World mew Yorlq NY: MacMillan Publishing, 1990), p.

92.

IATNote, however, titfor ~T to work refiable ~nspo~tion and co~tications infr~tructures we required.

ldS~&ew J. Ewing, op. cit., foomote 125, p. 45.
Chapter 4--Energy Services: Industry and Agriculture ● 133

equipment with limited flexibility and with lower

production runs per type of product.

National Infrastructures

Inadequate national infrastructures also reduce

efficiency and productivity. Poor transport infrastructure, for example, reduces cost-effective transport distances and market sizes. Frequent electric

power brownouts or cutoffs can seriously disrupt

operations. The Indian steel minimill industry, for

example, received just 38 percent of the power

needed to run at full capacity between 1976 to 1986.

In response, the steel, cement, and other industries

have installed-at considerable expense—large

amounts of onsite generation capacity. The Indian

cement industry had installed some 545 MW of

onsite capacity as of 1988-89. Overall, some 40

percent of electric power needs in India’s cement

industry are met with onsite generation, usually by

low efficiency steam plants.149

Available Technology

Paper plants, for example, are often sold in

developing countries as turnkey operations. Under

these circumstances, one of the principal considerations is the initial capital cost. Oil freed boilers and

generators are cheaper than waste wood or dual fuel

boilers and/or cogeneration systems and so will

usually be specified even though these oil-based

systems will require very expensive fuel. Similarly,

process control equipment may often be omitted in

order to reduce capital costs, but then prevents

monitoring and fine tuning plant processes.150

Financial Constraints

The additional capital cost to the end user of

energy efficient equipment can be a substantial

barrier to investment. Investment costs raise several

different types of problems. The first is the ‘disconnect” between the user and the utility: the total

system capital cost is often lower for energy efficient

equipment, but the capital savings accrue to the

utility while the capital costs are incurred by the

user. Similarly, there is often a ‘‘discomect”

between the purchaser and the user. Where equipment is leased, the capital costs go to the purchaser—who will minimize expenditures by purchasing less efficient equipment, while the higher

energy bills go to the user.

Second, potential users of energy efficient equipment-even large industrial organizations-will

often have an effective discount rate that is much

higher than that justified by their cost of capital, let

alone social discount rates. This can dramatically

shorten the amount of time they are willing to wait

for energy savings to pay for the higher initial capital

cost of energy efficient equipment. There are several

reasons for these high effective discount rates.

Foremost among these is that energy is just one

component of overall corporate strategy to improve

profitability and competitiveness, and often a rather

minor component at that. Energy must compete with

these other factors of production when investment

choices are made and when the scarce time of skilled

manpower is allocated. In particular, capacity expansion provides a much more visible investment

alternative and is usually the preferred choice.

In existing plants, a pool of capital may be

budgeted for different types of plant improvements,

such as better process equipment or for improved

energy efficiency. Different energy efficiency improvements then compete against each other for this

limited budget rather than against an overall level of

profitability. Energy efficiency projects with very

high potential returns-but not the highest—may

then be deferred.151 In other cases, energy/cost

savings above a certain-very high-threshold level

may be required before management considers it

worthwhile diverting the attention of their limited

technical manpower from the business of keeping

the factory running.

Investments in new plant and equipment may also

focus on less efficient equipment than is desirable

from a systemwide life cycle cost perspective.

Factors that constrain these investments in developing countries include:

●

●

●

aversion to the risk of relatively new, untested

equipment, and the lack of an adequate infrastructure to repair the equipment should it fail;

lack of technical manpower to install, operate,

or maintain state-of-the-art equipment;

the risk of currency exchange rate fluctuations

when purchasing equipment denominated by

ld~nergy ad Environmental Ardysis, hlC., Op. Cit., fOO~Ote 86.

150~&ew J. Ewing, op. cit., footnote 125.

lslMarc Ross, “Capital Budgeting Practices of Twelve Large Manufacturers, ” Finuncial Management, winter 1986, pp. 15-21.
134 ● Fueling Development: Energy Technologies for Developing Countries

foreign exchange loans; and

. the risk of political instability and consequent

uncertainty in mid- to long-range loans.

Third, in many developing countries, fuel and

electricity costs are highly subsidized so that investments in energy efficient equipment by the industrial

user have very long payback times. For example, a

recent review of 60 developing countries found the

average cost of electricity to be $0.043/kWh

(US$1990) while the average cost (including industrial, commercial, and residential users) of new

supply was about $0.08/kWh.152

In addition, some countries use cost-plus pricing

for key public sector dominated industries—

allowing the industry to directly pass on the cost of

energy and providing no incentive to conserve.

India, for example, long used cost-plus pricing in

their public sector industries. They have now largely

eliminated this pricing system in cement, aluminum,

and pulp and paper, and have modified this system

in the iron and steel and in the fertilizer sectors in

order to spur energy efficiency improvements.

Cost-plus pricing remains in effect, however, in the

Indian refinery sector.153

Fourth, the lack of foreign exchange to buy spare

parts can also be a serious handicap. This has been

an important factor in the decline of the Tanzanian

cement industry, which operated at just 22 percent of

rated capacity in 1984.154

Fifth, secondhand markets for equipment may

provide no premium for efficient equipment, while

at the same timekeeping large amounts of inefficient

equipment in operation, sometimes as ‘‘hand-medowns’ from industrial countries.

POLICY RESPONSES

There are a variety of possible policy responses to

these barriers to energy efficiency improvements.

These policy responses are summarized in table 4-7

and a few of these are discussed below.

In making their choice of industrial equipment,

manufacturers must consider much more than energy efficiency. Decision criteria include: the financial return, the quality and quantity of product

produced, the timeliness and reliability of the

production equipment, and the flexibility of the

equipment, among others.

Simply investing in high technology mills, as

currently configured, does not necessarily meet

these criteria. High technology mills can achieve

higher efficiencies, but also tend to have high

capacity-making them less suited to developing

countries with their lower volume markets. High

technology mills are expensive to maintain, require

scarce technical manpower, and spares are often

unavailable due to the lack of foreign exchange,

lengthy licensing procedures, and high import duties. High technology mills may also not provide, for

a variety of reasons, the savings desired. Continuous

casting in the Chinese steel industry, for example,

has so far provided energy savings at a cost several

times greater than the price of the energy supply due

to the mismatch between the product the continuous

casters were designed to provide and that which was

required.155 Finally, high technology mills provide

less employment—widely seen as a liability in

developing countries with their large labor pools.156

Information

Even large industries may lack information on the

opportunities for and potential savings of investing

in energy efficient equipment. Policy responses

might include information programs-particularly

in conjunction with regional energy efficiency

testing centers, labeling equipment with its energy

consumption, training programs, and energy audits

of industrial operations by groups established inhouse or by outside experts-possibly supported by

the government, utilities, or even private Energy

Service Companies.

~slA. Mas~yeklli, World Bank, Indus&y and Energy Department, Review of Electn”city Tan~s in Developing Counm”es Dun”ng the 1980s, ~dusv

and Energy Department Working Paper, Energy Series Paper No, 32 (Washington DC: World BanlG November 1990).

lS3~ad Farqui et. al., ‘‘Application of Demand-Side Management (DSM) to Relieve Electricity Shortages in India, ’ contractor report prepared

for the Office of Technology Assessment, April 1990.

15AD.F. Stewart and B. Muhegi, op. cit., foonote 118.

155~kD, ~vlne ad Liu Xueyl, us< Dep@mentof EnerW, Lawrenm Berkeley Laboratory, Energy con~ervati~n programsin (he PeoplesRepublic

of China, Report No. LBL-29211 (Berkeley, CA: Lawrence Berkeley Laboratory, August, 1990).

lS6V~od B~, * ‘problems and Solutiom ~ Adopting Modern Tw~o]ogy At steel Pk@s h Developing Coutries, ” ~ron and Steel Engineer,

February 1988, pp. 26-31.
Chapter 4--Energy Services: Industry and Agriculture . 135

Energy audit services, when combined with a

variety of supporting conditions including information, training, financial assistance, appropriate price

incentives, and others, can be highly successful. In

a USAID program in Kenya, for example, just 24

audits and 30 site visits, together with other supporting activities, resulted in annual savings of about

US$1.1 million, at a cost of $136,000 annually in the

pilot program. 157 Nonetheless, the types of efficiency improvements adopted in this program were

limited to short to medium term pay-back measures,

were primarily implemented with in-house staff, and

were usually realized with very low cost used

equipment or equipment made onsite or otherwise

locally available. Very seldom were firms willing to

borrow for these investments; most were financed

out of maintenance budgets and internal funds.

Numerous countries now have audit programs,158

but the degree of their effectiveness depends on the

effort invested, the extensiveness of related support

programs such as training and financial assistance,

and other factors.

Numerous counties also have training or other

informational programs. South Korea, for example,

provided training sessions to some 89,000 people

between 1974 and 1980 through their national

energy management association.

Additionally, it might also be useful in many

cases to establish uniform testing methodologies

(test standards) to measure the performance of

motors, ASDs, pumps, fans, and other equipment on

a uniform basis. Such tests might best be done at

regional centers with close institutional relationships to industrial country institutions.159 Such a

regional center might also play a role in concentrating a critical mass of manpower on key RD&D

issues; developing computer design or diagnostic

tools; establishing methodologies for field evaluation and extension teams; developing protocols for

interfacing different types of efficient equipment—

such as common forms of communication to control

equipment via power line carriers or other means to

allow utility load management; and others.

Availability

Where potential users are aware of the advantages

of energy efficient equipment, they may still not be

able to obtain it. Obstacles may range from an

insufficient local market to be worth the expense for

the vendor to develop it; lack of sufficient maintenance infrastructure to support use of the equipment;

taxes and tariffs that prevent the import of the

equipment even when its use would provide substantial capital and/or foreign exchange savings; and

other factors.

Policy responses include local development of

technologies, organizing local or regional buyers

markets to develop sufficient demand to allow

development of the market, providing special incentives to make the vendor’s effort to enter a small

market more attractive, relaxing taxes and tariffs on

energy efficient equipment, and others. Local development efforts include the PROCEL (see ch. 3)

program of Brazil, which has supported the development of more efficient refrigerators, water heaters,

air conditioners, motors and controls, and lighting

technologies.

Minimum efficiency standards have been set, for

example, by Taiwan for numerous consumer appliances. Window air conditioners have improved in

efficiency by over 40 percent since the standards

were established. Building efficiency standards have

been established in Singapore, South Korea, China,

and on a voluntary basis are being established for

Indonesia, the Philippines, and Thailand.l60 On the

other hand, there are sometimes sound technical

reasons for not mandating minimum efficiency

standards for a product. Electric motors, for example, are more susceptible to stalling and burning out

as their efficiency is increased if there are voltage

fluctuations or if they are driving loads with very

large starting torques. Mandating minimum efficiency for all (as opposed to certain types) industrial

157H. Mike Jones, “Kenya Renewable Energy Development Project: Energy Consemation and Planning, Final Report, ” contractor report prepared

for the U.S. Agency for International Development, June 28, 1985.

158~c~e include: Argentin~ Banglades~ Br~l, Costa Rica, Ecuador, Egypt, E1 Salvador, Ghan% GwIe~a, Honduras, India, Indonesia, Jor@

Korea, Morocco, Pakistan, Panama, Philippines, Sri Lanka, Thailand, and ‘Ibnisia, Steven Nadcl, Howard Geller, and Marc Wdbetter, “A Review of

Electricity Conservation Programs for Developing Countries,’draft report for the American Council for an Energy Efficiency Economy, Washington

DC, Jan. 1991; Amory Lovins, Director, Rocky Mountain Im(i[ute, personal communication, July 2, 1991.

159~ese ~lght include tic National Imstltute for Standards and Technology, Environment~ ProtectionAgency (forenvironment-related teChIIOIOgieS),

the American National Standards Institute, the Institute for Electrical and Electronics Engineers, and others.

I@ Steven Nadel, Howard Gcllcr, and Marc Ledbetter, Op. cit., foomote 158.

297-929 - 92 - 10 - QL: 3
136 ● Fueling Development: Energy Technologies for Developing Countries

Table 4-29-Commercial Energy Use in Agricultural Production, 1972/73

Share

Fertilizers Traction Irrigation Pesticides Total

Industrial countries . . . . . . . . . . . 35% 62% 1% 2% 107 Mtoen

Developing countries . . . . . . . . . 68% 22% 8% 2% 31 Mtoe

motors might then sometimes lead to undesirable

results if the motor were incorrectly specified.

In some cases, more efficient equipment may be

available, but will not be considered for developing

country applications due to its greater complexity

and more difficult operation and maintenance. For

example, high pressure steam boilers are widely

available, but require more sophisticated water

treatment-without which they can fail, and require

substantial skills if they are to be operated safely.

Capital Cost

A variety of responses have been developed to the

capital constraint problem. These include: loan

programs, rebates, tax credits, accelerated depreciation, or other financial assistance for efficient

equipment; adjusting energy prices to reflect its full

cost; direct installation of efficient equipment by the

utility; alternative financing arrangements in order

to eliminate the “disconnect" between the user and

the utility or between the user and the owner; and

other arrangements.

A number of rate incentive programs (adjusting

electricity tariff rates in order to reduce peak loads,

base loads, etc.) have been established in Brazil,

Costa Rica, Indonesia, Pakistan, Uruguay, and other

countries. Loans, grants, leasing arrangements, tax

credits, and other financing schemes are being tried

in Thailand, Brazil, China, India, and elsewhere.161

A broader range of barriers to investment in

energy efficient technologies is given in table 4-6; a

list of potential policy options is given in table 4-7.

These are not directly matched up as many barriers

have multiple policy responses and, correspondingly, many policy options address a variety of

barriers. These barriers and policy responses are

strongly influenced by the scale and type-small

traditional to large modern-of the industry concerned.

AGRICULTURE

Relatively little energy is used directly in the

agricultural sector, ranging from less than 1 percent

of the national total in the United States to perhaps

5 to 8 percent of the national totals in developing

countries such as Brazil, China, India, and Kenya

(see tables 4-3, 4-29). Energy used to manufacture

farm equipment and fertilizer, store and process

food, or haul it to market are generally accounted for

separately by these energy balances in the industrial,

commercial, and transport sectors. Despite its relatively low energy use, agriculture is nevertheless a

very important sector in the developing countries

due to its social and economic significance: agriculture provides fully one-third of the Gross Domestic

Product for the nearly 3 billion people in low income

countries and it provides an even higher share of

national employment (see figure 4-13).162 In subSaharan Africa, for example, 75 percent of the work

force is engaged in agriculture, compared to just 2

percent in the United States. Other comparisons of

agriculture between developing and industrial countries are given in tables 4-30 and 4-31. Agriculture

is also important in terms of its impact on the local,

regional, and global environment.l63

As for the residential, commercial, and industrial

sectors, there are numerous opportunities for improving the efficiency of energy use in agriculture.

These include improvements:

IGISteven Nadel, Howard Geller, and Marc b-dbetter, op. cit., footnote 158.

IczworldBeWorId Development Report 1990 (New York NY: Oxford University Ress, ~M).

163A more de~led ~scussion of ~ese ismes cm be fo~d ~: U.S. Congras, OffIce of Ttx~ology Assessment Energy in Developing Counfrie$,

OT14-E-486 (Washington DC: U.S. Government Printing Office, January 1991).
.. -—.

Chapter 4--Energy Services: Industry and Agriculture ● 137

Figure 4-13—Agricultural Labor Force as a Percent

of The Total Labor Force, 1960 to 2020

Agricultural labor force as percent of total

100 T ‘-

1

+--- ~ Africa

+,.

- .l,z China

~lndian

subcontinent

1

Latin America~

20 ., ,/

Europe w

<< fj ~~<u.s. , 0+ ,

1960 1980 200 0 2020 204 0

Year

The developing countries have large shares of their total labor

force in agriculture.

SOURCE: World Bank, Agricultural Mechanization: Issues and Ootions

(Washington, DC: World Bank, 1987).

●

●

●

●

●

●

●

in the industrial energy used to produce farm

implements, fertilizers and other chemicals

(discussed above);

in the application and utilization by the plants

of fertilizers and other chemicals;

in the pumping and application of irrigation

water;

in the efficiency of traction for cultivation,

sowing, weeding, harvesting, and other operations as well as potentially minimizing the need

for traction through low-tillage agriculture;

in the efficiency of post-harvest crop drying

(using solar energy or heat recovery systems)

and storage (see commercial refrigeration, ch.

3);

in the utilization of crop residues for energy

production (see ch. 6); and

in the transport of crops to market (see ch. 5),

among others.

The discussion here focuses primarily on efficiency improvements in the use of commercial

Photo credit: Appropriate Technologies, /n fernationa/

More efficient irrigation technologies could save energy

and boost agricultural productivity.

energy for irrigation and traction in developing

countries. Improvements in the production of fertilizer were discussed above and transport is discussed

in chapter 5. Discussion of agricultural practices,

programs, or policies more generally are beyond the

scope of this assessment (see box 4-A);164 several

recent Office of Technology Assessment publications examine these and related issues.l65

Irrigation

Irrigation frees the farmer from dependence on

irregular rains and raises yields, allowing doubleand even triple-cropping. Some 160 million hectares

of land in developing countries are irrigated. In Asia,

100 million hectares are irrigated, and this land

produces roughly 60 percent of the region’s food on

just 45 percent of its cropped area.l66

India, for example, nearly doubled its irrigated

area between 1950 and 1984 in order to reduce its

16.tFor ~ recent review, see: R~esh Bhatia and Rishi Sharma, ‘‘Energy and Agrictdme: A Review)’ Ashok V. Desai (cd.), Patterns of Energy Use

in De}eZopin,g Counrries (New Delhi, India: Wiley Eastern Limited, and OttawA Canada: International Development Research Center, and Tbkyo:

United Nations University, 1990).

165u,s cong~ss, Offlce of TW~oloW Assessment, Err~ncirrg Ag~”cul~re in Afi”ca: A Role for U.S. D~elopment Assistance, OTA-F-356

(September 1988); U.S. Congress, Office of Technology Assessment, Grassroots Development: The African Development Foundation, OTA-F-378

(June 1988); U.S. Congress, Office of Technology Assessment, Technologies to Sustain Tropica/ Forest Resources, OIA-F-214 (March 1984); U.S.

Congress, Office of Technology Assessmen~ Technologies to Maintain Bio/ogicalDiversity, OTA-F-330 (March 1987). See also the UNFAO and World

Bank publications listed below,

l~Mon~~e Yudelman, “Sustainable and Equitable Development in Irrigated Environments,’ Jeffrey Leonard (cd.), Environment and the Poor:

DeveZopmerrt Strategies for a Common Agenda (New Brunswick, NJ: Transaction Books, 1989), pp. 61-85.
138 ● Fueling Development: Energy Technologies for Developing Countries

Table 4-30-Comparison of Agriculture in Developing and Industrial Countries, 1980

Developing industrial

Share of world population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Share of world agricultural production . . . . . . . . . . . . . . . . . . . . . . . .

Production per agricultural worker. . . . . . . . . . . . . . . . , . . . . . . . . . . .

Arable land per agricultural worker . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fertilizer use (kg/ha) of agricultural land. . . . . . . . . . . . . . . . . . . . . . .

Total daily food consumption . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . .

(low-Income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(middle-Income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of seriously malnourished . . . . . . . . . . . . . . . . . . . . . . . . . . .

67%

38%

$550 (1975$)

1.3 ha

9 kg/ha

2,200

2,000

2,500

435 Million

33%

620/o

$5,200

8.9 ha

40 kg/ha

3,300

NA

NA

NA

NA - Not available or not applicable.

SOURCE: “Agriculture: Toward 2000” (Rome, Italy: Food and Agriculture Organization of the United Nations, 1981),

Table 4-31-Agricultural Indicators for Various Developing and Industrial Countries, 1982/83

Agricultural labor Arable land Fertilizer kg Rice yield

Country percent of total Ha/capital arable land kg paddy/ha

India . . . . . . . . . . . . . . . . . . . . . . . 61

Bangladesh . . . . . . . . . . . . . . . . . 83

China . . . . . . . . . . . . . . . . . . . . . . . 57

Pakistan , . . . . . . . . . . . . . . . . . . . 52

Sri Lanka . . . . . . . . . . . . . . . . . . . 52

Burma . . . . . . . . . . . . . . . . . . . . . . 50

Egypt . . . . . . . . . . . . . . . . . . . . . . . 49

Philippines . . . . . . . . . . . . . . . . . . 44

Brazil . . . . . . . . . . . . . . . . . . . . . . . 36

Iran . . . . . . . . . . . . . . . . . . . . . . . . 36

Korea . . . . . . . . . . . . . . . . . . . . . . 35

Mexico . . . . . . . . . . . . . . . . . . . . . 34

Italy . . . . . . . . . . . . . . . . . . . . . . . 10

Japan . . . . . . . . . . . . . . . . . . . . . . 9

France . . . . . . . . . . . . . . . . . . . . . . 8

Canada .,..... . . . . . . . . . . . . . . 4

Germany . . . . . . . . . . . . . . . . . . . . 3

United Kingdom. . . . . . . . . . . . . . 2

U.S . . . . . . . . . . . . . . . . . . . . . . . . 2

0.24

0.10

0.10

0.22

0.14

0.27

0.06

0.23

0.58

0.34

0.05

0.32

0.22

0.04

0.34

1.87

0.12

0.12

0.82

39

60

181

59

71

17

361

32

37

66

345

61

169

437

312

49

421

375

105

2,200

2,050

5,070

NA

NA

3,090

NA

2,470

NA

NA

NA

NA

NA

5,700

NA

NA

NA

NA

5,150

SOURCE: TER/EnergyDataDirectory and Yearboo~7988(New DelhL lndia:Tata Energy Research lnstitute,1989).

vulnerability to poor monsoons.l67 More than 6

million electric and 3 million diesel pump sets have

been deployed (see figure 4-14). Electric pumpsets

consumed some 23,000 GWh of electricity in India

in 1985-86, about 14 percent of total national

electricity generation

168 and about two-thirds of

169 Similarly,in China, irrigation rural electricity use.

consumes unestimated 70 percent of rural electricFailure to provide adequate power for pumping

can have serious consequences for those regions

dependent on it. The Sudanese lost some $100

million worth of agricultura1 output in 1984 due to

a shortage of energy for pumping and traction.

Similarly, the Somalis lost 40 to 60 percent of their

irrigated crops in some regions during 1984 due to

a lack of diesel fuel for irrigation.171

ity, with the remainder used for food processing, Irrigation is most commonly done with either

various rural industries, and lighting.170 electric motor or diesel driven pumps. Electric

167~ta )7nerw Re~e~ch Imti~te, TEN Energy Data Djrectov ad yearboo& (TEDDY) 1988 (New Delhi, India: Tata Energy Research bstitute,

1990), p. 128.

lc8Ashok Desai, “Energy Balances for Indi~ 1985 -86,’ contractor report prepared for the OffIce of Technology Assessmen4 1990. This is equivalent

to 125,000 GJ.

l@s, mesh and T.V. Natarajan, “Policy Options in Rural Electriilcation in India,’ Pacific and Asian Journal of Energy, vol. 1, 1987, pp. 44-53.

17~c. Howe, Cfiina’s Economy (New York NY: Basic BOOkS, kc., 1978), p. 88.

ITIU,S. Congess, House select Cofittee on Huger, ~earrng~ On Energy a~Deve/opmen/: Choices in the Food Sector, Serial No. 101-11, U.S.

Government Printing Office, July 25, 1989.
Chapter 4-Energy Services: Industry and Agriculture ● 139

Box 4-A—Agricultural Energy Use in Context

A thorough discussion of agricultural energy use necessarily includes a host of important issues beyond the

scope of this study. Other issues of importance in agriculture, but not discussed here, include:

. proper pricing of agricultural products (allowing the market to work);

● the international impact of agricultural subsidies by Europe, Japan, and the United States, particularly on

domestic valuations of crops, land tenure, and subsistence agriculture in developing countries;

. soil conservation and the proper accounting for the value of soil and other environmental assets; 1

. the agricultural potential of low-energy inputs such as microcatchments, improved pest management,

intercropping and agroforestry, and improved post-harvest storage;

c the role of higher value inputs (including information-intensive management as for improved pest

management or intercropping, etc.) into agriculture to reduce agricultural expansion onto biologically rich

or fragile lands and the corresponding environmental damage that can then result; and

● the multiple roles and needs served by traditional technologies--draft animals can provide meat, leather, and

dung in addition to traction, and cows also provide milk and reproduce while modem electric or

engine-driven mechanical drive only provides traction.

In the 1950s, most Western development economists did not view the agricultural sector as important for

economic development.2 Today, the view has been largely reversed, with agriculture widely seen as an important

underpinning of an economy and some suggesting that, under certain conditions, agriculture could be an important

driver of industrialization just as export markets have been for the newly industrialized countries.3 Realizing this

potential will require public sector support and substantial extension services due to the highly dispersed nature and

small scale of agriculture.

IRat~ hl, “M~ging the soils of Sub-Saharan fica, “ Science, vol. 236, May 1987, pp. 1069-1076.

2Joh M. StaatZ and Carl K. Eicher, “Agricultural Development Ideas unhistorical Perspective, ” Carl K. Eicherand John M. Staatz (eds.),

Agricultural Development in the Third World (Baltimore, MD: Johns Hopkins University Press, 1984) pp. 3-32.

31ma Ade~an, ‘<Beyond Expofl.~d Grow”Wor/d DOe/opment, vol. 12, No. 9, 1984, pp. 937-949; John W. Mellor, “Agriculture

on the Road to Industrialization’ John P. Ixwis and Valcriana Kallab (eds.), Development Strategies Reconsidered, Overseas Development

Council (New Brunswich NJ: Transaction Books, 1986) pp. 67-90,

pumps are quite reliable (although subject to inter- agricultural pumps could be substantially upgraded.

ruptions in the electric power grid) and convenient,

and are often the lowest cost alternative. Dieselelectric pumping systems, in which diesel generators

produce electricity that is then used to drive electric

pumps, and direct diesel and gasoline-powered

pumps are more often used where no electric grid is

available. These are much less mechanically dependable than electric pumps. Other pumping systems include wind energy, photovoltaics, producer

gas driven engines, and others. Only grid connected

electric pumping will be examined here; other

systems are explored in chapter 6.

As indicated above, numerous improvements are

possible in pumping systems with potentially vex-y

large leverage on upstream utility investment. A

field study in India found 90 percent of the

For example, reducing the friction in the piping

system and foot valve in a field test of 25,000 pumps

typically cost about $80, but provided energy

savings of 30 percent for the same quantity of water

pumped. Assuming 5 kW input motor/pump systems

operating at an annual capacity of 10 percent,172 this

$80 investment in motor/pump system efficiency

provides a $570 savings in utility capital investment

(total, not annualized). Similarly, a field trial of 300

complete rectifications of pumping systems resulted

in 50-percent energy savings or 10,600 kWh/year

per pumping system. This is equivalent to 1.21 kW

of firm capacity with an avoided cost of roughly

$4,600 per pumping system (total, not annualized).

In contrast, the investment per pumping system was

about $600. 173 At a cost of $0.09/kWh, these

tTZThe~e WC noml~ v~ues as reported for more carefully documented field tids discussed by S. M. patel, ‘‘Low-Cost and Quick-Yielding Measures

for Energy Conservation in Agricultural Pumps, ”Pacifi”c and Asian Journal of Energy, vol. 2, No, 1, 1988, pp. 3-11. and by S, Ramesh and T.V.

Na[arajan, ‘‘Policy Options in Rural Electrification in IndiA” Pac@c and Asian Journal of Energy, vol. 1, No. 1, 1987, pp, 44-53.

IT~S,M patel, ~ ‘~w-cost and Quick_Yielding Measures for Energy Conservation in Agicultud PUIIlpS, Pacific and Asian Journal of Energy, vol.

2, No. 1, 1988, pp. 3-11.
140 . Fueling Development: Energy Technologies for Developing Countries

Figure 4-14-Use of Agricultural Pumpsets in India,

1950 to 1990

Number of pumps by type India (millions)

‘ ~

5“

4;

3 -

2

~

.“/ /

1 /x: ““

o 1 1

, ,1

1950 1955 1960 1965 1970 1975 1980 1985 1990

Year

* Electric pump sets ~ Diesel pump sets

~ Animal-powered pump

SOURCE: Tata Energy Research Institute, TER/ Energy Data Directory

and Yearbook (TEDDY), 1988 (New Delhi, India: 1989).

investments would have a payback time of about 4

months. The electricity price paid by farmers,

however, is substantially lower in India due to

subsidies, with correspondingly longer payback

times.

Similar efficiency improvements are possible

elsewhere in the world. In the United States, for

example, average agricultural pump efficiencies

have been estimated at 55 percent, with the potential

to increase them to an average of 82 percent.174

Other measures that could have a substantial

impact on energy use for agricultural pumping

include better techniques for delivering the water to

the plant-such as drip irrigation, the use of sensors

to monitor the actual need for water by plants, or the

use of computer controls for scheduling irrigation. 175

Traction

Many countries have made greater use of animal

or mechanical traction for agricultural operations to

ease seasonal labor demands. In Africa, the emphasis has been primarily on animal traction due to the

frequent failure, for a variety of technical and

institutional reasons, of projects attempting to introduce tractors.176 Draft animals become increasingly

difficult to support as pasture is converted to crops

in the most densely populated regions, however, and

feeding the animal over the course of a year can

require the output of several times as much land as

the animal can work during the short growing

season.

Energy use (crop residues) for draft animals is not

currently included in national energy balances,

despite its important role. 177 If it were, the energy

input into agriculture in some developing countries

would increase dramatically. For example, it has

been estimated that the energy use in animal traction

in India during 1970/71 ranged from about 1 to 5

times greater (depending on assumptions and methodology) than commercial energy inputs into agriculture.178 A variety of improvements in nutrition,

harness design, and other factors can greatly improve the work output by draft animals. 179

Mechanical traction comes in many forms, ranging from power tillers to large tractors. Large scale

manufacturing and engineering innovations have

also made many of these systems increasingly

accessible to small farmers.180 There is a wide

variation between countries in the extent to which

agriculture is mechanized (see figure 4- 15). There is

a similarly wide and inverse variation in the number

of agricultural laborers (see figure 4-16).

In China the most popular tractor is probably the

‘‘Worker-Peasant,’ a 7-hp garden tractor. In Thai174JoSeph T. Hamric~ ~ ‘Efflcien~ Improvements in Irrigation Well ~Ps~’ Agricultural Energy: Volume 2, Biomass Energy Crop Production,

selected papers and abstracts from the 1980 American Society of Agricultural Engineers (St. Joseph, MI: ~eriean Society of Agricultural Engineers,

1981).

175Energetics, Inc., for the U.S. Department of Energy, Oftlce of Industrial Technologies, “Industry Profdes: Agriculture,” Contractor No.

DE-ACO1-87CE40762, December 1990.

176- p. B&~ger et. ~,, Agnc*/~r~/ &fec~uniza~o~: ~Sme~ and options (washingto~ DC: World B- 1987).

177Arjun Makhijaru,“ “Draft Power in South Asia Foodgrain Production: Analysis of the Problem and Suggestions for Policy,” conhactor report

prepared for the ~ce of Technology Assessmen4 June 1990.

17S~mh B~ti& “Energy and Agriculture in Developing COuIltTieS, ” Energy Policy, vol. 13, No. 4, August, 1985, pp. 330-334.

ITgsee, for e-pie, Peter M@er, A~”~l Tra~riOn in &iCa (~~ny: ~ch~m 1982); J= B~@ ~d David Gibbon, Atu”~l Draught

Techno/ogy:An AnnotatedBibliography @cmdon: Intermediate Technology Publications, 1984). More recent and complete inforrnationcanbe obtained

from: Tillers International, Kal amazoo, Michigan or from the Centre for Tropical Veterinary Medicine, University of Edinburgh, Scotland.

1- p. B~a.nger et. al., op. cit., footnote 176.
.

Chapter 4--Energy Services: Industry and Agriculture ● 141

Figure 4-15—Mechanical Traction Per 1,000

Hectares of Agricultural Land

Traction horsepower per 1,000 hectares

10,000 ~ ‘— —

4 I

0

1,000&‘- -

/s—— ‘

- –

//- -

— -+ ——.— – -——–-+

Europe

Us.

China

Indian Subcontinent

Latin America

Africa

I

1960 1970 1980 1990

Year

The developing countries have much lower levels of agricultural

mechanization than the industrial countries.

Note the logarithmic scale.

SOURCE: World Bank, Agricultural Mechanization: Issues and Options

(Washington, DC: Worid Bank, 1987).

land, a versatile system known as the ‘iron buffalo’

is widely used. This 8-hp system can alternately be

used to plow (using 1 meter iron paddle wheels that

are more stable in a paddy than rubber tires), pump

water, power a cart, run a generator, or do other

tasks. These iron buffaloes allow farmers to drain

their rice fields, mechanically or hand-scatter the

seeds and, when the rice sprouts, pump water back

into the paddies. This avoids the traditional laborious hand planting of seedlings in the rice paddies.

By 1984, some 400,000 of these systems were in use

in Thailand. *81 In contrast to these smaller tractors,

the most popular tractor in India, where the number

of tractors almost doubled from 1972 to 1977,182 is

a 30-hp diesel.

Energy use by mechanical traction equipment

varies widely by region and according to operating

conditions and a host of other factors such as the

degree to which the operation is power- or controlintensive. Some regions of Latin America are as

mechanized as the industrial countries, while most

African workers still rely primarily on hand tools.

Figure 4-1 6—Agricultural Workers Per 1,000 Hectares

of Agricultural Land

Agricultural workers per 1,000 hectares

“ooor” > Indian I

1,500 j

/

/ “ t

subcontinent

I .x “

/—–

+ Latin America 1 — Europe T -–—— , ~ Us. ‘– J

1960 1980 2000 2020 2040

Year

SOURCE: World Bank, Agricultural Mechanization: Issues and Options

(Washington, DC: World Bank, 1987).

Generally, diesel powered equipment is roughly

25-percent more efficient than gasoline powered

equipment. Specific performance improvements in

motors (for transport applications) are examined in

detail in chapter 5. Mechanization of agriculture is

one of several means of improving productivity;

mechanization is not an end in itself.183

CONCLUSION

Industrial and agricultural energy use will continue to grow in developing countries in order to

meet the aspirations of a growing population that is

making the transition from a traditional rural to a

modern urban lifestyle. Technologies either exist or

can be readily adapted to substantially moderate

these increased demands for industrial and agricultural energy use while still providing the energy

services-manufactured goods and high quality

foods-desired. These technologies can provide

these energy savings at both a capital and an

operating cost less than what is paid today. These

savings can bean important source of capital to meet

other pressing development needs and to spur more

rapid economic development.

1

81 Ben Barber, “Buffaloes Mooove With the Times,” Asian Wall Street Journal, July 24-25, 1987.

182Tata Energ Re5emch Imtitute, TEN Energy ~ara Direcfo~ ad year~oo~ (TEDDY) 1988 (New Delti, kdia: Tata Energy Research hMltUte,

1990), p, 137.

lssfim p. Binswanger et. al., op. cit., footnote 176.
p@~ @dif: Thomas 6u*e

‘“?& .-
Contents

Page

INTRODUCTION AND SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

TRANSPORTATION SYSTEMS IN DEVELOPING COUNTRIES . . . . . . . . . . . . . . . . . 155

IMPROVING FREIGHT TRANSPORT ENERGY EFFICIENCY . . . . . . . . . . . . . . . . . . . 156

The Truck Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156

Improving Rail Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

Modal Shifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

IMPROVING PASSENGER TRANSPORT ENERGY EFFICIENCY . . . . . . . . . . . . . . . 161

Automobiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161

Motorized Two- and Three-Wheelers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165

Buses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

Modal Shifts in Urban Passenger Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

THE DEMAND FOR TRANSPORT SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169

NONMOTORIZED MODES ........0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169

ALTERNATE FUELS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

Boxes

Box Page

5-A. Singapore’s Area Licensing Scheme: Carrot and Stick . . . . . . . . . . . . . . . . . . . . . . . . . . 167

5-B. Urban Design and Transport Energy Use in North America . . . . . . . . . . . . . . . . . . . . 170

5-C. Brazil’s Ethanol Fuels Program: Technical Success, Economic Distress? . . . . . . . . 175
Chapter 5

Energy Services: Transport

/

INTRODUCTION AND SUMMARY

Transport services are a key component of economic development. As the economies of the

developing world expand, transport services must

also grow to supply the raw material, labor, food,

and consumer goods needed by the growing economy, and to integrate rural areas into the larger

economy. At the same time, higher standards of

living associated with economic expansion lead to

sharply rising demand for personal mobility, often

by automobile.

Providing these services can be difficult and

costly. The transport sector, in most developing

countries, accounts for one-third of total commercial

energy consumption (see table 5-1) and over onehalf of total oil consumption. India and China are

exceptions. In these countries transportation accounts for under 10 percent of commercial energy

consumption.

As many developing countries have little or no

domestic oil resources, purchases of imported oil to

satisfy transport demand together with imports of

transport equipment put considerable pressure on

limited foreign exchange resources. In addition,

capital requirements for road and railway construction and maintenance take up a significant share of

development budgets.

Road vehicles are also major contributors to high

levels of urban air pollution currently experienced in

developing countries. In Indian cities, for example,

gasoline fueled vehicles—mostly two and three

wheelers—are responsible for roughly 85 percent of

carbon monoxide and 35 to 65 percent of the

hydrocarbons in the air from fossil fuels. Diesel

vehicles—buses and trucks-are responsible for

over 90 percent of nitrogen oxide emissions in urban

India. 1 Emissions from the transport sector also

account for a significant share of global greenhouse

gas emissions.

Along with these high economic and environmental costs, the transport systems in developing

countries are frequently unsatisfactory in terms of

the quality and quantity of transport services they

deliver, inadequately supporting the free flow of

goods and people that is vital for economic development. Urban traffic is severely congested2 and rural

areas are poorly served.

This chapter examines ways in which the energy

efficiency of the transport system could be improved

and environmental pollution could be reduced while

still providing the transport services needed for

economic development. This can be done by improving the efficiencies of each transport mode,

changing the modal mix, moderating the demand for

transport through full costing of services, and

improving land use planning (see table 5-2). This

chapter focuses primarily on technological opportunities for improving transport efficiency.

Commercially available technologies, many of

which are widely used in the industrialized countries, could significantly improve transport energy

efficiencies in the developing countries. In freight

transport, the existing developing-country truck

fleet is generally older, smaller, and less technologically sophisticated than the truck fleet of industrial

countries. A wide range of retrofits such as rebuilt

motors incorporating improved diesel fuel injection

systems, cab mounted front air deflectors to reduce

wind resistance, turbochargers, and radial tires are

available. The rapid diffusion of these and other

technologies could yield substantial energy savings.

In passenger transport, automobiles and other

modes could benefit from the use of commercially

available technologies such as electronic control of

spark timing, radial tires, improved aerodynamics,

and fuel injection. Many more efficiency improvements are at various stages of development and

commercialization.3 Table 5-3 lists a few of these for

the U.S. fleet. The energy efficiency of the rapidly

ITa~ J7nerw Rmeach ~qi~te, TEN E~~~gy Data Di~~~to~ and yearbook 19~ mew Delhi, India: 1989), p. 250.

~oad vehicles in Lagos and Bangkok for example, move at only half the speed of road vehicles in Imndon or Frankfurt. World B@ Urban

Transpor~, World Bank Policy Study (Washington DC: World B@ 1986), p. 3.

s~e~e t~~ologies, ~e~ cosW, and nmaous con~vemies surrounding tbeir implementation are explored ~ U.S. Con@ss. OffIce of Tec~oIogY

Assessment, ZmprovingAutomobile Fuel Economy: New Startabrds, New Approaches, OTA-E-504 (Washington, DC: U.S. Government Printing OffIce,

October 1991).

–145 –
146 ● Fueling Development: Energy Technologies for Developing Countries

Table 5-l-Total Delivered Energy by Sector, in Selected Regions of the World, 1985 (exajoules)a

Residential/commercial Industry Transport Total

Commercial Traditional Commercial Traditional Commercial Traditional Commercial Traditional Total

Region fuels fuelsb

fuels fuels bfuels fuels b

fuels fuels benergy

Africa . . . . . . . . . . . . . . . 1.0 4.0 2.0 0.2 1,5 NA 4.4 4.1 8.5

Latin America. . . . . . . . . 2.3 2.6 4.1 0.8 3.8 NA 10.1 3.4 13.5

India and China . . . . . . . 7.3 4.7 13.0 0.2 2.0 NA 22.2 4.8 27.1

Other Asia . . . . . . . . . . . 1.9 3.2 4.0 0.4 1.9 NA 7.8 3.6 11.3

Developing countries . . 12.5 14.5 23.1 1.6 9.2 NA 44.5 15.9 60.4

United States , . . . . . . . . 16.8 NA 16.4 NA 18.6 NA 51.9 NA 51.8

SOURCE: U.S. Congress, Office of Technology Assessment, Energy in Developing Countries, OTA-E-486 (Washington, DC: U.S. Government Printing Office,

January 1991) p. 49.

Table 5-2—improving the Efficiency of Transportation Services

Efficiency improvement

Remarks

Vehicle technical efficiency:

Automobiles

The technical efficiency of automobiles can be improved by: reducing vehicle weight; reducing vehicle aerodynamic drag; improving

engine performance--overhead cam engines, multipoint fuel injection, roller cam followers, low friction engine, etc.; improving

vehicle drive trains and transmissions; reducing rolling resistance; etc. (See table 5-3 for additional detail).

Two and three wheelers:

The technical efficiency of two and three wheel vehicles can be improved by converting from two-stroke to four-stroke engines, using

improved carburetors and electronic ignition, reducing rolling resistance; etc.

Freight trucks;

Freight truck efficiencies can be improved by using diesel rather than gasoline engines, using improved fuel injectors and injection

pumps, using turbochargers, using improved lubricants, reducing aerodynamic drag, reducing rolling resistance, etc.

Freight trains:

Freight train efficiencies can be improved by using diesel-electric locomotives, lighter weight cars, low friction bearings, on-board

flange lubricators, steerable trucks, computer directed operations, etc.

Vehicle load factor:

Vehicle operational efficiencies can be improved by: increasing load factors through carpooling and other means for passenger

vehicles and by maximizing loads and reducing empty or part-load back hauls for freight vehicles.

Vehicle operational efficiency:

Vehicle operational efficiencies can be improved by: better driving habits; improved traffic control-high-occupancy -vehicle only

lanes, timed traffic signals, limited access roads, and other traffic management systems, etc.-for passenger vehicles; efficient

routing for freight trucks; sidewalks, bicycle paths, and other means to reduce road congestion; improved roads and related

structures to allow higher average speeds, heavier loads, etc; and by other means.

Modal shifts:

Efficiency gains by modal shifts require the movement of freight and passengers to more efficient transport systems. For freight, this

typically includes from long-distance truck to rail; for passengers this includes from private automobile to commuter bus or rail mass

transit, or to nonmotorized modes such as bicycling or walking.

Transport demand:

The demand for transport services or their equivalent can be satisfied while the demand for transport energy can be dramatically

reduced: by land-use planning to better match residences with jobs, schools, shopping, and transport corridors-aiding modal shifts

to more efficient transit systems as well as potentially reducing infrastructure costs for water, sewage, etc. and possibly reducing

loss of agricultural lands; by improved telecommunications technologies; by charging users the full cost of transport

services-including roads, parking, death and injury, pollution, and other costs; etc.

NOTE: These efficiency improvement opportunities are often highly interdependent. For example, technical improvements to freight trucks such as reduced

aerodynamic drag, etc. are of Iittle use unless the road infrastructure allows medium to high speeds. The above list does not include air-or water-based

transport systems or a variety of land-based modes. The same considerations, however, generally apply.

SOURCE: Office of Technology Assessment, 1992.
Chapter 5-Energy Services: Transport . 147

Table 5-3—Technologies for Improving the Fuel Economy of Automobiles

Weight reduction. Includes three strategies—substitution of lighter weight materials, e.g., aluminum or plastic for steel; improvement of

packaging efficiency, i.e., redesign of drivetrain or interior space to eliminate wasted space; and technological change that

eliminates the need for certain types of equipment or reduces the size of equipment.

Aerodynamic drag reduction. Primarily involves reducing the drag coefficient by smoothing out the basic shape of the vehicle, raking the

windshield, eliminating unnecessary protrusions, controlling airflow under the vehicle (and smoothing out the underside), reducing

frontal area, etc.

Front wheel drive. Shifting from rear to front wheel drive, which allows: mounting engines transversely, reducing the length of the engine

compartment; eliminating the transmission tunnel, which provides important packaging efficiency gains in the passenger

compartment; and eliminating the weight of the propeller shaft and rear differential and drive axle. Now in wide use.

Overhead cam engines. OHC engines are more efficient than their predecessor pushrod (overhead valve, OHV) engines through their

lower weight, higher output per unit displacement, lower engine friction, and improved placement of intake and exhaust ports.

Four valve per cylinder engines. Adding two extra valves to each cylinder improves an engine’s ability to feed air and fuel to the cylinder

and discharge exhaust, increasing horsepower per unit displacement. Higher fuel economy is achieved by downsizing the engine;

the greater valve area also reduces pumping losses, and the more compact combustion chamber geometry and central spark plug

location allows an increase in compression ratio.

Intake valve control. Shift from fixed-interval intake valve opening and closing to variable timing based on engine operating conditions,

to yield improved air and fuel feed into cylinders and reduced pumping loss at low engine loads.

Torque converter lockup. Lockup eliminates the losses due to slippage in the fluid coupling between engine and transmission.

Accessory improvements. Adding a two-speed accessory drive to more closely match engine output to accessory power requirements,

plus design improvements for power steering pump, alternator, and water pump.

Four-and five-speed automatic transmissions, and continuously variable transmissions. Adding extra gears to an automatic

transmission increases fuel economy because engine efficiency drops off when its operating speed moves away from its optimum

point, and the added gears allow the transmission to keep the engine closer to optimal speed.

Electronic transmission control. Electronic controls to measure vehicle and engine speed and other operating conditions allow the

transmission to optimize gear selection and timing, keeping the engine closer to optimal conditions for either fuel economy or power

than is possible with hydraulic controls.

Throttle body and multi point fuel injection. Fuel injection allows improved control of the air/fuel mixture and thus allows the engine to

continually adjust this mixture for changing engine conditions. Multipoint also reduces fuel distribution problems. in wide use.

Roller cam followers. Most current valve lift mechanisms are designed to slide along the camshaft; shifting to a rolling mechanism reduces

friction losses.

Low friction pistons/rings. Lower friction losses result from better manufacturing control of tolerances, reduced ring tension, improved

piston skirt design, etc.

Improved tires and lubricants. Continuation of longstanding trends towards improved oil (in near-term, substitution of 5W-30 oil for

10W-40 oil), and tires with lower rolling resistance.

Advanced engine friction reduction. Includes use of light weight reciprocating components (titanium or ceramic valves, composite

connecting rods, aluminum lifters, composite fiber reinforced magnesium pistons), improved manufacturing tolerances to allow

better fit of moving parts, available post-1995.

Electric power steering. Used only for cars in the minicompact, subcompact, and compact classes.

Lea n-burn engines. Operating lean (low fuel to air ratio) improves an engine’s thermodynamic efficiency and decreases pumping losses.

Requires a new generation of catalysts that can reduce NOX in a “lean” environment.

Advanced two-stroke engines. Unlike a conventional engine, there is a power stroke for every ascent and descent of the piston, thus

offering a significantly higher output per unit of engine displacement, reduced pumping loss, smooth operation, and high torque at

low speeds, allowing engine downsizing and fewer cylinders (reduced friction losses). Also, operates very lean, with substantial

efficiency benefits (if NOX problems are solved). Compliance with stringent emissions standards is unproven.

Diesel engines. Compression-ignition engines, or diesels, are a proven technology and are significantly more efficient than gasoline

two-valve engines even at constant performance; new direct injection turbocharged diesels offer a large fuel savings. Although the

baseline gasoline engine will improve in the future, a portion of the improvements, especially engine friction reduction, maybe used

beneficially with diesels as well. Use may be strongly limited by emissions regulations and consumer reluctance.

Electric hybrids. involves combining a small electric motor for city driving and a diesel for added power and battery charging. The small

size of the diesel eases emissions limitations, and the substantial use of the electric motors reduces oil use.

SOURCE: U.S. Congress, Office of Technology Assessment, Improving Automobile Fuel Economy: New Standards, New Approaches, OTA-E-51J4

(Washington, DC: U.S. Government Printing Office, October 1991).
248 ● Fueling Development: Energy Technologies for Developing Countries

growing fleet of two and three wheelers could also

be increased, notably through the use of improved

carburetors, electronic ignition, and four-stroke

rather than two-stroke engines.4

Developing countries currently have little influence over the development and commercialization

of these technologies, due to the small size of their

market. As their market is growing rapidly, however,

their influence will most likely grow as well.

Greater use of these technologies could result in

significant energy savings-estimated at about 20

percent over current levels5—and they are highly

cost effective, with short payback periods. The

environmental benefits would also be significant.

Improved carburetors and electronic ignition in two

wheelers, for example, could improve efficiency

between 10 and 15 percent, and reduce hydrocarbon

emissions by 50 percent. The use of four-stroke

rather than two-stroke engines could increase energy

efficiency by 25 percent and reduce hydrocarbon

emissions by 90 percent.6 Lower consumption of

petroleum products would save foreign exchange (or

in the case of oil exporting countries, increase the

amount of petroleum products available for export).

Despite the multiple advantages of these technologies there are several factors impeding their diffusion or diluting their potential energy savings (see

table 5-4):

●

●

Poor infrastructure. The benefits of aerodynamic improvements and turbocharging accrue

only at higher speeds, which are often not

possible on the rougher, more congested roads

in the developing world. Similarly, poor roadbeds deter the use of larger and therefore more

energy efficient trucks. Many of the new

technologies depend on high quality fuels and

do not operate well with the variable quality

fuels often encountered in developing countries.

Maintenance and training. Several technologies require specialized skills for maintenance

that may not now be generally available in

developing countries. If truck owners need to

seek out specialist firms for routine mainte-

●

●

●

●

nance, “down time” is increased, thus reducing the benefits from improved energy efficiency. Poor driving habits can also reduce

efficiency gains.

High first costs and high consumer discount

rates. As in other end-use sectors, potential

users are deterred by the additional cost of the

improved technology, which they are apparently willing to undertake only if they can

recover their additional cost in a very short

period of time. In many cases, the costs of

energy are a relatively small part of total

operating costs so that the expected benefit may

not be large in relation to other considerations,

including the effort involved in finding and

maintaining a more efficient vehicle as well as

the various attendant uncertainties. In transport

modes where fuel is a large share of total costs

(such as air and maritime transport) and where

financial decisions are made on the basis of

discount rates closer to commercial bank rates,

energy efficient technologies have often been

adopted more rapidly than in passenger road

transport

Fuel costs. The length of the payback time is

closely related to the costs of fuel. In oil

exporting developing countries, prices of transport fuels are often kept well below world

prices, offering little incentive to economize on

their use. In the oil importing countries, gasoline prices are generally higher than international costs. Diesel prices, however, are often

considerably lower than gasoline and/or international prices, which again discourages conservation.

Import duties. High import duties on vehicles

with higher initial costs due to more efficient

equipment, and on retrofit equipment, deter

their diffusion despite their potential to reduce

oil (and/or refinery equipment) imports.

Low scrappage rates. The high demand for

road vehicles generally, relatively cheap labor

for maintenance, expensive capital, and other

factors have led to low scrappage rates in

developing countries, and therefore an older

(and less energy efficient) road vehicle fleet.

d’ ‘Big Be~ @ a Little Engine,“ Business Week, Jan. 15, 1990, pp. 81-83.

SWorldB~,Urkn Transport, world B~policy s~dy (w~~gton, ~: world B* 1986), p. 2; see dSO, Mud~~hr~~d ~~p Barnes,

World Bank Energy Demund in the Developing Countries, World Bank Staff Commodity Working Paper #23 (Wash@tom DC: World Bank 1990).

Whese improved two-stroke engines, currently under development for use in small automobiles or other applications, could also lower capital costs

compared to the equivalent power four-stroke engine.
Chapter 5--Energy Services: Transport ● 149

Table 5-4-Barriers to Transportation Efficiency Improvements

Technical

Availability

High efficiency vehicles and related technologies and their needed support infrastructure of ski lied manpower and spare parts may

not be locally available. Foreign exchange may not be available to purchase critical spare parts.

Infrastructure

The available infrastructure within a developing country may not be able to adequately support a particular high-efficiency

technology. For example, the benefits of aerodynamic improvements and turbocharging accrue only at higher speeds, which are

often not possible on the rougher, more congested roads in the developing world. Similarly, poor roadbeds deter the use of larger

and therefore more energy efficient trucks. Many of the new technologies depend on high quality fuels, and do not operate well with

the variable quality fuels often encountered in developing countries. The existing infrastructure might also impede the

implementation of a more efficient system.

Information

Potential users of energy efficient vehicles may lack information on the opportunities and savings.

Reliability

Innovative high-efficiency vehicles and components may not have a well proven history of reliability, particularly under developing

country conditions.

Research, development, demonstration

Developing countries may lack the financial means and the technical manpower to do needed RD&D in energy efficient vehicle

technologies, or to make the needed adaptations in existing energy efficient technologies in use in the industrial countries to meet

the renditions-such as relatively low highway speed and frequent speed changes-in developing countries.

Technical manpower

There is generally a shortage of skilled technical manpower in developing countries for installing, operating, and maintaining energy

efficient equipment in vehicles. If truck owners need to seek out specialist firms for routine maintenance, “down time” is increased

thus reducing the benefits from improved energy efficiency.

Training

Poor driving habits can also reduce efficiency gains. See also Behavior, below. Training in vehicle maintenance and driving habits

could promote efficiency.

Financial/economic

cost

As in other end use sectors, potential purchasers of high efficiency vehicles are deterred by the additional cost of the improved

technology, which they are apparently willing to undertake only if they can recover their additional cost in a very short period of time.

In many cases, the costs of energy area relatively small part of total operating costs so that the expected benefit may not be large

in relation to other considerations, including the effort involved in finding and maintaining a more efficient vehicle as well as the

various attendant uncertainties. In transport modes (such as air and maritime transport) where fuel is a large share of total costs and

where financial decisions are made on the basis of discount rates closer to commercial bank rates, energy efficient technologies

have been adopted more rapidly than in passenger road transport.

Currency exchange rate

Fluctuations in the currency exchange rate raises the financial risk to firms who import high efficiency vehicles with foreign exchange

denominated loans.

International energy prices

Falls in international oil prices below expected Ievels can reverse the profitability y of investments in efficiency or alternative fuels. This

has happened to some extent with the Brazilian ethanol program.

Scrappage rates

The high demand for road vehicles generally and for used vehicles in particular, combined with inflation (which protects the values

of used cars), relatively cheap labor for maintenance, expensive capital, and other factors has led to low scrappage rates in

developing countries, and therefore an eider (and less energy efficient) road vehicle fleet. While old vehicles can be retrofit to

improve fuel efficiency their owners are likely to be the least able to afford the additional costs. The replacement of old vehicles by

new, though contributing to the improved fleet energy efficiency, would in the short run at least incur large foreign exchange costs.

Secondary interest

Energy efficiency is often of secondary interest to potential users. Vehicle acceleration, roominess, comfort, or accessories such

as air conditioning may be of greater importance to the prospective purchaser.

Secondhand markets

Low-efficiency vehicles may be widely circulated in secondhand markets in developing countries, including “gifts” or

“hand-me-downs” from industrial countries. Further, users who anticipate selling vehicles into the secondhand market after only a

few years may not realize energy savings over a long enough period to cover the cost premium of the more efficient vehicle.

Subsidized energy prices

Energy prices in developing countries are often controlled at well below the long run marginal cost, reducing end-user incentive to

invest in more efficient vehicles. Energy prices may be subsidized for reasons of social equity, support for strategic economic

sectors, or others, and with frequent adverse results. In oil exporting developing countries, prices of transport fuels are often kept

well below world prices, offering little incentive to economize on their use. In the oil importing countries, gasoline prices are generally

higher than international costs. Diesel prices, however, are often considerably lower than gasoline and/or international prices, which

again discourages conservation.

Taxes and tariffs

Unless appropriately designed, taxes and tariffs can bias purchasing decisions away from vehicles, components, or retrofit

equipment with higher initial costs due to more energy efficient equipment despite their potential to reduce oil (and/or refinery

equipment) imports.

(continued on next page)
150 ● Fueling Development: Energy Technologies for Developing Countries

Table 5-4-Barriers to Transportation Efficiency Improvements-Continued

Institutional

Behavior

Users may waste energy, for example, by leaving vehicles on. In some cases, such seeming waste may be done for important

reasons. Bus drivers in developing countries often leave their engines on for long periods, at a significant cost in fuel, in order to avoid

jumpstarting their vehicle if the starter is broken, or to prevent customers from thinking (if the engine is off) that their vehicle is broken

and going to a competitor whose engine is running.

Disconnect between purchaser/user

In a rental/lease arrangement, the owner will avoid paying the higher capital cost of more efficient vehicles while the rentor/lessor

is stuck with the resulting higher energy bills.

/integration

Poor integration between modes—such as between rail and road systems--can result in shipping delays or simply not using the

more efficient rail system due to its lower flexibility and difficulty in door-to-door delivery.

Land use planning

Poor land use planning can prevent the establishment of efficient transportation corridors for mass transit options, and encourages

low density urban sprawl dependent on private vehicles.

Political instability

Political instability raises risks to those who would invest in more efficient vehicles that would only pay off in the mid to Iongterm.

Service

Poor servi ce--crowded, slow, infrequent, etc.-from, for example, buses in congested urban areas encourages people to purchase

less energy efficient, but more convenient personal transport such as 2/3 wheelers or autos.

SOURCE: Office of Technology Assessment, 1992.

While old vehicles can be retrofit to improve

fuel efficiency, their owners are likely to be the

least able to afford the additional costs. The

replacement of old vehicles by new, though

contributing to the improved fleet energy

efficiency, would—in the short run at least—

incur large foreign exchange costs.

In addition to efficiency improvements within

each transport mode, the energy efficiency of the

transport sector as a whole (as measured by energy

consumed per tonne-kilometer or per passengerkilometer) could be improved by encouraging the

movement of both freight and passenger traffic to the

most energy efficient modes. In freight traffic, rail

uses about one-fourth to one-third of the operating

energy per tonne-kilometer that road vehicles use. If

the energy embodied in transport equipment and

associated railways and roads is included, the

difference is reduced but railways continue to be

much more energy efficient than roads for freight

traffic, In addition, rail freight is usually cheaper per

tonne-kilometer, at least for bulk commodities. This

advantage is reduced, however, when door-to-door

delivery is considered or as the size of the shipment

decreases.

Despite its efficiency and cost advantages, rail’s

market share in those countries with rail networks

has declined. This is due to a number of reasons,

including: the greater convenience, flexibility, and

reliability of truck transport; structural changes in

the economy that favor road transport; and weakening of previously strong government support for rail

systems, which has led to deterioration in the

systems. Railroads serve well those markets with

large volumes of commodities moved between freed

points, but are less effective where timeliness or

flexibility in delivery are more important, as indicated in table 5-5. Technologies such as containerization and improved scheduling (aided by telecommunications and computing technologies) can help

use all elements of the freight transport system in an

integrated manner.

The energy efficiency of passenger transport can

also be improved by greater use of more efficient

modes. In the passenger transport sector there is a

wide variation in energy use per passenger-kilometer with private auto by far the least efficient and

Table 5-5—Rail and Truck Shares for

Different Commodities, India 1978-79

Average Rail Road

distance hauled share share

Commodity (kilometers) (percent) (percent)

Iron ore . . . . . . . . . . . . . . . . 526 99.30/0 0.7%

Coal . . . . . . . . . . . . . . . . . . . 699 92.2 7.8

Cement. . . . . . . . . . . . . . . . . 614 77.9 22.1

Fertilizers. . . . . . . . . . . . . . . 794 71.9 28.1

Iron and steel . . . . . . . . . . . 841 64.3 35.7

Stone and marble . . . . . . . . 290 49.4 50.6

Wood and timber . . . . . . . . 564 38.6 61.4

Building materials . . . . . . . . 242 13.1 86.9

Fruit and vegetables . . . . . . 532 8.9 91.1

SOURCE: Martin J. Bernard Ill, “Rail vs. High..vay: A Difficult lntercity

Transport Decision fora Developing Country,” paper presented

at the United Nations Center for Science and Technology for

Development Workshop on New Energy Technologies and

Transportation in Developing Countries, Ottawa, Canada, Sept.

20-22, 1989.
Chapter 5---Energy Services: Transport . 151

buses—the backbone of the urban passenger transport system in developing countries-the most

energy efficient of the motorized forms of passenger

transport. The inclusion of energy embodied in

associated infrastructure further increases the attractiveness of buses (compared with cars, and two and

three wheelers). In addition to the energy benefits of

buses, capital costs of bus systems are lower than the

alternatives. Despite these advantages, bus systems

in developing countries often provide unsatisfactory

service, not offering in their present form a sufficiently attractive alternative to private transport for

those who can afford it.

Light rail systems, at present under construction

or planned in 21 cities of the developing world, are

generally more energy efficient than cars though less

so than buses. According to a recent evaluation, light

rail has achieved mixed results. Travel times were

reduced, most systems provided high quality services, and ridership levels were high—although

below forecasted levels. These systems require

extensive subsidies, however, if fares are kept low

enough to provide service to the poor.

Although important, technologies for transport

efficiency are just one component of developing an

efficient and cost effective transport system. Transport management schemes can also be a cost

effective way of relieving congestion and thus

improving the overall efficiency of the transport

system. The success of such schemes in several

cities of the developing world (e.g., Curitiba, Brazil

and Singapore) testifies to their potential. Improved

telecommunications can reduce the number of needed

trips. Improved land use and transport planning-for

example, by locating services (e.g., shopping) closer

to intended customers, siting major freight terminals

away from congested city centers, and promoting the

integration of residential and employment centers—

can reduce the demand for travel and thereby reduce

transport energy use. These options are most promising for cities that are not yet fully developed but are

growing rapidly—a common characteristic of cities

in the developing world. Without a carefully implemented land use planning program, a private vehiclebased transport system is the likely end result by

default. It is easy to add one automobile and one

short stretch of road at a time; it is much more

difficult to plan a comprehensive urban transport

system.7

High and rising levels of urban air pollution are

also focusing attention on fuels to replace gasoline

and diesel in both industrial and developing countries. Several fuels, including CNG (compressed

natural gas), ethanol, and methanol, not only reduce

pollution but can often use domestic, rather than

imported, energy resources. Several of these technologies are particularly suited to centrally fueled

fleet vehicles, which form a larger share of the total

fleet than in the industrial countries, CNG is an

especially promising fuel for those countries with

underutilized natural gas reserves. Alcohol fuels,

although they are still more expensive than conventional fuels at current oil prices of $20/bbl, are

becoming more cost competitive. Several of these

fuel replacements are already widely used in some

developing countries. Argentina had more than

37,000 CNG vehicles on the road as of July

1989—with the total increasing by 1,300 per month,8

and Brazil had more than 4 million ethanol-fueled

vehicles on the road in 1988.9

A substantial number of trips-performed largely

by the urban and rural poor—for both passenger and

freight traffic are by nonmotorized modes, including

walking, push carts, animal drawn carts, and bicycles. Technologies exist-such as improved bullock

carts and harnesses-to improve the efficiency of all

of these modes. One obstacle to their more rapid

diffusion is lack of capital for even the most modest

improvements.

The incomplete diffusion of known, cost effective

transport technologies with substantial energy and

environmental benefits suggests the need for stronger

TM~~ J Bemd III, I IR~l “s. Hi@w~y: A D~flc~t Intcrci~ Tra~port D~ision for a Developing COurl&y, ’ paper presented ai d!: ~.’ ~;td ~“~tiOIIS

Center for Science and Technology for Development Workshop on New Energy Technologies ami Transportation in Developing Cou:vr ~ Oftawq

Canada, Sept. 20-22, 1989.

‘Jorge Del Estado, “NatioMl substitution Plan of Liquid Fuels: CO~., i cssed Natural Gas, paper presented at the United Natiom Center for Science

and Technology for Development Workshop on New Energy Technology+ and Transportation in Developing Countries, Ottawa, Canada, Sept. 20-22,

1989.

gJacy de SOUza Mendonca, “The Brazilian Experience With Straigh? ~’ilcohol Automobile Fuel, ” paper presented at the United Nations Center for

Science and Technology for Development Workshop on New Energy Technologies and Transportation in Developing Countries, Ottawa, Canada, Sept.

20-22, 1989. Note, however, that the fluctuations in oil prices before, during, and after the gulf war have caused some conversions, when oil prices were

low, back to gasoline and created some concerns about the direction of the Brazilian program and its cost effectiveness.

297-929 - 92 - 11 - QL : 3
152 ● Fueling Development: Energy Technologies for Developing Countries

Photo credit: Ed Smith

Many people in developing countries rely on human

muscle power for transportation energy.

incentives (or the removal of disincentives) for their

adoption (see table 5-6). Such incentives could take

the form of providing information on fuel efficient

technology; higher fuel prices where appropriate;

pricing policies and procedures that incorporate the

environmental costs and benefits of transport fuels;

acquisition and ownership taxes on motor vehicles

inversely proportional to their energy efficiency; and

setting standards on energy efficiency or environmental impacts (as seems to be the approach

followed by cities such as Mexico City and Sao

Paulo concerned about urban air pollution). Driver

training and education could also improve energy

operating efficiencies in many cases.

It is important to note, however, that people using

energy ‘‘inefficiently in a technical sense are

nevertheless generally operating logically within

their framework of incentives and disincentives. For

example, bus drivers in developing countries often

leave their vehicles idling for long periods, at a

significant cost in fuel. This is not done through lack

of training (as commonly suggested), but as a

practical response to the problems they face. These

problems include: 1) broken starters, requiring a

difficult push start; and/or 2) the perception by

potential customers that if the vehicle is not running

then it must not be in service, resulting in them going

to a competitors’ vehicle. 10 Thus, as long as a

driver’s competitors keep their vehicles running, so

must he.ll

As the efficiency of transport energy use is closely

correlated with the overall efficiency of the transport

sector, policies to promote better and more efficient

transport systems could simultaneously have economic and environmental benefits. Segregated bus

lanes, truck climbing lanes, 12 traffic management

systems, side walks, bicycle paths, and others can all

r-educe congestion, thus increasing the average

speeds necessary for more fuel efficient operation

and making bus services more attractive to potential

patrons. These changes can also defer expensive

construction of new roads. Making all users pay the

full cost of using road space, parking space, accidental injury and death, environmental effects, and other

impacts could also encourage more efficient use of

existing road space. Integrated freight transport

policy could combine the strengths of all the

different modes-road, rail, and maritime transport

where available.

U.S. policies and programs could assist in some of

these initiatives:

●

●

●

providing information and technical assistance

on such topics as the technical and operational

characteristics of road vehicles, the connection

between transport energy efficiency and urban

air quality, and rural transport technologies;

as the multilateral development banks make

major loans for transport infrastructure projects, U.S. influence on the development of

these projects could ensure that energy efficiency and environmental considerations are

taken into account; and

although the main barriers to improved energy

technology at present do not appear to be

related to technology, improvements in fuel

efficiency depend critically on developments in

those countries-mainly Japan, Italy, France,

Germany and the United States—that dominate

global road transport technology. Developing

countries share of the global market will,

however, rise substantially in coming years,

giving them increased influence on technology

IOpersoml r.om~mtio%S. pa~mb~, Energy ad Environment~ Poficy, Movation, and Commercialization (EPIC) fko~, U.S. Agency

for International Development, Office of Energy, June 9, 1991.

1]~~ type of sit~tion is explored in depth in studies of g-e ~~ry.

l~spccl~ lanes for ~c~ on steep SIOpeS enable other tr~fic to Pas ‘ore qtic~y”
Table 5-6—Policy Options

Alternative financial arrangements

The high sensitivity of consumers to the initial capital cost of a vehicle often leads to lower levels of investment in efficiency than is justified on the basis of life cycle

operating costs. Alternative financial arrangements to redress this might include low-interest loans for the marginal cost of efficiency improvements, rebates, or other

schemes. These might be financed by various fuel or other taxes. Note that users that would have purchased efficient equipment anyway, however, also get the

Ioan/rebate--the “free rider” problem. This reduces the effectiveness of the loan/rebate programs by raising the cost per additional user involved. This problem can

be minimized by restricting the loans/rebates to only the very highest efficiency vehicles for which there is little market penetration.

Alternative fuels infrastructure investments

See Office of Technology Assessment, U.S. Congress, Rep/acing Gasoline: Alternative Fuels for Light-Duty Vehicles, OTA-E-364, September 1990.

Availability

Provide incentives to manufacturers to market high efficiency vehicles within the country when, otherwise, the potential market would be too small to justify the effort

on the part of the manufacturer.

Data collection

The range of opportunities for energy efficient transport systems, end-user preferences, and operating conditions are not well known in many countries. Data collection,

including detailed field studies, would help guide policy decisions.

Demonstrations

Many potential users of energy efficient vehicles remain unaware of the potential savings or unconvinced of the reliability and practicability of these changes under

local conditions. Demonstration programs-such as government purchase of high efficiency vehicles--can show the effectiveness of the equipment, pinpoint potential

problems, and in so doing convince potential users of the benefits of these changes.

Inf rastructure investments

Improve roads, railways, etc. to allow higher average speeds, heavier loads, more timely delivery, etc.

Information programs

Lack of awareness about the potential of energy efficient vehicles and related equipment, traffic management improvements, modal shifts, land use planning, or other

improvements can be countered through a variety of information programs; competitions and awards for efficiency improvements; etc.

Labelling programs

The efficiency of vehicles and related equipment can be labeled to provide purchasers a means of comparing alternatives. Measuring efficiencies, however, needs

to be done in conjunction with standardized test procedures, perhaps established and monitored by regional test centers, rather than relying on disparate and perhaps

n misleading manufacturer claims. >

Land use planning 4

Land use planning can be a particularly effective, but long term, means of improving system wide transport efficiencies. It does this by better matching residences to a

jobs, schools, shopping, and transport corridors, etc. to minimize transport distances and maximize the opportunities for using mass transport options. A phased :

approach-beginning with dedicated busways to hold and maintain right-of-ways and to encourage high density, mixed job and residential land use; followed by the

replacement of buses with light-rail systems where necessary--might then be an effective approach (if combined with other policy measures such as appropriate k

land-use planning; full pricing of automobile use--fuel, roads, parking, congestion, injury and death, etc.; effective traffic control; and others) in developing a

comprehensive and effective urban transport system.

Loans/rebates ;

See Alternative financial arrangements, above. ~

Marketing programs 2

A variety of marketing tools might be used to increase awareness of energy efficient vehicles and increase their attractiveness. These might include radio, TV, and

- .

n

n

newspaper ads, billboards, public demonstrations, product endorsements, and many others. k

Non-motorized transport

. .

~

Provide full consideration, including reasonable investment, in nonmotorized transport design and infrastructure--such as segregated bicycle paths, broad

intersections, curb cuts, etc. Provide training to transport designers to assist consideration and incorporation of design features for nonmotorized transport. $

6

(continued on next page) ~
Table 5-6--Policy Options-Continued

Pricing policies

Energy prices should reflect the full costs of supply. The structure of petroleum product prices should not be distorted; for example, gasoline prices should not be out

of line with diesel or kerosene, or else inefficient and unplanned for substitutions will take place. Prices alone, however, are often insufficient to ensure full utilization

of cost effective energy efficient vehicle technologies. There are too many other market failures as discussed above. As evidence of this, even the United States has

adopted efficiency standards for vehicles.

R&D

Most vehicle R&D is done in the industrial countries with industrial country operating conditions and needs the primary considerations. As developing country markets

for vehicles grow, however, they are likely to gain greater leverage over this research agenda.

Secondhand markets-standards, scrappage

Efficiency Iabels or standards might be set for secondhand vehicles and equipment. Alternatively, registration fees might be increased with the age of the vehicle,

bounties might be offered for the oldest of vehicles, or other means employed-such as emissions standards-to retire the worst cars.

Social costs

Users of transportation should be assessed for the full costs of the transport services they receive. These include especially medical and economic rests (leave from

job, disruption of office, etc.) associated with death or injury due to car accidents, as well as air pollution, and other social costs.

Standards for vehicles

Many industrial countries have chosen to use minimum efficiency standards for vehicles rather than market driven approaches, due to the difficulty of overcoming the

numerous market failures noted above.

Tax credits, accelerated depreciation, tariffs

A variety of tax incentive-tax credits, accelerated depreciation, reduced import tariffs etc.--couid be used to stimulate investment in energy efficient vehicles.

Conversely, taxes or tariff-such as gas guzzler taxes/tariffs on vehicle purchases or registration fees that increase as vehicle efficiency decreases-could be used

to reduce investment in inefficient vehicles or equipment.

Traffic management

improved traffic management, including, high occupancy vehicle lanes, segregated bus lanes, truck climbing lanes, bicycle lanes, timed lights, etc.

Training programs

Training programs may be needed in order to ensure adequate technical manpower for maintenance of advanced energy efficiency equipment in vehicles. Driver

training programs can also be useful.

Transport planning

Transport planning can, in conduction with land use planning, help ensure efficient choice of transport modes, effective integration of different modes, etc.

User costs

Users of transportation infrastructure--roads, parking, etc.--should pay the full cost of using these facilities.

SOURCE: Office of Technology Assessment, 1992.
Chapter 5--Energy Services: Transport ● 155

Table 5-7-Road Vehicle Fleet Growth and Ownership in Selected Countries

Annual growth (percent/year, 1982-86)

Trucks 2 and 3 Ownership (1986

Country Autos buses wheelers Total vehicles/1 ,000 people

Cameroon . . . . . . . . . . . . . . . . . . . . . . . .

Kenya . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Bolivia . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . .

India . . . . . . . . . . . . . . . . . . . . . . . . . . . .

China . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . .

Us. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

W. Germany . . . . . . . . . . . . . . . . . . . . . .

11.8

3.2

8.6

8.9

8.8

8.2

41.6

3.0

2.4

3.3

29.5

3.7

24.5

7.3

4.4

11.2

14.8

4.1

3.5

0.4

9.1

4.0

6.9

35.6

9.5

25.4

44.9

7.0

-5.6

-2.2

13.1

3.3

11.6

9.8

8.8

18.4

29.8

4.4

2.4

2.6

16

11

37

106

64

10

7

538

44

511

SOURCES: Energyand Environmental Anatysis(EEA), “PolicyO ptionsforlmproving Transportation EnergyEfficieney in Developing Countries:’contractor

report prepared for the Office of Technology Assessment, July 1990, pp. 2-15, 2-16.

development. Advances in alternative fuel

technologies could help developing countries

in their search for substitutes for petroleum

products.

TRANSPORTATION SYSTEMS IN

DEVELOPING COUNTRIES

With the important exceptions of rail in China and

India, commercial transportation in the developing

countries is road based—trucks, buses, motorcycles,

and automobiles.13 Road vehicle fleets are growing

rapidly in the developing world (see table 5-7), The

expansion of the road vehicle fleet is particularly

rapid in India and China, where road transport has

until recently played a relatively small role in overall

transport services. In several countries, there has

been a sharp increase in growth of two and three

wheelers. These vehicles provide a high level of

personal mobility at less cost to the purchaser than

an auto. Ownership of road vehicles in developing

countries is growing rapidly, but is still much lower

than in industrial countries.

Over 90 percent of the transport energy used in the

developing world is in the form of oil, with the

remaining 10 percent largely coal for use in rail in

India and China (see table 5-8).14 Over half of the oil

consumed for transport is in the form of diesel for

freight transport (see table 5-9). This contrasts with

the United States, which uses most of its transport

fuel in the form of gasoline for autos.

The energy requirements of transport systems in

developing Asian countries have grown at an

average annual rate of 4.5 percent between 1980 and

1987.15 According to a recent World Bank study,l6

this rapid growth could well continue, thus exacerbating financial and environmental problems.

Although the commercial transport sector attracts

most attention, most of the population in developing

countries live in rural and poor urban areas and are

largely dependent on local informal transport systems--

particularly walking, animal power, and bicycling.

As a transport mode, walking is flexible and low

cost, but it is slow, tiring, and very limited in hauling

capacity. Animal technologies, such as bullock

carts, have a much greater ii-eight capacity than

walking, but are more costly. They require considerable human effort to maintain the animals, capital

investment in a bullock and cart, and operational

costs for feed and veterinary services.

Bicycles are widely used. In China, for example,

50 to 90 percent of urban vehicle trips are made by

bicycles. Although they are a highly energy efficient

mode of transport, bicycles often require more

roadway per passenger than buses due to their slower

average speeds and less compact seating. Like other

131D chl~ ~o~t (89 ~~ce~t) ~~1 ~~e.g ~~e is ~ fhe form of cod, whale ~ ~&a r~l energy use is split be~een coal (73 perCent) and Oti (22 perCent).

141ntermtion~ Energy Agen~~, World Energy Stafi~tic~ ad Ba/ances 197] .f987 (paris: Orgtiation for Econofic Cooperation and Development,

1989), data are for 1985, pp. 120, 124, 128.

1

5

1 bid., pp. 118-128.

l~M. [reran, op. cit., footnote 5.
156 ● Fueling Development: Energy Technologies for Developing Countries

Table 5-8-Transport Energy Use, 1985 (percent)

Chinaa

India Brazil Nigeria Us.

Fuel type (percent)

Oil . . . . . . . . . . . . . . . . . . . . . . . . . 52 79 100 100 100

Coal . . . . . . . . . . . . . . . . . . . . . . . . 47 20 0 0 0

Electricity . . . . . . . . . . . . . . . . . . . 1 1 0 0 0

Mode(percent)

Road . . . . . . . . . . . . . . . . . . . . . . . 38 65 85 91 82

Rail . . . . . . . . . . . . . . . . . . . . . . . . 52 27 3 0 3

Air . . . . . . . . . . . . . . . . . . . . . . . . . 1 7 7 9 14

Water . . . . . . . . . . . . . . . . . . . . . . 9 1 5 0 1

Total (exajoules) . . . . . . . . . . . 1.03 0.92 1.13 0.27 18.65

Cameroon . . . . . . . . . . . . . . . . . .

Kenya . . . . . . . . . . . . . . . . . . . . . .

Bolivia . . . . . . . . . . . . . . . . . . . . . .

Brazil . . . . . . . . . . . . . . . . . . . . . . .

Thailand . . . . . . . . . . . . . . . . . . . .

India . . . . . . . . . . . . . . . . . . . . ., .

China. . . . . . . . . . . . . . . . . . . . . . .

Taiwan . . . . . . . . . . . . . . . . . . . . .

United States . . . . . . . . . . . . . . . .

296

515

266

18,004

4,878

16,700

19,785

2,786

68,056

276

220

308

10,182

1,654

2,508

15,258

2,269

290,113

52

70

46

64

75

87

56

55

19

28

24

40

130

93

21

19

136

282

26

10

47

74

31

3

14

111

1,201

Adapted from: Energy and Environmental Analysis (EEA), “PolicyOptionsf orlmproving Transportation Energy Effidency in Developing Countries, ’’contractor

report prepared for the Office of Technology Assessment, July 1990, pp. A-3, A-6.

forms of animate energy, the range and freight

capacity of bicycles are limited, accounting for the

decisive popularity of the internal combustion engine for both passenger and freight transport as soon

as it can be afforded.

IMPROVING FREIGHT

TRANSPORT ENERGY

EFFICIENCY

In developing countries, freight transport accounts for a much higher share of total transport

fuels--about one half-than in the industrial countries. Freight movement in the developing world is

principally by truck, with the exception of India and

China, which also use rail. Options for improving

the energy efficiency of freight transport include:

1. improving the energy efficiency of trucks;

2. improving the energy efficiency of rail; and

3. greater use of the more efficient of these two

modes.

The Truck Fleet

At first sight there appears to be considerable

potential for improving the energy efficiency of

developing countries’ truck fleets. While there is

wide variation in the types of trucks used in

developing countries, their fleets are, in general,

older, smaller, and less technologically sophisticated than trucks found in the industrialized countries-all factors that result in lower energy efficiencies (see table 5-10).

Developing-country truck fleets are older because

vehicle scrappage rates (i.e., the fraction of the fleet

that is scrapped per year) are much lower than in

industrial countries. In developing countries, new

trucks are expensive to buy, and if they need to be

imported, foreign exchange may not be available.

On the other hand, due to low labor costs, repair is

relatively cheap. The result of these two reinforcing

factors is that it is usually cheaper and easier to

repair and patch up a vehicle than to replace it. In

general, it is not easy to retrofit trucks with
Chapter 5--Energy Services: Transport ● 157

Table 5-10-Energy Efficiency of Trucks in Selected Countries

Energy consumption

Country/ Capacity (megajoules per metric

region Truck name (metric tons) ton per kilometer)

OECD Mercedes Benz 1217 (1979) 7.0 1.0

OECD Man-VW 9136 (1980) 5.9 1.0

India TATA 1201 SE/42 5.0 2.1

India Ashok Leyland Beaver 7.5 1.6

China Jiefang CA-1OB 4.0 2.3

China Dongfeng EQ140 5.0 1.8

efficiency improvements once they are operating.

An exception is periodic engine rebuilding. If this

rebuild is done with more modern technology, such

as improved fuel injectors and injection pumps,

engine efficiency gains of up to 5 percent can be

obtained .17

Many local shops in developing countries, however, do not have the technical expertise to rebuild

engines with these improved technologies. This

leads to increased downtime and transport costs as

engines have to be sent to the factory for rebuilding.

Increased attention to training in local shops could

reduce these costs and make energy saving investments more attractive.

Low scrappage rates could be discouraged by

policies such as the introduction of annual registration fees inversely proportional to vehicle age. Such

policies could, however, involve heavy foreign

exchange costs, at least in the short run. The long

lifetimes of trucks in the developing world also

emphasizes the importance of building efficiency

into new trucks, as these trucks will continue to

operate for many years.

The size of a truck has an important bearing on its

overall energy efficiency. Small trucks, in particular,

generally require more energy to move a ton of

freight than large trucks. On average, developing

world trucks are smaller than trucks found in the

industrialized countries. Chinese trucks are mostly 4

to 5 ton,18 and the largest Indian trucks are typically

rated at 8 to 9 tons (although they routinely carry up

to 14 tons) .19 These sizes are considerably less than

the 20-ton trucks used in the United States. The poor

highway infrastructure in many developing countries, however, constrains the use of larger trucks.

Less than 20 percent of China’s highways are paved,

for example.20 Increases in truck carrying capacity

and the energy efficiency advantages resulting from

this, cannot be implemented without corresponding

improvements in road carrying capacity.

Developing world trucks are, on average, less

technologically sophisticated than industrialized

country trucks. Principal truck manufacturers in

India build diesel engines comparable in technological sophistication and efficiency with those built in

the industrialized countries in the 1960s. This is

changing. For example, one of the dominant Indian

truck manufacturers now offers an optional Japanese

engine with improved fuel efficiency .21 Much of

China’s truck fleet uses relatively inefficient gasoline engines.

22 The share of more energy efficient

diesel trucks is growing,23 however, and much of the 

vehicle-related foreign investment in China involves

ITEnergy and Environmental &dySiS, kc., ‘‘Policy Options for Improving Transportation Energy Efficiency in Developing Countries, ’ contractor

report prepared for the Office of Technology Assessment, July 1990, pp. 5-6.

ISJ, Yemy ad L. UY* ‘‘Transport in China, ’ World Bank Staff Working Papers Number 723 (.Washingto& DC: World B* 1985), p. 39.

IYM~ j. B~~d ~, u.S. Dep~ent of Ene~, ~gome Natior@ Laboratory, Transportation-Related Energy Problems in India, Report No.

ANL/EES-TM-163 (Argonne, IL: Argome National Laboratory, September 1981), p. 7.

mJ. Yemy, op. Cit., footnote 18.

zlEnergy ~d Environmen@l hldysis, hlC., Op. Cit., fOO~Ote 17.

2.21b1d. ~ gener~, diesel en@es me more efficient tin gasoline engines, due ~ pm to tie tie~odynamic advantages Of the compression i@tiOn

(diesel) cycle over the spark ignition (gasoline) cycle.

~In 1978, 13 percent of the trucks in China used diesel; by 1988 this had increased to 18 pereent. Motor Vehicle Manufacturers Association of the

United States, Inc., World Motor Vehicle Data, 1990 Edition (Detroit, MI: Motor Vehicle Manufacturers Association of the United States, Inc., 1990),

p. 46.
158 . Fueling Development: Energy Technologies for Developing Countries

diesel truck engines. 24 Brazil assembles truck s

designed in Western Europe and exports these

relatively efficient trucks to all of Latin America.

Many countries, particularly in Africa, import modern trucks from Europe and Japan, and therefore in

principle have access to the most advanced truck

technologies.

In operation, however, the energy benefits of

these up-to-date technologies may not be fully

realized under developing country conditions. The

benefits of aerodynamic improvements and turbocharging accrue primarily at higher speeds, which

are often not possible on the rougher, more congested roads in the developing world. Highefficiency engines are often dependent on highquality fuels, and do not operate as well under the

conditions of variable quality fuels frequently encountered in developing countries. Maintenance

requirements are more complex and more critical to

engine performance. As the share of developing

countries in markets for trucks rise, they maybe able

to increase their leverage on manufacturers in the

industrial world to provide technologies more suitable to the conditions of the developing world.

Further, the cost effectiveness of the various

technological options may be compromised by

energy pricing policies widely followed in developing countries. For social and development reasons,

many governments keep diesel prices as low as

possible. In oil exporting countries, prices are

generally well below levels reflecting international

costs plus distribution costs. In oil importing countries, diesel prices are usually near international

prices or slightly higher but often do not bear the

high taxes typically imposed on gasoline. The high

cost of capital combined with relatively low diesel

prices discourages energy efficiency improvements.

For example, the installation of a turbocharged

engine at a $800 to $1,000 premium for a relatively

small (5 percent) benefit in fuel economy is cost

effective, but only marginally so: a truck achieving

10 miles per gallon (23 liters/100 km), driven 40,000

miles (64,000 km) per year, and paying $1/gallon

($0.26/liter) for diesel will have a payback of about

4.7 years on such an investment.

Improved lubricants for the gearbox, engine, and

axle can provide small benefits (1 to 2 percent) in

fuel economy. At the low speeds typical in developing countries, however, aerodynamic improvements

are not very effective in reducing fuel consumption.

Improved drivetrain matching is also problematic

because of the propensity of truck owners to

overload vehicles. Tire improvements offer limited

potential, as radial tires of modern design provide

only a 2 to 3 percent efficiency benefit over bias-ply

tires. Total improvements of 5 to 8 percent in diesel

fuel economy may be all that is possible with current

technologies under developing country conditions

when using trucks.

Technology alone thus may have a limited role to

play in improving truck efficiencies. Proven efficiency improvements-the use of larger trucks,

travel at higher, constant speeds allowing the use of

aerodynamic improvements and turbochargers—

require smooth, uncontested, paved heavy duty

roads. Furthermore the efficiency of diesel engines

drops sharply under conditions of varying load and

speed, such as are often found on the congested,

poorly maintained roads of the developing world.

Advanced truck technologies under development in

the industrialized countries, such as further improvements in aerodynamics, low rolling resistance tires,

and multiple turbochargers, also require smooth,

high-speed roads.

Road construction and improvement is expensive,

and the benefits are diffuse and often difficult to

measure. For these reasons, the public sector,

including the international development agencies,

has long been the principal source of funds for road

building and repair. The energy efficiency effects of

improved roads are complex. In the short term,

improved roads increase energy efficiency by allowing for higher, sustained speeds. By one estimate,

heavy truck operating costs per kilometer (due

largely to energy) drop 34 percent when a dirt road

is paved.25 In the longer term, improved roads allow

for the use of larger, heavier trucks as well as the use

of turbochargers and aerodynamic improvements.

Improved roads may also encourage increased

traffic (and therefore increased energy use), but this

increased traffic may contribute to overall economic

development in an efficient manner.

Z.@+ -q New Form of lnvest~nf in Developing Counq Industries (ptirk: ~ganization for Economic Cooperation and Development 1989),

p. 160.

~H+ A&m, World Ba~ &on~~icApp~ai~a/ of ~ransport p~oje~rs ~~~ore,m: JOhS HOpkiIIS University press, 1987), p. 120.
Chapter 5-Energy Services: Transport ● 159

Operational improvements in trucking have the

potential to improve freight energy efficiencies.

Load factors are often low. Improved communications, route scheduling, and overall coordination of

the freight transport system can improve energy

efficiency by ensuring full loads and reducing waste.

Part of this low load factor, however, is rooted in

policy and institutional factors. Many enterprises in

developing countries do their own shipping rather

than rely on common carrier fleets that they find less

reliable. These ‘‘own account’ shippers are usually

licensed to carry their own products only, resulting

in empty backhauls and low average load factors.

Improving Rail Efficiency

Rail systems carry a significant fraction of freight

only in India and China, but as these counties

account for about half of the developing world’s

population, their rail systems represent a large part

of the developing world’s freight system.

The rail systems of India and China use a mix of

coal, diesel, and electric locomotives, although coal

locomotives are being phased out (see table 5-11).

The substitution is more advanced in India than in

China. Coal still accounts in China for about 80

percent of total rail freight tonne-kilometers.26 The

energy benefits of this technological change are

considerable, as diesel locomotives are about five

times more energy efficient than coal locomotives .27

There appears to be no decisive energy benefit in

switching from diesel to electric locomotives,28

however, which in any event tend to be economically efficient only for high traffic densities.

In addition to the energy efficiency benefits

associated with a conversion from coal locomotives,

U.S. experiences suggest that there are other opportunities for energy efficiency improvements within

the rail sector. Improved operations, such as reducing empty car miles and matching loads and speeds

Table 5-1 l-Characteristics of the Indian Rail System

Number of locomotives

1971 1987

Steam (coal) . . . . . ., . . . . . . . 9,387 4,950

Diesel . . . . . . . . . . . . . . . . . . . 1,169 3,182

Electric . . . . . . . . . . . . . . . . . . 602 1,366

SOURCE: Tata Energy Research Institute (TERI), Teri Energy Dafa

Directory and Ymrbook, New Delhi, 1988, pp. 165, 170.

to the locomotive’s optimum operating characteristics, can reduce energy use. Lighter weight cars, low

resistance bearings, and onboard flange lubricators

all contributed to a 32-percent increase in energy

efficiency (tonne-kilometers per unit energy) in U.S.

freight railroads from 1970 to 1987.29 Other promising technological innovations include steerable

trucks for cars and locomotives. Computers to assist

drivers in efficient operation can reduce consumption by up to 25 percent.30

Modal Shifts

In principle it is possible to improve the energy

efficiency of the entire freight transport system by

ensuring that the bulk of freight is carried in the most

efficient mode. The relative operating energy efficiencies of rail and road for freight depend on several

factors, including how heavily the vehicles are

loaded and whether or not the vehicles are loaded for

the return trip. Although estimates vary, it is

generally agreed that, on average, rail is more energy

efficient than road for freight.31 The trend away from

rail therefore represents a loss in energy efficiency.

The magnitude of this loss depends on the specific

system, but a rule-of-thumb number is that operating

energy efficiencies in rail freight transport are 3 to 4

times as energy efficient as truck freight transport.32

If the comparison of energy efficiencies between the

two systems is expanded to include not only the

amount of energy used for operating the train or

~J, Yenny op. cit., footnote 18.

I~J. D@er]ey, Tre~~ in Energy Use in Industrial Societies, Resources for the Future, kc., =wch paper R-19, 1980, P. 149.

~~e efficiency of elw~c lmomotives depends on the fiel u~ to generate the elm~ci~. For el~ticity produced from fossil fuels the energy

efficiency of diesel and electric locomotives are comparable. See L. AIsto% Raifways and Energy, World Bank Staff Working Paper Number 634

(Washington DC: World B- March 1984), p. 31.

2~.s. Dep~ment of fierg, OA ~dge Natio~ ~borato~, Transp~rtari~n Energy Data Book: E~irion 10, Re~rt No. OR.NL6565 (Springfield,

VA: National Technical Information Service, September 1989), pp. 4-23. During this time period the average trip length increased 34 percen~ therefore

at least part of this increase in efficiency was probably due to the inherent efficiency of longer trips.

%. Alston, op. cit., footnote 28, pp. 14-15.

31 According to a World Bank report, “. . railways have a substantial energy advantage for large volumes of bulk commodities, but for passenger

transport they are generally no more energy-efficient than buses. ” Ibid., p. I.

32M, Be~~d, op. cit., foomote 7. Also L. A1.5ton , Op. Cit., footnote 30* P. 7.
160 . Fueling Development: Energy Technologies for Developing Countries

Table 5-12--Systemwide Energy Use by Alternative Transportation Systems

Operating energy Linehaul energy Modal energy

United States

Freight . . . . . . . . . . . . . . . . . . . . . . . .

Rail . . . . . . . . . . . . . . . . . . . . . . . .

Truck . . . . . . . . . . . . . . . . . . . . . . .

Barge . . . . . . . . . . . . . . . . . . . . . . .

Passenger

Auto . . . . . . . . . . . . . . . . . . . . . . . .

Bus . . . . . . . . . . . . . . . . . . . . . . . .

Metro . . . . . . . . . . . . . . . . . . . . . . .

(Btu/ton-milea

)

660

2,100

420

(Btu/pass-mile b

)

8,490

2,740

3,570

(Btu/ton-mile)

1,130

2,800

540

(Btu/pass-mile)

10,790

2,950

4,550

Latin America

(Btu/ton-mile)

1,720

3,420

990

(Btu/pass-mile)

10,790

3,220

6,690

Passenger (Btu/pass-mile b

) (Btu/pass-mile) (Btu/pass-mile)

Auto . . . . . . . . . . . . . . . . . . . . . . . . 4,820 7,130 7,130

Bus . . . . . . . . . . . . . . . . . . . . . . . . 603 660 660

Metro . . . . . . . . . . . . . . . . . . . . . . . 760 990 1,130

truck, but also the amount of energy contained in the

manufacture of the transport equipment and associated railways and roads, and the amount of energy

needed to gain access to each mode, then the gap

between them is reduced. Railways then appear to be

about twice as efficient as roads rather than the 3 or

4 times when only operating efficiencies are taken

into account (see table 5-12).33

Despite the fact that rail transport is more energy

efficient and cheaper than road freight transport, its

share of total freight is declining in both India and

China (see table 5-13). Road transport has the

advantage of being more flexible and accessible. For

rural areas it is essentially the only transport mode

available. Door to door delivery possible with road

transport avoids the risk of delay due to transshipment when using rail. As the demand for consumer

goods increases, the demand for transport services

that can deliver high value-added goods to many

areas quickly increases.

Changes in government policy with regard to

freight transport have also played a part in the

relative decline of rail. In many countries throughout

the world—in Europe as well as the developing

countries-railways are State owned. Strenuous

efforts have been made by governments through

investment and pricing policies and regulations to

reserve a dominant share for railways in the freight

transport system. In recent years, however, this

policy has been reversed. Investments in the railway

system have failed to rise as they did previously. In

India, for example, railroad’s share of public investment in transport has decreased,34 leading to poorer

service and maintenance. At the same time some

deregulation was introduced into the road transport

system. Given the declining performance of rail

freight and the growing opportunity to ship by road,

customers have chosen road transport despite its

frequently higher cost per tome-kilometer (and its

higher energy intensity).

The key issue is, however, to use all elements of

the freight transport system in an integrated reamer.

The two systems have strong complementarities as

railways (and waterways and coastal carriers where

available) have a decisive advantage in the transport

of large loads, especially of bulk commodities like

coal, cereals, steel, fertilizer, etc., over long distances between fixed points, while road transport is

preferred for the transport of small- and mediumsized loads over relatively small distances to dis33~ew ~oncepw ~erc deve]ope(f and ~er exp~~ & Damian J. K&Mk U.S. Congress, congressional Budget OffIce, ‘ ‘Energy Efficient Modes

of Transportation: Some Comments on Urban Transportation in the United States and Latin America*’ (Washington, DC: February, 1982), p, 6.

.~Ta(a Ener~ ReseMch Institute (TERI), op. cit., footnote 1, p. 161.
Chapter 5---Energy Services: Transport ● 161

Table 5-1 3-Market Share of Road and Rail for Freight

(percent of frelght ton-kilometers,

excluding water, air, and pipeline)

1977 1983

Road Rail Road Rail

China . . . . . . . . . . . 5 95 14 86

India . . . . . . . . . . . . 37 63 51 49

Us. . . . . . . . . . . . . 37 63 41 59

SOURCES: J. Yenny and L. Uy, Transport in China, Worfd Bank Staff

Working Papers No. 723, 1985, p. 4; Tata Energy Research

Institute (TERI), Teri Energy Data Directory and Yearbook,

New Delhi, 1988, p. 163. U.S. data are for intercity freight traffic

in 1980 and 1987, from Association of American Railroads,

Railroad Facts, 1989 edition, Washington, DC, November

1989.

persed recipients (see table 5-5). Technologies such

as containerization, which facilitates transshipment

between different modes, encourage such integrated

systems. Historically, the separate elements of the

freight transport system—road, rail, ports etc.—

developed independently and often opposed integration. In many countries, major changes in institutions and administrative procedures will be required

to fully implement efficient integrated systems.

IMPROVING PASSENGER

TRANSPORT ENERGY

EFFICIENCY

The demand for passenger transport, particularly

private transport such as autos and two and three

wheelers, rises rapidly as incomes grow (see figure

5-l). At the same time, there is wide variation in

vehicle ownership rates even in countries with

similar standards of living. Bolivia and Cameroon,

for example, have similar standards of living (in

terms of their purchasing power) but car ownership

rates in Bolivia are twice as high as in Cameroon.

Similarly car ownership in Thailand is more than

nine times higher than in China, although Thailand’s

standard of living is only one-third higher (taking

into account purchasing power). These disparities

are due to a variety of factors—the degree of

urbanization, the nature of the vehicle stock, and

government polices towards motor vehicle ownership. Table 5-14 illustrates the mode share of

motorized passenger trips in selected countries.

The energy efficiency of the passenger transport

sector can be improved in three primary ways. First,

the vehicles themselves can make use of technologies that increase energy efficiency. Second, their

operational efficiencies can be improved by carrying

larger loads or through improved traffic management. Third, there could be increased use of those

modes, such as buses and rail-based systems or

walking/bicycling that use less energy per passenger

mile. These modes already provide a significant

share of trips in some areas (see table 5- 15). Land use

planning and

influence the

nonmotorized

other government

viability of these

modes.

policies strongly

mass transit or

Automobiles

The energy efficiency of automobiles-the most

energy intensive of all forms of passenger transport—

is of crucial importance due to the rapid rate of

growth of automobile ownership. As for trucks, the

average energy efficiency of the automobile fleet is

held down in many developing countries by low

scrappage rates. The reasons for this are much the

same-low labor costs for repair, minimal quality

requirements for annual registration, and the high

cost and limited availability of new vehicles.35

Measures to increase scrappage rates—through registration fees that are inversely proportional to age,

offering bounties for old cars, or establishing safety

emissions standards-would increase the average

energy efficiency of the auto fleet, but at a financiaI

cost to users. The long life of the average car in

developing countries also puts a premium on high

standards of energy efficiency in the new cars that

are being added to the fleet.

The vehicles currently being sold in the developing countries vary widely in energy efficiency,

depending largely on whether such vehicles are

manufactured at home or imported. In India, for

example, the most popular car until recently was the

domestically produced “Ambassador.” This vehicle, based on a 1954 British Morris, is still being

produced, although the fuel consumption is about

twice that of a current and comparably sized

Japanese or German car.36 Energy efficiencies of

cars produced in China are similarly low. In both

countries, however, new automotive technologies

sSEnergy and Environmen@l Analysis, Inc., Op. Cit., fOO~Ote 17, p. 5-1.

MJ, Satiye and S. Meyers, “Transport and Home Energy Use in Cities of the Developing Countries: A Review,’ The Energy Journal, vol. 8, special

issue, 1987, pp. 85-103.
162 . Fueling Development: Energy Technologies for Developing Countries

Figure 5-1—Passenger and Freight Transport v. GNP for Selected Countries, 1960-81

Passenger traffic and GNP per capita

10,000 —

1000 —

i100

Vvchina 1

c1 I I 1 I 1 I , 1 I I 1 1 1

100

1,000

100 1

10

1,000 10,000

GNP per capita (1979.1981 constant use)

Total freight and GNP for selected countries, 1960.1981

~–

~ ‘- ‘‘– ~T

T

~-.

U S.S. R.

1 I I I I I 1 , , I 1 1 I , ,

10 100 1,000

I

GNP (BIL.US$)

This figure shows how passenger and freight transport energy use have increased with GNP for seven countries. The individual data points

are for specific years.

SOURCE: J. Venny and L. Uy, Transport in China, World Bank Staff Working Paper, No. 723 (Washington, DC: World Bank, 1985).
Chapter 5----Energy Services: Transport ● 163

Table 5-14-Mode Share of Motorized Passenger Trips in Selected Cities, 1980

Modal Share (percent)

City Auto Taxi Bus Para-transit Rail/subway Other

Bangkok . . . . . . . . . . . . . . . . . . . .

Bombay. . . . . . . . . . . . . . . . . . . . .

Calcutta. . . . . . . . . . . . . . . . . . . . .

Hong Kong. . . . . . . . . . . . . . . . . .

Jakarta. . . . . . . . . . . . . . . . . . . . .

Karachi. . . . . . . . . . . . . . . . . . . . . .

Manila . . . . . . . . . . . . . . . . . . . . . .

Seoul. . . . . . . . . . . . . . . . . . . . . . .

Bogota . . . . . . . . . . . . . . . . . . . . .

Mexico City..... . . . . . . . . . . . . .

Rio de Janeiro.. . . . . . . . . . . . . . .

Sao Pablo . . . . . . . . . . . . . . . . . . .

Abidjan. . . . . . . . . . . . . . . . . . . . . .

Nairobi. . . . . . . . . . . . . . . . . . . . . .

Cairo . . . . . . . . . . . . . . . . . . . . . . .

Tunis . . . . . . . . . . . . . . . . . . . . . . .

Amman . . . . . . . . . . . . . . . . . . . . .

Ankara . . . . . . . . . . . . . . . . . . . . .

25

8

NA

8

27

3

16

10

10

2

13

NA

7

2

55

34

67

60

51

52

16

10

13

14

NA

NA

18

59

NA

34

10

19

1

6

NA

NA

NA

4

NA

21

13

8

9

14

19

24

32

33

45

15

24

15

1

NA

2

3

12

NA

15

4

68

80

51

62

54

0

0

13

2

NA

7

0

15

11

10

0

5

2

NA

1

50

31

70

61

NA

15

NA

NA

NA

o

NA

10

5

9

NA

NA

44

23

11

10

19

53

26

9

NA

2

NA

2

have been introduced in recent years, sharply

increasing the fuel efficiencies of domestically

manufactured cars. The fuel efficiencies of cars

produced by other developing country producers—

Mexico, Brazil, and South Korea—are at current

international standards for their size, accessories,

and other factors.

Most developing countries, however, import their

autos from the industrialized world, either in finished form (as is the case with small African and

Central American nations) or in the form of completely knocked down kits (CKD) from which cars

and trucks are assembled. In the latter case, local

industry provides many components such as tires,

batteries, and light bulbs. Examples of CKD production include Thailand for cars, and Thailand and

Taiwan for heavy-duty trucks.

Autos produced in the industrialized countries

and then exported to the developing countries are

similar but not identical to those sold in the

industrialized countries. In general, models sent to

the developing world have smaller engines, fewer

luxury accessories (e.g., air conditioning), lower

compressions ratios (to allow for the use of lower

octane gasoline), and often do not use proven

Table 5-15-Motorized and Non-Motorized Mode

Shares.

Percent of passenger trips

City Walk Bicycle Motorized

Bangalore, India . . . . . . . . . . 44 12 44

Delhi, India . . . . . . . . . . . . . . . 29 17 54

Jakarta, Indonesia. . . . . . . . . 23 17 60

Shanghai, China . . . . . . . . . . 43 13 44

SOURCES: V. Setty Pendakur, “Urban Growth, Urban Poor and Urban

Transport in Asia,” Occasional Paper No. 39, The Centre for

Human Settlements, The University of British Columbia, 1986,

p. 33; J. Sathaye and S. Meyers, “Transport and Home Energy

Use in Cities of the Developing Countries: A Review,” The

Energy Journa/, Special LDC Issue, vol. 8, 1987.

efficiency technologies such as fuel injection and

electronic engine controls. The lack of luxury

accessories increases efficiency (air conditioning,

for example, adds weight and requires engine

power); however, the lack of electronic engine

controls and other similar technologies decreases

efficiency. The net effect is that autos produced in

the industrialized countries and then exported to the

developing countries are of comparable energy

efficiency (in terms of kilometers per liter of fuel) to

similar models produced and sold in the industrialized countries.37

JTEner~ ~d Env~~~enM ~ysis, kc., op. cit., footIIOte 17, pp. 4-15.
164 . Fueling Development: Energy Technologies for Developing Countries

These vehicles’ energy efficiency could benefit

from the use of readily available proven technologies, although at an increased first cost. Electronic

control of spark timing and idle speed found in

almost all industrialized country vehicles, for example, provides a 4 to 5 percent fuel efficiency gain at

a cost of about $75 to $100.38 Radial tires, improved

aerodynamics, and fuel injection also offer similar

energy savings. The cost effectiveness of such an

investment is strongly dependent on retail fuel

price-in Ethiopia, with high fuel prices, the payback is a relatively quick 2 or so years; in the United

States, with low fuel prices, the payback is a little

over 5 years. Table 5-16 gives payback times for the

installation of electronic spark controls.

Such calculations incorporate only increased first

costs and fuel savings, and do not account for the

environmental and safety benefits. Nevertheless, it

illustrates that investments in increased auto efficiency can provide a reasonable return. Evidence

from the industrialized world, however, indicates

that consumers often demand a payback of 2 years

or less from efficiency investments,39 and consumers in developing countries might be expected to

have an even shorter payback period. Although

gasoline prices in oil exporting countries are low

(see table 5-17), in oil importing countries they are

already well above international levels and there is

a limit to how much further gasoline prices can be

increased without unduly widening the gap between

them and diesel prices. In most countries, purchase

taxes on autos are already structured to discourage

the purchase of large autos, suggesting a role for auto

efficiency standards.

Some efficiency features, such as fuel injection,

are considerably more complex than the present

practice (carburetors), and therefore would require

skilled (or differently skilled) labor for repair. Some

efficiency features offer benefits in addition to fuel

savings. Fuel injection is more reliable, does not

require adjustment, and results in lower emissions

than carburetors.40 Radial tires offer improved

handling and safety as well as increased tire life.

Developing countries are largely dependent on

the industrialized countries for vehicle design. Thus,

Table 5-16-Simple Payback From the Addition of

Electronic Spark Controls to Automobiles.

Retail gasoline price Simple payback for

(U.S. $/gallon,a

electronic spark controls

Country Jan. 1990) (years)

Thailand . . . . . . . . . . . . 1.24 4.1

Brazil . . . . . . . . . . . . . . 1.41 3.6

India . . . . . . . . . . . . . . 1.92 2.6

Ethiopia . . . . . . . . . . . . 2.93 1.7

Us. . . . . . . . . . . . . . # . 1.04 4.9

U.K. . . . . . . . . . . . . . . . 2.55 2.0

Japan . . . . . . . . . . . . . 3.05 1.7

Table 5-17-Diesel and Gasoline Prices in Selected

Countries, as of Jan. 1, 1990, in U.S.$/gallon

(including taxes)

Gasoline Diesel

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . 1.41 0.69

Ecuadora 

. . . . . . . . . . . . . . . . . . . . . . 0.52 0,37

Mexicoa. . . . . . . . . . . . . . . . . . . . . . . . 0.88 0.67

India. . . . . . . . . . . . . . . . . . . . . . . . . . 1.92 0.78

Thailand . . . . . . . . . . . . . . . . . . . . . . . 1.24 0.89

Ethiopia . . . . . . . . . . . . . . . . . . . . . . . 2.93 1.44

Ghana . . . . . . . . . . . . . . . . . . . . . . . . . 0.76 0.69

Venezuelaa 

. . . . . . . . . . . . . . . . . . . . 0.24 0.06

Peru . . . . . . . . . . . . . . . . . . . . . . . . . . 1.28 0.39

Indonesiaa 

. . . . . . . . . . . . . . . . . . . . . 0.81 0.42

Pakistan . . . . . . . . . . . . . ., . . . . . . . . 1.52 0,68

Japan. . . . . . . . . . . . . . . . . . . . . . . . . 3.05 1.75

Us. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.04 0.99

W. Germany . . . . . . . . . . . . . . . . . . . 2.72 1.91

Reference priceb . . . . . . . . . . . . . . . . 0.87 0.70

further improvements in fuel efficiencies will depend on advances in automotive technologies in the

industrial countries. Vehicles currently being sold in

both the developing and the industrialized world are

not nearly as efficient as is technically possible.

Several manufacturers, including GM, Volvo, and

381bid., pp. 4-17.

3~. Rude-, M. ~vlne, and J. Mc~o~ “me Be~vior of tie ~ket for Wergy ~iciency in Residential Appliances ~cludfig H~tig and

Cooling Equipmen6° The Energy Journal, vol. 8, No. 1, 1987, p. 101.

‘lOFuel ~jectioq however,quires gasoline with low levek of dirt and o~er con taminants; and the gasoline sold in some developing countries may

not meet this requirement.
Chapter 5---Energy Services: Transport . 165

Volkswagen have built prototype automobiles that

achieve from 66 miles per gallon (3.5 litres/100 km)

to 70 miles per gallon (3.3 lires/100 km). 41 A

prototype automobile introduced by Toyota in 1985

achieves 98 miles per gallon (2.4 litres/100 km,

while providing room for 4 passengers. This vehicle

uses a direct-injection diesel engine, a continuously

variable transmission (CVT), and plastics and alu42 These vehicles are not ‘n

minum to reduce weight,

production; nevertheless, the long term technical

potential for energy efficiency improvements in

automobiles is large, and improvements made in the

industries of the major producers will rapidly

become the global standard. The rapid growth in the

auto fleet in developing countries will give these

countries increasing influence over the major car

developers.

Motorized Two- and Three-Wheelers

The two-wheeler has appealed to many Asian and

other developing nations as an inexpensive technology for providing personal transportation for a

growing urban middle class. In many Asian cities,

two- and three-wheelers vastly outnumber autos,

and are responsible for a large fraction of total

gasoline consumption (see table 5-18). The relative

efficiency in terms of energy per passenger-mile of

two-wheelers falls between that of autos and buses

(see table 5-19).

Two-wheeler engines are either “two-stroke” or

‘‘four-stroke. In the early 1960s, virtually all but

the largest motorcycles had two-stroke engines,

since these engines are simple to manufacture and

inexpensive. In addition, they produce more power

for a given displacement and require little maintenance. Two-stroke engines, however, have emissions (largely unburned gasoline) 10 times greater

and fuel efficiencies 20 to 25 percent lower than

four-stroke engines of equal (or near equal) power

(see table 5-20).

The problems associated with the two-stroke

engine are still more acute for three-wheelers, of

which India is a large producer. These vehicles are

underpowered and the engine is usually operated at

near wide-open throttle. Under these conditions,

two-stroke engines produce high emissions and have

Table 5-18--Estimated Fraction of Gasoline

Consumption Attributable to Two- and

Three-Wheelers (1987)

Country Percent of gasoline

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Bolivia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Kenya . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . <2

Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . <1

SOURCE: Energy and Environmental Analysis (EEA), “Policy Options for

Improving Transportation Energy Effiaency in Developing Countries,” contractor report prepared for the Office of Technology

Assessment, July 1990.

Table 5-19-Relative Energy Consumption of

Passenger Transport Technologies, United States

Energy use per

passenger-mile Load factor assumed

Technology (MJ/passenger-km) (passengers/vehicIe)8

Private auto . . . . . . 2.5 1.7

Motorcycle . . . . . . . 1.5 1.1

Rail . . . . . . . . . . . . . 1.5 24.8

Bus . . . . . . . . . . . . 0.6 10.2

a~ad factors in developing countries will generally be much higher than

those listed here for the United States.

SOURCES: Oak Ridge National Laboratory, Transportation Energy Data

Book: Edition 70, ORNL-8585, 1989, p. 2-23; M. Lowe,

“Reinventing the Wheels,” Technology Review, May/June

1990.

poor fuel economy, with fuel consumption equivalent to that of some modern small cars. Yet there is

a widespread perception in India and in some Asian

countries that these “auto rickshaws’ are very

efficient modes of public transport. Two-stroke

two-and three-wheelers are now a significant source

of gasoline consumption and emissions in several

developing counties.

Improved technologies are available, although at

increased first cost to the user, which could drastically reduce emissions and fuel consumption. The

use of improved carburetors and electronic ignition

could improve efficiency 10 to 15 percent, and

would reduce hydrocarbon (HC) emissions by 5 0

percent. 43 The use of four-stroke rather than twostroke engines would reduce HC emissions by 90

41M. Ross, ‘ ‘Energy and Transportation in the United States, ”Annual Revie~l of Energy, vol. 14, 1989, p. 158.

d~J Goldemberg i-t al, EnergJ,~or De},ezopment (Washingto~ DC: World Resourc~ Institute, 1987)$ p. 54”

4sEncrq, and Environmental Analysis, Inc., Op. Cit., fOO~O[e 17, p. 3-11.
166 . Fueling Development: Energy Technologies for Developing Countries

Table 5-20--A Comparison oft he Performance Characteristics of a Two- and a

Four-Stroke Motorcycle Engine

Emissions Fuel economy

Engine size (cm3

) Engine type (stroke) HC (g/km) NOX (g/km) (miles/gallon)

400 , . . . . . . . . . . . . . . 2 11.1 0.1 50

500 . . . . . . . . . . . . . . . 4 1.2 0.1 67

SOURCE: Energy and Environmental Analysis (EEA), “Policy Options for Improving Transportation Energy Efficiency

in Developing Countries,” contractor report prepared for the Office of Technology Assessment, July 1990,

p. 3-6.

percent and increase fuel efficiency by 25 percent

(see table 5-20). The increased first cost for this

technology is about $lOO. 44 The cost effectiveness

of this investment depends on fuel price, but at a

gasoline price of $1.50/gallon ($0.40/liter) the

simple payback is about 1.6 years, even without

taking into account environmental benefits. 45

Buses

Buses are the backbone of urban passenger

transport in the developing world, providing essential low cost transport, particularly for low income

groups. They provide over half of all motorized trips

in many cities (see table 5-14).

As for other road vehicles, there are a variety of

technologies available to improve bus energy operating efficiencies, including turbochargers, smaller

engines in some cases, automatic timing advances,

lighter bodies through use of aluminum or plastic

components rather than steel, and others. But the

effectiveness of these technologies in conserving

fuels is constrained by their operating environment.

Most urban buses operate on congested streets, and

the resulting low speeds and frequent speed changes

are associated with low operating efficiencies.

Turbochargers are often ineffective, for example, as

they require higher, sustained speeds. In so far as

unsatisfactory bus service has contributed to the

rapid increase in ownership of autos and two and

three wheelers, faster bus service could slow the

increase in private vehicle ownership.

In an effort to improve bus services by increasing

speed and reducing the number of stops, some cities

have introduced exclusive or priority bus lanes.

Abidjan has 5 kilometers of priority bus lanes,46

Porto Alegre has exclusive busways, and Sao Paulo

is paving and improving its bus routes in lowincome areas.47 In 1978, Porto Alegre, Brazil, with

World Bank assistance, designated 30 kilometers of

road for exclusive use by buses. The roads were

paved, barriers to other vehicles were built, and bus

signs and stops were added. The cost was about

$500,000 per kilometer-or about 4 percent that of

the Manila light rail system (see below). The system

has a peak capacity of about 28,000 passengers per

hour (slightly higher than the capacity of Manila’s

light rail system), and yielded an increased bus speed

of about 20 percent.

Modal Shifts in Urban Passenger Transport

The high capital, energy, and environmental costs

of a private auto-based urban transport system raises

issues of how urban passenger traffic should be

served, and what role different modes—buses, cars,

two- and three-wheelers, light rail, walking, and

bicycles—should play in an efficient urban transport

system. These issues are closely interconnected with

the broader issues of land-use and transport planning.

The energy intensities of the different passenger

transport modes (measured by the amount of fuel

required to move one passenger 1 kilometer) varies

widely (see table 5-19). Buses use only one-fourth as

much energy per passenger-mile as private cars

according to U.S. data, and the difference is estimated to be much greater (one-eighth) in the

developing countries because of the higher load

factors on buses. Light rail fuel use is estimated to be

some 30 percent higher per passenger-kilometer

than buses, but still well below private passenger

cars. If the indirect energy-the energy used in

‘Ibid., pp. 3-5.

45Ass..g 10,000 ~yw mMI mileage, ef%ciency her== from so to 63 mPg.

~R. B_tt, ur~n Tran~pO~ in Jf’e~tAfi”~~, World B~ Tm~c~ ~Wr N-r 81 (Washington, ~: World B* 1988), p. 7.

dTWorld Bank, Urbun Transport (Wasbi.ngto~ DC: World Bati 1986), P. 30.
Chapter 5-Energy Services: Transport ● 167

associated infrastructure such as roads and railbeds—

is included, buses use less than one-tenth as much

energy per passenger mile as private cars, Light rail,

including energy in roadbeds and other indirect

consumption, uses twice as much energy per passenger kilometer as a bus system but still one-fifth that

used by private cars (see table 5-12).

Given the high energy and other costs of a private

auto-based system, one of the most important and

difficult issues facing those in charge of urban

planning is the role of the private auto. The

advantages of private cars-flexibility, comfort, and

convenience—have led to unprecedented increases

in car ownership. This has led to severe congestion

in many areas. In many countries, car ownership and

operation are already made expensive through high

gasoline taxes, and high ownership and acquisition

taxes. Demand has proven remarkably resilient in

the face of such policies. A notable exception is

Singapore, where an area licensing scheme has

proven effective in controlling congestion in its

central business district (see box 5-A).

A growing concern over the contribution of

private cars to urban air pollution has led to new

policy initiatives: both Mexico City and Sao Paulo,

for example, have responded with mandatory installation of catalytic converters, bans on using cars on

various days, and other measures. These actions

could limit car use in the future.

In addition to saving energy and reducing pollution, a larger role for public transport could reduce

transport costs, As table 5-21 shows, the total

costs—including costs of road and metro construction, vehicles, etc.—are 2 to 3 times higher for

private autos than for buses on segregated highways

or paratransit48 systems. Improvements in bus services could therefore release resources that could

instead be used to finance improvements in efficiency, transport infrastructure, or other development needs. Buses have additional advantages. They

are flexible in routing and scheduling. They can

make use of existing roads or segregated ‘bus only’

lanes. Buses usually use diesel engines, which are

already familiar to most mechanics, and they are

quite sturdy—able to go long distances with minimal repairs.

Despite the many advantages of buses, however,

bus systems in developing (and industrialized)

Box 5-A—Singapore’s Area Licensing

Scheme: Carrot and Stick

Congestion in Singapore’s central business district (CBD) led the government to institute an ‘area

licensing scheme” in 1975. This program was

intended to reduce congestion and increase bus

ridership through the use of financial disincentives

for private vehicle use. Private vehicles were

charged an “entrance fee” (currently about $1.50

per day per vehicle) upon entering the central

business district during peak hours.

The initial effect of the program was a 51 percent

drop in the number of cars entering the CBD in

morning peak hours. From 1975 to 1989, the

vehicle population in Singapore grew by 68 percent, yet traffic in the CBD is still below the levels

found prior to the program’s inception.

The program has been modified a number of

times. The peak hours have been changed, the

restrictions have been extended to all vehicles,

including motorcycles and taxis, the fees have

changed, and the boundaries of the restricted zone

have been enlarged. Although the program is not

popular with motorists, it is seen as inexpensive and

highly effective in reducing congestion. Energy

savings are difficult to measure, but the modal shift

from cars to buses, as well as the increased vehicle

speeds, are thought to reduce energy use by about

30 percent. The fees charged to drivers more than

cover the operating costs of the program.

SOURCES: B. w. Ang, “Traffic Management Systems and

Energy Savings: The Case of Singapore,” paper

presented at the New Energy Technologies Transportation and Development Workshop, Ottawa,

Canad% September 1989, p. 13; Hagler, Bailly, and

co., “Road Transportation Energy Conscmation

Needs and Options in Developing Countries,”

contractor report to the U.S. Agency for International Development Washingto~ DC, September

1986, p. Al 1.

countries have a mixed reputation. This is usually

due to managerial, institutional, and infrastructural

shortcomings rather than technical failures. Many

systems are poorly run--overstaffed, inefficiently

operated, and with very high costs. Some systems

provide poor service-infrequent service at peak

hours, overcrowded and unclean buses, and undependable schedules. Many publicly run bus systems

require large government subsidies to operate.

48pua~am\1t j5 ~ bla~et tem for shared ~i5, jitneys, rninivans, and other similar systems that provide shared @ansport services.

297-929 - 92 - 12 - QL : 3
168 ● Fueling Development: Energy Technologies for Developing Countries

The World Bank has examined bus services in

cities of the developing world, and several World

Bank reports point to the potential benefits of an

increased private sector role in providing bus

services. World Bank studies of public and private

ownership found that the costs of private bus

services were roughly half those of public systems,

that little evidence could be found showing different

levels of safety in the two systems, and that private

systems offered more dependable and comfortable

service. 49 Others argue, however, that safety and

service to the poor are neglected by private operators; and that the need for central depots, special

“bus only” lanes, and the difficulties involved in

importing buses and spare parts all argue for a

government role in urban bus systems.

In the longer term, bus services may find it

difficult to compete effectively with automobiles

due to their lower average speeds under typical

urban conditions. A study of 32 cities in Asia,

Australia, Europe, and North America found typical

average bus speeds of about 20 kilometers per hour

(km/h) compared to average speeds for automobiles

of about 40 km/h in the United States and Australia.5o However the use of segregated busways or bus

only lanes can increase average bus speeds.

Rail-based light transit systems have become

increasingly popular in North America, and are

beginning to be seen in the developing world as well.

Urban rai151 systems—including metros, subways,

and similar light rail systems—are operating, under

construction, or being planned in 21 cities in the

developing world. These systems offer the advantages of relatively high speed, smooth, and dependable service-but at a cost. According to a recent

evaluation, rail-based transit systems in the developing world have achieved mixed results. Travel times

were reduced, most systems provided high quality

service, and ridership levels were high, although

below forecasts. These systems are expensive,

however. As fares are kept low to allow the poor

access to the system, fare revenue cannot cover

costs. As discussed above, however, a full accounting of the costs of a private auto-based system may

Table 5-21—Total Costs of Passenger Transport

Options, as Estimated by the World Bank

Total rests in US$/passenger-km

System type (1986)

Bus on segregated busway . . . . . . . 0.05 to 0.08

Paratransit . . . . . . . . . . . . . . . . . . . . . 0.02 to 0.10

Surface rail . . . . . . . . . . . . . . . . . . . . 0.10 to 0.15

Private car . . . . . . . . . . . . . . . . . . . . . 0.12 to 0.24

Underground rail . . . . . . . . . . . . . . . . 0.15 to 0.25

NOTE: Total costs include initial and operating costs. Bus data include

estimates for roadway construction.

SOURCE: A. Armstrong-Wright, Urban Transit Systems, World Bank

Technical Paper No. 52, 1986, p. 49.

increase the comparative economic attractiveness of

a rail-based system.

Manila’s light rail system illustrates some of these

points. Severe congestion and a growing urban

population in Manila led the Philippine government

to decide in 1980 to build a light rail system in

Manila. This light rail system was completed in

1985, at an initial cost of $212 million, or about $14

million per kilometer. By 1988,28 percent of urban

trips were by light rail. Fares are set at a flat rate of

14 cents. The income from fares is sufficient to meet

operating expenses, but does not cover interest and

principal on the initial construction costs. It has been

calculated that a fare of about 28 cents would be

necessary to allow the system to be financially

self-sufficient, however, it has also been shown that

this fare would be unaffordable to most patrons. The

Manila system, like many light rail systems, provides reliable, safe, and fast service at a reasonable

price. However, it requires a large government

subsidy; and the effects on urban congestion and

energy use are unclear.52

A key issue is to use all elements of a transport

system in an integrated manner. For example, the use

of dedicated busways to hold and maintain right-ofways, the encouragement of mixed employment and

residential land use, and appropriate use of light rail

systems could be considered. Related policy options

might include full pricing of all transport options

(including fuel, roads, parking, congestion, and

injury), effective traffic control, and others; all with

d~orld Bank, Urbun Transpoti (WSshingto% DC: World Bank 1980 P. 23.

~p~.~~ w@G. N~_~ ~d Jeffr~~ R. Ken~~@, Clfies an~Aufo~~iZe Dependence: A Sourcebook (Brooktield, VT’: Gower Twhnictd, 1989).

5]~~ di~m~~ion is b~~ ~ pm OU World B* “Metios in Developing Cities-Are They Viable?” The Urbun Edge, VO1. 14. No. 1.

January/Febmary 1990.

52A. Gimenez, “The Manila Light Rail Syste@” paper presented at the New Energy Technologies Transportation and Development Workshop,

Ottawa, Canada, September 1989.
Chapter 5--Energy Services: Transport ● 169

the goal of developing a comprehensive and effective urban transport system.

THE DEMAND FOR TRANSPORT

SERVICES

Although the emphasis in this report has been on

improving the energy efficiency with which services

are delivered, the high societal costs (as well as

benefits) of the transport sector raise the question of

whether or not economic growth could be sustained

with lesser rates of growth in passenger-kilometers

and freight tonne-kilometers. In the past, transport

services have increased at about the same rate as

economic growth or slightly faster (see figure 5-l).

Although freight transport intensity (number of

tonne-kilometers per unit of gross national product)

declines at high levels of economic development,

most of the developing countries are expected to

continue experiencing rising or at least constant

freight intensities as they continue the transformation from rural agricultural economies to urban

industrial economies. The rapid rise in urban passenger transport services stems from the increase in

urban population—between 1970 and 1980 the

population of several major developing country

cities doubled—and the spread of urban areas.

Further, journeys tend to lengthen as cities grow; in

Bogota, the average commuting distance increased

by 13 percent between 1972 and 1978.

There are a number factors that could moderate

these rapid increases. Improved communications

(better telephone systems and fax machines, for

example) could displace a certain amount of business travel.53 Improved communications and overall

logistics can ensure full loads and most efficient

truck routing, and thereby improve overall efficiency. Traffic management schemes, such as segregated bus lanes, truck climbing lanes, and limited

vehicle access to city centers, could reduce congestion and thus promote more fuel efficient vehicle

operations. Several cities of the developing world

have already instituted successful traffic management systems (see box 5-A).

In so far as an appreciable amount of demand for

transport services arises because users do not pay the

true costs of using the roads, efforts to reflect these

costs (through road pricing, area licensing, user

taxes on fuels, parking fees, import duties, sales

taxes, and annual licensing taxes), could moderate

the demand for transport services. Physical restrictions on access to certain areas have also been

introduced.

In the longer term, careful attention to the physical

layout of residences, employment centers, and

services could allow for a less expensive and more

efficient transport system. Locating employment

closer to residences, locating public services (e.g.,

shopping and recreation) closer to intended users,

siting major freight terminals away from congested

city centers, and controlling the density of land

occupation (as is done in Curitiba, Brazil and

Bombay, India) could reduce travel needs. These

options are especially promising for developing

countries whose cities are not yet fully in place but

are growing rapidly, in contrast to cities of the

industrialized world, which are already largely built.

Without a carefully implemented land use planning program, however, a private vehicle-based

transport system is the likely end result by default

through ‘‘creeping incrementalism." It is easy to

add one automobile and one short stretch of road at

a time; it is much more difficult to plan a comprehensive urban transport system.54 The end result can be

an energy inefficient system that is difficult to

change (see box 5-B).

NONMOTORIZED MODES

Much of the discussion on transport in the

developing world focuses on motorized technologies—

autos, trucks, trains, buses, and motorcycles. It is

important to recognize, however, that many trips are

by nonmotorized modes-walking, animal-drawn

carts, or bicycles (see table 5-15)--used in rural

areas and by a large part of the urban poor. While

nonmotorized modes by definition do not use

transport fuels, they have many shortcomings. They

can be relatively uncomfortable under a variety of

circumstances, they are slow, and they have limited

freight capacity when compared to automobiles and

trucks .55

53s=, for exmple, P. Mo~t*~ “The State of Telecommuting, ” lnstitufe of Transportation Studies Review, VO1. 13, No. A, Au@st 1990).

However, in most developing countries labor is largely physical rather than information-related, making telecommunications of less relevance.

WM. Bermd, op. Cit., foomote 7.

ssWorld Ba~, “Gridlock Weary, Some ~n to pedal pOWer,’ The Urban Edge, vol. 14, No. 2, March 1990.
170 . Fueling Development: Energy Technologies for Developing Countries

Box 5-B—Urban Design and Transport Energy Use in North America

A private vehicle based transport system, such as that found in many U.S. cities, tends to have an urban core

with few residents and many high-rise office buildings surrounded by farflung suburbs. Because there is little

overlap between jobs and residences, most people travel relatively long distances to work; because suburban areas

have low population densities, effective and low cost mass transit systems are difficult to support and, where

available, may require driving to feeder stations. Finally, because the urban core must support a high density of roads

and parking spaces for commuters, there is less space for parks, central plazas, or other amenities. This could

encourage the flight of residents to the suburbs.

In the low density suburbs of this system, the distances between houses and shops are great leading to

dependence on private vehicles (rather than walking, bicycling, etc.) for transport to schools, shopping, and so on.

Houses are often widely scattered, with the result that water, sewage, police, fire, and other public sector services

must be extended long distances at considerable cost. Concerns of social equity could be raised, in that low suburban

densities often require private vehicles, thereby excluding those not able to afford them. On the other hand, this form

of land use has many well known attractions in terms of personal convenience, living space, and other factors.

The private-vehicle based urban design that results by default from these processes has high capital costs and

energy use. For example, per-capita fuel use for transport is four times greater for U.S. cities than for European cities

(see figure 5-2). Numerous studies have examined various problems raised by the private vehicle-based urban

design, and a number of cities in North America are now taking steps to reverse this trend. For example some 22

cities in North America now have light rail systems recently put into place, upgraded, or under construction.

SOURCES: Peter W.G. Newman and Jeffrey R. Kenworthy, Cities and Automobile Dependence: A Sourcebook (Brookfiel& VT: Gower

Publishing Co., 1989); Jeffrey Mora, “A Streetcar Named Light Rail,” IEEE Spectrum, February 1991, pp. 54-56; Transportation

Reseruch Board, National Research Council, “Light Rail Transit: New System Successes at Affordable Prices, ” Washington DC,

1989.

The bicycle plays an important intermediate role

between animate and motorized transport systems.

In Beijing, for example, bicycles are the major form

of passenger transport. Bicycles have many advantages. They do not contribute to air pollution, they

are much less expensive per unit, and (in contrast to

autos) they can often be produced domestically in

relatively small quantities—providing local employment. Providing bicycles, and the infrastructure

to support them (e.g., paved bike paths separated

from motorized traffic) may provide improved

transport to those who would otherwise walk. Such

a policy could relieve pressure on overloaded buses,

may delay or offset the transition towards motorized

forms of private transport, or may supplement

motorized transport in areas with appropriate land Photo credit: Denise Mauzerall

use planning,

Bicycles are a major form of transport in Beijing.

Rural transport needs pose particular problems.

Lack of transport services in rural areas means

delays in delivering essential agricultural inputs try. Technical improvements to cars, two and three

such as seeds and fertilizers, and inability to bring wheelers, and buses and trucks also benefit rural

harvested crops to market,56 thus frustrating in- areas, but these modes form only a small part of local

creases in agricultural productivity and rural indus- rural traffic, In India, for example, trucks account for

SsIn some regions of Ta~~ia for example, tie mdirnen~ state of the transport system has prohibited the development of cash crops. I.J. BarWell

et al., International Labor Office, World Employment Program, Rural Transport in Developing Countries (Worcester, UK: Intermediate Technology

Publications, 1985) pp. 93-108.
Chapter 5-Energy Services: Transport ● 171

Figure 5-2—Urban Density v. Gasoline Use Per Capita,

Adjusted for Vehicle Efficiency

80,0001 ,

t

Houston

1}Phoenix

Detroit

Denver

.-6

U

60,000

H

● Los Angeles =

z Boston San Francisco

a)

z

i \

Washington DC .-C

0 . Chicago

>

z

. New York

+ Brisbanet perth

u

Q) 40,000

-

\

Melbourne

z

3 . Adelaide

. -

-ua

.\ Sydney

m \

. Toronto

“: parls Zurich

o \ i \ Stockholm

& Hamburg

Lb

F ran~ Brussels

: 20,0001 ●

\<

~MuniCh London

.-c Copenhage~

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w-l West Berlin ● ‘ienna

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75 Singapore

3

E Mosco;~HOng ‘on ’

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, 1 1 1

0 25 5’0 75 100 125 150 175 200 225 250 275 300

Urban density (person per hectare)

under 10 percent of total tonnage, and bullock carts emissions associated with gasoline and diesel comfor over two-thirds. Technologies for improving the bustion. Alternative fuels offer the potential to

efficiency of animal powered transport are available, decrease the local and global pollution currently

but have diffused slowly due to the absence of rural associated with vehicles.

credit.

According to the World Bank, “motor vehicles

ALTERNATIVE FUELS cause more air pollution than any other single human

activity. The primary pollutants emitted by motor

Concern over high levels of urban air pollution vehicles are hydrocarbons (HC) and nitrogen oxides

and the high import costs of transport fuels have (NOX

), the precursors to ground level ozone, and

directed attention in developing countries to alterna- carbon monoxide. ’57 In the most polluted American

tive transport fuels—fuels not derived from crude cities, highway vehicles alone are estimated to

oil-especially those based on indigenous resources. contribute about 40 to 45 percent of the total

Such a transition is desirable, in part, because of the emissions of manmade volatile organic compounds

57A. F& et ~],, Wor]d Ba~ l~r~~~~e and Urban Development DW~men$ A~t~~~}~e Air pollution: ~ssues and OptiOrl$ f07 Developing

Countries, working paper No. 492 (Washington, DC: World Bank, August 1990), p. 14.
172 . Fueling Development: Energy Technologies for Developing Countries

(a key ingredient of smog). Although data are not

widely available, the percentages may be even

higher for a number of cities in the developing

world. Gasoline combustion also results in other

toxic emissions, including benzene, lead,58 gasoline

vapors, 1,3-butadiene, and polycyclic organic matter. Particulate emitted from vehicles cause visible

air pollution and some adverse health effects, with

diesel-fueled vehicles emitting 30 to 70 times more

particulate than gasoline. Diesel vehicles also emit

SOX and NOX

. Due to their fewer numbers, however,

diesel vehicles-in aggregate-emit less pollutants

than do gasoline vehicles.59

Vehicle emissions have not only contributed

dramatically to local air pollution problems in many

developing countries, such as Mexico and India, but

have also contributed to the global accumulation of

greenhouse gases in the atmosphere. Of all the

carbon dioxide resulting from the burning of fossil

fuels, 15 to 20 percent is estimated to come from

motor vehicles. Carbon monoxide, another vehicle

emission, is likewise a greenhouse gas and also

causes harmful local pollution.60 Vehicles account

for over 90 percent of the carbon monoxide pollution

in many urban areas. Alternative fuels, with the

exception of methanol from coal, would contribute

less to the accumulation of greenhouse gases.

Chapters 6 and 7 discuss supplies and conversion

of such fuels. Here their potential use in the transport

fleet is examined. Although alternative fuels are

often assessed as a replacement for gasoline, some

types can also be used to replace diesel in trucks and

buses. Indeed, for those developing countries with

refinery capacity, the need to find a replacement for

diesel is often more pressing than for gasoline.

Changes in product demand in past years-a more

rapid increase in demand for diesel compared with

gasoline-has led to severe refinery imbalances. As

a result, several countries have a surplus of gasoline

that has to be exported-often at distress prices.

A recent OTA report61 describes in detail the

advantages and disadvantages of alternative fuels to

replace gasoline used in private automobiles (see

table 5-22). This report summarizes some of the

issues raised in that report, and discusses issues

specific to alternative fuels applications in developing countries, particularly for diesel vehicles. The

focus is on transport fuels that can be produced from

resources found in the developing world, with

existing technology-methanol made from natural

gas, ethanol from biomass, and natural gas used

directly (either as CNG or LNG).62

Methanol is a liquid fuel that can be produced

from natural gas, coal, or biomass; natural gas

appears to be the most likely feedstock in the near

future. One major advantage of methanol is that it

would require fewer changes in vehicle design than

would some other alternative fuels. Flexible-fueled

vehicles, which can operate on methanol, ethanol,

gasoline, or a mixture of these fuels, are already

being produced in limited numbers in the United

States. 63 The use of such vehicles would ease the

transition away from gasoline, This may be less of

a problem in developing countries, however, as their

vehicle fleets are growing so rapidly and much of

their infrastructure is only now being put into

place—and could be more readily switched to

alternative fuels or flexible-fuel capability.64 Although methanol is frequently discussed as a replacement for gasoline, it can also be used to replace

diesel. The cost for diesel engine modifications to

accommodate methanol is estimated at $500 to $800

per vehicle.65

As discussed in chapter 6 of this report, the major

disadvantage of methanol is its high cost of production. The cost of methanol made from natural gas is

of course tied to the price of natural gas, but if a

5gAlthough lead is no longer a major pollutant in the industrialized countries, many developing countries still use leaded gasolbe.

59A, F~z et. ~,, op. ~lt., fm~ote 57, pp. 41, 75; U.S. con~ess, Ofilce of Tec~ology Assessment, i?eplucing cusd~~e: Alternative Fuels for

f.ighr-Dury Vehicles, OTA-E-364 (Washington DC: U.S. Government Printing Oftlce, September 1990), p. 35.

60A$ F~ et al., Op. Cit., foo~ote 57. p. 25.

61u.s. Cowss, office of Te~~olo~ Assessment, Replacing Gasoline: Alternative Fue/sfor L,ight-Dufy Vehicles, OTA-E-364 (’wt@@toq DC:

U.S. Government Printing Office, September 1990).

620~er fuels often ~scused as ~tamtives to g~~e ~d/or die,~l ~clude elec~city, LPG, ~d hydrogen,

63u,s. Congess, office of Technology Assessment, op. cit., footnote al, P. 25.

64Fo~ eXmple, ~ show ~ ~blc S-T, ~~a’s vc~clc fleet is po~g at ~ ~~ ~tc of 18.4 pmcent. ~ a new vehicles were built tO aCC0m2110<e

methanol, for example, then within about 4 years half the fleet would be methanol-fueled.

ssEnerW and Environrnen@l Analysis, klc., Op. Cit., fOObOte 17, pp. 413.
Chapter 5--Energy Services: Transport . 173

Table 5-22—Pros and Cons of Alternative Fuels

Fuel Advantages Disadvantages

Methanol . . . . . .

Ethanol . . . . . . .

Natural gas . . . .

Electric . . . . . . .

Hydrogen . . . . .

Reformulated

gasoline . . . . .

●

b

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

b

●

b

●

●

b

b

b

●

Familiar liquid fuel.

Vehicle development relatively advanced.

Organic emissions (ozone precursors) will have

lower reactivity than gasoline emissions.

Lower emissions of toxic pollutants, except

formaldehyde.

Engine efficiency should be greater.

Abundant natural gas feedstock.

Less flammable than gasoline.

Can be made from coal or wood (as can gasoline),

though at higher cost.

Flexfuel “transition” vehicle available.

Familiar liquid fuel.

Organic emissions will have lower reactivity than

gasoline emissions (but higher than methanol).

Lower emissions of toxic pollutants.

Engine efficiency should be greater.

Produced from domestic sources.

Flexfuel “transition” vehicle available.

Lower carbon monoxide with gasohol (1 O percent

ethanol blend).

Enzyme-based production from wood being developed.

Excellent emission characteristics except for potential of somewhat higher nitrogen oxide emissions.

Gas is abundant worldwide.

Modest greenhouse advantage.

Can be made from coal.

Fuel is domestically produced and widely available.

Minimal vehicular emissions.

Fuel capacity available (for nighttime recharging).

Big greenhouse advantage if powered by nuclear or

solar.

Wide variety of feedstocks in regular commercial

use.

Excellent emission characteristics, minimal hydrocarbons.

Would be domestically produced.

Big greenhouse advantage if derived from photovoltaic energy.

Possible fuel cell use.

No infrastructure change except refineries.

Probable small to moderate emission reduction.

Engine modifications not required.

May be available for use by entire fleet, not just new

vehicles.

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

Range as much as one-half less, or larger fuel tanks.

Formaldehyde emissions a potential problem,

especially at higher mileage, requires improved

controls.

More toxic than gasoline.

M100 has nonvisible flame, explosive in enclosed

tanks.

Costs likely somewhat higher than gasoline,

especially during transition period.

Greenhouse problem if made from coal.

Higher cost than gasoline.

Food/fuel competition possible at high production

levels.

Supply is limited, especially if made from corn or

sugar.

Range as much as one-third less, or Iarger fuel tanks.

Dedicated vehicles have remaining development

needs.

Retail fuel distribution system must be built.

Range quite limited, need large fuel tanks with added

costs, reduced space (liquefied natural gas (LNG)

range not as limited, comparable to methanol; LNG

disadvantages include fuel handling problems and

related safety issues).

Dual fuel “transition” vehicle has moderate performance, space penalties.

Slower recharging.

Greenhouse problem if made from coal.

Range, power very limited.

Much battery development required.

Slow refueling.

Batteries are heavy, bulky, have high replacement

rests.

Vehicle space conditioning difficult.

Potential battery disposal problem.

Emissions for power generation can be significant.

Range very limited, need heavy, bulky fuel storage.

Vehicle and total costs high.

Extensive research and development effort required.

Needs new infrastructure.

Emission benefits remain highly uncertain.

Costs uncertain, but will be significant.

No energy security or greenhouse advantage.

SOURCE: Office of Technology Assessment, 1992.
174 ● Fueling Development: Energy Technologies for Developing Countries

natural gas price of $1.00/mmBtu ($0.95/GJ) is

assumed—not an unreasonable assumption for those

countries with gas resources that are not presently

fully used—then the wholesale methanol cost per

gallon of gasoline equivalent could be at about $1.05

($0.28/liter) if production volumes are high.66This

compares with wholesale gasoline prices today in

the range of 60 to 70 cents per gallon ($0.16 to

19/liter) for crude oil at $16 to $20 per barrel.

Methanol from cheap natural gas is therefore substantially more expensive than gasoline from crude

at present, but it does have environmental and supply

security benefits. Methanol produced from coal or

biomass is thought to be considerably more expensive.67 By one estimate, manufacturing costs alone—

excluding the costs of feedstock—for methanol from

coal are about $1.00/gallon ($0.26/liter).68

Methanol could reduce air pollution, particularly

urban smog. Tests have yielded mixed results,

however, making the actual environmental benefits

of methanol difficult to quantify.69 Methanol may

reduce carbon monoxide and nitrogen oxides, and

may provide a small greenhouse gas benefit over

gasoline. Any greenhouse gas benefits are highly

dependent on the feedstock, however. Methanol

from coal, for example, would result in higher

greenhouse gas emissions.70 Methanol does have

some environmental disadvantages, particularly greater

emissions of formaldehyde, which could require

special emission controls. The liquid fuel itself is

toxic, corrosive, and highly flammable, making

methanol difficult to handle and distribute.71

Ethanol, like methanol, is a liquid fuel that can be

used with minor modifications in gasoline engines.

It can be produced from biomass—about one-third

of Brazil’s automobile fleet, for example, runs on

straight ethanol produced from sugar (see box

5-C). 72 The vehicle-related technical issues for

ethanol are essentially the same as with methanol—

it requires only minor modifications for use in

gasoline engines, but requires more complex changes

for use in diesel engines. The major issue with

ethanol is the cost of production. It is heavily

dependent on the cost of the feedstock (corn in the

United States, sugar in Brazil, molasses in Kenya)

and on the market value of the byproducts. Research

by the Solar Energy Research Institute, U.S. (now

the National Renewable Energy Laboratory) and

others into wood-to-ethanol processes is promising,

but not yet commercial (see ch. 6).73

Ethanol is used either as an additive to gasoline or

directly. As an additive, its primary environmental

benefit is a reduction of carbon monoxide. Directly,

ethanol may reduce concentrations of urban ozone,

though probably not to the same extent as methanol.

The net environmental effects of ethanol, however,

are not yet clear.74 If carefully done, ethanol would

not add to net carbon dioxide emissions.

Compressed Natural Gas (CNG) is simply

natural gas under pressure. It can be burned in

gasoline engines with minor modifications, and in

diesel engines with more complex modifications.

Natural gas is a cleaner fuel than gasoline, with

lower emissions of most pollutants. The major

drawback of CNG as a transport fuel is the difficulty

of transporting, storing, and delivering it.

The use of CNG in gasoline engines requires the

installation of gas cylinders, high pressure piping,

and appropriate fittings to the carburetor. In order to

take full advantage of CNG, the compression ratio

should also be raised to about 12:1.75 An automobile

designed for CNG would cost about $700 to $800

more than a comparable gasoline-fueled vehicle, due

in large part to the pressurized tanks.

@u.s. Cowess, ~fice of Technolo~ Assessment, op. cit., footnote 61, p. 16. Note that these are wholesale prices, exclutig @m.

671bid., p. 13.

‘Ibid., p. 78.

‘~bid., p. 61.

701bid., p. 71.

71U+S. confle~~, Offim of Tec~olo~ A~~essment, De]i~ering the Goods: Public Worh Technologies, Management and Financing, OTA-SET-477

(Washingto@ DC: U.S. Government Printing Office, April 1991), p. 101.

Tzworld Bank, “Alcohol Fuels from Sugar ti Bred, ’ The Urban Edge, vol. 14, No. 8, October 1990, p. 5.

73u.sC con~e~s, ~lce of T@~ology Assessmen~ Renewabie Energy Technology: Research, Development, and Commercial Prospects,

forthcoming.

WU.S. Congess, Offlce of TW~olom Assessment, op. cit., footnote 61, p. 108.

TSR, Moreno, Jr. ~d D. B~e~, world Ba~ ~dus~and ~er~ ~~ment,Alfernafive Transport Fuelsfiom Natural Gas, World Bti Technical

Paper No. 98, Industry and Energy Series (Washington DC: World Ba~ 1989), p. 11.
Chapter 5-Energy Services: Transport . 175

Box 5-C—Brazil’s Ethanol Fuels Program: Technical Success, Economic Distress?

Brazil has long used ethanol as a replacement fuel for gasoline. As early as 1931, Brazil used ethanol-gasoline

blends to fuel vehicles. In the early 1970s, the drop in world sugar prices combined with the 1973 jump in world

oil prices led to an expansion of ethanol production from sugar cane. The program was intended to produce a mix

of 20-percent ethanol and 80-percent gasoline. In response to the second oil price jump in 1979, the program was

changed to promote vehicles that would operate on 100-percent ethanol.

To encourage the purchase of ethanol-fueled vehicles, the government set up strong financial incentives.

Ethanol prices were initially set at 65 percent of gasoline prices, yearly licensing fees were lower for ethanol

vehicles, and generous vehicle financing was offered. Consumer acceptance was low at first, due to problems with

cold-starting and fuel system corrosion, but by 1983, 89 percent of new light duty vehicles sold used ethanol. From

1979 to 1988, ethanol’s share of total transportation fuel market jumped from 11 percent to 52 percent, and gasoline

consumption in Brazil dropped 46 percent.

The remarkable technical success of the program-fleet conversion to a domestically produced alternative

fuel-has been overshadowed by a number of economic questions. World sugar prices have increased to the point

where Brazilian sugar growers find it more profitable to export than to produce ethanol. This has led to shortages

of ethanol, and has forced Brazil to import some ethanol. Ethanol shortages at the pump have angered consumers

and led to a sharp drop in the sales of new ethanol-fueled vehicles. And domestic oil exploration has been successful,

bringing into question one of the primary motivation of the program-to reduce dependence on imported oil.

The program did reduce gasoline use, but at a cost—the economic losses of the program have been estimated

as high as $1.8 billion, although these figures remain controversial. The program did demonstrate that it is

technically feasible to convert a significant fraction of the fleet to an alternative fuel. Whether or not this was

economically desirable is less clear.

SOURCES: Jacy de Souza Mendonea, “The Brazilian Experience with Straight Alcohol Automobile Fuel,” paper presented at the Ottawa

Workshop on New Energy Technologies Transportation and Development Workshop, September 1989, p. 9; S. Trindade,

‘‘Non-fossil Transportation Fuels: The Brazilian Sugarcane Ethanol Experience,’ paper presented at the Energy and Environment

in the21st Century Conference, Cambridge, MA, March 1990, p. A-142; World Banlq “Alcohol Fuels from Sugar in Brazil, ’ The

Urban Edge, October 1990, p. 5.

Using CNG in diesel engines is more complex. Unlike methanol and ethanol, natural gas reduces

Retrofitting existing diesels to run on CNG is emissions contributing to urban smog, although it

possible but difficult. A more practical option is may increase nitrogen oxide emissions. Natural gas

modifying the design of diesels to use CNG. Buses vehicles also should contribute less to greenhouse

in Hamilton, Ontario use diesel engines redesigned gases than petroleum or coal-based transport fuels.

to use CNG; this engine is estimated to cost about 10 The lower emissions of carbon monoxide and carbon

percent more than the standard diesel engine. dioxide by natural gas compared to petroleum or

Transporting, storing, and delivering CNG will be coal may be offset, however, by methane leaks—

the major barrier to widespread CNG use, Natural methane is a potent greenhouse gas-during the

gas, unlike liquid fuels, cannot be easily moved by production and distribution of gas. Although natural

truck or ship. 76 Most developing countries do not gas presents some special handling problems, it is

have a natural gas supply infrastructure, and the neither toxic nor corrosive, unlike methanol and

construction of such a system is expensive. Using

gasoline.

the gas for other end uses, such as process heat or Liquefied Natural Gas (LNG) is natural gas that

electricity generation, would improve the economic has been liquefied by cooling it to –161 ‘C. The

attractiveness of pipeline construction. Transferring advantage of LNG over CNG is its energy density—

natural gas from a pipeline to a vehicle can also be a given volume of LNG will provide about 3 times

expensive, as a compressor is required. For fleet the vehicle range between refueling than the same

vehicles that make use of central refueling facility, volume of CNG.77 The liquefaction process is

the cost per vehicle for the compressor system will expensive, however, and the fuel must be kept at

be reduced somewhat. –160 °C to prevent boiling off. The practical

Tbunlcss it is converted to LNG.

77u,s. congress, Office of Technology Assessment, op. cit. fOOmOte 61, p. 99.
176 ● Fueling Development: Energy Technologies for Developing Countries

difficulties of maintaining these low temperatures,

along with the high cost of containers capable of

storing LNG, make LNG less promising as a fuel for

road vehicles .78 Furthermore, LNG requires an

expensive conversion process to liquefy it from

natural gas. This costs about $1 to $3 per thousand

cubic feet of natural gas, plus the process consumes

about 10 percent of the incoming gas as fuel.79

Electric vehicles are under development in the

United States, and several prototypes exist. Major

limitations are short range due to limited battery

storage, and the cost of electricity. Advanced battery

technologies, although not yet commercially available, may allow for greater energy storage and

longer battery life. Many developing countries are

now electricity-short and electric vehicles would

aggravate this problem. If in the future electricity

supplies are ample then electric vehicles may be a

more realistic option. Electric vehicles hold special

promise in congested urban areas, where most trips

are short and therefore the limited range of electric

vehicles is less of a problem.

Electric vehicles have essentially no direct emissions and therefore may alleviate urban air quality

problems. The overall contribution to pollution

depends, however, on the nature of the electricity

generation process. Electricity generated from a

coal-freed power plant will contribute significantly

to local and global pollution. Vehicles powered with

electricity from nuclear, hydroelectric, or solar

technologies, however, will generate less pollution

than conventional gasoline-powered vehicles. In any

case, electric vehicles may contribute less to urban

pollution as power plants are frequently located

outside of urban areas.

Electric vehicles may pose an additional environmental hazard, unique among the alternative fuels.

The batteries required by electric vehicles typically

have short lifetimes and present a disposal problem.

The battery technologies under development also

require special disposal procedures for production

wastes as well as for spent batteries.80

Hydrogen has been discussed as an alternative

fuel for transport. Hydrogen is an extremely clean

fuel,81 and is compatible with internal combustion

engines. The two largest barriers to widespread use

are storage and costs of production. Hydrogen has a

very low energy density. Therefore, a hydrogenfueled vehicle would require very large on-vehicle

storage tanks. Hydrogen could be produced from

natural gas or coal; however, a more environmentally appealing idea is to produce hydrogen from

electrolysis of water using renewable energy generated electricity. This would, like electric vehicles,

require an inexpensive source of electricity. Due to

its various limitations, hydrogen is a speculative and

very long term option.

CONCLUSION

The demand for transport services will continue to

grow rapidly in developing countries, driven by

population growth, economic growth, structural

change, such as the transition to urban industrial

economies, and other factors. The energy needed to

meet these transport service demands, however, can

be moderated through improvements in vehicle

technical and operational efficiencies, and shifts to

more energy efficient transport modes. Land-use

planning can also substantially reduce the underlying need for transport services and assist the

movement to more efficient modes by better matching residences with jobs, schools, shopping, and

transport infrastructures. In contrast to the industrial

countries whose infrastructure is largely in place,

developing countries are only now building their

infrastructures for the next century. Thus, they have

a particular opportunity to redirect urban growth

with appropriate incentives and disincentives towards more efficient and environmentally sound

forms.

78R. Moreno, Jr. and D. Bailey, Op. cit., fOOtllOte 75, p. 11.

79U.S, con~e~~, ~l~eof T~~ologyAssessmen~ op. cit., foomote 61, p. 103. Na~algas at the wellhead COStS about $l/million Btu, or$l/thousand

cubic feet, so the LNG process will, at a minimum, double the fuel cost.

WJ.S. Congress, Office of Technology Assessment, op. cit., foonote 61, p. 119.

slHydmgen.power~ “ehicles efit o~y water vapor and small amounts of nitrogen oxides. U.S. COngX!M, Offke of Technology ~s~sment, oP,

cit., p. 128; also J. MacKenzie and M. Walsh, Driving Forces (Washington, DC: World Resources Institute, December 1990), p. 42.
Chapter 6

Energy Conversion Technologies

Photo credit: Appropriate Ttinologies, International
Contents

Page

INTRODUCTION AND SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Introduction to the Energy Supply Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Energy Conversion Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

THE POWER SECTOR IN THE DEVELOPING WORLD:

IMPROVEMENTS COEXISTING SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Generating System Rehabilitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transmission and Distribution Systems .,...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

System Interconnections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Improved System Planning Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Improved Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Environmental Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TECHNICAL OPTIONS FOR NEW ON-GRID GENERATION . . . . . . . . . . . . . . . . . . . . . . . . . . .

Clean Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fluidized Bed Combustion (FBC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Integrated Gasification Combined Cycle (IGCC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Applications to the Developing World. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..,. . . . . . . . . . . .

Large Hydra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Nuclear Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gas Turbines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cogeneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Geothermal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Solar Thermal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fuel Cells . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Comparing the Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OPTIONS FOR RURAL ELECTRICITY SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Wind Turbines. . . . . . . . . . . . . . . . . . . . . . . . .

Photovoltaics (PVs) . . . . . . . . . . . . . . . . . . . .

MicroHydropower . . . . . . . . . . . . . . . . . . . . .

Engine Generators . . . . . . . . . . . . . . . . . . . . .

Comparing the Technologies . . . . . . . . . . . .

Grid Extension. . . . . . . . . . . . . . . . . . . . . . . . .

OIL REFINING . . . . . . . . . . . . . . . . . . . . . . . . . .

BIOMASS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gases and Electricity From Biomass . . . . .

Gas Cost Comparisons . . . . . . . . . . . . . . . . . .

Liquid Fuels From Biomass . . . . . . . . . . . . .

Box

6-A. Thermal Plant Rehabilitation in Kenya .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

,.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Boxes

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179

180

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188

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189

190

190

191

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Page

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

6-B. Opportunities for Interconnection, Regional Integration, and Joint Development

of Electricity Systems in the Developing World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

6-C. Training Programs for Utility Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

6-D. Nuclear Power in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196

6-E. Wind Turbines for Water Pumping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202

6-F. Photovoltaic Powered Vaccine Refrigerators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206

6-G. Residential Photovoltaic Systems in the Dominican Republic . . . . . . . . . . . . . . . . . . . . . . . . . . 207

6-H. Micro-Hydropower in Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208

6-I Gasifier-Engine Implementation in the Phillippines and India.. . . . . . . . . . . . . . . . . . . . . . . . . . 219

6-J. Current Gas Turbine Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
.—..—

Chapter 6

Energy Conversion Technologies

INTRODUCTION AND SUMMARY

Introduction to the Energy Supply Sector

The previous chapters analyzed the services that

energy provides to consumers in the major end-use

sectors. The analysis identified many cost-effective

and often capital-saving technical opportunities for

improving the efficiency of energy use in all sectors.

Despite these benefits, institutional problems, a

variety of market failures, and many other factors

frequently discourage the adoption of these energy

efficient technologies even when they are mature

and well known.

Even under the most optimistic assumptions

about improvements in energy efficiency, however,

energy supplies will need to increase, Rapid population growth, economic growth, and structural change

are creating a demand for energy services (see ch. 2)

that cannot be met by efficiency gains alone.

According to the U.S. Agency for International

Development, for example, approximately 1,500

gigawatts (GW) of new electricity generating capacity could be needed in the developing world by 2008.

Under an aggressive program of efficiency improvements in both the supply and demand sectors, this

growth in demand could be reduced to about 700

GW, which would still require more than a doubling

of present day capacity.l

Chapters 6 and 7 therefore turn to the ways in

which energy is supplied in developing countries—

the processes and technologies by which energy is

produced, converted from one form into another, and

delivered to users. Parallel to the analysis of end-use

sectors in chapters 3 to 5, a range of energy supply

technologies are examined, particularly in relation to

their suitability for the special circumstances and

opportunities of developing countries, the problems

that could impede their adoption, and the policy

issues involved. Many of these technologies have

also been discussed in other recent OTA reports,2 

so

the discussion here will be primarily limited to

issues of particular relevance to developing countries.

Chapter 6-the conversion sector--covers that

part of the energy sector devoted to turning primary

or raw energy, such as coal, crude oil, gas, biomass,

and other resources, into high quality forms for end

users. Currently, the major conversion processes

include electricity generation, oil refining, and, for

biomass fuels, the production of charcoal from wood

and ethanol from sugar cane (largely confined in the

developing world to Brazil). In the future, the

biomass conversion sector could expand to include

a wider range of liquid fuels, gases, and electricity.3

Chapter 7—primary energy supplies-completes

the exploration of the energy system back upstream

to its sources: the exploration and mining of fossil

fuels and the growth and collection of biomass. The

energy resources available to a country invariably

determin e the composition of its fuel supply.

Table 6-1 and figure 6-1 illustrate the current

structure of primary energy supplies in developing

countries. According to these data, biomass is the

most important fuel, closely followed by oil and

coal. There is considerable variation between countries. For example, coal accounts for 70 percent of

energy use in China and almost 40 percent in India

but is little used elsewhere. For the rest of the

developing countries, oil is the major source of

commercial primary energy. Natural gas accounts

for a relatively small share in all countries. Primary

electricity (e.g., hydroelectricity) is an important

component of the energy supply mix. A large

quantity of electricity is also generated from fossil

fuels. Developing countries meet a much higher

share of their needs with biomass and much less with

natural gas than the industrial nations. The share of

biomass in the total energy supply mix of developing

IUS. Agency for ~termtio~ Developmen~ Office of Energy, PoKer Shortages in Developing coun~les: Magnifude, ImPacts, solutions, ad the

Role of the Private Sector (Washington DC: U.S. Agency for International Development, March 1988). Foreeasts quoted here are for the medium

economic growth rate scenario.

‘See, for example: U.S. Congress, Office of Technology Assessment, Energy Technology Choices: Shaping Our Future, OTA-E-493 (Washington,

DC: U.S. Government Printing Office, July 1991),

3See ~so, us. ConWess, Office of TW~oloH Assessment, Renewable EnergJr Technology: Research, Deve[opmen(, and Commercia[ prospects

(forthcoming).

.

–179–
180 . Fueling Development: Energy Technologies for Developing Countries

Table 6-1—1985 Primary Energy Supplies (exajoules)

Primary Total Total

Coal Oil Gas electricity commercial Biomass energy

World . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88.7 104.6 58.2 33.0 284.5 36.9 321.3

Industrial countries . . . . . . . . . . . . . . . . . 63.5 77,0 51.7 26.6 218.7 5.5 224.2

Developing countries . . . . . . . . . . . . . . . 25.2 27.7 6,5 6.4 65.7 31.3 97.1

Share of industrial countries ....,. . . . . 72% 74% 89% 81% 77% 15% 70%

Share of developing countries . . . . . . . . 28% 26% 11% 19% 23% 85% 30%

NOTE: As in table 2-1, the values reported for developing country biomass are too low. Field surveys indicate that biomass accounts for roughly one-third of

the energy used in developing countries.

SOURCE: World Energy Conference, G/oba/Energy Perspectives 2000-2020, 14th Congress, Montreal 1989 (Paris: 1989).

countries generally declines as the standards of

living and the extent of urbanization rises.

The developing world as a whole produces more

energy than it consumes, and significant amounts of

both oil and gas are exported. Again, there are large

disparities among countries. Only a few developing

countries, primarily the OPEC nations, export energy; most are heavily import dependent.

Reliable and affordable supplies of energy are

critical for economic and social development. Conversely, inadequate or unreliable energy supplies

frustrate the development process. Electricity supplies in many developing countries are characterized

by disruptions, including blackouts, brownouts, and

sharp power surges. Lost industrial output caused by

shortages of electricity have had noticeable detrimental effects on Gross Domestic Product (GDP) in

India and Pakistan. Supplies of household fuels are

notoriously intermittent, leading households to install a wide range of cooking systems in order to

ensure against the shortage of any one fuel. Transportation services are similarly subject to disruption

because of unreliable fuel supplies. Unreliable

supplies of high quality fuels and electricity also

impede the diffusion of improved technologies that

are sensitive to fuel or power quality.

On the other hand, energy supply systems are

expensive to build and maintain. Capital intensive

electricity generating stations and petroleum refineries already account for a large part of all public

investment budgets in developing countries, with

electric utilities taking as much as 40 percent of

public investment in some .

4 Overall, annual power

sector investments would have to double to meet

rapidly growing demands. This would take up

virtually the entire projected annual increase in the

combined Gross National Product (GNP) of the

developing countries, leaving little for other pressing development needs. Further, a large part of the

investment in capital equipment for energy facilities

and in fuel to operate them must be paid for in scarce

foreign exchange, which is already under pressure in

many countries to service foreign debt. Similarly,

there is often a shortage of local currency to pay for

energy development due to inadequate revenues

from existing operations. The energy supply sector

also relies heavily on other scarce resources, such as

skilled labor and management, and can cause

environmental damage.

Energy Conversion Technologies

The conversion sector covers the processing of

primary-or raw-energy such as coal and crude oil

into forms (e.g., electricity, gasoline, and diesel)

required by end users. Historically, most fuels

passed from the production phase to final consumers

with minimum processing or conversion; this remains the case today in many developing countries.

As development takes place, however, an increasing

amount of processing takes place in order to make

these fuels cleaner and more effective, notably in the

share of fossil fuels converted into electricity. If

biomass based fuels are to provide an increasing

share of developing country energy supplies, they

too will have to undergo further processing into

convenient forms, such as liquids, gases, and electricity with properties that can enable them to

compete with energy products based on fossil fuels.

4u,s. ConweSS, Office of Te~~~lo~ Assessment Energy in D~e/oping Counm’es, om-&$gG (Washington ~: U.S. Government ~thlg

Office, March 1991), p. 93.
Chapter 6--Energy Conversion Technologies . 181

Figure 6-l—1 985 Energy Consumption in

Developing Countries

Primary electricity

7%

32%

fuels

Developing nations

Total ■ 97 exajoules

SOURCE: World Energy Conference, Global Energy Perspectives 2000-

2020, 14th Congress, Montreal 1989 (Paris: 1989).

The following survey of the three major conversion sectors--electricity; oil refining; and liquids,

gases, and electricity from biomass—indicates that

there are many technologies presently available or

under development to meet the rapidly growing

needs of this sector. There are problems, however, in

financing the expansion of these sectors on the scale

projected, and in improving the poor technical

performance that dogs the electricity and refining

sectors in many developing countries. These problems also could impede the timely adoption of

energy efficient equipment.

Electricity

Electric utilities in developing countries face a

rapidly growing demand for electricity, stimulated

in many cases by low, subsidized prices. With large

segments of the population typically still without

electricity, the political and social pressures for

system expansion are strong. Many utilities, however, have difficulty meeting even present day

demand. Electricity systems in many developing

countries are poorly maintained, resulting in unreliable service and frequent system breakdowns. The

operating efficiency of electricity generating equipment in developing countries-with some notable

exceptions—is often substantially below that of

industrialized countries with similar technology,

and the financial performance of many developing

country utilities is deteriorating. Management attention must often focus on short term remedial

measures, to the detriment of sound long term

planning. Industry is frequently forced into self

generation on a large scale, often with diesel

generators dependent on high-cost imported oil.

Although the electricity systems of the developing world are as diverse as the countries themselves,

several common issues underlie their frequently

poor technical and financial performance:

●

●

●

●

●

●

overstaffing, but shortages of trained manpower;

lack of standardization of equipment;

limited system integration and planning;

political and social obligations to provide parts

of the population with electricity at less than

cost;

shortages of foreign exchange to buy spare

parts; and

a regulatory framework that discourages competition,

Poor current performance raises doubts about the

ability of the system to meet the projected rapid rise

in demand even if the financial resources were

available for capacity expansion. The effective

deployment of technology will therefore depend on

addressing these related financial, policy, and institutional issues.

Given low operational efficiencies, technologies

relating to plant rehabilitation, life extension, system

interconnections, and improvements in transmission

and distribution (T&D) systems often offer higher

returns to capital investment than new generating

technologies. Plans for system expansion, reflecting

indigenous energy resources, center on coal and

hydro, followed by gas, nuclear, oil, and geothermal.

Developing counties could benefit from several

technologies in this expansion.

Fluidized bed combustion (FBC) with its greater

tolerance for low quality coal could improve plant

availability--offsetting its higher initial capital

cost—as well as reduce SOx and NOX emissions.

Combined cycle coal plants, specifically integrated

gasification combined cycle (IGCC) plants, have

much higher efficiencies than conventional coal

plants, but uncertainties remain over IGCC’s performance with lower quality coals. Gas turbines

operated in a steam injection mode also promise to

be attractive for electricity generation in the devel-
182 ● Fueling Development: Energy Technologies for Developing Countries

oping world. Gas turbines are small and modular

with short construction lead times and high operating efficiencies.5 These characteristics make gas

turbines particularly attractive to private power

producers with limited capital. Natural gas or

gasified biomass also have environmental benefits

relative to coal and oil.

Although hydropower is a viable option for many

developing countries, concerns about environmental

and social impacts are coming to the fore. Growing

knowledge of the environmental impacts of large

scale hydro projects can, however, contribute to

better project design with lesser environmental

impacts and a longer productive life for the plant.

Much of the planned expansion in nuclear power

(in countries with large systems such as South

Korea, China, and Taiwan) is based on existing

nuclear technology. Smaller, modular, and safer

nuclear power technologies under development in

the industrialized countries might extend the market

for nuclear power in developing countries depending

on their ultimate cost and performance characteristics. The technical skill requirements of nuclear

power may continue to limit its use in the developing

world, as may the larger problems of nuclear

proliferation and waste disposal.

Rural electrification is an important component of

economic and social development in the developing

world. While costs are variable, site specific, and

poorly documented, the costs of stand alone renewables--notably microhydro, wind turbines, and photovoltaics--are competitive in many cases with diesel

generators and grid extension, and in addition have

significant environmental benefits compared to conventional systems.

Thus, there are many opportunities for technical

improvement-in improving the existing system, in

system expansion, and in rural electrification-but

there are serious financial and institutional impediments. There are several ways in which the United

States might help. The United States could work

with the multilateral development agencies, which

are major providers of finance to the electricity

sector, to:

. improve the operational and financial efficiency of the sector;

● encourage the use of integrated resource management approaches, giving equal weight to

conservation and renewable as alternatives to

conventional supply expansion; and

. stimulate, through institutional and other reform, greater participation by the private sector.

Lack of training and familiarity with modern concepts of utility management could be addressed in

part through training programs and “twinning”

arrangements with U.S. and other utilities.

Oil Refining

Although there is a wide variation among countries, refinery operations in many developing nations

are substantially below international norms in terms

of efficiency and cost. Average refinery operating

costs in Africa, for example, are $2 per barrel

compared with $0.75 in the rest of the world.

A variety of technologies are available today that

can improve refinery performance. Examples of

cost-effective retrofits include heat recovery from

stack gas and recuperation of flared relief valve and

other gas. By the end of the decade, new catalysts are

expected to improve product yields. These technology improvements would increase operational efficiencies and somewhat reduce the adverse environmental impacts of oil refining.

Problems hindering investment in the rationalization of refinery operation in the developing world

include: lack of foreign exchange for parts; distorted

pricing structures and earmarked government subsidies that hide the inefficiency of the plant; global

overcapacity; and, in some countries, local markets

that are too small to support efficient equipment.

An alternative to refineries for those countries

with natural gas is methanol conversion. New

technologies permit the direct conversion of methane to methanol near the well head cheaply enough

to be used for such energy services as transport.

Biomass Fuels

Increases in energy consumption in developing

countries are spurring efforts to use domestic

resources, including biomass. If biomass fuels are to

gain consumer acceptability, however, they must be

converted into clean and convenient fuels. Biogas is,

after a rocky start, becoming an established technol5Note tit tie Opaafig efficiencies of convention~ combustion turbines are lower than many other options; in contrast, the steam-injection mode,

particularly with intercocding, provides higher efficiencies.
Chapter 6-Energy Conversion Technologies ● 183

ogy, although there are significant doubts about its

financial viability in small scale (household) applications. Small scale producer gas made from biomass is relatively low in capital cost and can produce

a moderate quality gaseous fuel at competitive

prices under a range of conditions. These gases can

be used directly for process heat or to generate

electricity. Electricity from internal combustion

engine systems fueled with biogas or larger sized

producer gas systems may now be marginally

competitive with central station power at remote

sites—if the avoided costs of transmission and

distribution are taken into account. Larger scale

biomass based gas turbine electricity generation is

nearing commercial readiness and is expected to be

competitive with many central station power plants

if adequate biomass feedstocks are available at

reasonable prices.

While liquid fuels from biomass are not competitive at the oil prices of today, current or near

commercial technologies could be competitive at oil

prices of perhaps $30 a barrel-a price that is widely

projected to be attained by the end of the century.

Technologies now under development, particularly

ethanol by enzymatic hydrolysis, may provide liquid

fuels at competitive prices in the future.

Biomass technologies offer the prospect of using

domestic resources at competitive costs. There are

other benefits as well. Together with other renewable energy technologies such as wind energy,

photovoltaics, and microhydro, these small scale

systems can bring high quality energy to rural

areas--creating jobs and providing important environmental benefits.

On the other hand, there area variety of obstacles

to the introduction of renewable. In some cases,

further RD&D are needed; subsidies to other forms

of energy may discourage their development; credit

may not be as readily available for renewable as for

other more traditional energy supply systems; and

there may be a lack of information on these

alternatives, their costs, and their benefits at the local

level. For biomass, in particular, land costs may

become too high-due to competition between

producing fuels and electricity for the wealthy

versus producing food for the poor; environmental

impacts on land and water could be excessive if

biomass is grown too intensively or poorly managed; and infrastructure needs (notably roads) for

large scale bioenergy plants could be high. The

United States could help in overcoming these

obstacles in a number of ways—through supporting

RD&D, encouraging financial institutions to lend to

such projects, and encouraging the transfer of these

and related technologies through the private sector

or by other means.

THE POWER SECTOR IN THE

DEVELOPING WORLD:

IMPROVEMENTS TO EXISTING

SYSTEMS

Electric utilities inmost developing countries face

a rapidly growing demand for electricity; many,

however, have difficulty even meeting present

demands due to poor technical, operational, and

institutional performance. Improvements in existing

electricity systems should therefore be considered

before or in conjunction with system expansion.

Options for system improvement discussed here

include:

. Rehabilitation of existing generating plants,

● Transmission and distribution systems,

● System interconnections,

. System planning, and

. Management.

Generating System Rehabilitation

The operating efficiency of the electricity generating equipment in developing countries-with some

notable exceptions—is often substantially below

that achieved in the industrialized countries, despite

the fact that the basic technology is the same. An

excellent example is the use of low speed diesels for

power generation. This technology is widely reputed

to be highly reliable, yet in developing countries

many such units are out of service for much of the

time.

Thermal efficiency is an accepted indicator of the

ability of a utility to maintain its thermal power

stations in good working order. As can be seen from

table 6-2, thermal efficiencies in some Asian countries are comparable to those achieved in the United

States. Performance in India and Pakistan, however,

is quite poor.

297-929 - 92 - 13 - QL : 3
184 . Fueling Development: Energy Technologies for Developing Countries

Table 6-2—Thermal Efficiency of Selected Electric Power Plants

Thermal

Country Fuel type efficiency

Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hong Kong..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Malaysia .,.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Typical American Plants

(with initial year of operation)

Canal, Massachusetts (1,072MW, 1968) . . . . . . . . . . . . . . . . .

Ghent,Kentucky (2,226MW, 1973) . . . . . . . . . . . . . . . . . . . . .

Pleasants, W. Virginia (1,368MW, 1979) . . . . . . . . . . . . . . . . .

Chesterfield, Virginia (1,353MW, 1952) . . . . . . . . . . . . . . . . . .

Tradinghouse, Texas (1,380MW, 1970) . . . . . . . . . . . . . . . . .

Northport, NewYork (1,548MW, 1963) . . . . . . . . . . . . . . . . . . .

oil

coal

oil

oil

oil

gas

oil

coal

brown coal

oil

oil

coal

coal

coal

gas

oil

35.4

30.6

35.3

34.5

30.0

26.0

28.8

25.9

23.8

33.8

36.4

33.5

33.0

34.8

33.0

33.8

SOURCE: international Development and Energy Associates (lDEA), lnc.’’lmproving Power Sector Efficiency in

Developing Countries:’ November 1990, OTAcxmtractor report, p. 22; based on Tbcdmo/ogyPo/ky Inthe

EnergySectoclssues, Scopeand@iorrsforDeve/oping Countries, United Nations Conference onTrade

and Development, UNCTADTIT/90, 1990. AmericanDatafrom E/attiPhnttistandPowaPrtiwtion

Expenses, 1988, Energy Information Administration, Department of Energy, DOE/EIA 0455/8.8, Washington, DC, 19S9.

A second important measure of maintenance

efficiency is the forced outage rate (FOR).7 Over

the past 10 years, there has been considerable

progress in reducing forced outage rates in those

developing countries that have had unusually high

rates in the past. In India, for example, the average

FOR for coal fired units in the 1983 to 1984 time

period was 24 percent; in 1988, the average had

improved to 16 percent.8

Over the past decade, the cost effectiveness of

generation system rehabilitation has become recognized in the United States and Europe, where a great

deal of attention has been placed on what has

become known as “life extension” or “life optimization.” The average cost of utility refurbishment

projects in the United States has been reported to be

considerably below the cost of new generating

units. 9 Improved procedures for predictive and

preventative maintenance have also contributed to

the extended life of many industrialized-country

power plants.

A number of major generation rehabilitation

projects are now underway in developing countries.

For example, a rehabilitation project in Pakistan,

funded in part by the World Bank,10 will refurbish 15

steam and combustion turbine units at Sukkur,

Guddu, Faisalabad, Quetta, and Multan.11 This

project will provide additional capacity of 120

megawatts (MW) by restoring original ratings, in

addition to improved heat rates and forced outage

rates (see table 6-3). The cost for this rehabilitation

is about $110 million. The potential for rehabilitating generation plants in the smaller systems of

Africa is illustrated in box 6-A for Kenya.

bIt might be no~d tittie use of tie plant load factor (PLF), which is often used as a yardstick for COIIIptKkOXI of the relatively poor wrfo~nce

of developing country generating units, is not a very useful measure for this purpose, since there may be sound economic dispatch reasons for a plant

not to be used for all of the hours in which it is available.

WOR is defined as (forced outage hours)/(sewice hours + forced outage hours).

80p, D~J% operation, Maintenance ~nd Re~bi/itufion Of ‘fhe~l Power plants in India (In&a: IJt@ Pradesh State Electricity Bored, 1988),

9A. Armor et al., ‘‘Utility Implementation of Life Optimization Programs,’ paper presented at the GEN-UPGRADE Conference, Washington, DC,

March 1990, table 2.

l% fact tie f’wnc~g plan, ~ is ~cremfigly me cue, involves cof~c~g by o~er entities, incIud@ the overseas Development Admllll“ “sfration

of the U.K. (ODA), USAID (from its Energy Commodities Equipment Program), and the Government of Pakistan.

I IIDEA, $ ‘Clean Coal Technologies for Developing Countries, ” contractor report prepared for the Office of Technology Assessmen4 May 1990, p.

72.
Chapter 6-Energy Conversion Technologies . 185

Table 6-3—impact of Generating Plant Rehabilitation in Pakistan

Heat rate before Heat rate after FOR a before FOR after

rehabilitation rehabilitation rehabilitation rehabilitation

Plant Btu/kWh Btu/kWh percent percent

Multan, steam/fuel oil . . . . . . . . . . . . . . . . . . . . . 12,808 11,280 13 6

Faisalabad, steam/fuel oil . . . . . . . . . . . . . . . . . 12,850 11,290 13 6

Guddu Steam/fuel oil . . . . . . . . . . . . . . . . . . . . . 13,250 11,113 10 6

Quetta Steam/coal. . . . . . . . . . . . . . . . . . . . . . . 20,850 20,850 13 8

Faisalabad gas turbines . . . . . . . . . . . . . . . . . . . 16,700 15,113 10 5

Bank, April 1990.”

Transmission and Distribution Systems

System losses are perhaps the most common

indicator used to describe the overall efficiency of

the transmission and distribution system. T&D

losses in the 6 to 9 percent range are regarded as

good. In a recent compilation of system losses by the

World Bank,12 however, few developing countries

experienced total system losses of below 10 percent.

Several other developing countries had considerably

higher losses (see table 6-4). ’3 The most common

way of measuring system losses is to compare

generation at the busbar with sales (usually obtainable from billing records). This method measures

both technical losses and nontechnical losses—

which reflect the failure of many developing country

utilities to meter and/or bill consumers and their

failure to control illegal connections.

Over the next 20 years there will likely be a

substantial effort in developing countries to reduce

T&D system technical losses. A number of power

system efficiency studies have been conducted by

the World Bank and others, and T&D system

rehabilitation has been recommended in almost all

cases. Often, the recommendations are not just for

hardware, but for technical assistance to strengthen

T&D departments.

Losses are particularly high at the end of the

distribution system, especially in low tension feeders and distribution transformers (see table 6-5).

Technical improvements to reduce T&D losses

include: providing adequate capacity in overloaded

T&D system; adding power factor correction capacitors or overexcited synchronous motors to correct

; *

Photo credit: U.S. Agency for international Development

In some cases, it may be more cost effective to improve

transmission and distribution lines than to add new

generating capacity.

12J EScay Sumnlary Data Shee[$ of ]9&’ ~oHer and Commercial Energ~~Staristics for ZOO Developing Countrie$t Indusw ~d ‘ner~ ‘eP~ment

Working Pap&, Energy Series Paper 23 (Washington, DC: World Bank, 1990).

l~one might ~xpec[ slighdy higher losses in developing counties ~in Western Emope, due [o tie lower vOl@geS and ~eater MIMber Of llld

networks in the developing world; but the loss levels shown in table 6-5 are much larger than would be considered desirable.
186 . Fueling Development: Energy Technologies for Developing Countries

Box 6-A—Thermal Plant Rehabilitation in Kenya

The Kenya Power and Lighting Co. operates a generally well run and efficient power system, serving about

170,000 customers in Nairobi and other urban centers. The Kenya Power System Efficiency Assessment found that

its main hydro plant (335 MW on the Tana River) operates with a high degree of reliability, and is relatively

trouble-free. The 2 X 15 MW Geothermal plants at Olkaria, commissioned in 1981-1982, were found to be in

‘‘exceptionally good condition, ” and operate as base-load units at their fully rated capacity.

The Kipevu thermal power station in Mombasa, however, was in need of immediate rehabilitation. The 12 MW

combustion turbine has been derated to 6 MW due to basic design shortcomings. Installation of a forced-air-finned

cooler system and forced ventilation systems would permit uprating. The condensers and sea-watercooling systems

are in severe disrepair due to corrosion and lack of proper maintenance: the cathodic protection system has not

functioned for many years. The lack of a chlorination system has resulted in extensive fouling of lines and

condensers with clams, worms, and other marine life. The 7 steam turbine units are in various stages of disrepair;

1 is no longer functional, 2 of the 12 MW units are derated to 8 and 10 MW, respectively, and even the 2 most recent

units, aged 11 and 7 years, require rehabilitation because critical monitoring and metering equipment is

nonfunctional. The costs of rehabilitating the power station are estimated at about $2.8 million, with a resulting

benefit valued at about $1.8 million per year. This is a payback of about 1.5 years.

SOURCE: IDm “Improving Power Seetor IMciency in Developing Countries,” contractor report prepared for the Ofllce of Teebnology

Assessment October 1990, p. 73.

the power factor; using low loss distribution trans- kilometers (km) or more), and increasingly has been

formers;14 and changing distribution system design.

A number of distribution configurations are used

in developing countries. The traditional European

system was designed to serve high density urban

areas of Europe: the entire system is three phase, and

is not the most appropriate for low density rural

areas. The modified European system, however,

provides good flexibility for single phase extensions

to serve lightly loaded areas. The North American

system carries a neutral wire along with the three

phase wires. Single phase lines consist of a phase

wire and an uninsulated neutral conductor, and can

be cheaper than the European systems. The single

wire earth return system uses a single conductor with

the earth as return path; it is especially suitable for

very lightly loaded systems involving long distances. The frost reported use of such a system in a

developing country is in a project in the Ivory Coast,

partly funded by the World Bank.

High Voltage Direct Current (HVDC)

used in the United States. Major HVDC projects in

developing countries are +500 kilovolts (kV) links

in China and India. The Indian project is a 900 km

link between the Singrauli minemouth generating

complex and Delhi that will provide a transfer

capability of about 1,500 MW, The Chinese HVDC

project links the central and East China Regional

Grids.

A more immediate use for HVDC in many

situations is as asynchronous links between neighboring systems that use different frequencies and

voltages. Again in India, such an HVDC link has

been made to connect the Northern and Western

Table 6-4—Technical and Nontechnical Losses

(in percent of net generation)

Total Technical Nontechnical

Sri Lanka . . . . . . . . . . . . . . 18 14

Panama . . . . . . . . . . . . . . 22 17

4

— — 5

Sudan . . . . . . . . . . . . . . . . 31 17

Capital investment in developing country trans14

Bangladesh . . . . . . . . . . . . 31 14 17

mission systems will need to increase over the next Liberia ... , . . . . . . . . . . . . 35 13 22

decade. An important innovation likely to come into Malaysia . . . . . . . . . . . . . . 28 11 17

Ivory Coast . . . . . . . . . . . . 12 8 4

more widespread use in developing countries is

HVDC. HVDC has proven economic for moving

SOURCE: M. Munasinghe et al., A Review of World Bank Lending for

Electric Power, World Bank, Washington, DC, Energy Series

large blocks of power over long distances (500 Paper No. 2, p. 60.

Idswuel F. B~dw~ ‘ ‘Energy-Efficient Electric Motor Drive Systems, ” Thomas B. JohanssoQ Birgit Bodlund, and Robert H. Williams (eds.),

Electricity: Eficient End-Use and New Generation Technologies, and Their Planning Implications (Lund, Sweden: Lund University Press, 1989).
Chapter 6--Energy Conversion Technologies “ 187

Table 6-5-Distribution of Technical Energy Losses (percent)

Madagascar Kenya Bangladesh Targeta

Power plant transformers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 0.5 0.5 0.3

Transmission lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 5.2 2.2 3.8

Substations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8 0.9 1.1 0.3

Primary lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 2.1 4.2 2.5

Distribution transformers and low tension network . . . . . . . . . . . . . . 4.2 6.3 6.0 1.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.0 15.0 14.0 8.3

p.26

regions as the initial step in the establishment of a

national grid. This link provides for the exchange of

up to 500 MW of power between the two regional

grids.

Compact Design

Transmission line research over the past decade

has indicated substantial potential for reducing

transmission line cost, lessening visual impact, and

maximizing use of existing rights of way by compact

construction involving much lower line spacings

than has been traditional practice. The most dramatic

reductions have been at the 115 to 138 kV level

where traditional clearance specifications were established long before technical requirements were

clearly understood.

In the United States, a number of 138 kV lines

have been uprated to 230 kV without any change in

either conductor or insulation system, a practice that

has been made possible because of better understanding of insulation and clearance requirements,

and the need for large design margins correspondingly diminished. Particularly in the 50 to 230 kV

range, attractive opportunities for uprating will often

exist. Voltage uprating of a line greatly increases its

load carrying capacity.

System Interconnections

The systems of India, Brazil, and China, in

particular, are not single integrated systems, but

consist of a set of regional systems, each no more

than about 10 to 15 GW in size. The Chinese system,

for example, consists of six regional grids--of

which four exceed 10 GW in size-plus seve n

provincial grids. In this respect, these countries are

similar to the United States, where individual power

pools are the basic dispatch entities. 15 While interconnections do exist for power transfers to exploit

interregional diversity, or for emergency assistance,

a national power grid for large scale transfers of

power does not yet exist.

The effects of capacity shortages and skewed

financial incentives on economic dispatch and

regional operation of interconnected systems are

well illustrated in India.

16 Regional electricit y

boards were established in India as the primary

mechanism for integrated regional operation. Each

regional board consists of several State Electricity

Boards, which are, in theory, subordinate to the

regional dispatch centers but, in practice, often resist

dispatch instructions.

17 The practice of allocating

shares in large central sector plants to individual

States creates particular difficulties, because during

peak periods States tend to overdraw power from the

central stations, which results in the frequency of the

system falling from the nominal 50 Hz to as little as

48 Hz. During off-peak hours power is dumped into

the system, resulting in frequency increases to 51 Hz

or higher. Grid management problems arise when

frequency falls outside the normal range of 50 ± 0.2

Hz, including the potential of grid collapse and

damage to large thermal and nuclear generating sets.

The difficulties of backing down local plants

during off-peak periods, even though these are less

15A de~l]cd study of ~y~tem in[ercomection issues can be found in US. Congess, Office of Technology Assessmen~ Ekcm’c pOWt?r Wheeling and

DeuZing: Techrroiogical Considerationsfor Increasing Compe~ition, OTA-E-409 (Washington DC: U.S. Government Printing OffIce, May 1989).

l% Swarup, K., ‘‘Inter-state Power Exchanges and Integrated Grid Operations Proceedings, ’ Planning for the Power Sector (Agra, India: September

1989).

17~other reason for the reluc~ce of Sta[e El~~cBo~ds to back do~ uni~ is tie in~easing UK of the PLF as a yardstick of plant pelfOITlliUICe

in IndiA the higher the Plant Imad Factor (PLF), the “better’ the performance of the plant. As noted in footnote 6, however, use of the PLF for such

purposes is questionable.
188 . Fueling Development: Energy Technologies for Developing Countries

efficient than the large central sector plants, is

largely a matter of tariffs that provide few incentives

for efficient operation. Moreover, because of financial difficulties, States are reluctant to permit net

transfers of energy for fear of not getting paid by the

recipient.

Trade in electricity among developing countries is

very small compared to that in Europe and North

America and far less than the technical and economic potential. The largest import dependency

among African countries appears to be that of

Zimbabwe on Zambia, reaching 25 percent of supply

in the early 1980’s. One major reason for the low

level of intercountry trade in electricity is the

question of payment. Exporting countries expect to

get paid in a timely way, and in foreign exchange—

not in inconvertible national currency. National

security concerns also play a role. Box 6-B describes

opportunities for interconnection, regional integration, and joint development of electricity systems in

the developing world.

Improved System Planning Procedures

In the past, power system planning in the developing world has meant finding the least expensive

generating mix to meet forecasted demand.18 Although such least-cost analysis is essential, these

methods conventionally have not incorporated demand side options and environmental impacts.

There are three basic improvements that could

enhance system planning in developing countries.

First, the analysis itself could account for uncertainty, particularly in availability of foreign exchange and in demand growth. This could help avoid

the sort of overbuilding characteristic of some

Central American hydropower facilities in the last

decade. Second, demand reduction and load management could be considered as investment opportunities and even as alternatives to new generation.

Finally, the analysis could incorporate the social and

environmental costs of power supply, which often

are not reflected in cost estimates and regulations.

In the United States, many utility- and State-level

regulators are paying considerable attention to the

need for improved system planning. Although a

single integrated approach to system plannin g has

not been agreed on, many of the utilities and State

regulators have adopted the concept of “integrated

resource planning" (IRP) (see box 3-G on IRP in ch.

3). IRP allows for consideration of both demand and

supply side investments and externalities. These

planning methods could help promote energy efficient technologies in the developing world as well.

Integrated resource planning may be particularly

appropriate for developing countries, where there

are often severe capital constraints and an untapped

potential for demand reduction. The United States

(particularly utilities and State regulatory agencies)

could help the developing countries by providing

policy advice, training, and technical assistance.

Improved Management

The issue of effective management of electric

utilities is not just one of public versus private sector

ownership, since there are many public sector

utilities throughout the world that are well run, and

private sector utilities whose technical and financial

management has been consistently poor. In the case

of government-owned entities, which applies to

most developing countries, top management of

utilities is sometimes appointed primarily for political reasons. In other cases, appointments are made

on the basis of technical competence, and managers

are held accountable in exchange for a certain degree

of autonomy.

The Volta River Authority (VRA) of Ghana is a

good example of a well run facility. The VRA was

established primarily to own and operate the 1,000

MW hydro facility at the Akosombo Dam. The 1961

Volta River Development Act requires VRA to

operate its plants according to sound public utility

practices, a requirement that has in fact been met. In

addition, the international institutions that financed

the project insisted from the beginning on high

standards of technical management. The tradition of

technical competence in management has endured,

coupled with a degree of autonomy from government interference.

Although competent management at the head of a

utility is a key condition for good performance, it

alone is not sufficient. A utility must also buildup

and maintain a competent technical staff (see box

6-C). Training is required at all levels--college level

NID. ~~, “power Sector hovation in Developing Countries: Implementing Multifaceted SOIUtiO~, “ Annual Review of Energy, vol. 15, 1990,

p. 377.
Chapter 6--Energy Conversion Technologies . 189

Box 6-B--Opportunities for Interconnection, Regional Integration, and Joint Development

of Electricity Systems in the Developing World

A 330 kV interconnection between the Ivory Coast, Ghana, Togo, Benin, and Nigeria has long been discussed.1

The Nigerian system, with a strong potential for low cost gas fired generation, would complement the hydro-based

system in Ghana. Even with the large storage capacity at Akosombo in Ghana, 2 or 3 wet years in a row necessitates

spilling, which could instead be used to produce power for export to Nigeria. On the other hand, dry years cause

serious problems for Ghana, since the 1,072 MW Akosombo project accounts for all but 50 MW of the installed

capacity of Ghana. Shortfalls could be filled in with thermal power from Nigeria.

The possibility of linking Burkino Faso with Ghana has also been examined as part of extending the Ghanaian

grid to its northern regions. For Ghana, electricity sales would generate sufficient export revenues to justify the

investment, and enable its northernmost loads to be served more economically by increasing the capacity utilization

of the grid extension. Economic analyses of this proposal indicate rates of return of about 15 percent on the cost

of the grid extension.

Although cooperation among the East African countries has been impeded for many years by political factors,

the potential for joint development of hydroelectric resources remains. Tanzania plans to develop significant hydro

capacity on the Rufiji river, and could export expected surpluses in the late 1990s. This would require construction

of a 220 kV intertie between Mombasa in Kenya and Tanga in Tanzania, and would enhance reliability in both

systems as well. In Uganda, there is a potential for 500 MW of hydro at Ayago, which could be developed jointly

with Kenya.

Two separate systems serve Pakistan: the smaller Karachi Electric Supply Corp. (KESC) and the larger Water

and Power Development Authority (WAPDA). The former is a 100 MW all thermal system serving the Karachi area

(93 percent of whose shares are owned by government) and the latter is an autonomous government body with an

installed capacity of 2,900 MW of hydro and 2,000 MW of thermal, serving the rest of Pakistan.

At present two single circuit 132 kV lines and one double circuit 220 kV line interconnect these two systems.

While exchanges between the two systems do occur, the interconnected system is still operated on the basis of

avoiding load shedding, rather than on economic dispatch of an integrated system. A recent study found that

integrated system operation could provide savings in:2

● capital costs on new generating capacity-because a larger system needs less total capacity to meet an

identical reliability criterion than the sum of two separate systems;

. fuel costs-achieved through least cost dispatch of available plants; and

● energy—achieved through more effective use of plants to reduce load shedding.

The economic analysis indicated overall benefits of about $1 billion (expressed as a present worth at lo-percent

discount rate) over the 20-year planning period, equal to about 5.7 percent of total system costs of separate KESC

and WAPDA systems. About 90 percent of the benefits are in fuel cost savings.

IS=, for ~mple, worldB@ Ghana: Issues and options in the Energy Sector, Re~rt 6234-GH ~-to~ ~: Nov-r 1986)”

2CooWr~ ~d Ly~~d, Jn~egra~ed Operatiom S~y~or WAPDA andKESC, Repofl to tie Asim Development B&(April 1990).

training 19 for electrical engineers and in-country, static precipitators (ESP) for particulate control are

on-the-job training programs, perhaps in conjunc- now routinely fitted to new coal-fired power plants

tion with utilities from the industrial countries. in developing countries: a recent survey of World

Bank financed projects indicates that over the past

Environmental Considerations decade, all such plants were so equipped. The extent

The degree to which electricity generating equip- to which such equipment is properly maintained,

ment in the developing world currently incorporates however, is not clear. If the plant as a whole is in

pollution control equipment varies. Modern electro- poor condition, ESPs may be among the first items

19co~ege level ~~g is ~f(en done at ~ti~tiom ~ &e United states or E~ope. ~ an attempt to ensue tit foreign trained IliltiOIlilk ~turn home,

some developing country institutions now require the posting of bonds prior to departure on overseas University courses to ensure returw sometimes

in amounts of as much as 3 months salary. Yet with a degree in hand, graduates discover that industrial country salaries are so attractive in comparison

that such bonds can easily be forfeited.
190 ● Fueling Development: Energy Technologies for Developing Countries

of equipment not to be properly maintained as their

failure does not require the plant to shut down.

Moreover, where ash contents are far in excess of

design norms (as is the case at many Indian plants,

for example), failure rates of ESPs will be high.

Environmental considerations are now playing a

larger role in system expansion decisions. For

example, concerns over the environmental impacts

of large hydropower development have influenced

system planning in India, China, and Brazil. Environmental issues are likely to be even more important in the future as concerns over the regional and

global environment grow.

TECHNICAL OPTIONS FOR NEW

ON-GRID GENERATION

The improvements to the existing system described above could lead to substantial increases in

supplies from existing capacity. Sooner or later,

however, additional capacity will be required.

The selection of a technology for electricity

generation is based on many factors, but a principal

factor is and will continue to be availability of the

fuel needed to power the technology. Several Asian

countries have access to coal and therefore can be

expected to continue to build new coal-fired generation. Hydropower resources in many areas, notably

Latin America, are abundant and will probably

continue to be exploited for electricity generation.

Oil is a less popular fuel for new on-grid electricity

generation due to its volatile price. Even those

developing countries with domestic oil reserves may

prefer to export their oil rather than consume it

domestically. Natural gas is still unavailable in

many areas, although the gas resource base is

considerable (see ch. 7).

Much of the planned expansion in electricity

generating capacity in the developing world reflects

these resource considerations (see table 6-6). Coal

and hydro will supply much of the expected expansion, followed by gas, nuclear, oil, and geothermal.

In this section, the technologies for expanding the

supply of on-grid electricity generation in the

developing world are reviewed. Many technologies

could potentially play a role, but the analysis here

will be limited by two principal criteria: those likely

to play a large role in near term expansion (coal,

hydro, etc.); and those playing a smaller role in

current plans but with significant environmental or

Box 6-C—Training Programs for

Utility Planning

There are several examples of successful training

programs in utility planning procedures. The training program at Argonne National Laboratory,

financed for more than a decade by the International

Atomic Energy Agency (IAEA) in Vienna, covers

many aspects of power sector planning, and has

played a significant role in raising the level of

power sector planning in developing countries. A

second example is the Brookhaven/Stony Brook

Energy Management Training Program, sponsored

for many years by Agency for International Development in Washington, whose objective was to

train energy sector planners. Some 40 percent of the

more than 350 senior individuals who attended the

course were from electric utilities. In some countries almost the entire cadre of senior energy sector

planners attended the course. The energy planning

program at the University of Pennsylvania as well

as activities of the National Rural Electric Cooperative Association (NRECA), are two more successful and well-regarded training programs.

Developing effective programs requires an institutional commitment over substantial time periods,

sufficient for adequate curriculum development and

for the planning philosophy to become established.

For demand-side management and integrated resource planning to gain widespread acceptance, a

long-term training effort must be launched. A major

training effort will similarly be necessary if new

agencies with environmental planning and regulatory functions are to be adequately staffed.

other benefits (gas turbines, renewable) and substantial long term potential. The focus is on those

technologies that are currently commercially available or expected to become so in the near future. Due

to the diversity of the developing world, it is not

appropriate to identify a specific technology as the

best for all situations; nevertheless, the analysis

identifies issues influencing the choice of technologies for electricity supply expansion in the developing world.

Clean Coal

The conventional technology for utilizing coal to

produce electricity-the pulverized coal boiler-is

reliable and technically straightforward, but results

in relatively high emissions of NOX

, SOX, particulate, and solid wastes. These pollutants can have

adverse impacts on human health, ecosystems, and
.—.—.——... .—

Chapter 6--Energy Conversion Technologies ● 191

Table 6-6-Planned Expansion in Electric Power

Facilities of the Developing World, 1989-99

Planned new capacity

Plant type (Gw) (percent)

Coal thermal . . . . . . . . . . . . . . . . . 172 45

Hydro . . . . . . . . . . . . . . . . . . . . . . 137 36

Gas thermal . . . . . . . . . . . . . . . . . 34 9

Nuclear . . . . . . . . . . . . . . . . . . . . . 24 6

Oil thermal . . . . . . . . . . . . . . . . . . 14 4

Geothermal . . . . . . . . . . . . . . . . . 3 1

Total . . . . . . . . . . . . . . . . . . . . . 384 100

NOTE: Dataref Iect official country plans, and do not reflect capital or other

constraints.

SOURCE: Worid Bank, Capita/ Expenditures for E/ectric Power in the

Developing Countries in the 1990s, Industry and Energy

Department Mrking Paper, Energy Series Paper No. 21,

February 1990, p. i.

structures such as bridges and buildings. Coal

burning also releases significant amounts of the

greenhouse gas CO2

: about 11 percent more than oil

combustion; and 67 percent more than natural gas

combustion per unit of energy output. 20

As a result of the Clean Air Act Amendments of

1977, coal burning power plants in the United States

were fit with flue gas desulfurization (FGD) or

‘‘scrubbers, ’ a technology for removing SOX fro m

the post-combustion gas stream. SOx , scrubbing

techniques currently in use include lime/limestone

and double alkali scrubbing in which SOX is captured

from the gas stream and consolidated as sludge.

Disposal of the sludge remains an environmental

problem, though in some cases the sludge can be

regenerated. There are also wet scrubbers and fabric

filters for removing particulate from the flue gas. 21

FGD is effective at removing SOX, but is expensive, reduces overall plant efficiency, and does little

to reduce NOX, C02, and other emissions. A recent

Indian study concluded that the addition of a FGD

system would increase costs per kWh output by

about 15 percent.

22 Although common in the United

States, 23 FGD is almost unknown in India and

China24 as their coals are, on average, relatively low

sulfur.

The high cost of FGD in the United States led to

a search for other methods to burn coal with reduced

emissions. The resulting technologies are often

called ‘‘clean coal’ technologies. They include

improved coal processing before combustion (see

ch. 7), improved ways to burn coal, and improved

ways to treat waste gases. Some ‘‘clean coal’

technologies offer important benefits in addition to

reduced emissions, such as greater tolerance for low

quality coal, but their major benefit is reduced

emissions and this usually comes at a cost in

comparison to conventional pulverized coal technologies.

Fluidized Bed Combustion (FBC)25

Fluidized bed combustion combines pulverized

coal with limestone particles in a hot bed fluidized

by upflowing air. Calcium in the limestone combines with sulfur in the coal to reduce SOX emissions, and the relatively low combustion temperatures also reduce NOX formation. FBC systems can

be either pressurized (PFBC--operating at about 10

atmospheres air pressure) or atmospheric (AFBC—

operating at ambient air pressure). PFBC is still in

the development stage, although there are demonstration projects running in Stockholm and in

Ohio.26 AFBC technology can be retrofit onto an

existing power plant, and appears to be quite tolerant

of low quality coals.

Many AFBC units are in operation worldwide,

including about 280 in the industrialized countries

(some for industrial use).27 India and China both

20Ufited Natio~ De~~ment of Tec~c~ Cooperation for Developmen~ Energy and Environment: ~mpucts and Controh (New York, NY: October

1990), p. 10.

Zlunited Natio~ Deptiment of Technical Cooperation for Development, Ibid., pp. 24-26.

ZZIDEA, { ‘C]ean COal Technologies for Developing CO~rnes, ’ contractor report prepared for the Office of Technology Assessment May 1990, p.

25.

~A~ of 1988, about 22% of ~o~-fu~power p~n~ in tie United S@tes us~ FGD system. U.S. Department of Energy, Assistant Secretary fOr FOSSfl

Energy, Clean Coal Technology, DOE/FE-0149 (Washington DC: U.S. Department of Energy, November 1989), p. 10.

UIDEA, ‘ ‘Clean COa.1 Technologies for Developing COUnrneS,’ contractor report prepared for the Office of Technology Assessment, May 1990, p.

25.

~For more ~omatlon on ~C tec~olo@es, see U.S. Congess, Office of Tec~ology Assessment, New Electric Power Technologies, OTA-E-246

(Wasbingtoq DC: U.S. Government Printing O&ice, July 1985).

26p~c ~dus~ Newsletter, ‘‘Clean Coal Technology, ’ No. 1, 1991.

Z?’wlorld Ba@ The Cument State ofAt~~ph~~”c F[uidi~ed-BedCo&ustion Technology, WJorld Bank Technical Papa Number 107, September 1989,

p. 13.
192 . Fueling Development: Energy Technologies for Developing Countries

Table 6-7-Costs of AFBC and PC Coal-Burning Power Plants

PC with

15 percent

Conventional PC with lower

Cost component PC AFBC FGD availability

Technology Assessment, May 1990, p. 32.

have hundreds of small AFBC bubbling bed

plants.

28 Most of the small Indian and Chinese plants

are used for steam heat rather than for electrical

generation. A few, such as the 30 MW plant in

Trichy, India, do generate electricity.

The advantages of AFBC over traditional pulverized coal (PC) technology are reduced emissions and

increased tolerance to a wide range of low quality

fuels. PC plants tend to break down when the ash in

low quality fuels melts and clogs the boiler machinery. AFBC plants have reported successful burning

of fuels with ash contents of from 4 to 40 percent,29

and AFBC can also burn rice husks and other

agricultural wastes. The costs of AFBC are thought

to be “competitive’ with PC plants, depending on

the local situation.30 A cost analysis for AFBC plants

in U.S. applications found that AFBC had lower

capital requirements and a similar cost of electricity

when burning high quality fuels, when compared to

pulverized coal with flue gas desulfurization.31 Few

plants in India or China presently use FGD, however, so this comparison may be misleading.32

The benefits associated with the greater flexibility

of AFBC can be evaluated by comparing the costs of

AFBC to those of a conventional plant burning low

quality coals. AFBC is more expensive than a

conventional (PC) plant, but less expensive than a

PC plant with FGD (see table 6-7). If the reduced

availability of a PC plant due to low quality fuel is

taken into account, AFBC becomes less expensive.

This analysis assigns no value to the reduced air

emissions of AFBC in comparison to PC. Despite

increasing use of FBC plants, they are a relatively

new, still evolving technology. There is, therefore, a

certain amount of uncertainty about the future costs

of FBC technologies.

Integrated Gasification Combined Cycle

(IGCC)33

Integrated Gasification Combined Cycle (IGCC)

combines several advanced technologies: a gasifier

that reacts coal with oxygen to produce a mixture of

combustible gases, a gas cleaning process to remove

sulfur and other pollutants from the gas prior to

combustion, a turbine that burns the gas to produce

electricity, a waste heat recovery boiler that produces steam, and a steam turbine to generate

additional electricity. Several demonstration projects in the 100 to 200 megawatts electric (MWe) size

are being designed or operated.

IGCC systems have several advantages. IGCC

plants have somewhat higher efficiencies than

conventional pulverized coal plants. Unlike most

coal-fired electricity technologies, relatively small

(100 MW) IGCC plants can be built that are similar

in cost per kW to large (500 MW) IGCC plants; and

2sS@ato~ ~vo~a, Setior Ener~ co~~tit, U.S. Agency for International Development, unpublished memor~dum+ Apr. 26! 1991”

~orldBa~ The Current State ofAtmosphencFluidzzed-Bed Combustion Technology, World Bank TeehnicalPaperNumber 107, September 1989,

.,.

p. Xvlll.

%bid., p. xviii.

slIbid., p. 52.

%?Differen~es in p~t sim ~so cornpficate tie cornp~son. -c p~@ ~Ve been built Up to 200 we in SiZe, w~e traditional pulverized COd

plants are often 300 MWe or larger.

33For mo~ ~o-tionon 1~C tec~ologies, we U,S. Congress, office of Tec~ology Assessment, New E/ecm”c Power Technologies, O’IA-E-246

(Washington DC: U.S. Government Printing Office, July 1985).

MIDEA, “clean COal Technologies for Developing Countrk%” contractor report prepared for the Ofilce of Technology Assessment May 1990, p.

54. The efficiency gain of the IGCC process comes from the use of a combined (2-stage) cycle-a concept that can also be applied to oil and natural

gas plants.
Chapter 6--Energy Conversion Technologies ● 193

Table 6-8-incremental Effects of Improved Coal Technologies Relative to a Conventional (PC) Plant Without FGD

IGCC plants have low SO2 emissions. 34 The tolerance of IGCC plants to lower quality coals is not yet

clear. IGCC plants have been operated with coals

with up to 28 percent ash content,35 but not at the ash

levels of 40 percent typical of Indian coals.

Applications to the Developing World

AFBC and IGCC technologies have higher first

costs than conventional coal plants—but they offer

several advantages, including reduced emissions,

increased efficiency for IGCC, and increased fuel

quality tolerance for AFBC (see table 6-8). Both

AFBC and IGCC are promising technologies for

those developing countries with domestic coal

reserves, though improved coal washing alone

would do much to improve plant availability and

efficiency in conventional PC plants in India and

China (see ch, 7). AFBC would allow use of lower

grade, relatively dirty coals and would result in

reduced SO2 and NOX emissions.

Coal burning technologies allow use of a vast,

inexpensive resource but have environmental impacts and costs. The use of AFBC and/or IGCC

technologies reduces both SO2 and NOX emissions,

but CO2 and the remaining NOX emissions will still

be considerable. The costs of these technologies (see

app. B, at the end of this report) are relatively high

as well, depending on plant availability and other

factors.

Large Hydro

Hydroelectric power plants currently supply a

significant fraction of the developing world’s electricity (see table 6-9). By one estimate, an additional

137 GW of hydroelectric power maybe added in the

developing world by 2000.36 Although hydropower

has many advantages, notably use of an indigenous

renewable resource, it often has relatively high

capital costs (see app. B). A number of specific sites,

such as the Narmada River project in India and the

Three Gorges project in China, are also controversial

due to adverse environmental and social impacts.

Although regions differ in their hydropower

resources, according to one estimate, less than 10

percent of the technically usable hydropower potential in developing countries has been developed.37

There are many valid reasons why this huge

technical potential is not being fully utilized. In

some cases, existing markets are too small. Zaire, for

example, has 120 GW of technical hydro potential—

about 50 times their current system capacity .38 The

estimates for technical hydro potential do not

account for costs,39 and many of the potential sites

are located in remote areas, making construction

costs unaffordably high and markets for the power

distant. Construction times can be long. Large

projects in China, for example, can require up to 7 to

sSGoverment of ~dia, ~~~of EnerW, Dep~~t of cod,IGCC Power Generation ~f)O.120 me De~nstrafion Plant Based on High Ash

lndian Cod, January 1988, p. VIII.

36E. Moore and C. Sfiti World Ba~ ~dus~ and Ener~ DWartment, Capital Expenditures for E[ec~”c power in the Developing countrieS in

the 1990s, Industry and Energy Department Working Paper, Energy Series Paper No. 21, February 1990, p. i,

3TJ, Be~ant-J~ne~, World Ba~ The ~ufure Ro/e of ~y~ropower in D~e/oping Coun~”eS, Energy Series paper No. 15, Apfl 1989, p. 15,

38 Wor]d Ba~ A $Umq of r& Future Role Of HY&Oeleem”C Power in 100 Developing COunttieS, Energy Department papr No. 17, ‘u~st 19849

Annex Il. World Bank, Summary Data Sheets of 1987 Power and Commercial Energy Statistics for 100 Developing Countries, Industry and Energy

Department Working Paper No. 23, March 1990,

3gA~ much of tie costs of hy&opowercon~~ction ~ site. spifjc and for Io@y avaj~ble ]abor ad matetis, construction COStS VW widely. The

average is typically $1,500-$ 2,000/kW. See World Bank, ibid., p. 19
194 ● Fueling Development: Energy Technologies for Developing Countries

Table 6-9-Hydroelectric Power Generation in

Developing World Countries

Hydroelectric power generation

(percent of

Country (terawatthours) total generation)

Africa . . . . . . . . . . . . . . . . . 50 18

Asia . . . . . . . . . . . . . . . . . . 241 22

Latin America . . . . . . . . . . 330 63

U.S . . . . . . . . . . . . . . . . . . . 250 10

SOURCE: International Energy Agency, Wor/d Energy Structure and

Ba/ancx?s 1971 -1987 (Paris: OCED, 1989); Energy Information

Administration, Annua/ Energy Review 1989 DOE/EIA0384(89), p. 203.

10 years for construction. 40 In many cases, these

factors constitute a major drain on developing

country economies. Other problems include seasonal fluctuations in precipitation, which may limit

plant output, and accommodating competing uses

for water.

Large hydropower can also have significant

environmental costs. Large land areas are cleared for

access, construction materials, or for the reservoirs

themselves and are then flooded. This can affect the

watershed, displace people and flood fertile agricultural land, and destroy forests and wildlife habitats.41

If the area to be flooded is not adequately cleared, the

resulting rotting vegetation can release large quantities of methane, a greenhouse gas. Environmental

problems also arise when a dam is operational. Dams

may cause detrimental downstream effects due to

changes in the level of sedimentation and flood

patterns. New reservoirs can also mean an increase

in diseases, such as schistosomiasis, which flourish

in still water.

Nuclear Power

Nuclear power currently supplies a relatively

small amount of electricity in the developing world—

less than 5 percent of total generation.42 Both South

Korea and Taiwan make heavy use of nuclear power,

and are expected to continue to do so. Several

developing countries are currently building nuclear

power plants (see table 6-10). Other countries with

nuclear power programs, including Argentina, India,

and the Philippines, have had problems similar to

those of the United States43--high capital costs,

construction delays, cost overruns, low reliability,

and concerns over waste disposal. Several countries,

including Argentina, Brazil, Mexico, Pakistan, and

the Philippines have scaled back or canceled their

nuclear power plant construction plans.%

Most existing nuclear power plants are of two

main types: boiling water reactors (BWRs) and

pressurized water reactors (PWRs). BWRs use the

heat of fission to cause water to boil, and the

resulting steam is then used to drive the turbine.

PWRs keep the primary cooling water at high

pressure to prevent boiling, and have a secondary

water system that absorbs heat from the cooling

water and generates steam, which then drives a

turbine. Both systems are in widespread use. Heavy

water reactors, which use water in which hydrogen

contains an additional neutron to moderate the

fission rate, are used in Canada, Argentina, and

India. Gas-cooled reactors, which use a gas as a

coolant, are used in the United Kingdom. Advanced

technologies, including breeder reactors and fusion,

are not currently in commercial use.

Recent R&D efforts have focused on making

reactors safer, simpler, and of a more standardized

design. These designs vary, but common features

include smaller unit size, use of so called “passive”

safety features (which do not require external power,

signals, or forces to operate), and overall simplified

design, potentially reducing costs and opportunities

for operator error.45 Data on costs and performance

however, are not yet available. The proponents of

these new technologies argue that they will offer

high performance and safety at a reasonable cost,

while others suggest that costs will be high and

‘H. Yicheng, “Relying on Reform to Speed up Hydropower Development” JPRS Reporf, Science and Technology-China: Energy,

JPRS-~N-9(P014, Nov. 13, 1990, p. 11.

416 ‘~pacts of Hy&Wlec@ic Development on the Environmen~’ Energy Policy, vol. 10, No. 6, 1982, p. 351,

42U4S. ConW~~, of fIce of T~~~logy Assessment Energy in Developing Countries, OTA-E-486 (wmgto~m: U.S. Government PIiUthlg

Office, Januaxy 1991).

43u.s. con=e~~, Office of Te~~olo~ Assessment, Nuc/ear Power in an Age of unce~ain~, OTA-E-216 (wdlitlgk)~ DC: U.S. GOV ernment

Printing Office, February 1984).

~J. Pemra, “PowerGenemtio~” South, No. 102, Apd 1989, p. 65; Jo~ Swey, ‘‘Nuclear Power: An Option for the Third World?,’ Energy Policy,

vol. 16, No. 5, October 1988, pp. 461479.

45c.w, Forsberg and A. Weinberg, ‘‘Advanced Reactors, Passive Safety, and Acceptance of Nuclear Energy, ”Annual Review of Energy, vol. 15,

1990, p. 140.
Chapter 6--Energy Conversion Technologies ● 195

Table 6-10-Status of Nuclear Power Plants in the Developing World

(as of December 1988)

Electricity y supplied by Nuclear power plants nuclear power plants

Country

under construction

(GWh) (percent of total) (MWe)

Argentina . . . . . . . . . . . . . . . . . . .

Brazil . . . . . . . . . . . . . . . . . . . . . . .

China. . . . . . . . . . . . . . . . . . . . . . .

Cuba . . . . . . . . . . . . . . . . . . . . . . .

India . . . . . . . . . . . . . . . . . . . . . . .

Mexico . . . . . . . . . . . . . . . . . . . . .

Pakistan . . . . . . . . . . . . . . . . . . . .

S. Africa . . . . . . . . . . . . . . . . . . . .

S. Korea . . . . . . . . . . . . . . . . . . . .

Taiwan . . . . . . . . . . . . . . . . . . . . .

5,100

600

0

0

5,400

0

200

10,500

38,000

29,300

11.2

0.3

0.0

0.0

3.0

0.0

0.6

7.3

46.9

41,0

692

0

2,148

816

1,760

1,308

0

0

900

0

Us. . . . . . . . . . . . . . . . . . . . . . . . . 526,900 19.5 7,689

SOURCE: B. Semenov etal.. ’’Growth Projections and Development TrendsforNuclear Power.’’ lAEABulletin, vol. ,

31, No.3,1989, p.7.

reliability low. Historically, nuclear power systems

have cost more and operated at lower capacity

factors than anticipated, suggesting that it maybe

appropriate for risk-averse potential users of nuclear

power with limited capital to wait for these systems

to operate commercially, thereby demonstrating

their cost and performance characteristics.

There are several issues related to nuclear power

in the developing countries that differ from those in

the industrialized countries. These include scale,

technical skill requirements, environmental constraints, and proliferation.

. Scale: it is sometimes argued that nuclear

power is too large for developing countries, If

the rule-of-thumb that no single facility should

supply more than 10 percent of total system

electricity is used, then a 600 MW nuclear

power plant would be appropriate only for

systems 6,000 MW or larger, According to

official capacity expansion plans,% over 20

developing countries will have systems this

size or larger by 1999. Although the World

Bank projections are essentially a ‘‘business-asusual’ scenario, excluding aggressive efficiency improvements, it appears that 600 MW

power plants, nuclear or otherwise, are not

oversized for at least the larger developing

countries. Moreover, the new nuclear plants

●

●

●

currently under development are expected to be

about 150 MWe in size, making them a feasible

size for some smaller countries as well.

Technical Skill Requirements: Nuclear technology is complex, requiring a high level of

skilled personnel. Few developing countries

currently have sufficient domestic training

facilities to produce these personnel, and would

therefore be dependent on other countries for

both the equipment and the operation of nuclear

power plants. This could further aggravate

foreign debt problems. This is not true for those

countries, like China, that have considerable

experience with and infrastructure for nuclear

technologies (see box 6-D).

Environmental Aspects: Nuclear power releases little of the air pollution associated with

fossil fuel combustion. Every stage of the

nuclear fuel cycle, however, poses the risk of

releasing radioactive pollutants. Wastes vary

from mining dust with a low level of radiation

to the highly radioactive spent fuel rods,

requiring careful handling and long term disposal strategies.

47 The probability of a large

scale nuclear accident—such as Chernobyl—

may be small, but poses serious implications

for the environment and human health.

Proliferation: Concern over nuclear weapons

proliferation limits the attractiveness of export46E. Moore and G. s~~ World B* ~du~~ and Ener~ D~artmen4 Capital E~e~i~res for Elecrn’c power in the Developing COUnfiieS in

the 1990s, Industry and Energy Department Working Paper No. 21, February 1990, p. 49.

47Ufit~ Natiom Dep~ment of Te~~~ Cwpaation for Development, Energy and Environment: ~~pacfs ad Conmols (New York, ~: october,

1990), p. 33.
196 ● Fueling Development: Energy Technologies for Developing Countries

ing nuclear power technologies. The links

between nuclear power and nuclear weapons

are subject to some dispute, but the basic issue

is straightforward. Nuclear power requires

nuclear fuels, facilities to process them, and

trained personnel, and these facilities hypothetically could be used to produce nuclear weapons.

48 India’s first demonstration of a nuclear

weapon, detonated in 1974, was believed to be

derived from research facilities.49 More recently, the discovery of Iraq’s nuclear weapons

program has cast serious doubts on the ability

of the existing nonproliferation regime or even

much more stringent criteria50 to control the

spread of nuclear weapons.51

Gas Turbines

A basic gas turbine is a conceptually straightforward device. Air is compressed and then mixed with

natural gas. The mixture is ignited, and the expanding hot gas turns a turbine. The turbine drives both

the air compressor and an electric generator.

Gas turbines have long served as peaking power

plants for electric utilities in the United States. A

number of innovative technologies have increased

the efficiency of gas turbines from about 25 percent

for a standard gas turbine52 to up to 47 percent for the

most advanced turbine systems using steam injection and other improvements.53 These efficiency

improvements are lowering costs to the point that

gas turbines are no longer necessarily limited to

peaking. Gas turbine costs are also relatively insensitive to scale,54 and therefore can be sized to meet

relatively small loads with only a modest cost

penalty.

Box 6-D—Nuclear Power in China

China suffers from severe power shortages, and

coal and hydropower reserves, although plentiful,

are expensive to use, aggravate environmental

problems, and are located far from population

centers. China, unlike other developing countries,

also has a relatively large and experienced nuclear

industry. These factors have led to ambitious plans

for nuclear power generation. As with other technologies, China has shown a clear preference for

domestic production over imports. In the case of

nuclear power, China is both importing selected

technologies where necessary while also working to

develop indigenous production capabilities.

China’s first nuclear power plant was a 300 MW

PWR reactor using mostly indigenous technology

located near Shanghai. Two 900 MW units, using

imported technology, are under construction in

Daya Bay. It is expected that much of the electricity

from these units will be sold to Hong Kong. Also

planned are two 600 MW units using domestic

technology and two 1,000 MW units using Soviet

technology.

SOURCES: Foreign Broadcast Information Service, JPRS Repo~ Science and Technology+-China: Energy,

JPRS-CEN-89-005, My 17, 1989. Y. Lu, “The

Prospects and Economic Costs of the Reduction of

the C02 Emissions in the PRC,” presented at the

Global Climate Change: The Economic Costs of

Mitigation and Adaptation Conference, Dec. 4-5,

1990, Washington DC. U.S. Congress, Office of

Technology Assessmen6Energy Technology Transferto China, ATechnical Memorandum, O’IA-TMISC-30 (Washington DC: U.S. Government Printing Office, September 1985).

One effective modification to the basic gas

turbine is to use its hot waste gas to heat water and

power a separate steam turbine. This combined cycle

As~oMeration conce~ me discussed in more detail in U.S. Congress, Office of Technology Assessmen~ Energy Technology Trumfer to China,

OTA-TM-ISC-30 (TVashington, DC: U.S. Government Printing Office, September 1985); U.S. Congress, Office of Technology Assessmen4 Nuclear

Power in an Age of Uncertainty, OTA-E-216 (Washington DC: U.S. Government Printing Oftlce, Febrwq 1984), pp. 200-203; U.S. Congress, Office

of Technology Assessment, Nuclear Proliferation and Safeguards (New York: Praeger Publishing Co., June 1977).

49u.s, Consess, Office of Technology Assessment, Nuclear Power in an Age of Uncertainty, Ibid., p. 2~.

50R,H. Wlllims and H*A Felveso~ “Diversion-R esist~ce Cfitel-ia for Future Nuclem Power, ” Center for Energy and Environmental Studies,

Princeton University, May 26, 1989.

SIR. Jeffrey Smiti ‘‘~q’s Secret A-Arms Effort: Grim Lessons fOr the World,’ The Washington Post, Aug. 11, 1991, p. Cl; see also, George W.

Rathjens and Marvin M. Miller, “Nuclear Proliferation after the Cold W~,” Technology Review, August/September 1991, pp. 25-32.

52Elm~c power Rese~ch Imtitu[e (Ep~), TAG-T~Chnica/ ASseS$~enf Gu~&, E/ectrici~ SUpp/y 1989, Epw P-6587-L (pdo ~to, CA: EIwtric

Power Research Institute, September 1989), p. 7-56, average annual heat rates. All heat mtes given here Me m~sured at ~gher heat~g value (HHW,

that is they include the latent heat of condensation of the water produced.

5qNa~al gm f~ed IS~G. See R wilfi~s ad E, ~so~ ‘‘Expan~g Roles for Gas ~bines ti power Generatio~’ ‘rhOIMS B. Johansson, Birgit

Bodlund, and Robert H. Williams (eds.), Electricity: Eficient End-Use and New Generation Technologies, and Their Planning Implications (Lund,

Sweden: Lund University Press, 1989), p. 524.

‘Ibid., p. 515.
Chapter 6---Energy Conversion Technologies ● 197

process increases overall efficiency but at an increased capital cost (see app. B).55 Construction can

be phased, whereby the gas turbine can be built and

operated, and the steam turbine added when needed.

Alternatively, the hot waste gas from the gas

turbine can be used to heat water and the resulting

steam injected directly back into the turbine. Again,

this increases efficiency, but at some increase in

capital cost (see app. B),56 Several steam injected

gas turbines, or STIGs, are already in use for

industrial cogeneration.57 Further modifications, such

as intercooling, increase the efficiency even more,58

but costs are uncertain.

Gas turbines are a promising technology for the

developing world. As discussed in chapter 7, many

developing countries have untapped natural gas

reserves that could be a supply for future electricity

needs. Gas turbines have a relatively low initial cost,

and when combined with low cost domestically

produced natural gas could produce electricity at a

low total cost. Gas turbines can be sized to fit a wide

range of needs, and there is little cost penalty for

installing smaller units. Construction times can be

quite short-less than 1 year.59

The technological sophistication of advanced gas

turbines poses potential difficulties in maintenance

for developing countries, but these could be overcome if modular aircraft derivative turbine designs

are used. In this case, spares could be kept at a central

regional facility and quickly transported to the site

and swapped for a turbine needing maintenance.

Concerns over air quality and global warming

also favor gas turbines, as they give off little SOX and

up to 60 percent less CO2 per kWh produced than

coal-fired plants.60 NOX emissions, however, are a

continuing concern: technologies for reducing NO=

emissions, such as water or steam injection, are

being explored.

Cogeneration

Cogeneration is the combined production of

electric or mechanical power plus thermal energy in

a single process and from the same primary energy

resource. A typical cogeneration system will produce electricity for running factory motors or for sale

to the electric utility grid, and at the same time use

the waste heat from electricity production to provide

process heat for the plant or, in some cases, to be sold

to neighboring industry, commerce, government

buildings, or residential housing for heating. The

passage of the Public Utility Regulatory Policies Act

(PURPA) in 1978 has led to a substantial increase in

cogeneration in the United States with large sales of

privately cogenerated or otherwise produced electricity to the utility grid.61

Cogeneration is also heavily used in some developing countries. In China, for example, 4.6 GW of

steam extraction turbines for cogeneration were on

line in 1980, representing 11 percent of all steam

turbine units. The thermal output from central

station power plants used for cogeneration totaled

about 11 percent of total national heating demand;

85 percent of this was used for process heat, 15

percent for space heat. For example, roughly 7

percent of building space heating in Beijing is

supplied by cogeneration facilities.62

Yet cogeneration faces substantial obstacles in

many countries. 63 In India, for example, many state

55El=~c power Re~~Mch ~ti~te ~p~), TAG.Te~hni~~/ A~~e~~~e~~ Gui&, E/ecfn”cjty .$upp/y 1989, I?PRI P-6587-L (Pdo ~to, CA: El~tric

Power Research Institute, September 1989), p. 7-61.

‘Ibid.,, pp. 7-57.

57R wfl~~and E, ~sou C’Expand&g Roles for Gas ~rbines ~ power Generatio~” Thomas B. JOlUUMSO~ B@it Bodlund, and Robert H.

Williams (eds.), Electricity: Eficient En&Use and New Generation Technologies, and Their Planning Implications (Lund, Sweden: Lund University

Press, 1989), p. 529.

Sgfbid., p. 531.

5~lW~c power Resemch ~ti~te @p~), TAG-Technica/ As~essmenr Guide, E/ecrn”city supply 1989, EPRI P-6587-L (pdo Alto, CA: E1ectic

Power Research Institute, September 1989), p. 7-58.

-orISTIG. R. Williams and E. Larson, ‘‘Expanding Roles for Gas Thrbines in Power Generation” Thomas B. JohanssorL Birgit Bodhmd, and

Robert H. Williams (MIs.), Electn’city: Eficient End-Use and New Generation Technologies, and Their Planning Implications (Lund, Sweden: Lund

University Press, 1989), p. 539.

61u,s. Conwess, Offlw of Te~hnolo~ A~SeSS~ent, ]ndustn”al ad co~ercial Cogeneration, oTA-E-lqJ (Washingto~ DC: U.S. Government

Printing Office, February 1983).

62Qu Yu, “Cogeneration in the People’s Republic of China,” The Energy Journal, vol. 5, No. 2, 1984, pp. 133-137.

63* OTA rew~ ~ex~ed ~my of tie issues surround~g cogeneratio~ U.S. Congress, OffIce of Technology Assessment, Industrial and

Commercial Cogeneration, OTA-E-192 (Washington, DC: U.S. Government Printing Oftlce, February 1983).
198 ● Fueling Development: Energy Technologies for Developing Countries

Table 6-1 l-Geothermal Electricity y Generation in Developing Countries (1990)

Geothermal capacity

Country (MW) Technology

Philippines . . . . . . . . . . . . . . .

Mexico . . . . . . . . . . . . . . . . . . .

Indonesia . . . . . . . . . . . . . . , .

El Salvador . . . . . . . . . . . . . . .

Nicaragua . . . . . . . . . . . . . . . .

Kenya . . . . . . . . . . . . . . . . . . .

Argentina . . . . . . . . . . . . . . . .

Zambia . . . . . . . . . . . . . . . . . .

894

725

142

95

70

45

<1

<1

Single flash

Dry steam, single flash, double flash

Dry steam, single flash

Single flash, double flash

Single flash

Single flash

Binary

Binary

Us. . . . . . . . . . . . . . . . . . . . . . 2,827 All

SOURCE: R. DiPippo, ’’Geothermal Energy;’ on Proceedings of the Enwgyati Environment in fhe21st Century

Conference, Mar. 26-28, 1990, Cambridge, MA.

electricity boards may refuse to take privately

generated power at all; others may impose a sales tax

on self-generated electricity; some may decrease the

maximum power available to industries with on-site

generation capabilities, and then may be reluctant to

provide backup power for occasions when the

cogeneration systems are down.64 Responses to

these barriers include requirements for state electricity boards to purchase self-generated power at

reasonable-i. e., avoided cost with some small

adjustments—rates as in the United States under

PURPA regulations; the development of generic

contract forms for cogeneration arrangements with

state or national grids; and the provision of backup

power.

Geothermal 65

Heat inside the Earth can be used to produce

electricity. Worldwide geothermal generating capacity, which includes several developing countries,

is almost 5 GW (see table 6-11).66 Recent technological advances may allow for the expanded use of

geothermal energy. Worldwide geothermal resource

estimates are very uncertain and must generally be

quantified locally by drilling wells (see table 6-12).

Technologies for utilizing geothermal resources

include direct steam, single-flash, dual-flash, and

binary systems. The simplest technology is direct

steam, in which steam is piped directly from

underground reservoirs and used to drive turbines.

The initial capital cost of a direct steam geothermal

unit is estimated at about $1,100/kW.67 Single-flash

units are quite similar, except they make use of

underground hot water that is “flashed’ into steam.

Most existing geothermal plants are direct steam or

single-flash. A dual-flash system uses a second

flash-tank to capture energy that would otherwise

not be utilized. This can increase the overall

efficiency by up to one-fifth, but at a somewhat

higher cost--capital costs for dual-flash units are

estimated at $1,600 to 1,900/kWe.68 Several dualflash systems are currently operating.69

A new technology of special relevance to developing countries is the binary cycle unit. This

technology uses an intermediate working fluid to

transfer energy from the geothermal resource to the

turbine. This allows for the use of relatively low

temperature resources, typically 170 to 180 °C.70

Binary plants can be quite small (typically 5 to 10

MWe) and can be erected and operated in as little as

~~ad FfirtK@ d ~V “Application of Demand-Side Management to Relieve Electricity Shortages in India,’ contractor report prepared for the

OffIce of Technology Assessmen4 April 1990.

65~s ~scus~ion does not ~clude geop~ssw~ or hot d~ rock resomc~, as these reso~ces cannot be utiiz~ for electricity generation with eXiS~g

technology.

fiR. DiPippo, “Geothermal Energy: Electricity Production and Environmental Impact A Worldwide Perspective,” paper presented at the Energy and

Environment in the 21st Century Conference, Cambridge, MA, Mar. 26-28, 1990, p. DKU-21.

67ElW~c Power Resemh ~ti~te @pRr), TAG-Technica/ A~~e~~ment Guide, Efectn”cify S~pply 1989, EPRI P-6587-L (Pdo Alto, CA: E1ectic

Power Research Institute, September 1989), pp. 7-73.1990 dollars.

68U.S, Conwess, offIce of Technology Assessment, New E/ec~ic Power Technologies, OTA-E-246 (WaShiXIgtOC DC: U.S. Government ~t@

Office, July 1985), p. 99, in 1990$. These costs do not include costs to extractj pump, transport, or reinject the water/steam.

@For a more de~~ discussion of the dual-flash technology, see ibid., p. 97.

70The Heberb@<ycle demons~tionp~nt ~ Nofiem C~ifornia makes use of bfie at 170180 ‘C. S= Elec@ic Power Research Institute ~~,

TAG-TechnicalAssessmenr Guide, Elecfriciry Supply 1989, EPRI P-6587-L (Palo Alto, CA: Electric Power Research Institute, September 1989), p. 7-75.
Chapter 6--Energy Conversion Technologies ● 199

Table 6-12-Geothermal Resources Suitable for Electricity Generation

in Selected Developing Countries

Geothermal Geothermal

electric power

Country

electric power

potential (GW) Country potential (GW)

China . . . . . . . . . . . . . . . . . . . .

Indonesia . . . . . . . . . . . . . . . .

Peru . . . . . . . . . . . . . . . . . . . . .

Mexico . . . . . . . . . . . . . . . . . . .

Chile . . . . . . . . . . . . . . . . . . . .

Ethiopia . . . . . . . . . . . . . . . . .

Ecuador . . . . . . . . . . . . . . . . .

Brazil . . . . . . . . . . . . . . . . . . . .

Kenya . . . . . . . . . . . . . . . . . . .

Colombia . . . . . . . . . . . . . . . .

160

130

86

77

54

50

30

29

24

23

Bolivia . . . . . . . . . . . . . . . . . . .

Philippines . . . . . . . . . . . . . . .

Venezuela . . . . . . . . . . . . . . . .

Vietnam . . . . . . . . . . . . . . . . .

Nicaragua . . . . . . . . . . . . . . . .

Chad . . . . . . . . . . . . . . . . . . . .

Zambia . . . . . . . . . . . . . . . . . .

Guatemala . . . . . . . . . . . . . . .

Korea . . . . . . . . . . . . . . . . . . .

Us. . . . . . . . . . . . . . . . . . . . . .

22

20

12

11

10

9

8

7

7

150

100 days. 71 Costs for a large (54 MWe) plant are

estimated at about $l,800/kWe72, smaller plants are

estimated to cost $1,800 to $2,400/kWe.73 Other

costs associated with geothermal energy include

drilling wells, pumping, and reinfecting water.

These costs are heavily site dependent, but are

estimated at 2.4 to 8.5 cents/kWh.74

The major advantages of geothermal technologies

are its use of an indigenous resource (see table 6-12),

its lowland requirements, and, if modular technologies such as binary systems are used, short construction lead times.

The major constraints on greater use of geothermal resources for electricity production are resource

limits and costs. Although geological studies can

help to locate geothermal potential, this resource can

only be quantified by expensive drilling.75 The

subsequent resource extraction also requires technical expertise and can be costly. Finally, geothermal

energy can be depleted if oversubscribed, as has

occurred at The Geysers in northern California.76

The environmental effects of geothermal power

include CO2 and H2S emissions and high water

consumption. The CO2 emissions are dependent on

the CO2 content of the resource, but are on average

about 5 percent of the CO2 emissions of a coal plant,

per kWh output. H2S emissions are regulated in the

United States to 30 parts per billion. There are

several H2S control technologies in use in the United

States, while many other countries do not currently

control H2S emissions. Binary technology has no

emissions of CO2 or H2S. Water requirements vary,

depending on the plant design. Large binary plants

can require as much as five times as much water, per

kW, as a coal plant. Small binary plants, however,

can use air-cooled condensers.77

Site specific environmental problems can include

subsidence of land overlying wells; contamination

of water supplies by saline (and sometimes toxic)

geothermal fluids and reinfected water; and the

generation of surplus high temperature liquid effluents containing metals and dissolved solids.78 These

problems can be controlled.

71u.s. conge~~, Office of TeA~~l~~ A~~e~~rnen~ New Elec@i~ POWCT Technologies, OTA-E-Z46 (wMhin@oL DC: U.S. ~vernrnent ~~

OffIce, July 1985), p. 101. This does not include the time required to locate or tap the resource.

72Elm~c Power Res~~h ~ti~te ~),TAG-Technica/ Assess~nt G~i~e, E/ectrici~ ~upp~y ]9S9, EpM P-6.587-L, (pdo ~to, CA: El~hic

Power Research Institute, September 1989), pp. 7-73.

73u.s. conwe~~, Office of T~~ology ~se~~mm~ New Ele~@ic power Technologies, OTA-E-~(wti@O~ DC: U.S. GOV ernrnent Printing

~1~, July 1985), p. 102, in 1990$.

741bid., p, 309.

TSBY one es~ate, geo~e~ ~Mg COSLS in Kenya are roughly $250/foot. From E. Eli~son! “Geothermal Conversion and Its Role,” paper

presented at The Advanced Technology Alert System Meeting on New Energy Technologies, Moscow, U. S. S.R., October 1988, p. 8.

TbRichard A. Kerr, “Geothermal Tragedy of the Commons,” Science, vol. 253, No. 5016, pp. 134-135, July 12, 1991.

77R. DiPippo, “Geothermzd Energy: Electricity Production and Environmental Impact A Worldwide Perspective, ” paper presented at tie Energy and

Environment in the 21st Century Conference, Cambridge, MA, Mar. 26-28, 1990, pp. DIIL13, DIIL16.

78u.s Con=ess, Offlce of TW.olo~ Assessment, Energy in f)e},eloping countries, OTA-E-486 (wmhingto~ DC: U.S. Government Prhl@

Office, Januag 1991), p. 130.

297-929 - 92 - 14 - QL : 3
200 ● Fueling Development: Energy Technologies for Developing Countries

Solar Thermal Table &13-Solar Radiation in Selected Countries

Solar thermal electric technologies use sunlight to

heat a fluid, and then use the hot fluid and steam to

turn a turbine that generates electricity. The parabolic trough is the most mature of the solar thermal

electric technologies. Parabolic troughs are long

channels that focus sunlight onto a pipe at the center,

heating a liquid (oil, water, or brine) that is then used

to heat steam, powering a turbine generator. Several

hundred MW of solar thermal electric capacity using

the parabolic trough design is now in place in

California. These systems are gas and solar hybrids,

with the gas supplementing solar radiation at night

or during cloudy periods.79 Other technologies

include parabolic dishes and central receivers. Their

costs and performance, however, remain uncertain.80

Although the costs for solar thermal electric

technologies remain somewhat higher than conventional fossil steam plants, they have been declining

in recent years due to improvements in the technology gained largely through demonstration projects

in southern California.81

Off-grid generation of electricity through solar

thermal-electric technology has yet to be demonstrated, but such an application is thought possible .82

The modular nature of the technology could lessen

problems of economies of scale that often inhibit

electrification in developing countries. For many

developing countries, the abundance of sunshine and

the potential for off-grid generation make these

technologies promising. Since the areas with the

highest incidence of solar radiation tend to be dry

and hot (see table 6-13), water used as a transfer

medium or to operate the turbine generator may be

a scarce resource. Without further research, development, and demonstration, however, these technologies may not be cost effective for grid applications

in many developing countries in the near term.

Solar radiation

Region (kWh/m2

/year)

Mali. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Niger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sierra Leone . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,490

2,450

2,080

2,000

2,000

1,950

1,880

1,630

SOURCE: California Energy Commission, Renewable Energy Resources

Market Analysis of the WorM,P50G87-015, pp. 14-16. Average

annual horizontal insolation.

Fuel Cells

Fuel cells are another promising future electric

power source for developing countries. Fuel cells are

conceptually similar to a battery in that they convert

chemical energy in a fuel to direct current electricity,

achieving high efficiencies (40 to 60 percent, and 85

percent with cogeneration83) with low emissions.

The cells are modular and can be sized to fit different

and changing applications. This highly sophisticated

technology is still being developed and is just

beginning to see commercialization in industrialized

countries. Further commercial experience is needed

to resolve some of the uncertainties about cost and

performance before fuel cells can be used with

confidence in developing countries.

Comparing the Technologies

I-f choice of technology were based solely on the

levelized costs of generation, abstracting from site

specific factors that can strongly influence the costs,

then many technologies are available within the

same broad cost range (see figure 6-2 and app. B at

the back of this report). Even some of the highest

cost options, such as decentralized renewable, may

still be competitive in many situations as they avoid

transmission and distribution losses and costs.

T9u.s. Dep~rnent Of Ener~, solar tier= Research Institute, The Potential of Renewable Energy: An Interfaboratory White Paper, RCIXXI No.

SERVI’P-260-3674 (Goldem CO: Solar Energy Research Institute, March 1990), p. E-1; Electric Power Research Institute @pRI), TAG-Technical

Assessment Guide, Electricity Supply 1989, EPRI P-6587-L (Palo Aito, CA: Electric Power Research Institute, September 1989), p. 7-82.

80C~le~ Y. Werek&Brobby and Fredefick 0.~o,Solar Power Genera~on: Stares andprospectsforDeveloping countries, unpublished pa~r

(October 1988), p. 24, table 3.

81u.s. Dep~ment of Enm~, Solm ~ero Rese~ch ~ti~te, The Porentia/ Of Renewable Energy: An ]nrer/abOrafOry White paper,

SEIWIT-260-3674 (Goldeu CO: SoIar Energy Research Institute, March 1990), p. E-6.

821bid., p. E-5.

ggFr~ Kemp, program IVIMIager, International Fuel Cells, presentation to the Office of Technology Assessment, my 22, 1991.
Chapter 6--Energy Conversion Technologies . 201

Figure 6-2—Levelized Costs of Electricity

Generating Technologies (1990)

Levelized costs (cents/kWh, 1990)

40 r—-— I

I

ABCDEF GHIJ KLMNOPQ

Technologies A-Q are described in app. B. Technologies A-F are

conventional technologies: A = hydroelectric power; B = natural

gas-fired steam plant; C = oil-fired steam plant; D = coal-fired

steam plant; E = diesel engine generator; F = combustion turbine.

Technologies G-J are improvements to existing technologies: G

= distillate-fired combined-cycle plant; H = natural gas-fired

steam-injected gas turbine; I = coal-fired fluidized bed; J = natural

gas-fired advanced combustion turbine run on a simple cycle.

Technologies K-Q are innovative technologies: K = binary

geothermal; L = advanced nuclear; M = integrated gasification

combined cycle; N = wind turbine; O = solar thermal/natural gas

hybrid; P = fuel cell; and Q = photovoltaic. Note that these costs

do not include other costs associated with operations on a

systemwide basis. See app. A and app. B for details.

SOURCE: U.S. Congress, Office of Technology Assessment, 1992. See

app. B for more detail.

The initial capital cost of the different technologies is an important factor for many developing

countries, With capital costs, the range is much

wider; gas turbine and oil combined cycle are on the

low end and hydro and nuclear are on the high end

(see figure 6-3). Though developing countries generally are capital constrained, the electricity sector

may be less affected than others due to the availability of relatively low cost public sector funds for

supply expansion. If the role of private generators,

-dependent on raising funds from local markets—

grows, initial capital costs may become of mounting

importance in technology choice.

Technology choice is also affected by the resource

and other characteristics of the individual country.

Most countries will wish to adopt technologies that

use domestic resources, especially when these resources (e.g., coal and hydro) are of limited commerFigure 6-3-Capital Costs of Electricity y Generating

Technologies (1990)

‘~

Capital costs ($/kW) (thousands)

6-

5-

4-

3-

2-

1-

0 Uhlll

ABCDEF GHIJ KLMNOPQ

Technologies A-Q are described in app. B. Technologies A-F are

conventional technologies: A = hydroelectric power; B = natural

gas-fired steam plant; C = oil-fired steam plant; D = coal-fired

steam plant; E = diesel engine generator; F = combustion turbine.

Technologies G-J are improvements to existing technologies: G

= distillate-fired combined-cycle plant; H = natural gas-fired

steam-injected gas turbine; I = coal-fired fluidized bed; J = natural

gas-fired advanced combustion turbine run on a simple cycle.

Technologies K-Q are innovative technologies: K = binary

geothermal; L = advanced nuclear; M = integrated gasification

combined cycle; N = wind turbine; O = solar thermal/natural gas

hybrid; P = fuel cell; and Q = photovoltaic. Note that these costs

do not include other costs associated with operations on a

systemwide basis. See app. A and app. B for details.

SOURCE: U.S. Congress, Office of Technology Assessment, 1992. See

app. B for more detail.

cial value in other uses. In some cases, however,

development of domestic resources may be limited

by their inaccessibility. The size of the country and

its grid influence technology choice. Countries with

small grids cannot accommodate technologies (e.g.,

present day nuclear facilities) that are inherently

large scale. Uncertainty over load growth can lead to

favoring small scale technologies that are well

known, such as diesel generators.

OPTIONS FOR RURAL

ELECTRICITY SERVICE

The provision of electric service to rural areas is

an important aspect of social and economic development.84 The traditional means of rural electrification

is extension of the existing electricity grid. An

alternative method is to produce electricity off-grid,

using diesel or gasoline powered engine generators.

MA recent World Bank report s~tes, ‘‘most of the rural population in developing countries are not served by electricity and even in those countries

where there have been rural electrification prograxns over the last 1020 years, only a few serve more than 20% of their rural population. ’ From M. MasorL

Rural Electrificatiorr-A Review of World Bank and USAID Financed Projects,’ background paper for the World Bank April 1990, p. 1.
202 ● Fueling Development: Energy Technologies for Developing Countries

This avoids the need for expensive transmission

lines to remote areas, but engenders problems with

expensive, scarce, and unreliable fuel supplies.

Renewable electricity generating technologies—

small wind turbines, photovoltaics, and microhydromay be able to play an important role here. They are

not dependent on fossil fuels and recent advances

have reduced their costs to competitive levels for

many remote power generation applications.

Wind Turbines

Wind power has long been used to pump water,

grind grain, and meet other mechanical needs (see

box 6-E). The amount of electricity generated by

wind remained small, however, until the early 1980s

when a combination of new legislation and tax

credits in the United States led to the installation of

a large number of wind turbines. Many of these were

large (100+ kW) grid-connected units in California,85 but smaller, off-grid turbines were installed as

well. Although many of the tax credits have been

eliminated, wind turbine technology has continued

to progress and now appears to be competitive with

traditional generation in some applications. The

major constraints on widespread use of wind turbines are wind resource limitations and backup

requirements.

Wind turbines come in all sizes, from units as

small as 100 watts used in China to 100+ kW units

used for utility scale generation, Furthermore, units

can be combined into large wind farms like the

Altamont Pass area in California, with a generating

capacity of over 600 MW.86

Wind resources are distributed very unevenly

over the Earth’s surface and are strongly influenced

by climate and terrain. Several studies have used

spot measurements and climatological data to identify regions with high windpower potential. A recent

study for the World Bank identified developing

countries 87 that would be appropriate for gridconnected wind turbines. The criteria for inclusion

included sufficient wind resource within 50 km of

Box 6-E—Wind Turbines for

Water Pumping

The Naima region of Northeast Morocco is very

dry and the soil is relatively unfertile, making water

the key to sustaining life. Donor aid had provided

a diesel pumping system that tapped a local spring

and pumped the water to holding tanks-but the

local residents found the operations, maintenance,

and fuel costs of the system made it all but

unaffordable.

The need for a sustainable system, which would

not be dependent on the residents’ scarce cash

income, was needed. In 1986 the Moroccan Government, along with the U.S. Agency for International Development (AID), implemented the Naima

Wind Project. This project used two 10 kW wind

turbines, designed and manufactured in the United

States, to replace the diesel pumps.

After several delays and problems (including

poor timing-Ramadan, the Islamic month of fasting,

began 1 day after the installation team arrived), the

wind pumping system began operations in 1990.

Reliability has been quite high (88 to 100 percent),

and replication costs are estimated at about $2,500/

kW. A detailed economic analysis found that the

lifecycle costs for the wind system were lower than

for a comparable diesel system-and the benefits to

the local residents of a dependable, low-cost water

supply, although difficult to measure, are large.

SOURCE: M. Bergey, “Sustainable Cormmmity Water Supply:

A Case Study fkom Moroeeo,” paper presented at the

American Wind Energy Association National Conference, September 1990.

the existing electricity grid, so this list is not

appropriate for identifying all off-grid potential

sites. A separate study identified the western and

eastern coasts of Africa, eastern Asia, and western

and southern South America as most promising for

wind-generated electricity .88

There are two principal components of costs for

wind turbines-the initial capital costs, and the

operation and maintenance (O&M) costs. The capital costs of small turbines varies from about $5,500/

85BY 1985, c~or~a wind ~rbines we~ generating 670 GWh/year. D.R. Smi@ “The Wind Farrns of the Altz_imont P~s fie~’ Ann~/Rfliew 0~

Energy, vol. 12, 1987, p. 146.

86D,R, Sfiti ~ f~e Whd F-s of the A1-ont pus ~~, ’ Annual Review of Energy, vol. 12, 1987, p. 145, as of December 1986.

gTS~ategies UIlklited, ‘‘Study of the Potential for Wind Thrbines in Developing Countries, ’contractor paper prepared for the U.S. Department of

Energy and the World Bank, March 1987. The identified countries include Argentina, Brazil, Chile, China, Colombi& Costa Rica, India, Kenya, PakistaQ

Peru, Sri Lanka, Tanzani A Uruguay, Venezuela, Zambia, and Zimbabwe.

88BM~ on da~ ~o~~ted by Battelle pacific Nofiwest ~borato~, and repofied in California Energy (hnrnissiq Renewal (sic) Energy Resources

Market Analysis of the World, CEC P500-87-015, p. 34.
Chapter 6-Energy Conversion Technologies ● 203

Figure 6-4-Capital Costs

$/kW (1990 U. S.) (thousands)

of Wind Turbines

T--”--–– ‘– -

$—

1

0.25

~ Turbine _

I

turbines in California achieve a 90 percent reliability, 93 but this translates to a capacity factor of 35

percent (see glossary for definitions) because the

wind does not blow steadily year round. Although

the reliability of the wind turbines has improved

—1 considerably, resource limits will continue to be the

I I I

1.5 10

System size (kW)

Mechanical/electric [ ‘ Batteries

SOURCE: U.S. Congress, Office of Technology Assessment, 1992.

kW for a small 250 W system to about $2,800/kW

for a larger 10 kW system, including storage (see

figure 6-4).89 The cost of large wind turbines for

on-grid applications (not including storage) are

much lower than this. By some estimates, the capital

cost of large turbines could be as low as $600 per

installed kilowatt by the mid-1990s.90

The operations and maintenance costs of intermediate size turbines are estimated at 0.7 to 1.5 cents

per kWh.91 Data on O&M costs for small turbines

are not well documented. Data from a 5-year field

test of a 10 kW turbine conducted by Wisconsin

Power and Light Co. suggest O&M costs as low as

0.3 cents per kWh.92 The levelized costs of windgenerated electricity are compared with those of

other generating technologies in figure 6-5.

Wind turbines are dependent on a resource that,

unlike fossil fuels, cannot be stored. The best wind

major constraint to widespread use of this technology.

Stand alone applications often require a backup

generating system or a storage system depending on

the specific application and the characteristics of the

local wind resource. Small wind turbines are used

for battery charging in Inner Mongolia, for example,94 and for this application short term fluctuations

in wind are less important. For services such as

lighting or refrigeration, however, a battery or other

backup supply is needed, considerably adding to the

system cost. For grid-connected wind turbines,

fluctuations in output due to changes in wind speed

can be moderated by other generating units in the

grid and no storage is necessary.

The land requirements of wind turbines can be

large. A typical 100 kW turbine in California, for

example, requires about 1.2 hectares (ha) of land, or

12 ha/MW.95 Crop production and livestock grazing

can still be done on this land, however. Otherwise,

wind turbines have few adverse environmental

impacts. There are no direct air emissions or water

requirements, and noise levels are generally low

(except in the immediate vicinity of the turbine).

Concerns have been raised, however, about the

impact of wind turbines on local bird populations.

The design and fabrication of the wind turbine

itself is somewhat complex and may not be readily

done in many developing countries. The manufacg~ese COSLS ~ for tie entire wind-electric system, including batteries.

mJudi~ M. Siegel and Associates, ‘‘Wind Electric, Photovoltaic, and Micro-Hydro Technologies for Developing World Applications,” contractor

report prepared for the OffIce of Technology Assessmen~ October 1990, p. 22.; Michael L.S. Bergey, Bergey Windpower Co., Comments on the

Maturation and Future Prospects of Small Windllwbine Technology, paper presented at the A. S.E.S. Solar ’90 Conference, Norrnam OK, Mar. 22, 1990;

Michael L.S. Bergey, Small Wind 7hrbinesfor Rural Energy Supply in Developing Countries (NorrnaQ OK: Bergey Windpower Co., June 1988, revised

June 1989).

91Judi~ M. Siegel and Associates, ‘‘Wind Electric, Photovoltaic, and Micro-Hydro Technologies for Developing World Applications, ’ contractor

report prepared for the Off’ce of Technology Assessrnen4 October 1990, p. 23.

92Mic~el L,S Bergey, Bergey Windpower Compmy, Comments on the Maturation a~Future Prospects of small wind Thrbine Technology, paptX

presented at the A. S.E.S. Solar ’90 Conference, Norman, OK, Mar. 22, 1990, page 6.

9JT. Moore, “Excellent Forecast for Wind,” EPRIJourna/, VO1.15, No. 4, June 1990, p. 19.

WJudi~ M. Siegel and Associates, “Wind Electric, Photovoltaic, and Micro-Hydro Technologies for Developing World Applications,’ contractor

report prepared for the Offke of Technology Assessment, October 1990, p. 28

9SD.R, Smiti ~ ‘me Wind F-s of tie ~~ont Pass Arm, ’ Annual Review Energy, vol. 12, 1987, p. 145.
204 ● Fueling Development: Energy Technologies for Developing Countries

Figure 6-5--Levelized Cost of Remote Electricity

Generating Technologies

Cents/kWh

50 -

40

30

20

10

0R/4// 2ZZ2.

Diesel

generator

Micro- Photo- Wind

hydro voltaics turbines

~ Capital costs _ O&M costs [ ‘-1 Fuel costs

This figure compares nominal costs for different technologies

where good wind, hydro, and solar resources are present. Note

that these figures do not include system losses of power

conditioning or battery storage and will vary widely depending on

local conditions.

SOURCE: U.S. Congress, Office of Technology Assessment, 1992.

turing and assembly of most other components—

such as the tower, cabling, etc., however, account for

half the initial cost of the system and might be done

within the country.%

Photovoltaics (PVs)

Photovoltaics convert sunlight directly into electricity with no moving parts and no direct fuel

consumption. Their modular design lends itself to

both small and large scale applications, they are

reliable, and they require little maintenance. The

major disadvantages of photovoltaics are high first

cost and, as in wind turbines, the intermittent nature

of the resource. There are several types of photovoltaics, with varying costs, performance, and

potential for future cost reductions.

Crystalline silicon photovoltaic cells have been

the dominant technology since the frost solar cell was

produced in 1954, and still account for a large

fraction of commercial photovoltaic production. The

efficiencies of these cells are as high as 23 to 24

percent in the laboratory (with no concentration) and

typically 12 to 13 percent in commercially available

form. The manufacturing costs and material requirements of crystalline silicon photovoltaics cells are

relatively high, which has led to research into using

other manufacturing approaches and materials. Poly -

crystalline thin films of silicon are lower cost than

single crystal silicon, but have somewhat lower

laboratory and commercial unit conversion efficiencies.97

Amorphous silicon photovoltaic cells are used in

consumer products, such as watches and calculators.

Efficiencies of these cells in commercial modules

are typically 4 to 5 percent after several months of

use, although laboratory efficiencies as high as 9.5

percent have been achieved.98 Present designs suffer

from light induced degradation to about five-sixths

of their initial efficiency in the first year,99 although

alternative designs to reduce this are being explored.

Amorphous silicon cells have the potential for low

cost manufacturing.

Compound semiconductors, made up of combinations of semiconductor materials other than silicon,

are also produced, although in considerably lower

volumes than silicon based solar cells. Recent

laboratory breakthroughs have pushed the efficiency

of thin film cadmium telluride cells to roughly 14.5

percent. The required materials for compound photovoltaics could be environmentally harmful if mishandled.

Concentrators use mirrors or lenses to concentrate

solar radiation onto photovoltaic cells. Laboratory

efficiencies of more than 28 percent have been

achieved with concentrators using single crystal

%~e ~b~eb~des, h~~eVe~,~~~~p~obab~yn~to~im~fie~, butthey XCOUM foro~y about 5-15% of total material costs. MichaelL.S. Bergey,

Bergey Windpower Co,, letter to Ofllce of Technology Assessmen~ Feb. 6, 1991.

sTDep@ment of Energy, ‘‘PhotovoltaicEnergy Program Summary.- Volume I: Overview, Fiscal Year 1989”; D. Carlsow ‘Photovoltaic Technologies

for Commercial Power Generation,” AnnuaZ Review of Energy, vol. 15, 1990, pp. 85-119. Also T. Moore, “Thin Films: Expanding the Solar

Marketplace,’ EPRIJourna/, March 1989, p. 4. Eftlciency, as used here, is the amount of electric output divided by the amount of energy, as sunlight,

received as input. It is a useful criterion because the cells are the major expense of PV systems, and greater efficiency means less cell area required to

produce a given electrical output. PV efilciencies given here are for commercial products, which can be considerably lower than that achieved in the

laboratory under ideal conditions.

9sDep~mentof ~ergy, ‘‘Photovoltaic Energy Program Sumrnary: Volume I: Overview, Fiscal Year 1989’ D. Carlsom ‘Photovoltaic Technologies

for Commercial Power Generation” Annual Review of Energy, vol. 15, 1990, p. 85-119. Also T. Moore, “Thin Films: Expanding the Solar

Marketplace,” EPRI Journal, March 1989, p. 4.

~. Peterson, “Amorphous Silicon Thin-Film Solar Cells,” EPRf Journal, vol. 13, No. 4, June 1988, p. 42.
— ———-—.—

Chapter 6--Energy Conversion Technologies . 205

silicon cells.l00 The additional cost of the mirrors or

lenses can be offset by the smaller cells; concentrators may, however, require more frequent cleaning,

adding to the O&M costs of the system.

There are two components of photovoltaic system

capital costs—the photovoltaic cells and the balanceof-system (BOS) components, which includes everything else-the structures holding the photovoltaic

cell, power conditioning equipment to convert direct

current electricity to commonly used alternating

current, controls, possibly battery storage, and

others. Costs of photovoltaic cells have dropped

dramatically due to technical advances, but still

remain higher than many alternatives. Current prices

are about $4,000 to $6,000/kWP

, excluding balanceof-system costs.

101 Prices are expected to continue to

fall, due to advances in photovoltaics design, advances in manufacturing, and economies of scale

from increased production volumes.102 

Balance-of-system costs depend on the specific

application. AC systems require an inverter to

convert the photovoltaics DC current to AC current.

There are, however, lights, refrigerators, and other

appliances that can use DC current directly. Small,

remote systems commonly use batteries to store

power, The size (and therefore cost) of the battery

system will depend on the load and on how long one

requires the backup system to produce electricity.

Shown in table 6-14 are some representative costs

for specific systems.

Operating and maintenance (O&M) costs for

photovoltaic systems are in general quite low. O&M

Table 6-14-Representative Balance of System (BOS)

Costs for Specific Photovoltaic Applications

Dominican Republic

Application: Small residential system, 38 WP

BOS rests: Battery $1,050/kW (lasts 3-5 years)

Electronic control equipment $1,000/kW

United States

Application: Residential mixed use system, 200 WP

BOS costs: Battery $1,400/kW (lasts 3-5 years)

Mounting hardware $800/kW

Electronic control equipment $1,800/kW

SOURCE: Data for Dominican Republic from D. Waddle, R. PerfacK and R.

Hansen, “Rural Based Photovoltaic Systems in the Domhiean

Republie: An Agenda for Future Activities,” Report to the U.S.

DOE by ORNL. Data for United Staies from Real Goods Trading

Company, Ukiah, CA.

costs for existing systems can usually be traced to

problems with the BOS components. By one estimate, O&M costs for small photovoltaic systems are

about 0.5 cents/kWh.103 Systems with battery storage require battery replacement every 3 to 5 years.

The Electric Power Research Institute examined

O&M costs for utility scale systems, and found that

flat plate photovoltaic systems had actual O&M

costs of 0.39 to 1.44 cents/Wh.104

Photovoltaic systems have been found to be

highly reliable in developing countries,105 as well as

the United States. For example, a survey of residential photovoltaic systems in the United States found

most systems were operating properly 90 percent or

more of the time.l06

I%qmment of Energy, ‘‘Photovoltaic Energy Program Summary, Volume I: Overview, Fiscal Year 1989,”.

IO ID, C=lSOU * (~otovolt~c Te~~ol@e~ forcomercl~power Gener~o~’’Ann~/R evieW ofEnergy, VO1. 15, 1$xX), p. m, estimates $4,~/kWp

in 1988. United Nations, Committee on the Development and Utilization of New and Renewable Sources of Energy, ‘Direct Soktr-to-Eleetrieal Energy

Conversion” Report of the Secretary-General, Mar. 8, 1990, estimates price for crystaltie silicon of $4,~&WP for ~ge orders, exclu@ delivv

and taxes. A retailer in the U.S. sells PV panels for about $6,000/kWP in small quantities. Current price in the Dominican Republic for a 38 watt (peak)

panel is $226, or about $6,000/kWp. See D. Waddle, R. Perlac~ and R. Hansen, U.S. Department of Energy, Oak Ridge National Laboratory, Rural

Based Phofovo[taic Systems in the Dominican Republic: An Agenda for Future Activities, Report No. DE-840R21400 (Oak Ridge, TN: Oak Ridge

National Laboratory).

102u.s, Dep~ment of Ener~, Solm Ener~ Resemch~ti~te, The Potential Of Renewable Energy, SE~P-260-3674 (Goldeq CO: SOh Energy

Research Institute, March 1990), reports PV industry representatives forecasting $1,000/lcWp by 1995. Electric Power Research Institute (EPR.1),

TAG-TechnicalAssessment Guide, Elecm’city Supply 1989, EPRI P-6587-L (Palo Alto, CA: Electric Power Research Institute, September 1989), p. 7-81

forecasts $1,500/kWp in 1994 for a large flat-plate system.

1°~Meridian Corp., “Evacuation of international Photovoltaic Projects, Volume II: Technical Repon” prepared by San&a for DOE! and AID,

SAND85-7018/2, September 1986, p. 134.

l~Lynette and Associates, ‘‘Photovoltaic Operation and Maintenance Evaluation,” GS-6625 (Palo Alto, CA: Eleetric Power Research Institute,

December 1989).

1°SMeridian Corp., “Evaluation of International Photovoltaic Projeds, Volume II: Technical Repofi” prepared by Sandia for DOE and AID,

SAND85-7018L2, September 1986. Reliability refers to the fraction of time the system is operating correctly, and does not include resource limits. A

PV system with 100% reliability will have zero output at night, and diminished output when solar radiation levels are low.

106Elec~c power Rese~ch ~titute, “Survey of U.S. Line-Connected Photovoltaic Systems,” EPRI GS-6306 (Palo Alto, CA: Electric pow~

Researeh Institute, March 1989), pp. 3-7.
206 . Fueling Development: Energy Technologies for Developing Countries

Box 6-F—Photovoltaic Powered Vaccine

Refrigerators

Vaccines must be kept cold to maintain effectiveness. Vaccine refrigerators powered by fossil fuels are

dependent on expensive and erratic fuel supplies, leading to loss of vaccines. The World Health Organization

(WHO) has examined the potential of photovoltaic-powered refrigerators for vaccine storage and is installing them

in rural health care centers and hospitals in several developing countries. Photovoltaic powered refrigerators offer

independence from fossil fuels, longer system life, improved temperature control, and greater mechanical reliability.

In Zaire, domestically designed and produced photovoltaic powered refrigerators using imported compressors

and batteries have been placed in rural areas and have been reported as more reliable than kerosene refrigerators.

In India, there are more than 200 rural health care centers without grid access, and photovoltaic powered

refrigerators are now being tested under Indian conditions. Mali, Sudan, Indonesia, and several other countries are

now using photovoltaic powered vaccine refrigerators.

Although the initial capital costs of the photovoltaic system are high, the longer life, fuel cost savings, and

increased reliability of the photovoltaic system lead to a cost of about 32 cents per dose for the photovoltaic system,

as compared to 47 cents for the kerosene system.

SOURCES: United Nations, Committee on the Development and Utilization of New and Renewable Sources of Energy, “Direct

Solar-to-Electrical Energy Conversion” Report of the Secretary-Gener~ Mar. 8, 1990. Government of India, Ministry of Erqy,

Department of Non-Conventional Energy Sources, Annual Report 1988-89, p. 53. See also C. Rovero and D. Waddle, Vaccine

Refrigeration T’ecfmoZogies and Power Sources, Report No. ORNL-6558 (Oak Ridge, TN: Oak Ridge National Laboratory, April

1989).

The lifetimes of photovoltaic cells vary. Cells Electricity generation by photovoltaics is not land

used for vaccine refrigeration systems are expected constrained. For example, India’s entire electricity

to last 15 years (see box 6-F).107 Utility scale

systems are forecasted to last 20 years.108 Balance-ofsystem components, particularly batteries, rather

than the cells themselves, may often be the limiting

factor in system lifetimes.

Photovoltaic systems can be sized to fit any

application. Installed photovoltaic systems range

from 38 W household systems found in the Dominican Republic (see box 6-G) to a 5.2 MW gridconnected system in California.

The operation of photovoltaics requires no fuel,

and therefore avoids the detrimental environmental

effects of fuel combustion. Manufacturing some

types of photovoltaics does require the use of

potentially harmful chemicals, if released.l09

needs could be met with photovoltaic cells covering

1,120 km2, or about 0.034 percent of the land.110

Some argue that traditional centralized generation,

such as coal and nuclear, requires more land than do

photovoltaics if mining, transportation, and waste

disposal are taken into account.111

MicroHydropower

Microhydroelectric plants112 are common in several Asian countries-notably China and India—

and are also found in some African and Latin

American countries. Like all renewable resources,

hydropower requires no direct use of fossil fuels and

therefore has low operating costs. Although microhydropower systems can have relatively high

initial capital costs, much of this is in labor and

locally available materials for site preparation.

107ufit~ Natiom, Comittee on he Development and util~ation of New ~d Renewable Sowces of Energy, “Dtiwt Solm-to-EIWtic~ hers

Conversio~” Report of the Secretary-General, Mar. 8, 1990, p. 9.

108 Elec~c powti Resemch ~sti~te @p~), TAG-Technica/ Assessment Guide, Efec~”ci~ SUppfy 1989, EPRI P-6587-L (pdo ~to, CA: EhxWiC

Power Research Institute, September 1989), p. 7-81.

I09D. CWIS04 ‘(photovolt~c Technologies for Commercial Power Generation” Annual Review Of Energy, vol. 15, 1990, p. ~.

t loElec~cl& Commptlonln 19*T from Intermtlo~ Energy Agency, wor~~Energy Sratj~tjc~a~DaJances 19P] tO 1987 (Pti: OECD, 1989). Md

area from World Bardq Wor/dDeve/opmenr Report 1989 mew York NY: Oxford University Press, 1989). Ten percent conversion efficiency assumed.

1 I IH.M. Hubbwd, 1‘Photovoltics Today and Tomorrow, ” Science, vol. 244, No. 902, Apr. 21, 1989, p. 300.

llz~s discussion focuses on small systems of up to 100 kW, called “micro-hydro,” which are suitable for off-grid applications. This is a subset of

“small hydro’ which refers to systems of up to 15 MW.
-—

Chapter 6-Energy Conversion Technologies ● 207

Box 6-G—Residential Photovoltaic Systems

in the Dominican Republic

A simple, low-cost residential photovoltaic system, costing about $500, now supplies electricity

for lights and radios in households in the Dominican Republic. Enersol, a U.S.-based nonprofit

organization, began photovoltaics demonstrations

in the Dominican Republic in 1984, and has since

installed the systems in over 1,000 households. This

has been done with minimal outside funding, and

has made use of local resources and the private

sector wherever possible.

The photovoltaic system consists of a 38 watt

(peak) photovoltaics array, a 12-volt car battery,

associated electrical components, and lights and

other appliances. The photovoltaics array is imported from the United States and faces a 70-percent

import tax. The battery is manufactured domestically and is relatively inexpensive, although it must

be replaced every few years. Service centers and

trained technicians provide system repair when

needed (most commonly blown fuses and dead

batteries). A revolving loan program is used to

provide the capital for initial purchase.

SOURCE: R. Hansen and J. MartirL “Photovoltaics for Rural

Electrification in the Dominican Republic,’ Natural

Resources Forum, vol. 12, No. 2, 1988, pp. 115-128.

Unlike large hydropower projects, microhydropower can often be installed quickly and usually

does not require the flooding of large areas,l 13 Sites

for microhydro are limited, however, and hydro

resources are often highly seasonal. With sufficient

long term, site specific water flow data, electrical

output can be predicted with reasonable accuracy.

These data can be expensive to collect, however,

adding to the total cost of the system.

Hydropower potential depends on annual runoff,

seasonal distribution of the runoff, topography, and

other factors, Some estimates of the potential for

small hydro (up to 15 MW) have been made. For

example, a recent report identified a small hydropower potential of over 40 GW in the developing

world.114 The fraction of this potential suitable for

microhydro (less than 100 kW) is unclear, Furthermore, these data are based only on large scale

hydrologic information and do not consider local

factors, such as the distance between the potential

system installation site and the area needing the

power.

Hydropower converts the kinetic energy of falling

or flowing water to drive a turbine connected to an

electrical generator. The hydropower potential of a

specific site is proportional to the water flow rate and

the ‘‘head, ” which is the vertical distance the water

falls. 115 The system design varies, depending on

whether or not storage is incorporated and on the

type of turbine used.

The simplest hydropower system is a waterwheel.

These have long been used to produce mechanical

power for crushing, grinding, and other similar

mechanical tasks. Waterwheels are simple to construct, and require little in the way of special tools or

materials, but their slow speed makes them unsuitable for generating electricity.

A complete hydropower system consists of a river

and dam (if used), a pipe carrying water to the

turbine, the turbine itself, the generator, various

controls, and other components,

For hydroelectricity generation, either impulse

turbines-which use a nozzle to direct the water at

high speed against the turbine blades--or reaction

turbines-that are powered by the pressurized flow

of water through the unit-can be used. Reaction

turbines are more common in low-head"116 microhy -

dro applications.

Hydropower systems to generate electricity can

be divided into ‘‘run-of-river” systems that do not

incorporate storage; and storage systems, which use

a dam or basin to store water. A run-of-river system

is less expensive to build and has reduced downstream impacts as the river flow will be affected less

significantly. The electricity output will fluctuate

with changes in river flow, however, requiring

storage or other systems to offset variations in

output. Alternatively, a dam or basin can be used to

I I I1n ~ggrcgate, however, rnicmhydm systems may flood subshnti~ ar~s.

1 IqCalifornia Energy Commission, “International Market Evaluations: Small-Scale Hydropower Prospects, ” Report No. P500-87-005, p. 25.

115~~e ~overnlng ~uation is p = 9,8 IQHC, where p is the power output of tie system ~ kw, Q is tie water flow mte in m3/see, His net hmd ti meters,

and e IS the conversion efficiency.

116~w-head means t~t tie water falls ICSS tin about 15 meters (5f) f&3t).
208 ● Fueling Development: Energy Technologies for Developing Countries

store water so that electric output can be tailored to

meet demand.

The initial capital costs for microhydropower

systems vary widely, depending on the site characteristics and how one accounts for local labor and

materials. Reported system costs range from as low

as $290/kW in Pakistan117 (see box 6-H) to $2,350/

kW in Thailand.118 Typical costs are in the range of

$1,000 to $2,000/kW.119 Site specific construction

costs are 15 to 45 percent of total costs (see table

6-15). If these costs are met with low cost local labor

and with locally available materials (concrete, wood,

etc.), then total system costs can be quite low while

benefiting the local economy and saving foreign

exchange.

Costs for the mechanical components—the turbine, generator, and associated electronic control

equipment—benefit from economies of scale, making larger systems less expensive per kW than small

systems. Mechanical equipment costs in the United

States range from about $2,800/kW for a small, 500

W, 12 V DC system to about $700/kW for a larger

50 kW 120/240 V AC system.120 These costs are not

expected to change significantly in the future, as the

technology for microhydropower is in general already mature and little R&D work is being done.121

Costs for operation and maintenance of microhydro systems are not well known. O&M costs of

about 2 cents/kWh are reported,

122 but are highly

variable. Routine operation and maintenance may

only involve periodic cleaning of water intakes. If

major repair is needed, however, the costs of skilled

labor may be high, especially in remote areas.

Microhydro systems can be quite reliable—many

Box 6-H—Micro-Hydropower in Pakistan

Less than one-quarter of rural villages in Pakistan

have electric service. Extending the electric grid to

these remote villages is prohibitively expensive, as

is diesel fuel for diesel generators. The Appropriate

Technology Development Organization (ATDO),

an agency of the Government of Pakistan, has

pursued the use of micro-hydropower projects to

supply electricity to remote villages.

The program emphasis is on the use of local

resources. All decisions regarding project size,

location, operation, etc. are made by the villagers,

The ATDO staff work with the villagers, and

encourage the use of locally available materials and

labor wherever possible. Costs are shared and the

community decides on the electricity rates to users.

The end result is rural electrification at a very low

cost--typically $250 to $400 per kW. Efforts are

continuing to further reduce costs with local fabrication of generators and penstock piping.

SOURCE: M. Abdulla&L “Micro-Hydroehxtric Schemes in

Pakis@” Small-Scale Hydropower in AfiicaWorkshop Proceedings, Abid~ Ivory Coas$ March

1982, pp. 27-30.

plants installed in the 1940s and 1950s are still

.

operating. 123

The environmental impacts of microhydro systems can include flow disruption due to diversion of

water from the stream and sedimentation due to

changes in river flow. Depending on the design of

the system, water quality and aquatic organisms can

be affected—for example, a system using a dam

provides a habitat for mosquitoes, which can spread

malaria or other diseases.

117M. AMuH~ ‘‘Micro-HydroeI~~c Schemes in Pakistan,” Small-Scale Hydropower in Ajh”ca-Workshop Proceedings (Abidjaq Ivory Coast:

March 1982), p. 29.

116P. clark ‘{cost Implications of Small Hydropower Systems, ’ Small-Scale Hydropower in Africa-Workshop Proceedings (Abidjam Ivory Coast:

March 1982), p. 100.

ll~fit~ Natiom Coderence on Trade and Development, Technology Policy in the Energy Sector: Issues, Scope ad Options for Developing

Countries, UNCTAD~190 (Geneva, Switzerland: United Nations, November 1989), p. 80, reports an average cost of $2,350/kW for sm~ (6-21 k~

systems in Nepal, P. Clark, ‘‘Cost Implications of Small Hydropower Systems, ” Small-Scale Hydropower in AjHca-Workshop Proceedings (Abidjam

Ivory Coast: March 1982), p. 106 reports an average cost of $1,000/kW for 7 projects under 50 kW in size in Asia.

120Dan New, ~nyon ~dus~es, Deming, WA, person~ communicatio~ November 1990. Five kW systems are about $l,400/kW, 20 kw are about

$1,000/kW. All prices include turbine, generator, and electrical equipment.

IZ1~prov~ maten~s and mm~ac~g processes, and large volume pmductio~ however, m@timPact costs.

IZZM. waKabasele, ‘Small Hydroelectric Power Development in tie, ’ Small-Scale Hydropower in Afi”ca-Workshop Proceedings (Abidj~ Ivory

Coast: March 1982), p. 36; J. Fritz, ‘Cost Aspects of Mini-Hydropower Systems, ”Small-Scale Hydropower in A~”ca-Workshop Proceedings (Abidja.ni

Ivory Coast: March 1982), p. 116; California Energy Cornmissio% “International Market Evaluations: Small-Scale Hydropower Prospects, ” Report

No. P500-87-005, p. 19. Fifty percent capacity factor assumed.

lzsc~fornia Energy Commission, “International Market Evaluations: Small-Scale Hydropower Prospects, ” Report No. P500-87-005, p. 18.
-——

Chapter 6--Energy Conversion Technologies . 209 —

Table 6-1 5-Breakdown of Micro-Hydro Capital Costs Table 6-16-Some Typical Fuel Consumption Rates

for Engine Generators

Item Percent of cost

Turbine-generator . . . . . . . . . . . . . . . . . . . . . . . . . . 18-39

Other electrical and plant equipment . . . . . . . . . . . 7-16

Site-specific Construction. . . . . . . . . . . . . . . . . . . . . 15-45

Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

SOURCE: P. Clark, “Cost Implications of Small Hydropower Systems, ”

Small-Scale Hydropower in Africa- Workshop Proceedings,

March 1982, Abidjan, Ivory Coast, p. 106.

Engine Generators

The most common technology today for remote

generation of electricity is usually an engine generator—

a small internal combustion engine using gasoline or

diesel fuel to generate electricity. This technology is

popular for good reason—it has a relatively low

initial cost, it is widely available, it can be installed

anywhere, and it uses a technology already familiar

in the form of cars, trucks, and buses. It is dependent

on scarce and expensive fossil fuels, however, which

are often imported. The costs and other characteristics of engine generators]24 are summarized here, as

they are the technology against which off-grid

renewable must compete.

Small (5 to 10 kW) engine generators typically

use gasoline and have initial costs of $600 to

$700/kW. Medium sized systems (10 to 100 kW)

usually use diesel fuel and have initial costs of $200

to $700/kW. Very large systems (250 kW and more)

exclusively use diesel and have initial costs of about

$125/kW. 125

Operation and maintenance costs for engine

generators can be divided into fuel and nonfuel

costs. Nonfuel costs include routine maintenance,

such as oil and filter changes, as well as repair. A

considerable amount of scheduled maintenance is

required, which costs about 1.3 to 2 cents/kWh. 126 In

addition, a complete overhaul is required about

every 10,000 hours of operation, at a cost of about 15

percent of the capital cost. The lifetimes for engine

Consumption rate Fuel operating costs

Size (kW) Fuel liters/kWh $/kwh

4.0 gasoline 0.71 0.71

7,5 gasoline 0.63 0.63

20 diesel 0.40 0.20

50 diesel 0.28 0.14

100 diesel 0.24 0.12

1,000 diesel 0.28 0,14

Fuel priced at 50 cents/liter.

SOURCE for fuel consumption rates: Real Goods Trading Co., Ukiah, CA;

Onan Corp., Minneapolis, MN.

generators are quite short-about 20,000 hours for

diesel units and 3,000 to 5,000 hours for gasoline

units. 127 Engine generators have a reputation for

high reliability as long as maintenance requirements

are met.

Fuel costs depend on fuel prices (table 6-16). In

many rural areas, fuel supplies for engine generators

are unreliable and expensive due to difficult and

time consuming transport. For oil importing countries, fuel expenditures require a large fraction of

foreign exchange. As long as fuel supplies are

available, engine generators can operate at very high

capacity factors. As the fuel supply can be stored, no

battery backup is required for engine generators. In

addition, no site surveys are needed to measure the

resource, and the engine generator can be moved to

a new location if desired.

The environmental effects of engine generators

include noise and air pollution. Noise effects can be

minimized by locating the engine away from residences, however, and in rural areas at least the local

air quality effects may be readily dispersed.

Comparing the Technologies

There is no one ‘‘best” technology: each specific

application must be considered on its own. Costs are

also uncertain, changing-rapidly in some cases--

over time, and are site dependent. The values given

here are approximate.

128 Capital, O&M, fuel costs,

lzd~e tem * ‘engine generator ‘‘is used to mean an integrated systen including an engine, an electrical generator, and associated electrical equipment.

125~ice~ MC approxfia~e, and me from Red G~d~ Trading Company, wCA, and from ~is Engine ~uipment, htc., Baltimore, ~. ~C&S

quoted here arc retail prices in the U.S.—prices in developing countries will differ due to transport costs, import duties, and other factors.

12bTypica1 requirements include checking engine oil every 8 hours, changing engine oil and oil filter every 150 hours, and changing fuel and air filter

every 500 hours. The cost for these parts in the U.S. is about 2 centsilcwh. Others estimate maintenance and repair at 1.3 cents/kWh (Sandia National

Laboratories, Evaluation of International Photovoltaic Projects Volume II: Technical Report, SAND85-7018L?, September 1986, p. 13-5.)

‘271bid., 8-7.

128see also, uS, Conwess, Ofilce of Tw.olo~ Assessment, Renewable Energy Technologies: Research, Dev~elopment, andcornrnercial prospects,

forthcoming.
210 ● Fueling Development: Energy Technologies for Developing Countries

Table 6-17—initial Capital Costs of Electricity

Generating Systems

Table 6-18-Operating, Maintenance, and Fuel Costs

(diesel fuel price of $0.50/liter assumed)

Initial

Size capital cost

Technology (kWp) ($/kWp)

Engine generator:

Gasoline . . . . . . . . . . . . . . .

Diesel . . . . . . . . . . . . . . . . .

Microhydro . . . . . . . . . . . . . . .

Photovoltaic . . . . . . . . . . . . . .

Photovoltaic . . . . . . . . . . . . . .

Wind turbine . . . . . . . . . . . . . .

Wind turbine . . . . . . . . . . . . . .

Wind turbine . . . . . . . . . . . . . .

4.0

20.0

10-20

0.07

0.19

0.25

4

10

760

500

1,000-2,400

11,200

8,400

5,500

3,900

2,800

NOTE: Costs are for entire system, including conversion device, electric

generator, and associated electrical equipment. Prices for wind

turbine and photovoltaic systems include batteries. kWP ratings are

for peak output, average output will be somewhat lower depending

on the resource. Prices for wind turbine, photovoltaic, and engine

generators are actual retail prices in the U.S. in 1990. Prices for

microhydro are averages across several installations.

SOURCES: Bergey Windpower Co., Norman, OK; Onan Corp., Minneapolis, MN; Real Goods Trading Co., Ukiah, CA.

equipment lifetimes, and other data for these technologies are shown in tables 6-17 to 6-19. Capital

costs-of particular concern for developing countries--

are lowest for engine generators. Life cycle operating costs for a 10 kW system-enough to supply a

small village-however, indicate that for a variety of

applications, various renewable energy technologies

may be more attractive than engine generators (see

app. B).

Obtaining the results shown in figure 6-5 required

making a number of assumptions. These results are

particularly sensitive to the assumed discount rate

and fuel price (see app. B). Access to good quality

resources that are reliable throughout the year, or at

least when power is needed, is also important.129 At

high discount rates, those technologies with a high

initial cost—notably photovoltaics--look less attractive (see app B). Individual consumers in developing countries often can borrow money only at very

high rates--40 percent per year in the Dominican

Republic,

130 for example, while governments and

large institutions can often borrow capital at much

lower rates—5 to 10 percent. If the selection of

remote generating technologies is made by individuals facing capital constraints and high interest rates,

renewable technologies with high capital costs will

be less attractive. If these decisions are made by

O&M costs Fuel costs

Technology (cents/kWh) (cents/kWh)

Engine generator . . . . . . . . . . . . . 2 20 (diesel)

Micro Hydro . . . . . . . . . . . . . . . . . 2 0

Photovoltaics . . . . . . . . . . . . . . . . 0.5 0

Wind turbines . . . . . . . . . . . . . . . . 1 0

SOURCE: Office of Technology Assessment, 1992.

Table 6-19-Approximate Lifetimes of Off-Grid

Renewable Generating Technologies

Technology Lifetime (years)

Engine Generator . . . . . . . . . . . . . . . . . . 8-10 (diesel)

Micro Hydro . . . . . . . . . . . . . . . . . . . . . . . 20-30

Photovoltaics . . . . . . . . . . . . . . . . . . . . . . 20-30

Wind Turbine . . . . . . . . . . . . . . . . . . . . . 15-25

Batteries. . . . . . . . . . . . . . . . . . . . . . . . . . 3-5

SOURCE: Office of Technology Assessment, 1992.

larger institutions and governments, these technologies are more financially attractive.

The cost of fuel is an important determinant of the

cost of diesel generation. At 50 cents/liter for diesel,

the cost of generating electricity with diesel sets is

two-thirds the cost achieved of photovoltaic power,

while at $1/liter, engine generated electricity costs

about 10 percent more than that from photovoltaics

(see figure 6-6 and app. B).

Given the large uncertainty in the cost data, it is

not appropriate to interpret these cost data as

applying to any specific situation Other factors, such

as those listed in table 6-20, may be as or more

important than cost. Nevertheless, the following

tentative conclusions can be drawn:

●

●

With reasonable assumptions concerning discount rates, capacity factors, and fuel cost,

microhydro and wind turbines can have the

lowest life cycle costs in locations where the

resource is sufficient.

Diesel generators have by far the lowest initial

capital cost, but when fuel and O&M costs are

considered, diesel generators are of comparable

expense to renewable technologies-more expensive than wind turbines and microhydro,

and less expensive than photovoltaics. The cost

129poremple, fhe~Sthy@~w~reso~Sared~ the rainy seasonwhenirrigationpumping is notneeded. Conversely, w~n~gationPW@3

is needed-during the dry season-hydropower resources are usually at their lowest.

1~. Ha~n and J, _ ‘‘Photovolhcs for Rw~ Elec~lcation in the Dotic~ Republic,’ Natural Resources Forum, vol. 12, No. 21988, p.

120.
Chapter 6--Energy Conversion Technologies . 211

Figure 6-6-Costs of Remote Generating

Technologies

Cents/kWh Rn““ I

30

20

10

nu kl

0.50 0.75 1.00

Effect of fuel prices ($/liter)

D Diesel generator = Micro-hydro

[—1 Photovoltaics m Wind turbines

10 kW systems with storage

This figure shows the relative cost of remote generating technologies for three different diesel fuel prices.

SOURCE: U.S. Congress, Offiea of Technology Assessment, 1992. See

app, B for more detail.

of electricity production from diesel engine

generators is heavily dependent on fuel prices

and quality of maintenance.

. Photovoltaics are expensive, due largely to the

cost of the panels themselves. Panel costs are

expected to continue to drop in the near future,

however. Further, the analysis presented here is

for a 10 kW system. Photovoltaic systems are

more economically attractive for smaller applications, such as household or agricultural pump

(less than 1 kW) systems.

Grid Extension

The alternative to remote generation of electricity,

either by renewable technologies or by diesel

generators, is to extend the existing electricity grid.

Grid extension costs have several components: the

capital cost of extending the electricity lines themselves; the operations and maintenance costs of the

lines; and the cost of generating the electricity. The

cost of electricity distribution lines varies with line

voltage and capacity, topography, and other factors,

and is estimated at $4,600 to $12,700 per kilometer,

Table 6-20-Non-Cost Attributes of Off-Grid Electricity y

Generating Technologies

Engine generators

● Independent of renewable resource fluctuations

● Dependent on fuel supply system

c Susceptible to fuel price increases

Micro-hydro

● Large part of costs for instruction, can be paid with local

currency

. Proven, mature technology, highly reliable and long lifetimes

. Output dependent on water flow

Photovoltaics

. Low maintenance requirements

. Low availability due to solar resource dependence

● Requires batteries for energy storage

Wind turbines

. Low maintenance requirements

● Suitable only for areas with sufficient wind resource

. Requires batteries for energy storage

SOURCE: Office of Technology Assessment, 1992.

with an average of about $9,000/km in the United

States.131 The operations and maintenance costs of

these lines are estimated at 2 to 4 percent of the

132 or about $270/km year for capital costs per year,

the average line. The cost of generating the electricity varies widely, depending on fuel used, power

plant efficiency, and other factors. Long run marginal costs of electricity generation, which include

fuel costs, operation and maintenance costs, and

levelized capital costs, were estimated at from 4.4

cents/kWh to 13 cents/kWh, with an average of 9

cents/kWh, in a recent study of developing countries .

133

The cost of grid extension increases with distance.

In contrast, the costs of remote generation are not

affected by distance from the grid. At some distance,

called the “break even’ distance, the costs of grid

extension exceed those of remote generation. The

results of such a calculation, frost considering only

capital costs and then considering life cycle costs,

are shown in table 6-21. Calculations and assump131 For ~~gle @Se Sy~tem, F~~m N~ti~~ Rw~ El@~c coo~rative AsS~iatio~ u~ersranding Eiecm”c utility Operations (wtMhiIlgtOIl, DC:

National Rural Electric Cooperative, 1989), p. 106. There are alternatives to this technology-for example, a single-wire earth return syste m-common

in rural Australia, could be used in developing countries, and costs as little as half as much as a traditional single-phase system (Allen Inverson, NRECA,

personal cornmunicationj 12/4/90).

132M M~o% Rural Eiecffificahon.A Rwie~ of WorldBank ad IJS~D Fi~nCedPrOjeCtS, &&grOud Paper for the World Ba~ April 1990, p.

27.

Issfiid., p. 27. me me~n long-~ marginal cost would be somewhat lower.
212 ● Fueling Development: Energy Technologies for Developing Countries

Photo credit: Bergey Wmdpower Cbmpany

Wind turbines may be less expensive than grid extension

in some areas.

tions are given in appendix B.134 For the assumed

system size, the break even distance varies from less

than 2 km for microhydro to 14 km for photovoltaics

when life cycle costing is used. Smaller system loads

than the assumed 10 kW reduce this break even

distance sharply.135 Different assumptions of grid

extension costs also change this break even distance.

For example, assuming the typical U.S. cost of

$9,000/km (rather than $4,500/km) the break even

distance for photovoltaics drops to 7km (from 14). In

contrast to remote generation, however, costs for grid

extension can be spread over several villages if multiple service drops to several villages are possible.

OIL REFINING

Petroleum products are obtained in the developing world through a combination of direct import of

refined products and local processing of crude

oil-usually imported-in local refineries. About

one-quarter of world refining capacity is located in

the developing world.

The scale and other characteristics of refineries in

the developing countries varies widely—from the

large state-of-the-art refineries of the major oil

producers, such as Venezuela and Mexico, to the

small uneconomic refineries operated in several of

the smaller African countries. One common characteristic, however, is widespread state ownership.

The government, generally acting through a parastatal enterprise, such as the national oil company,

takes a majority interest or even owns the facility

outright. A foreign company is generally involved in

designing, building, and sometimes managing the

refinery under a service contract. Such companies

often provide access to crude oil feedstock for the

refinery from their integrated international system,

though some state owners of refineries rely mostly

on government-to-government supply agreements.

The major oil producers apart, refineries in

developing countries face a number of problems. In

many cases, developing country refineries do not

produce a range of light and heavy products appropriate to the consumption patterns in the country.

This comes about for two reasons. First, much of

refinery technology is based on the product demand

of the industrial countries. In developing countries,

between 60 and 70 percent of refinery demand is

diesel and residual, compared with 30 percent for the

United States. On the other hand, gasoline accounts

for about half of U.S. production, compared with

about 20 percent in developing countries. Further,

developing-country consumers do not use the petroleum products designed for use in cold climates.

Second, most of the plants use the simplest

refining process—primary distillation (or hydroskimming)--which is limited in its flexibility. When

crude oil prices rose in the 1970s, demand for

petroleum products shifted. Developing-country refineries, which typically do not have secondary

conversion technologies, could not adjust to these

changes. The only flexibility available in such cases

(without huge investments) lies in varying the

quality of the imported crude feedstock. Many

developing countries now import crude oil, refine it

locally, and re-export the excess (typically residual

fuel oil and gasoline). As the quantities exported are

small, they are often sold for prices well below the

world average.

Diseconomies of scale cause refining costs to be

much higher than in the developed world. Average

refinery operating costs in Africa are $2 per barrel,

compared to $0.75 in the rest of the world. Very few

developing country refineries can process crude for

less than $1 per barrel, except the large export

refineries in the Far East and the Caribbean.

Refinery losses, which should not exceed 1 percent

134sW ~so, C~~she-Sti and T- Chndra Kandpal, “Decentralized v. Orid Electricity for Rural Id@” Energy policy June 1991, pp.

441-44s.

lqs{’on.site utih~ Applications for Photovoltaics, ” EPRf Jotwrrul, Wch 1991, p. 26.
Chapter 6--Energy Conversion Technologies ● 213

Table 6-21—Break-Even Distances for

Comparing Grid Extension to Remote Generation,

(10 kW system operating at 20% capacity factor)

Considering only initial costs

Technology Break-even distance

Diesel generator . . . . . . . . . . . . . . . . . . . . . . . . 1.4 km

Micro-hydro . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 km

Photovoltaics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.Okm

Wind turbine . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 km

Considering initial, operating and maintenance, and fuel costs

Technology Break-even distance

Diesel generator . . . . . . . . . . . . . . . . . . . . . . . . 8.1 km

Micro-hydro . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 km

Photovoltaics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9km

Wind turbine . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6 km

SOURCE: Office of Technology Assessment, 1992. See app. B for details.

in a properly maintained and operated refinery, often

exceed 2 or even 4 percent in developing-country

facilities.

Technology could improve the performance of the

refinery sector in developing countries. This is of

particular importance as old and inefficient refineries in many countries are among the largest single

consumers of petroleum fuels.

Besides repair and replacement of worn out or

obsolete equipment, the main targets of increased

efficiency are connected with the heat used to

process crude. For example, reducing excess air

mixing into the flue gas can result in energy savings

of about 2 percent in the heaters and 30 percent in the

catalytic reformer. This technology has been common in industrial-country refineries since the 1970s,

is relatively low cost, but is still the exception in

developing countries. Heater efficiency can also be

improved through the installation of heat exchangers

to recover heat from the stack gas, where temperatures can reach 1,000 “F. Retrofitting to take

advantage of previously flared relief valve and other

gas, reducing evaporation from storage tanks, and

other measures, can result in substantial savings at

moderate cost.

These technology improvements could also curtail some of the adverse environmental impacts of oil

refining. Obsolete and poorly maintained equipment

can lead to increased leaks of oil and a number of

toxic emissions, with negative effects on soil, water,

and air quality. Refineries also have solid and liquid

wastes that require special handling and disposal.

Many of the pollutants associated with refining

could be mitigated through properly maintained or

improved equipment.

More generally, prospects are for a continual

incremental improvement in oil refinery technology

and energy efficiencies, using improved separation

techniques and more intensive use of computer

technology to improve product quality. A major

change could be in new catalysts for the light end of

petroleum fraction and natural gas liquids. Present

day catalytic crackers produce excessive quantities

of the light ends such as off gas, methane, and

ethane. By the end of the decade, new catalysts are

expected to improve the yield of gasoline from these

light ends. Membrane separation technologies are

under development but appear to be more suitable

for use in large scale refineries rather than the

smaller operations typical of many developing

countries.

The low level of refinery efficiencies in developing countries is due largely to lack of investment.

Problems hindering investment in the rationalization

of refinery operation in the developing world include

lack of foreign exchange for parts; artificial refinery

profits stemming from subsidized feedstock, distorted pricing structures and earmarked government

subsidies; and noneconomic reasons such as ‘‘ security of supply.‘‘

It is estimated that between 1991 and 1995,

refinery rehabilitation and conservation in the developing world will require an investment of almost $2

billion. 136 The extent of the problems existing in

some countries and the large amounts of money

needed for rehabilitation raise the question of

whether some refineries should not be closed down,

meeting local needs through a combination of

regional restructuring and direct import of refined

products. Refining is capital rather than labor

intensive and so often requires highly paid expatriate

personnel and creates relatively few spinoffs for the

local economy. Where a small local market constrains capacity utilization and/or the facility is old

and/or decrepit and inefficient, the decision to close

the facility, politically painful as that may be, would

reduce economic losses.

lsb~eodore J. Gortoq ‘ ‘Oil and Gas Development in the Third World, ’ contractor report prepared for the Office of Technology Assessment, June

1990.
214 . Fueling Development: Energy Technologies for Developing Countries

Generalization is, however, difficult. Some developing country refineries benefit from strategic regional location and good management and are

clearly success cases. For example, the Societe

Ivoirienne de Rafinnage (SIR) in Abidjan, Cote

d’Ivoire, exports products to neighboring countries

and consistently makes a foreign-exchange profit for

its public and private shareholders.

An alternative for refineries in those countries

with natural gas is methanol conversion. There are

technologies to convert gaseous methane to liquid

methanol, allowing smaller scale liquefaction to a

versatile and easily transportable fuel. The disadvantages of methanol include the energy cost of natural

gas conversion to methanol and the low volumetric

energy content of methanol-about half that of

gasoline. Methanol can be exported, however, getting around the problem of how to generate foreign

exchange in a project and allowing foreign investors

to remit profits. A recent example of a methanol

export project is that of the government of Chile, the

U.S. company Allied Signal, and the World Bank

affiliate--the International Finance Corp. (IFC).137

In 1987, the project set up a methanol plant worth

$298 million at Cabo Negro in the remote south of

Chile on a “non recourse” basis.138This project is, .

however, probably more suitable for countries with

large gas reserves, such as Nigeria.

BIOMASS139

Biomass is the principal energy source for the half

of the world’s population living in rural areas and

accounts for about one-third of all primary energy

used in developing countries today. As presently

used, biomass is an inconvenient and inefficient

fuel, which contributes to high levels of indoor air

pollution and resource depletion.

To play a larger role in supplying energy services,

biomass must be converted into cleaner and more

convenient fuels (gases, liquids, electricity). A

modern biomass industry would have many advantages. In some cases, there would be a decrease in the

amount of biomass needed for a given energy

service. For example, cooking with a gas produced

efficiently from biomass could use less total biomass

than cooking directly with wood in a traditional

stove (see ch. 3).140 If operated on a renewable basis,

biomass makes no net contribution to atmospheric

CO2

. Biomass use could have economic benefits; as

an indigenous energy source, biomass could save

valuable foreign exchange. Establishing bioenergy

industries also would bring increased activity and

jobs into rural areas.

On the other hand, establishing a modern biomass

industry presents challenges. The physical and

chemical composition of biomass feedstocks varies

widely, potentially requiring the tailoring of conversion technologies to specific biofuels. The relatively

low bulk densities of biomass and possibly large

required collection areas limit the amount of biomass at any given site. This constrains the size of

individual conversion systems and limits the extent

to which economies of scale in capital and other

costs can be captured.141 Although there are a large

number of biomass technologies, the selected few

examined here appear to hold particular promise for

the future. This review does not include mature

technologies such as charcoal production or the use

of wood or agricultural wastes in boilers to produce

process heat and electricity. Some of these applications were already discussed in chapters 3 and 4.

lsTSome of these we ~~ydin G. Greenw~d, ‘Encotm@ng Natural Gas Exploration in Developing Countries, ” in NafurulResources Forum, vol.

12, No. 3, 1988.

13E~s mea tittie o~r~or puts in a m~est level of equity capital and gives a completion guarantee for the facilities, but does not assume W’

further risk the project financing is arranged solely on the basis of the assets of the project in this case substantial gas reserves,

139This section is drawnprimarilyfromEricD. Larson, “ADevelopingCountry-Oriented Overview ofTeehnologies and Costs for Converting Biomass

Feedstocks into Gases, Liquids, and Electricity,” contractor report to the Office of Technology Assessmen~ September 1991.

140G<S. Dutt and NH. ~v~-@“Altemtive Bioener~ s~tegies (Dir~t use of Bio~s,-o~,Biog~, fioduc~ GZW, Alcohol) fOr

Cooking,’ draft manuscript for Fuefs andElectncityj70m Renewable Sources ofEnergy, Johansso~ Kelly, Reddy, Williams (eds), 1S91 (forthcoming).

Idl’rypical rates of biomass fielproduction or use at individual sites rangefiom l-4kW - (0.2 to 0.4 Iq@r of @ biomass, assuming a dry-biomass

energy content of 20 MJ/kg) for residential cooking up to a maximum of some SOO-400 m-(54-72 @ ~nnew) at ~ge factori~ ~produ~

biomass as a byproduct and use it for energy (e.g. cane sugar and kraft pulp factoriw) (This can be compared to the 800 to 4,(KM) MW of coal consumed

at central station electric power plants.) Larger concentrations of biomass could be made available, e.g. from plantations dedicated to producing biomass

for energy. Under such schemes, transportation costs and land availability will be limiting factors on the quantity of biomass that can be concentrated

at a single site.
Chapter 6---Energy Conversion Technologies . 215

Gases and Electricity From Biomass

Combustible gas can be produced from biomass

through thermochemical processes (producer gas) or

through biological processes (biogas). Both can be

burned directly to produce heat, e.g., for residential

cooking or industrial process heating, and can be

used to produce electricity.142

Producer Gas143

Producer gas is a long established technology,

though largely abandoned with the development of

inexpensive petroleum supplies after the second

world war.144 Since the early 1970s, there have been

many efforts to resurrect producer gas technology,

largely for small scale use in the rural areas of

developing countries.145

Gasification systems can be classified as either

small scale—those with a fuel input of less than

about 2 GJ/hr (100 kg/hr dry biomass)--or large

scale. Economies of scale permit large scale systems

to be generally more technologically sophisticated.

Two basic gasifiers, updraft and downdraft, are used

in small scale applications using raw biomass. In an

updraft unit, biomass is fed in the top of the reactor

and air is injected into the bottom of the fuel bed.

Updraft gasifiers have high energy efficiencies,

typically 80 to 90 percent (chemical energy in gas

output divided by feed stock energy input), due to the

efficient counter-current heat exchange between the

rising gases and descending solids. However, the

tars produced by updraft gasifiers mean that the gas

must be cooled before it can be used in internal

combustion engines. Thus, in practical operation,

updraft units are used almost exclusively for direct

heat applications. For use in internal combustion

engines, downdraft technologies are needed. Even

so, fairly elaborate additional gas cleaning systems

are required in the downdraft technology, resulting

in lower overall energy efficiencies of 60 to 70

percent.

Large scale applications include more elaborate

versions of the small scale updraft and downdraft

technologies, and fluidized bed technologies. The

superior heat and mass transfer of fluidized beds

leads to relatively uniform temperatures throughout

the bed, better fuel moisture utilization, and faster

reactions than in fixed beds, resulting in higher

throughput capabilities.

146 Fluidized beds are, however, generally more expensive than fixed beds

below a fuel input rate of 35 to 40 GJ/hr (1.8 to 2.0

tonnes/hr of dry biomass), due to the high unit cost

of blowers, continuous feed systems, and control

systems and other instrumentation.147

Direct Heat Applications-Producer gas has

been used most widely (the country with the most

experience is Brazil) for direct heating in industrial

applications. In part, this is because such applications are often characterized by relatively high

capacity utilization rates and, more importantly,

because biomass is often available relatively inexpensively, e.g., as in the forest products industries.

For relatively small capacity units, the estimated

cost of gas ranges from $3.20 to $4.80 per GJ ($3.40

to $5.10/million Btu) for wood-fueled systems and

$4.70 to $7.40 per GJ ($5.00 to $7.80/million Btu)

for charcoal-fueled systems, competitive with fuel

oil when crude is priced at about $38 per barrel (see

table 6-22).148 Producer gas is generally not used for

cooking,

149 but it would offer advantages over raw

biomass—higher systems efficiencies, reductions in

indoor smoke and particulate, and reduced collecidz~emo~heml~~ ~m~lcation is ~so tie ffist step ~ produchg me~anol, a liquid fuel, from biomass.

ldJWoducer gas derives its name from the ‘‘gas producer‘‘ in which it is made and is a combustible mixture consisting primarily of carbon monoxide,

hydrogeu carbon dioxide and nitroge% and having a heating value of 4 to 6 MJ/Nm3, or 10% to 15% of the heating value of natural gas. It can be made

from essentially any carbon-containing feedstoc~ including woody or herbaceous biomass (lignocellulose), charcoal, or coal.

144~e use of producer gas &tes back well ~to tie 1800s when co~-d~v~ producer gas WaS used in a number of cities worldwide for cOOking ad

heating, This “town gas ‘‘ is still used in Calcutt% Beijing, and Shanghai, where about half of all households use it for cooking. Producer gas from

wood-charcoal was a prominent civilian fuel in Europe during the Second World War running several hundred thousand vehicles and powering industrial

machinery.

145G. FoIcy and G. Bar~d, “Biomass Gasiilcation in Developing Countries, ” Earthscan Technical Report No. 1 (London: 1982).

IME.D. ~son, P. Svenningsson, and I. Bjerle, ‘‘Biomass Gasification for Gas ‘Ibrbine Power Generation’ Thomas B. Johanssoni Birgit Bodlund,

and Robert H. William (eds.), Electricity: Eficient End-Use and New Generation Technologies, and their Planning Implications (Lund, Sweden: Lund

University Press, 1989), pp. 697-739.

ld?’~ld,

148 A55um1ng hat we per bmel wholesale price of resid~] fuel oil is (),87 ties tie refiner acquisition cost of crude oil (characteristic fOr tie Urdted

States) and that a barrel of residual oil contains 6.6 GJ.

IdgSec, Smuel F. Baldwin, “Cooking Technologies, ” OTA staff wortig paper, 1991.

297-929 - 92 - 15 - QL : 3
216 ● Fueling Development: Energy Technologies for Developing Countries

Table 6-22-Comparative Summary of Calculated Costs for Modern Energy Carriers Produced From Biomass

Production Installed Total

capacities capital costs production Costsb

103 GJ/yr kW $ per GJ/yr $/kW $/GJ $/kWh

Biogas

Domestic (E) . . . . . . . . . . . . 0.016-1.2

Industrial (E) . . . . . . . . . . . . 3.6-167

Producer gasC

Small (E) . . . . . . . . . . . . . . 1-12

Medium (E) . . . . . . . . . . . . . 20-200

Electricity

Steam-turbine (E) . . . . . . .

Biogas-lC engine (E) 0.16

Producer gasIC engine (E) . . . . . . . . . 0.16-3.2

Gas turbines

(NC) . . . . . . . . . . . . . . 1,580

(Y2) . . . . . . . . . . . . . . . 3,260

Methanol

(Y2) . . . . . . . . . . . . . . . . 10,000

. . . . . . . . . . . . . . . . . 1O,OOO-4O,OOO

0.50-38

114-5290

30-12

13-2.5

950-375

410-80

11-5

1.4-2.5

NA

NA

NA

NA

0.05-0.07 d

0.10

0.24-0.15

0.04-0.05 d

0.03-0.04 d

NA

NA

NA

NA

NA

NA

NA

NA

32-380

634-6,340

2-0.7

6-3

65-20

190-95

5-3

NA

5-50,000

5

5-1oo

60

38

1,900

1,200

NA

NA

22-13 680-420 NA

50,000

100,000

36

28

1,150

890

NA

NA

316X106

316X106

1,268X106

30-50

30-12

950-1,580

630-315

10-13

5-9

Ethanol from cane

(E) . . . . . . . . . . . . . . . . . . 1,000

(Y2) . . . . . . . . . . . . . . . . . 2,000

Ethanol acid hydrolysis

(CR) . . . . . . . . . . . . . . . . 1,000-2,000

(Y2) . . . . . . . . . . . . . . . . . 2,000

Enzymatic

(NC) ................5,500-27,000

(Y2) .................6,500-12,700

32X106

63X106

10

9

315

280

10

8.5”

32-63X106

63X106

80-60

50

25-1,890

1,580

19-21

15

142X106

205X106

18-27

11-15

1,260

500

9-11

6-6.5

tion times. Cooking with producer gas also involves

disadvantages, such as increased risk of exposure to

carbon monoxide in poorly maintained or operated

systems. Because of its low capital intensity, the cost

of producer gas is strongly affected by the cost of the

feedstock.

engines, particularly diesel engines, have a proven

record in developing countries as a versatile, relatively durable technology for producing mechanical

drive and small increments of stationary power, e.g.,

for irrigation pumping, lighting, cottage industries,

and rural processing facilities. In India alone, some

4 million small diesel engines are used solely to

drive irrigation pumpsets,150 with each engine consuming energy at about the same rate as the average

automobile in the United States-1,500 liters of

diesel fuel annually. Producer gas can typically

Internal Combustion Engine Applications—

Producer gas from downdraft gasifiers can be used

in either compression ignition (diesel) engines or

spark ignition (gasoline) engines. These stationary

1~.c. J@ * ‘Ass~~~t~f Cment s~~s ad ~epotent~ for co~erci~ Exploitation of Biomass Gasifkation in IDdi~’’Bio~ss, VO1. 18, 1989,

pp. 205-19.
Chapter 6--Energy Conversion Technologies . 217

replace 70 to 80 percent of the diesel fuel that would

be used in normal operation of a diesel engine. Some

diesel fuel is still needed because the low energy

density of producer gas prevents it from self-igniting

under compression.

Reported unit capital costs for producer gas

engine generator electricity plants are generally

below $1,000/kW, even for very small (5 kW) units.

Calculated costs of electricity production with

gasifier engine systems, assuming a 50 percent

capacity factor, range from $0.13 to 0.24/kWh for

small units (4 to 5 kW capacity) and from $0.10 to

0.15/kWh for units larger than about 100 kW (see

table 6-20). This compares with an average, highly

subsidized, price of $0.05/kWh currently being

charged in the developing countries. The most

important cost component for small units is labor;

for larger units it is fuel.

The costs of electricity from producer gas are thus

higher than the busbar cost of electricity from new

central stations, but for remote use a more appropriate comparison would include transmission and

distribution costs. Such an analysis for the state of

Karnataka, India indicated that gasifier engine

systems could produce electricity on a competitive

basis with a large coal and nuclear central station

power plants. 151 Electricity from producer gas could

have additional advantages for developing countries, including lower capital intensity, shorter lead

times (6 months versus 3 to 6 years for coal-fired

central station plants), and the use of indigenous

rather than imported fuel. Counting only investment

costs and foreign exchange expenditures for fuel

(zero for biomass),152 the Karnataka analysis indicated that irrigation pumping could be about 10

percent less costly with gasifier-based systems than

through extension of the national grid.

Despite these advantages, obstacles have been

encountered to more rapid diffusion. It has proven

difficult to reduce tar to tolerable levels even in

downdraft technologies (tar entering an engine is

deposited on components, causing loss of performance and, if unchecked, complete engine failure153).

Both fundamental and applied research efforts are

continuing.

154 For example, a 5 kW gasifier engine

generator system developed by the Centre for the

Application of Science and Technology to Rural

Areas (ASTRA) relies on strict specification of the

feedstock and careful design, operation and maintenance of the gasifier and gas cleaning system. The

design has proven to be a technical success in the

field.

The importance of institutional and management

issues in introducing new technologies is illustrated

by comparing major gasifier engine implementation

efforts undertaken beginning in 1981 in the Philippines with a more recently initiated effort in India

(see box 6-I).

Gas Turbine Applications-Producer gas can

also serve as a feedstock for gas turbines that operate

at much larger scales than internal combustion

engines. In a biomass gasifier/gas turbine system

(BIG/GT), biomass is gasified in a pressurized

air-blown reactor and the products cleaned of

particulate and other contaminants before being

burned in an efficient power cycle based on aeroderivative gas turbines, such as the steam injected gas

turbine (STIG), intercooled STIG (ISTIG), or a

151AKN. Reddy et al., “Comparative Costs of Electricity Conservation: Centralized and Decentralized Electricity Generatio~” Econorm”c and

Political Weekly, June 2, 1990, pp. 1201-1216.

ISZB.C. J~, ‘Ass~sment of Cwent status and tie potential for Commercial Exploitation of Biomass Gasification h Indi&” Biomass, VO1. 18,1989,

pp. 205-19.

153~ problems ~lth ~a~~ler-e~e ~~tem ~ve ~en ~dely repofled. s=: N. coova~c~, W. cho~ckeo~ ~d C. Kooptarnond, ‘‘The

Feasibility of Producer Gas in Electricity Generation%” Reg. J. Energy Heat Mass Transfer, vol. 4, No. 4, 1982; S. Kumir, et al., “Design and

Development of a Biomass Based Small Gasifler-Engine System Suitable for Irrigational Needs in Remote Areas of Developing Countries, ’ Energy

from Biomass and Wastes VIII (Chicago, IL: Institute of Gas Technology, 1984), pp. 723-745; T, Zijp and H.E.M. Stassen, “OperatingExperience with

Producer Gas Plants in Tanzanian Villages,” Department of Chemical Engineering, Twente University of Technology (Enschede, The Netherlands:

1984).

lmsee A. Kaupp, ‘‘Gasitlcation of Rice Hulls: Theory and PrfiS,’ German Appropriate Technology Exchange, Eschbow Germany, 1984; M.J.

Groeneveld, The Co-Current Moving Bed Gasifier, Ph.D. thesis for the Department of Chemical Technology, Twente University (J3indhoveu The

Netherlands: 1980); H. Susanto, Moving Bed Gasifier with Internal Recycle and Separate Combustion of Pyrolysis Gas, Ph.D. thesis for the Institut

Teknologi (Bandung, Indonesia: 1984); T.B. Reed and A. Das, Handbook of Biomass Downdraji Gasijler Engine Systems (Golde% CO: Solar Energy

Research Institute, 1988).
218 . Fueling Development: Energy Technologies for Developing Countries

combined cycle.155 Hot gas cleanup avoids cost and

efficiency penalties, and pressurized gasification

avoids energy losses associated with compressing

the fuel gas after gasification. While particulate

cleanup requirements are much stricter than for

heating applications and comparable to those for

internal combustion engines, tar removal is not

required. As with hot gas cleanup, the tar would

remain in its vapor state until it is burned in the

combustor. Thus, the fundamental technical problem that has plagued gasifier internal combustion

engines would not be present in gas turbine applications. A complication, however, is the need to

remove trace amounts of alkali vapor from the gas

before it enters the gas turbine. There appears to be

a basic understanding of the means for adequately

cleaning gases for gas turbine applications with

either fluidized bed gasifiers156 or updraft gasifiers,

although there has been no commercial demonstration of alkali removal. Box 6-J gives a description of

current efforts in gas turbine research.

Given the lack of commercial operation, cost

estimates must necessarily be tentative. BIG/GTs

are characterized by high conversion efficiencies

and low expected unit capital costs ($/kW) in the 5

to 100 MWe size range.157 The upper end of this

range is probably near the practical upper limit on

the size of a biomass installation. The expected

performance and costs compare favorably with

direct combustion steam turbine systems and with

much larger central station fossil fuel and nuclear

plants. The higher fuel cost figure corresponds to a

target fuel cost for biomass (after processing for use

in the gasifier) from energy plantations in the United

States. Plantations in many developing countries

could probably produce biomass at a lower cost than

this.

While the economics of plantation based BIG/GT

power generation appear attractive, initial BIG/GT

applications are likely to be at industrial sites where

biomass processing residues are readily available

today, such as at cane sugar processing mills158 and

mills in the forest products industry 159-replacing

the currently used biomass-fired steam turbine

cogeneration systems. BIG/GT systems have much

higher electrical efficiencies that would permit them

to meet onsite electricity needs and produce excess

electricity that could be sold to utilities. Because

BIG/GTs would produce less steam than steam

turbines, however, steam use efficiency would

generally need to be improved in a factory to enable

BIG/GT systems to meet onsite steam needs.

BIG/GT systems have a number of characteristics

that make them particularly attractive for developing

country applications, including their low anticipated

capital costs and high share of local content. With

the primary exception of the high technology core of

the gas turbine, most components could probably be

manufactured locally. U.S. companies appear to have

a strong competitive advantage in this technology.

The maintenance characteristics of the high technology core of the aeroderivative gas turbines at the

heart of a BIG/GT system are also attractive. Their

compact, modular nature makes it possible to

replace failed parts and even whole engines quickly,

with replacements flown or trucked in from centralized maintenance facilities. The required maintenance network is already largely in place in most

developing countries that have their own commercial airlines. The scale characteristics of these

systems are also well suited to developing countries.

lsssee E.D. ~sonand R.H. Williams, “Steam-Injected Gas ~bines, ” ASMEJournal of Engineering for Gas firbines and Power, vol. 109, No.

7, 1987, pp. 55-63; R.H. Williams and E.D. LarsorL ‘‘Expanding Roles for Gas ‘Ibrbines in Power Generation’ T.B. Johanssom et al., (eds.), Electricity:

EficientEnd UseandNew Generation Technologies, and Their Planning Implications (Lund, Sweden: Lund University Press, 1989), pp. 503-553; R.H.

Williams and E.D. Larsom “Advanced Gasification-Based Biomass Power Generation and Cogeneratio%” Fuels and Elecm”city from Renewable

Sources of Energy, TB. Johansson et al., (eds), (forthcoming).

ls6E, KUke~, et do, ‘‘Removal of Pa.rticulates, Alkali, and Trace Metals from pressurized Fluid-Bed Biomass Gasification Products--Gas Cleanup

for Gas ‘Ib.rbine Applications,” paper presented at Conference on Energy from Biomass and Wastes XV, Washingto~ DC, Mar. 25-29, 1991.

157see E*D4 ~sonmd R*H. wil~s, ‘ ‘Bio~s-Gasfler/Steam-~j~t~ Gas ~bine cog~~atio~’Journal ofEngineen”ngfor Gas Zhrbinesand

Power, vol. 112, April 1990, pp. 157-63; P. Elliott and R. Boot& “Sustainable Biomass Energy,” Selected Paper (Imndon: Shell International Petroleum

Co., Ltd., December 1990).

158See E@D. ~son et ~., ‘‘Biomass-Gasiiler Steam-Injected Gas Thrbine Cogeneration for the Cane Sugar Industry,’ Energyfiom Biomass and

Wastes XV, Elsevier Applied Science, 1991; J.M. Ogde~ R.H. Williams, and M.E. Fuhner, “Cogeneration Applications of Biomass Gasifkr/Gas

‘Ibrbine Technologies in the Cane Sugar and Alcohol Industries,’ Energy and Environment in the 21st Century (Cambridge, MA: MIT Press, 1990).

159FD$ ~WW “Biomass.G~ifler/G~ ~bine Cogenemtion in the ~p md Paper Industry, ” paper presented at 36th ASME kt~natiod Gas

‘Ibrbine and Aeroengine Congress, Orlando, FL, June 1991.
Chapter 6-Energy Conversion Technologies ● 2 1 9

Box 6-1--Gasifier-Engine Implementation in the Philippines and India

A 1981 presidential decree in the Philippines called for a strong national commitment and effort at reducing

dependence on imported oil through use of gasifier-engine systems. Irrigation pumpsets were identified as an

important target market, and a goal was set of replacing 1,150 diesel fueled units with biomass/diesel dual fuel

gasifier-engine systems. By 1985, when implementation efforts were halted, 319 units were installed, and by 1987

an estimated 99 percent of these were nonfunctioning, primarily due to lack of maintenance. According to a recent

analysis, l the fundamental reasons for the failure of the program were institutional and management-related rather

than technical problems. Political pressures pushed an un-debugged technology (charcoal gasifiers) into the field

prematurely and without a full understanding of the users needs.

2 A single quasigovernment agency (the Farm

Systems Development Corp. --FSDC) was given responsibility for technology development, dissemination,

financing, and maintenance, as well as for implementation of a new fuel (charcoal) supply infrastructure. Together

with its other responsibilities, the under-funded, over-burdened FSDC was unable to provide adequate service to

the user: training of users was inadequate; monitoring equipment needed for proper operation and maintenance was

not installed in order to reduce costs; and the charcoal production system was insufficiently developed to meet

demand, which resulted in high charcoal prices and thus marginal or negative fuel cost savings to farmers.

Furthermore, gasifiers were produced by a single quasi-governmental company (GEMCOR) controlled by the

FSDC, so that competitive market pressures were absent in the program.

There is a strong national commitment to gasifier systems in India, as there was in the Philippines, but the

Indian program appears to be proceeding at a more deliberate pace, with a keen appreciation of the need for

evolutionary development of the technology. The prospects for developing sound technologies is auspicious in

India, given its generally strong technological infrastructure. Also, market pressures are present, as there are several

competing manufacturers of gasifier-engine systems. Some 250 units are now installed (mostly for small—3.5 to

7.5 kW—irrigation engine-pumpsets), with hardware monitoring/feedback efforts in-built in many cases, Carefully

measured efforts to understand and meet user needs are ongoing. 3 Furthermore, many of the constraints to

commercial implementation that were recognized only in retrospect in the Philippines appear to be well understood

in India: the need for sound technology and a maintenance infrastructure, the need for committed and trained users,

the need to understand and meet user demands, and the need for financing to help small farmers.

IF,P. BerMdo and G.U. Kilayko, ‘ ‘Promoting Rural Energy Technology: The Case of Ga.sifiers in the Philippines, ” WorMDevebpment,

vol. 18, No. 4, 1990, pp. 565-574.

2For ~xmple, fmers ~encmlly saw less ~neflt ~ figation tin presumed. ‘rhus, tie ac~al numbm of hours per y~ a typical f~er

irrigated his land was relatively low, contributing to marginal cost effectiveness of switching from diesel fuel to biomass.

3R, B~[ia, ~ ID1ffusion of Renewable Ener~ Technologies in Developing Countries: A Case Study of Biogas Engines in IndiA” World

Development, vol. 18, No. 4, 1990, pp. 575-90.

Biogas A third design, the bag digester, is gaining in

Biogas is produced by the biological process of

anaerobic (without air) digestion of organic feedstocks. It consists primarily of methane and carbon

dioxide and has a heating value of about 22

megaJoules/normal cubic meter or (590 Btu/ft3

). In

the absence of oxygen, organic matter introduced

into the digester is degraded by the action of three

classes of bacteria. Proper operation of the digester

relies on a dynamic equilibrium among the three

bacterial groups. This balance, and hence the quality

and quantity of gas produced, are affected by

changes in digester temperature and acidity, and by

the composition and rate of loading of the feedstock.

Two basic digester designs have been used most

widely in developing countries. The floating cover

digester (India) and the fixed dome digester (China).

popularity. In the floating cover digester, a gas

holder floats on a central guide and provides

constant pressurization of the gas produced. The

reactor walls are typically brick or concrete. Traditionally the cover is made of mild steel, though more

corrosion resistant materials are also being used. The

digester is fed semi-continuously, with input slurry

displacing an equivalent amount of effluent sludge.

The primary drawback of the floating cover design

as developed by the Indian Khadi Village Industries

Commission (KVIC) is the high cost of the steel

cover. The floating cover digester is suitable for both

household size and larger scale community or

commercial operation.

In the Chinese freed dome digester, biogas

collects under a fixed brick or concrete dome,
220 ● Fueling Development: Energy Technologies for Developing Countries

Box 6-J-Current Gas Turbine Research

Biomass integrated gasification/gas turbines (BIG/GT) systems are likely to be available by the mid-1990s,

based on development efforts ongoing in Scandinavia, Brazil, and the United States.l Ahlstrom, a Finnish producer

of biomass gasifiers, plans to build a 6-10 MWe BIG/GT plant in southern Sweden in collaboration with Sydkraft,

a major Swedish electric utility.2 The plant will operate in a cogeneration mode, using an Ahlstrom pressurized

circulating fluidized-bed gasifier and a sophisticated hot gas cleanup system, including ceramic filters for

particulate.

In Brazil, a major electric utility has an ongoing R&D program to develop biomass from planted forests as a

major fuel source for power generation, with conversion to electricity using BIG/GT units.3 The utility is currently

planning to build an 18 MWe demonstration BIG/GT plant. The overall program goal is commercial implementation

of plantation-based BIG/GT systems starting in 1998.

The U.S. Department of Energy (DOE) announced in late 1990 a major new program initiative to

commercialize BIG/GT technology4 by the late 1990s. The DOE recently selected the pressurized bubblingfluidized bed RENUGAS gasifier developed by the Institute of Gas Technology (IGT) for a large scale gasification

demonstration. 5 A scaled-up unit will be built in Hawaii and be run initially on sugarcane bagasse (50 tonne per

day capacity). Start-up is anticipated in late 1992. Also in the United States, the Vermont Department of Public

Service, in cooperation with in-state electric utilities, is exploring possibilities for a commercial demonstration of

BIG/GT technology fueled by wood chips derived from forest management operations.6 The DOE, U.S.

Environmental Protection Agency, U.S. Agency for International Development, and GE are also participating.

IE.D.IAI-So~ “Bio~s.G~~ler~~‘llrbine Cogeneration in the Pulp and Paper Industry,” Journal of Engineen”ng for Gas nrbf”nes

and Power, forthcoming.

2~s~om COT. and A.B. Sy&af~ “Finland Goes Ahead with Unique Gaifkation Recess,” pms release, Helsinki, Finland and

Malmo, SwederL Nov. 7, 1990.

3E~. cvnti~ ~cf of Altemtive m~gy Rcsearc4 Compania Hidroeletrica do Sao FIzU3CiSC0, Reci.fe, B-, Wrso~

communication August 1991.

4R. sm _U.S. ~p~ent of ~ru, ~pu~~sis~nt s~~,~1~ of uti~ty T~~ologies, Division of Conservation ~d

Renewable, “DOE Research on Biomass Power Production,” presentation at Conference on Biomass for Utility Applications, ‘hrn~ Flori@

Oct. 23-25, 1990.

5s. Bab~ r.nstitu~ of Gas Technology, Chicago, IL personal communication, NOV*ff IWO.

6R0 Setio, Dep-nt of ~b~c s~ic% S@@ of Vermont Mon~lier, ~ pcmc)@ corrununicatio~ Jm~1991.

displacing effluent sludge as the gas pressure builds. The typical digester feedstock in India is wet

The dome geometry is used to withstand the higher

pressures generated. This technology has been

widely used for small household scale units. Relatively few large scale units have been built, due to

the difficulty of constructing large domes. A major

shortcoming of the freed cover units, even in small

sizes, has been the difficulty of constructing leakproof domes. However, a number of improved

versions of the freed dome design have been

introduced, including those designed to operate with

plug flow conditions and/or with storage of gas in

variable volume ‘‘bags. ’ ‘l@

cattle dung mixed-with water in a 1:1 ratio. A typical

yield of gas with the KVIC digester is 0.02 to 0.04

m

3 per kg of fresh manure input at a design ambient

temperature of 27 °C .

161 A family of 5 would

therefore need the dung output from a minimum of

2 to 3 animals to meet their cooking fuel needs.162

This is beyond the means of the majority of rural

Indian households. In China, the feedstock is typically a mix of nitrogen-rich pig manure, cow manure

and night soil, and carbon-rich straw and grass163

with water added to achieve a total input solids

concentration of about 10 percent. This technology

l~wu we~ “Bio~ss Utilization kl -,” draft paper for Energy Research Group, Ottaw4 Cana@ July 1984.

Iblc. Kas~, “Biog~ Plants in India, ” Energy in the Developing World: The Real Energy Crisis (Oxford, United Kingdom: Oxford University

Press, 1980), pp. 208-14.

162Ass~g a daily gas yield of 0.2 m3 per m3 of digester volume.

163see Wu We% ‘*BiomaSs Utilimtion ~ Cm,” tit papr for Energy R~~ChGrOUp, omWa, Cam@ July l$I&$; Q. Daxiong, et d., “Diffusion

and Innovation in the Chinese Biogas PrograrrL” World Development, vol. 18, No. 4, 1990, pp. 555-563.
Chapter 6--Energy Conversion Technologies ● 221

is therefore accessible to a larger share of households

than for the KVIC digester.

There is general agreement that the capital costs

of freed dome units are significantly lower than

floating domes, at least for household scale digesters, primarily because they do not require a steel

cover. Capital costs for both technologies are

declining,164 indicating significant learning from the

experiences of the 1970s and 1980s. Labor is

required in the production of biogas to collect water

and dung, mix and load inputs, distribute sludge,

clean out the plant, and for maintenance. Total costs

(both capital and operating) of community sized

digesters (100 GJ/yr to 1,000 GJ/yr capacity) are

estimated at $9/gigajoules to $5/GJ ($9.50 to $5.25/

MMBtu). At the household scale, the cost appears to

be higher, about $11/GJ165 These high costs greatly

limit the applicability of biogas units where justified

by energy output alone. At the present time, much of

the labor involved in small scale units may be

performed by household members, lowering the

financial cost; in the future, such low cost or “free”

labor will not be so readily available at either the

household or community scale and may limit biogas

operations to locations where large quantities of

waste materials are already collected for sanitation

or other purposes.

A major advantage of biogas over the direct use of

raw biomass is that valuable nutrients are retained in

the slurry, instead of being partially lost in the

combustion process. For example, the wet slurry

output from a digester fed with fresh cattle dung has

essentially the same nitrogen fertilizer value as the

input dung. Because water is also added to the

digester, however, about twice as much fresh digester effluent is needed to supply the same amount

of nitrogen.

Biogas digesters also have an important sanitation

advantage, reducing or eliminating pathogens present in animal and human wastes. Significant

declines in parasite infections, enteritis, and bacillary dysentery have been noted in areas following

installation of digesters. 166 Air drying or composting

of digester effluent can further reduce or completely

eliminate pathogens. An additional health benefit

where biogas replaces wood used in traditional cook

stoves is the elimination of noxious gases and

particulate from wood fires.

Biogas, like producer gas, can be used to fuel

either compression or spark ignited internal combustion engines, which can provide shaft power or drive

an electrical generator. Gas from an innovative

floating cover gasifier developed by researchers

from167 ASTRA of the Indian Institute of Science

(Bangalore) is used to replace about 70 percent of the

diesel fuel needed to run a 5 kW diesel engine

generating electricity used for pumping water and

providing lighting. Villagers are paid a fee of

$0.0016/kg for delivered dung and are also returned

digester sludge in proportion to their dung contribution. The sludge is passed through a simple sand bed

falter system to concentrate the solids content before

it is returned. The village biogas engine operation

employs two village youths full time. With the

current operating hours of the system (4.3 hours/

day), corresponding to a capacity factor of about 18

percent, the total levelized cost of electricity is about

15 cents/kWh.

There are an estimated 5 million digesters operating in China today, mostly at the household scale

16’$me five sew of data referred to here are all based on experiences with digesters in India, and thus COmptiSOnS amOng the data sets are meanin~.

The Rijal and Orcullo estimates are from experiences in Nepat and the Philippines and are thus probably not strictly comparable to the Indian data. See

M.T, Santerre and K.R. Smi@ “Measures of Appropriateness: The Resource Requirements of Anaerobic Digestion (Biogas) Systems, ” Work-i

Development, vol. 10, No. 3, 1982, pp. 239-61; N.A. Orcullo, “Biogas Technology Development and Diffusion: the Phillipine Experience,” Biogas

Technology, Transfer und Diffusion, E1-Halwagi (cd) (1.mdon: Elsevier Applied Science Publishers, 1986), pp. 669-86; K. Rijal, “Resource Potential

and Economic Evaluation of Bio-Gas Utilization in Nepal, “ Energy, vol. 11, No. 6, 1986, pp. 545-50.

165 For household-s~ed tits, an altermtive ~rspective on production cost fight be more appropriate, however. Householders wodd probably use

family labor to operate and maintain a digester and might not consider this a cost. In additiou capital costs converted using a purchasing-power-parity

(PPP) exchange rate m@t better represent the capital cost for a rural dweller with tittte or no access to hard currency. Also, capitat is generally likely

to be scarce for the household, which would be reflected by a much higher discount rate than the 7% assumed above. Neglecting labor and maintenance

costs, converting capital costs to U.S.$ using a PPP exchange rate, and applying a 30?10 discount rate would result in biogas costs up to five times those

shown for household-sized units (25 GJ/yr), corresponding to a gas cost of perhaps $25/GJ (R. Summers and A. Hesto~ ‘‘A New Set of International

Comparisons of Real Product and Price Levels Estimates for 130 Countries, 1950 to 1985,” Review oflncome and Wealth, March 1988, pp. 1-25 (with

accompanying data diskettes).

166C+G. Gmnerson and DC Smckey, ~n~egra~ed Resource Re~o\,eV: A~erobic Digestion, Techni~ PaWr49, World Ba~ washhgto~ DC, 1986.

167A.K.N. Reddy et d, ‘‘Studies in Biogas Technology. Part W. A Novel Biogas Plant Incorporating Solar Water-Heater and Solar Stdl, Proceedings

of the Indian Academy of Sciences, C2(3), Bangalore, India, Sept. 1979, pp. 387-93.
222 ● Fueling Development: Energy Technologies for Developing Countries

and some 300,000 in India.168 The efforts in China

and India to popularize biogas have been very

different in nature historically, which permits some

lessons to be drawn on implementation. These

include:

the need for national commitment (this has

helped address key problems such as distorted

user economics due to subsidized prices for

electricity and alternative fossil fuels, valuing

of nonpecuniary benefits such as improved

sanitation, and supporting R&D efforts aimed

at cost reduction and technology improvement);

the need for several stages of development,

including a strong technology base, and an

experimental and limited field test stage before

large scale dissemination;

an interdisciplinary approach;

the importance of training of disseminators and

users;

a mix of centralized and decentralized institutions; and

competitive market-type forces.

Gas Cost Comparisons

From our analysis of costs we conclude that

among gas generating technologies, biogas systems

are an order of magnitude more capital intensive

than producer gas systems up to the quite high

production level of 1,000 GJ/yr, when producer gas

and biogas are about equal in cost due to the high

feedstock cost for producer gas. At a very small scale

(less than 20 GJ/yr) biogas may likely be more costly

than producer gas, but the health and fertilizer

benefits of biogas technology are not included in the

biogas cost, and further reduction in costs of floating

cover digesters can be expected.

Liquid Fuels From Biomass

The production of liquid fuels from biomass, with

the exception of ethanol from sugarcane and corn,

has not been widely implemented commercially

because of their high cost. In the case of ethanol from

cane and corn, government subsidies have supported

commercial production. Research and development

work to reduce costs and improve yields have been

modest, except in the case of ethanol from sugarcane

in Brazil. Advances may make liquid biofuels more

competitive with fossil fuels over the next decade.

This section discusses three alternative liquid

fuels from biomass: methanol from lignocellulose

(any woody or herbaceous biomass), ethanol from

sugarcane (ethanol from corn is generally not

considered a practical option for most developing

countries), and ethanol from lignocellulose.

Methanol From Lignocellulose

Methanol is produced today primarily from natural gas. But it can also be produced from coal and,

through a similar process, from lignocellulosic

biomass feedstocks.169 Biomass-to-methanol plants

would typically convert 50 to 60 percent of the

energy content of the input biomass into methanol,

though some designs have been proposed with

conversion efficiencies of over 70 percent.

Three basic thermochemical processes are involved in methanol production from biomass:

1. A‘ ‘synthesis gas” (a close relative of producer

gas) is produced via thermochemical gasification, but by using oxygen rather than air in

order to eliminate dilution of the product gas

with nitrogen (in air). Oxygen plants have

strong capital cost scale economies, which

contributes to most proposed biomass-tomethanol facilities being relatively large (typically 2,000 tonnes/day or more input of dry

biomass). Biomass gasifiers designed for methanol production are not commercially available. A number of pilot and demonstration

scale units were built and operated in the late

1970s/early 1980s,170 but most of these efforts

were halted when oil prices fell. Work on one

(a fluidized bed unit developed by the Institute

16SQ. Daxiong et al., “Diffusionand Innovation in the Chinese Biogas Progra” World Development, vol. 18, No. 4, 1990, pp. 555-563; D.L. Klass,

“Energy from Biomass and Wastes: 1985 Update and Review, ” Resources and Conservation, vol. 15, Nos. 1 and 2, 1987, pp. 7-84.

169C.E. Wyman, et al., “Ethanol and Methanol From Cellulosic Materials, ’ Fuels and Elecrricityfrom Renewable Sources of Energy, T. Johansson

et al., (eds), (forthcoming).

ITOSee A. A.C.M. Beemckers and W.P.M. van Swaaij, “The Biomass to Synthesis Gas Pilot Plant Programme of the CEC: A First Evaluation of

Results, ” Energy jiom Biomass, 3rd EC Conference (Essex, United Kingdom: Elsevier Applied Science, 1985), pp. 12045; E.D. hSOQ P.

Svcmingsson, and I. Bjerle, ‘‘Biomass Gasification for Gas Tbrbine Power Generation,” T.B. Johansson et al., (eds.), Electricity: Eficient End-Use

and New Generation Technologies, and their Planning Implications (Lund, Sweden: Lund University Press, 1989), pp. 697-739.
Chapter 6--Energy Conversion Technologies ● 223

2.

3.

of Gas Technology171) has recently been

revived, with the construction of a bagassefueled demonstration unit now being planned.

In addition, there are some commercial gasifiers originally designed for coal that could be

used for biomass use. 172

The synthesis gas is cleaned and its chemical

composition is adjusted to produce a gas

consisting purely of hydrogen (H2) and carbon

monoxide (CO) in a molar ratio of 2:1. The

specific equipment configuration in the second

step in methanol production will vary depending on the gasifier used. A reactor common to

all systems is a ‘‘shift’ reactor used to achieve

the desired 2:1 ratio of H2 to CO by reacting

steam with the synthesis gas. The shift reactor

is a commercially established technology.

Other processing may be required before the

shift stage, however, depending on the composition of the synthesis gas leaving the gasifier.

For example, tars contained in the synthesis

gas must be removed or cracked into permanent gases.

The gas is compressed and passed through a

pressurized catalytic reactor-that converts the

CO and H2 into liquid methanol. A variety of

commercial processes can be used.

As biomass to methanol plants are not yet

commercially available, costs are uncertain. From

scattered cost data, mainly based on U.S. experience,

it is estimated, however, that methanol could be

produced for about $11 to $14/GJ ($1 1.50 to

$14.75/MMBtu) with commercially ready technology in a plant with a capacity of about 10 million

GJ/yr (about 500 million liters/yr). At larger scale—

40 million GJ/year--costs would be $7/GJ to $8/GJ

($7.50-$8.50/MMBtu). Capital represents the largest fraction of the total cost of methanol produced in

small plants, while feedstock is the dominant cost in

large plants. Thus, capital cost reductions will be

most important in reducing methanol costs from

small plants while increases in biomass conversion

efficiency will be most important at large scale.

Ethanol From Biomass by Fermentation

Two varieties of ethanol are being produced today

from sugarcane for use as fuel in developing

countries: anhydrous ethanol-essentially pure ethanol—and hydrous ethanol containing about 5

percent water, Anhydrous ethanol (apart from Brazil

the most common in developing countries) can be

blended with gasoline up to a maximum ethanol

content of about 20 percent without need for

modifying conventional spark ignition vehicle engines. 173 Hydrous ethanol cannot be blended with

gasoline, but can be used alone as a fuel in engines

specifically designed for ethanol. Most national

anhydrous ethanol programs are small, due to

uncertainty over oil prices and the limited size of

market (20 percent of gasoline consumption). In

Brazil, however, 90 percent of new cars are designed

to use hydrous ethanol.

At an autonomous alcohol distillery (i.e., not

associated with sugar production), raw sugarcane is

washed, chopped, and crushed in rolling mills to

separate the sugar laden juice from the bagasse, the

fiber portion of the cane. The raw cane juice,

containing over 90 percent of the sucrose in the cane,

is filtered and heated, and is either sent directly to a

fermentation tank after cooling, or limed, clarified,

and concentrated before fermentation. The fermented mixture contains water and ethanol in about

a 10:1 ratio. The mixture is then distilled, typically

through two distillation columns to concentrate the

ethanol. ]74 A typical yield of hydrous alcohol is 70

liters per tonne of cane processed. Stillage, a

potassium-rich liquid, is drained from the bottom of

the distillation columns.

The bagasse, accounting for about 30 percent of

the weight of fresh cane, or about 60 percent of the

cane’s energy content,

175 can be used to produce

both electricity and steam for process heating. The

17 IR.J, Evm ~t ~,, De},eiopment of B1o~S$ Gasification t. Produce Substimre Fuels, pNL.G5 Is, Battelle WCiflC Northwest bibomto~, Richland,

WA, 1988.

ITJSee Chem Systems, “Assessment of Cost of Production of Methanol from Biomass” (draft) (Golden, CO: Solar Energy Research Institute,

Dccembcr 1989); E.D. Larson, P. Svenningssow and I. Bjerle, ‘‘Biomass Gasification for Gas Thrbine Power Generation, ’ Thomas B. Johanssow Birgit

Bodlund, and Robert H. Williams (cds.), Electn”city: EJ6cient End-Use and New Generation Technologies, and their Planning Implications (Lund,

Sweden: Lund University Press, 1989), pp. 697-739; V. Brecheret Filho, A.J. Ayres Zagatto, “Methanol From Wood in Brazil,” presented at the 179th

American Chemical Society National Meeting, Houston, TX, Mar. 23-28, 1980;

]TJwIorld B~ Alcohol Productlonfiom Biom~~ in the ~evelopi~g CoUntries ~astigton, m: The World Bati 1980).

lT4Additio~ distillation steps are needed to produce anhydrous e~ol.

ITsAbout 3570 of the ofig~~ enern ~ tie sugti cane stalk brought to a mill is convefied to ~cohol, 59% to higa.sw, and 6~o to Stillage.
224 ● Fueling Development: Energy Technologies for Developing Countries

potential for selling excess electricity from alcohol

distilleries could be high as a result of new process

technologies that reduce onsite energy needs, and

new cogeneration technologies that increase the

ratio of electricity to heat produced.176 Credits for

these sales could significantly improve the economics of ethanol production. Stillage, which contains

about 6 percent of the energy contained in the cane,

also has economic potential as a fertilizer for

sugarcane

177 and as a feedstock for biogas production. If sugarcane tops and leaves (typically burned

in the fields and contributing to local air pollution)

could also be economically used for electricity

production, ethanol production costs would be

further reduced.

In a distillery annexed to a sugar factory, the

fermentation feedstock is typically molasses produced as a minor byproduct of sugar processing.

Some Brazilian factories are designed to use either

molasses or a mixture of molasses and raw cane juice

as the fermentation feedstock, thus permitting them

to vary their production of sugar and ethanol to

better match market demands.178

Estimating costs of ethanol from annexed distilleries is complicated by the multitude of options for

feedstocks and relative product mixes. 179 The application for which hydrous ethanol is most often

considered is as an automotive fuel to replace

gasoline. The cost of hydrous alcohol in the most

efficient mills in Brazil is about $9.00/GJ ($0.20/

liter). Correcting both for the lower energy content

of ethanol and its higher thermodynamic efficiency

in an engine, ethanol at this price would be

competitive with gasoline when crude oil prices are

about $30 per barrel. An average production cost,

including some less efficient plants, would be $0.22

to $0.26 per liter ($10.00 to $11.80 per GJ),

corresponding to an equivalent crude oil price of

about $30 to $35 per barrel (see table 6-23).

Costs have been falling since the inception of the

program, due in part to more efficient distillery

operation (increased liters of ethanol per tonne of

cane) and, more importantly, increased land productivity. The cost of delivered cane is the largest single

determinant of ethanol costs. Cane growing, harvesting, and transporting costs vary significantly from

one region of the world to another with Brazilian

costs among the lowest because of the large scale of

production and emphasis on cane varieties and

cultivation practices to maximize yield.180 Production costs in other countries would be higher, leading

to higher ethanol prices, which in turn would only

become competitive with gasoline prices at crude oil

prices over $35.

The economics of ethanol could be improved by

more intensive use of byproducts such as bagasse,

stillage, and sugarcane leaves. Crediting revenues

from the sale of electricity or stillage for fertilizer

would reduce the cost of the ethanol operation. A

recent study illustrates some of the possibilities,

based on Brazilian conditions and assumin g the use

of three different cogeneration technologies.181 This

study found that with state-of-the-art steam turbine

technology (CEST), ethanol costs could be reduced

to levels competitive with gasoline, but the cost of

exported electricity would not be competitive with

most central station alternatives. More importantly,

the study found, the use of advanced gas turbine

cogeneration technologies (BIG/STIG and BIG/

ISTIG) could also lead to ethanol production costs

substantially lower than today’s level, and simultaneously to electricity production costs that would be

competitive in many cases with central station

alternatives.

176M. Fulrner, “Electricity-Ethanol Co-Production horn Sugar Cane: A Technical and Economic Assessment” MSE thesis, Mechani~ and

Aerospace Engineering Department Princeton University, Princeto% NJ, January 1991.

ITTJ4 Goldemberg and L.C. Monaco, ‘‘Ethanol as Alternative Fuel: Successes and Difficulties in Brazil,’ draft manuscript for Fuels and Elecfriciry

from Renewable Energy Sources, T, Johansson et al., (eds), forthcoming.

178J.M. ogden and M, ~~m, ‘ IAsses~ent of New Technolo@~ for Co.pI-Oductionof Alcohol, Sugm and Elw&ici~ From Sugw Cane, ’ PU/CEES

Report 250, Center for Energy and Environmental Studies, Princeton University, Princeto@ NJ, 1990.

179M. F~er, t ‘EIW~ci~-E~nol Co-fioduction From Sugw Cane: A T~hnic~ and E~nomic Assessment, ” MSE tiesis, Mechanical and

Aerospace Engineering Departrnen4 Princeton University, Princetou NJ, January 1991.

IBoJ.M. Ogden and M. Fulmer, “Assessment of New Technologies for Co-Production of Alcohol, Sugar and Electricity from Sugar Cane,’ PU/CEES

Rpt. 250, Center for Energy and Environmental Studies, Princeton University, princeto~ NJ, 1990.

la Isee J.M. Ogden, R.H. Williams, and M.E. Fulmer, ‘‘Cogeneration Applications of Biomass Gasifkr/Gas ~bine Technologies in the Cane Sugar

and Alcohol Industries,” Energy and Environment in the 21st Century (Cambridge, MA: MIT Press, 1990); M. Fuhner, “Electricity-Ethanol

Co-Production from Sugar Cane: A Technical and Economic Assessment” MSE thesis, Mechanical and Aerospace Engineering Departmen~ Princeton

University, princeto~ NJ, January 1991.
Chapter 6---Energy Conversion Technologies . 225

Table 6-23—Required Production Cost of Ethanol for Competition With Wholesale Gasolinea

Much of the controversy over alcohol programs

centers on its indirect social and economic impacts.

The Brazilian PROALCOOL program-the only

large scale program yet in developing countries—

has been considered successful in achieving three of

its major initial goals: reduced dependence on

foreign oil, increased employment, and expanded

capital goods (distillery equipment) production capabilities in Brazil.182

Its success in creating jobs is, however, ambiguous. On the one hand, the current program supports

about 800,000 direct jobs, or 570,000 full time

equivalent jobs. The labor intensity of the industry

is much greater in the Northeast, the area of greatest

unemployment, than in the South-Central region.

The capital invested to create these jobs—some

$32,000 per job in the South-Central region and

$8,200 per job in the Northeast-has been relatively

small compared to other industries. The average for

all industry in Brazil is some $53,000; for the paper

and pulp industry, $88,000; and for petrochemicals,

$250,000. On the other hand, the quality of jobs is

more debatable. The large component of seasonal

labor has led in some cases to low wages, poor

working and living conditions, and a lack of social

benefits for workers,183 especially in the Northeast.

One strategy has been to extend the harvest period

from 6 to 8 or 9 months by planting cane varieties

that mature at different times.

184 In addition to

extending the period of employment, a longer

production season increases output and improves

capital utilization.

The impact of the ethanol program on land use is

similarly debatable. Some 4.3 million hectares are

currently planted with sugar cane in Brazil, 185

compared with a total crop area of 52 million

hectares186 and a total potential agricultural area of

520 million hectares.187 About half the cane area is

devoted exclusively to ethanol production.188 Many

analysts appear to agree that cane production has not

displaced domestic crop production.189 On the other

hand, production of export crops such as soybeans

has been growing faster than domestic crops, due to

agricultural pricing policies that make export crop

production more attractive to farmers.190

ISZJ. Goldemberg, L.C. Momco ~d I. Macedo, ‘‘The Brazilian Fuel Alcohol Program,’ ‘Fuels and Electricityj70m Renewable Energy Sources, T.

Johansson et al., (eds), (forthcoming).

IS3H.S. Gel]er, “Ethanol from Sugarcane in Brazil, ” Annuai Review of Energy, vol. 10, 1985, pp. 135-64.

184fiid.

lssAnuario E~ta~i~tico do Brasil, IBGE, Rio de Janeiro, 1989.

~gbAgn”cultura[ Land Use Census, IBGE, Rio de Janeiro, 1985.

ISTF. Rosillo-Calle, “Brazil: A Biomass Society, ” Biomass: Regenerabie Energy (Chichester, United Kingdom: John Wiley& Sons, 1987), pp.

329-348.

ISEJ. Golde~rg, L.C. Monaco and I. Macedo, op. cit., footnote 188.

lsgsee H.S. Geller, “Ethanol from SugarCane ~ B~fl, ’ Annual Review of Energy, vol. 10, 1985, pp. 135-164; J. Goldemberg, L.C. Monaco and 1.

Macedo, Op. cit., footnote 188, F. Rosillo-Calle, ‘‘Brazil: A Biomass Society,’ Biomass: Regenerable Energy (Chichester, United Kingdom: John Wiley

& Sons, 1987), pp. 32948.

1~H.S. Geller, “Ethanol from Sugarcane in Brazil, ” Annual Review of Energy, vol. 10, 1985, pp. 135-64.
226 ● Fueling Development: Energy Technologies for Developing Countries

Ethanol From Lignocellulose

The high costs of sugarcane (and corn in the

United States) has motivated efforts to convert lower

cost biomass, primarily woody and herbaceous

materials, into ethanol. These feedstocks are less

costly largely because they do not compete as food

crops. However, they are more difficult (and to date

more costly) to convert into ethanol. Woody and

herbaceous biomass, referred to generally as lignocellulosic materials, consist of three chemically

distinct components: cellulose (about 50 percent),

hemicellulose (25 percent), and lignin (25 percent). 191 Most proposed processes involve separate

processing (either hydrolysis or enzymatic) of these

components. In the first step, pretreatment, the

hemicellulose is broken down into its component

sugars and separated out. The lignin is also removed.

The cellulose is then converted into fermentable

glucose through hydrolysis. Following fermentation, the products are distilled to remove the ethanol.

Byproducts of the separation process, such as

furfural and lignin, can be used as fuel.

Acid Hydrolysis—A number of variants on the

basic process have been proposed, each typically

involving use of a different acid and/or reactor

configuration. 192 One system incorporates two stages

of hydrolysis using dilute sulfuric acid. In the first

step, the acid breaks the feedstock down into simple

sugars. However, the acids also degrade some of the

product sugars so that they cannot be fermented, thus

reducing overall yield. R&D effort has been aimed

at improving the relatively low yields (55 to 75

percent of the cellulose) through the use of other

acids.193 Low cost recovery and reuse of the acids is

necessary to keep production costs down,194 but has

yet to be commercially proven.

The conversion process becomes more competitive when furfura1 production from the hemicellulose fraction is maximize d

195 and sold, but the

furfural market is too small to support a large scale

fuel ethanol industry. Byproduct electricity could

also offset ethanol costs, but the amounts of exportable electricity coproduced in process configurations

to date are relatively small. This situation might

change if more advanced cogeneration technologies

are considered.

Enzymatic Hydrolysis—In enzymatic hydrolysis,

biological enzymes take the place of acid in the

hydrolysis step. Enzymes typically break down only

the cellulose and do not attack the product sugars.

Thus, in principle, yields near 100 percent from

cellulose can be achieved. Typically, a feedstock

pretreatment step is required since biomass is

naturally resistant to enzyme attack. The most

promising of several options for pretreatment appears to be treatment by a dilute acid,196 in which the

hemicellulose is converted to xylose sugars that are

separated out, leaving a porous material of cellulose

and lignin that can more readily be attacked by

enzymes.

A number of bacteria and yeasts have been

identified and tested as catalyzers of cellulose

hydrolysis, of which three process configurations

have received the most attention from researchers.

●

●

In the Separate Hydrolysis and Fermentation

(SHF) of cellulose, three separate operations

are used to produce enzymes, hydrolyze cellulose, and ferment the glucose. The presence of

glucose produced during hydrolysis slows the

catalytic effect of the enzymes, thus increasing

costs of ethanol production. Some enzymes

have been identified that are less susceptible to

end product inhibition, but the improvement in

overall economics of the SHF process are

relatively modest.

A more promising modification of the SHF

process involves simultaneous saccharification

and fermentation (SSF), permitting higher prod-

‘slJ.D. Wright, “Ethanol from Lignocelhdose: An Ovemiew, ” Energy Progress, vol. 8, No. 2, 1988, pp. 71-78.

192C.E0 wp~ Op. cit., footnote 175.

ls~J.D. Wright, ‘Ethanol from Lignocellulose: An Overview, ‘‘ Energy Progress, vol. 8, No. 2,1988, pp. 71-78; See J.D. Wrigh4 A.J. Power, and P.W.

Bergerom “Evaluation of Concentrated Halogen Acid Hydrolysis Processes for Alcohol Fuel PmductioI&” SERVI’R-232-2386 (Goldeu CO: Solar

Energy Research Institute, 1985); C.E. Wyrnam Op. cit., footnote 175.

1S4J.D. Wright, A.J. Power, and P.W. Bergero% ‘‘Evaluation of Concentrated Halogen Acid Hydrolysis Processes for Alcohol Fuel Production,’

SERVIR232-2386 (Golden, CO: Solar Energy Research Institute, 1985).

195see p.w. Be~~erO~ J.D. Wfight, and C-E. WN ‘ ‘Dflute Acid Hy&olysis of Biomass for Ethanol ~ductio~ “ Energy from Biomass and Wastes

XII (Chicago, IL: Lnstitute for Gas Technology, 1989), pp. 1277-1296; M.M. Bulls et al., ‘‘Conversion of Celh.dosic Feedstocks to Ethanol and Other

Chemicals Using TVA’s Dilute Sulfuric Acid Hydrolysis Process,’ Energyfrom Biomass and Wastes XIV (Lzmdon: Elsevier Applied Science, 1991)

pp. 1167-1179.

19SJ.D. wrigh~ ‘‘Ethanol from Biomass by E-tic Hydrolysis, “ Chemical Engineering Progress, August 1988, pp. 62-74.
Chapter 6--Energy Conversion Technologies ● 227

uct yield and use of a single reaction vessel.

This improves the economics substantially.197

However, the yeasts and bacteria used in SSF

processes cannot ferment xylose sugars to

ethanol. Incorporating xylose fermentation with

SSF cellulose fermentation promises significant reductions in cost for ethanol from biomass.

198

● Single reactor Direct Microbial Conversion

(DMC) combines enzyme production, cellulose hydrolysis and glucose fermentation in a

single process, In limited efforts to date,

however, DMC ethanol yields have been lower

than for the SHF or SSF processes, and a

number of undesired products in addition to

ethanol have been produced.

The next anticipated advancement is increased

xylose conversion to ethanol, which would double

efficiencies to 50 percent and reduce capital costs. If

this target can be achieved at a commercial scale,

hydrous ethanol from enzymatic hydrolysis might

become competitive with gasoline when the crude

oil price is as low as $20 per barrel, with most of the

cost in the feedstock. Advances in this technology

and in biotechnology more generally, suggest economically competitive commercial systems might

be developed by the year 2000.

197JD wn~g CE, Wwu ~d K. Gm_ Simultaneous Succhunficution and Fermeruation of Lignocelhdose: process Eva/~tion (Goldew CO:

Solar Energy Research Institute, 1988).

lsaL.R. Lynd, et al., ‘‘Fuel Ethanol From Cellulosic Biomass,” Science, vol. 251, No. 4999, March 1991, pp. 1318-1323.
Chapter 7

Energy Resources and Supplies

Photo credit: Jennifer Cohen
Contents

Page

INTRODUCTION AND SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231

OIL AND GAS SUPPLY... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233

Oil and Gas Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234

Oil and Gas Exploration and Production Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . 236

Institutional Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .241

The Special Characteristics of Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243

policy options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243

COAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244

Coal Reserves and Consumption in the Developing World.. . . . . . . . . . . . . . . . . . . . . . . 244

Coal Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 245

Coal Cleaning Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246

BIOMASS RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247

Agricultural/Industrial Residues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248

Forest Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250

Energy Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
Chapter 7

Energy Resources and Supplies

INTRODUCTION AND SUMMARY

Developing countries are projected to require

substantial increases in primaryl energy supplies.

The World Energy Conference predicts that with an

annual economic expansion of 4.4 percent, the

developing countries will require more than a

three-fold increase in commercial energy supply by

2020.2 An increase on this scale raises issues of the

availability of financial resources, the extent of the

domestic energy resource base, and the environmental impacts of rapidly expanding energy production.

Attention has already been drawn to the large

investments in the electricity sector. Roughly similar amounts are invested in fossil fuel production,

mainly oil and gas. As in electricity, much of the

investment is in the form of foreign exchange,

though unlike electricity, private foreign investment

plays a much greater role. In addition to investments

in domestic energy production, developing countries

also incur large foreign exchange costs for imported

energy, in some cases accounting for 40 percent and

more of total export earnings. As consumption

continues to rise, import dependence could rise, or in

the case of exporting countries, the export surplus

could disappear.3

These considerations focus particular attention on

technologies that could develop domestic energy

resources, while minimizing the environmental impacts of rising domestic energy production. Coal,

already the largest single source of fossil fuels in the

developing countries, presents both opportunities

and problems. Coal resources are much more

abundant than are oil and gas, though coal is widely

used in relatively few developing countries—

notably India, China, and South Korea. As these

countries are among the biggest energy consumers

of the developing world, coal accounts for almost

one-third of total developing-country energy consumption. Many other countries in Asia, Africa, and

Latin America also have significant proved or

probable coal reserves.

In addition to its abundance, coal has other

advantages. Per unit of heat value, coal is cheaper

than oil and, in most cases, gas. Coal is a familiar

fuel with a long established technology. Finally, coal

mine capital costs are low and in many countries

have a high content of locally manufactured goods

and services.

At the same time, coal suffers from serious

disadvantages. As a solid fuel it is difficult to handle

and transport, and is less versatile than oil. Its

variable and frequently poor quality discourages the

use of advanced combustion technologies and may

contribute to poor power plant performance. There

are also significant environmental drawbacks to all

phases of coal production, from mining to combustion. Mining operations can cause local air and water

pollution and are associated with severe occupational health hazards. Coal combustion results in

large amounts of solid wastes and airborne pollutants, including acid rain precursors and the greenhouse gas, carbon dioxide. Carbon dioxide emissions from coal are higher per unit energy than those

from other fuels so that the projected rapid expansion in coal use will contribute to high levels of

greenhouse gas emissions.

Technologies exist to mitigate at least some of

these problems. The introduction of mechanized

open cast and longwall mining into those parts of the

still unmechanized Indian and Chinese industries

could improve productivity, reduce occupational

hazards, and reduce incombustible waste. The simplest coal cleaning techniques (physically removing

impurities such as dirt and stones) could result in

I~c (cm ~ fp~v encr=’ includes fossil fiels (such aS COal, crude oil, gas) and biomass in their crude or raw state before Proc~sing into a ‘om

suitable for usc by consumers. The term also includes electricity generated by geothermal, wind and solar resources, and nuclear power. Electricity

generated from fossil fuels or biomass is not included in primary energy to avoid double counting.

World Energy Conference, Global Energy: Perspecti>’es 2000-2020, Conservation and Studies Committee 14th Congress Montreal 1988 (London,

England: World Energy Conference, 1988), tables 3 and 5.

3Accord1ng t. one study of 15 major enerD com~g developing countries, if the trends of the 1980s and 1990s contiued into me fu~e! oil imPort

dependence in the five oil importing countries would reach around 88 percent of the total oil needs by 2010 (compared with 37 percent in 1988) and

three oil exporting developing countries could become oil importers (Mudassar Irnran and P. Barnes, Energy Demand in the Developing Countries:

Prospecfsfor (he Furure, World Bank Staff Commodity Working Paper No. 23 (Washington, DC: World Bark 1990).

–23 1-

297-929 - 92 - 16 - QL :3
232 ● Fueling Development: Energy Technologies for Developing Countries

important benefits such as reduced airborne particulate, lower transport cost, increased plant availability, and the use of higher performance coal burning

equipment.

Despite the promising resource situation, there

exist several obstacles to the further development of

coal in many of the developing countries. In many

cases, governments (especially in countries without

domestic resources) give coal a low priority, preferring other forms of energy. Both China and India are

exceptions; with well established industries, they are

committed to a rapid expansion in output (doubling

by 2010). Shortages of capital, the ready availability

of low-cost labor, and other factors, however, may

deter the introduction of improved production technologies. Finally, global climate change negotiations may ultimately limit the use of coal due to its

high level of carbon dioxide emissions per unit

energy.

The United States is a leader in coal production

and combustion technologies. Recognizing these

opportunities, the U.S. Department of Energy (DOE)

has established programs to explore export opportunities for American coal-based technologies in

developing countries.

For most of the developing countries (India and

China are the major exceptions), oil is the mainstay

of their commercial energy supplies, accounting for

about two-thirds of the total. Oil is easy to transport

and versatile in use in all sectors, at all scales of

operation. These qualities led to an average annual

growth of 4.5 percent in oil consumption in the

developing countries from 1971 through 1987. This

growth is expected to continue at almost the same

rate (4 percent) in the future. In the absence of

sizable increases in domestic production, import

dependence will rise sharply.

The developing world4 possesses only limited

crude oil reserves with a reserves/production ratio of

26 years, compared with a worldwide ratio of 43

years. These reserves are concentrated in a few

countries; one-half of the developing countries do

not have any discovered recoverable reserves. The

industry consensus is that oil reserves likely to be

proved in developing countries will be relatively

small. Development of such fields, while traditionally not attractive to the major oil companies, is

important for the developing countries themselves,

especially the poorer ones.

A number of recent technical developments in oil

exploration and development may reduce risks and

costs, thus making small field development more

attractive than before, particularly for smaller oil

companies. These technologies include 3-D seismic

modeling, advanced drill bits, slim hole drilling,

directional drilling, and innovations in offshore

production. These technologies could also benefit

exploration for gas, a relatively undeveloped resource.

5 Many developing countries, including several poor sub-Saharan African countries,6 have

significant natural gas reserves, and the number of

nations with proven gas resources is following an

upward trend.

Despite promising geological prospects, the degree of exploration activity (density of wells drilled)

in the developing countries is much lower than the

world average, and is concentrated in countries

where resources have already been developed. In the

developing world, investment in petroleum exploration and development is carried out (with the

exception of a few, large-population, countries)

almost exclusively by international oil companies.

Thus the fiscal and contractual arrangements between country and company are important in providing the appropriate incentives. These incentives

have traditionally been biased in favor of large, low

cost rather than small, higher cost fields. Gas

development faces additional obstacles. Unlike oil,

markets have to be developed simultaneously with

the resource, thus adding to the start-up costs and

complexity of gas projects. Moreover, gas sold in

local markets does not directly generate the foreign

exchange needed to repatriate profits to foreign

investors.

Efforts are already being made to overcome some

of these obstacles. The multilateral development

banks, notably the World Bank, finance preinvestment studies, help countries towards agreements

with foreign investors, and encourage the development of fiscal systems and financial agreements

4~c dcf~tion of “deve@ing ~orld}’(~ch. 2) includes sever~ OPEC co~~es but not tie high income organization of P@OkXUIl Expofiing

Countries (OPEC) members, such as Saudi Arabia.

me gas reserves/production ratio for the developing world is about 88 years, which is significantly higher than the 32.4 years for crude oil,

6Moz~ique, E~opi~Sowa, Wagmcw, C6te d’Ivoire, Equatorial Guinea, Sud~ Senegal, Tanzania, and Ntibia.
Chapter 7--Energy Resources and Supplies ● 233

recognizing the special characteristics of gas. Given

the importance of oil and the great potential of gas, ’

there is room for further extension of such programs.

For the longer term, renewable forms of energy

offer the potential for sustainable, domestically

produced energy supplies. As discussed in chapter 6,

extensive hydro, wind, solar, and geothermal resources are present in many countries, and indeed

are particularly abundant in some of the poorest.

Chapter 6 also showed that there are opportunities to

convert biomass fuels into modern efficient energy

carriers. The question here is to what extent the

feed stock for a modern biomass conversion industry

can be supplied at a competitive price on a truly

sustainable basis, without major adverse environmental and social impacts.

Developing countries have the potential to greatly

improve utilization of their biomass energy resources. Large scale use of modern biomass energy

technologies could have major advantages for developing countries, and for the world. If produced on a

sustainable basis, biomass would not add to net

greenhouse gas emissions. If substituted for fossil

fuels, sustainably grown biomass could actually

decrease greenhouse gas emissions as well as

improve local environments through reduced emissions of SO2 and NOX

. As an indigenous resource,

biomass could reduce energy import dependence

and stimulate rural development.

In practical terms, there are several obstacles to

the development of dependable and large scale

biomass supplies for a modern biomass industry.

Data on the extent of forest area and the annual

increment of forest growth are sparse and unreliable,

creating uncertainty over how much biomass can be

produced and collected. There is also uncertainty

over costs; current estimates suggest that woody

biomass could be available at the competitive price

of $2 per gigajoule (GJ) ($1.90 per million British

thermal units (BTUs)), but this estimate will be

subject to wide local variations. The basic incentives

to growing biomass, however, are often absent.

Improvements in forest management are notoriously

difficult to achieve, and the introduction of high

yield field crops will require long term sustained

efforts. The long term environmental impacts of

sylvan monoculture and high yield crops are unknown.

There are also difficulties setting up a large scale

commercial biomass feedstock industry in rural

areas with inadequate infrastructure, especially when

national pricing policies often favor established

energy supply industries. Meshing a commercial

biomass industry with the current, largely noncommercial usage of biomass could raise problems of

access to traditional fuel supplies by the poor and

issues of equity between Landholders and the landless. In many developing countries, energy plantations might compete with food crops for limited land

resources, particularly as populations continue to

grow. Existing biomass resources (dung, agricultural residues) may have important uses other than

fuel, including livestock feed, fiber, and fertilizer.

Any diversion of land or resources could adversely

affect the poor, through decreased availability of

food and previously “free” fuel, fodder, fiber, and

fertilizer,

In the technical arena, several advances have been

made in improving plant productivity in recent

years. Physiological knowledge of plant growth

processes have improved, particularly through biotechnology. These and other efforts have identified

and developed fast growing species. Planting methods, such as intercropping, have also improved.

Successful experiments with crop residue densification have increased energy content, reducing transport and handling costs. The United States has

contributed to these and other technology improvements through experimental trials funded by the

U.S. Department of Energy and the U.S. Department

of Agriculture, and has unrivaled experience with

agricultural extension. Many institutional issues and

uncertainties will have to be addressed, however,

before large scale biomass feedstock supplies can be

developed beyond existing agricultural and forestry

residues.

The most promising innovations for biomass

resources have been in waste-to-energy technologies. Agricultural and industrial wastes, such as

sugar cane residues (bagasse, etc.) and sawdust, are

readily available energy resources in developing

countries. Many developing countries do not now

use these resources, or use them inefficiently.

OIL AND GAS SUPPLY

For most of the developing countries (India and

China are the major exceptions), oil is the mainstay

of their commercial energy supplies, accounting for

about two-thirds of the total. Oil is easy to transport

and versatile in use in all sectors and at all scales of
234 ● Fueling Development: Energy Technologies for Developing Countries

operation. These qualities led to an average annual

growth of 4.5 percent in oil consumption in the

developing countries from 1971 through 1987.

Projections of energy consumption in the developing countries7 foresee a continuation of this rapid

rise, though at a slightly lower rate—about 4

percent. Domestic production of oil in the developing countries is projected to stabilize or even

decline, so that the level of imports rises sharply. For

five major oil importing countries (Brazil, India,

Pakistan, Philippines, and Thailand) oil import

dependence is projected to rise from 37 percent now

to over 80 percent by 2010. Over the same time

period, a group of oil exporting developing countries

(China, Indonesia, Malaysia) could become net

importers.

Such developments would impose severe strains

on the foreign exchange budgets of these countries.

Half of the oil-importing developing countries

already must import over three-quarters of their

commercial energy requirements in the form of

petroleum products.8 For many of the poor African

countries, foreign exchange budgets are already

strained by oil imports, which account in several

cases for 50 percent and more of total foreign

exchange earnings.

This imbalance between projected consumption

and production underlines the need for improving

energy efficiencies, and the substitution of other

cheaper fuels for oil where possible. The imbalance

also suggests that opportunities to increase domestic

production of oil, gas, and other fuels should be

pursued. Many of the developing countries have

under-utilized known reserves of oil and natural gas.

Recovery of these reserves and resources could

bring in foreign exchange through exports, or could

supply domestic energy markets. Many factors are

involved in the successful exploration, production,

and marketing of oil (and even more with gas).

These include the size and nature of the resource

base, the availability of suitable technology to

develop these resources, and the complex institutional factors that determine the incentives for

investors to engage in oil and gas development.

Oil and Gas Reserves

The starting point is the resource base.9 The

world’s proved recoverable crude oil reserves10 total

approximately 932 billion barrels (see table 7-l).

The Middle East accounts for two-thirds of the total.

Outside the Middle East, the former Soviet Union

has the largest share-about 80 billion barrels. The

developing world possesses only 17.5 percent of

world crude oil reserves. About half of these are in

Latin America of which three-quarters is in just two

countries, Mexico and Venezuela; the other half is

divided almost equally between Asia and Africa.

Only one-half of the developing countries have

discovered recoverable reserves.

Assuming a static rate of production and discovery, and of population growth, the developing world

has a reserves/production ratio of 26 years, com7Mu&ssm Wm and Philip Barnes, Op. cit., foo~ote 3.

‘T. Gorton, “Petroleum in the Developing World,” contractor report prepared for the OffIce of Technology Assessme@ July 1990, p. 1.

me estimation of hydrocarbon reserves involves more than a geologically based analysis of the original or remaininghydrocarbon endowment.

While the amount of oil originally generated or thought to have been trapped and potentially available is a scientMc question (though still subject to

differences of opinion), there are additional factors involved in assessing actual reserves: how much oil and gas has actually been proven to exist at the

present time? How much is economically producible (that is, the value of the production brought to market exceeds the costs of producing and

transporting it)? At what point will discovered but currently uneconomic resemes become viable, if ever? These nongeological factors include the price

that reserves produced in the middle to distant future will fetch, and even the uses to which it will be put and the political relations along the spectrum

of producers and consumers. There are a multitude of uncertainties in estimates of the petroleum resource base.

10~rove~ ~ecoverable ~eSeWeS ~defied by the Swiety of pe~ole~ En@~rs m fo~ows. proved reserves can be estimated wdth m~o~blc

certainty to be recoverable under current economic conditions. Current economic conditions include prices and costs prevailing at the time of the estimate.

Proved reserves may be developed or undeveloped. In general, reserves are considered proved if commercial producibility of the reservoir is supported

by actual production or formation tests. The term proved refers to the estimated volume of reserves and not just to the productivity of the well or reservoir.

The salient points in this deftition are the word “reasonable’ applied to the certainty required; and the criterion of ‘current economic conditions. ’

This recognizes the fact that certainty is unattainable in this endeavoq and that reserves will not be counted if they are not economic to produce at the

present time. Discovered resemes that are expected to become economic under the market conditions they expect to prevail at a given time in thefurure

are not included; besides most of the shale oil, tar sands, and deep offshore oil (which may or may not be exploited even under future high-price scenarios),

this excludes reserves closer to viability such as the Orinoco Heavy Oil Belt in Venezuela. While this is a restrictive definition in some respects, it has

the advantage of economic realism at least over the next 30 years or so.
Chapter 7-Energy Resources and Supplies ● 235

Table 7-l—World Oil and Natural Gas Resources

Proved oil Proved gas

reserves reserves

Billion Percent share Trillion Percent share

barrels of world cubic feet of world

World . . . . . . . . . . . . . . . . . . . . 932 100 3,997 100

Developing countries . . . . . . . 163 17 727 18

Latin America . . . . . . . . . . . (81) (9) (240) (6)

Asia . . . . . . . . . . . . . . . . . . . (40) (4) (247) (6)

Africa . . . . . . . . . . . . . . . . . . (42) (4) (240) (6)

SOURCE: T. Gorton, “Oil and Gas Development in Developing Countries,” OTA contractor report, 1991.

pared with a worldwide ratio of 43 years.l1 There are

wide variations among developing countries: Mexico is expected to produce oil at current rates for

another 35 years (though there is much controversy

over South American reserves in general and Mexican ones in particular), while Pakistan will exhaust

current reserves in 9 years, Cameroon in 8, Gabon in

12, and Peru in 7 years.

Estimates of world oil reserves change over time

as new reserves are discovered or reevaluated.

According to the World Energy Conference, as well

as other authoritative current estimates, global

proved reserves have been revised upward by 32

percent over the past 3 years,l2 due to successful

exploration and exploitation activities.l3 Decreases

in drilling and other oilfield costs over the past 5 or

6 years also have led to reserve increases. In so far

as future developments in technology (see below)

lead to lower exploration and drilling costs, reserves

will further increase. The industry consensus is that

oil reserves likely to be proved in developing

countries will be relatively small in size. Although

such fields may not add much to the overall global

supply, they are very important to the developing

countries themselves.

While gas is a fuel and feedstock that in many

ways is as useful as crude oil, it is relatively

undeveloped. Worldwide proved reserves of natural

gas amount to some 4,000 trillion cubic feet (TCF),

providing 1988 production of about 67 TCF per

year.

14 At those rates, the world’s natural gas

reserves will last for 60 years, about half again as

long as global proved crude oil reserves. The

developing nations account for 18 percent of global

raw natural gas reserves, but only 13 percent of

global natural gas consumption. This suggests that

these countries are not taking full advantage of their

endowment of natural gas resources. The reserves/

production ratio for the developing world is about 88

years, which is significantly higher than the 32.4

years for crude oil in these countries.

At least 52 developing countries have significant

natural gas reserves (about 10 more than the number

of nations that possess oil reserves). Several poor

sub-Saharan African countries that are greatly in

need of additional energy supplies contain undeveloped gasfields: Mozambique, Ethiopia, Somalia,

Madagascar, Cote d’Ivoire, Equatorial Guinea, Sudan,

Senegal, Tanzania, and Namibia. Furthermore, the

number of nations with discovered reserves has

1 I It S} N)uId bc kepl In mind here, w for the discussion on Natural Gas reserves below, that (he definition of reserves docs not include udiscover~

resources or growth of cxlsting flclds through mvestmcnt or reevaluation. This figure is also distorted by the enormous reserve ‘‘overhang’ from Middle

East OPEC countries (with an average oil rcscme/production ratio of over 100 years even by conservative estimation). This figure also obscures that

the posltmn of the industrialized oil producers is much further along the decline-and-depletion curve.

1l~.c)rl(f Frlcr&,r Confercncc, op cit., footnote 2, p 35

1 ?ll, the mid- l~7~s, tic non.OpEC developing nation ~man, for example, was exp~ting i~S production to level off at about 330,~ barrels per day

(b/dj In 1977 and declmc to dcplctlon within 5 years Production is now Cumntly over mo.000 b/d and holding steady.

I 4Tt1cSc fjgur~s do not include 4‘ natural gas hquids (NGLs) or Iiquld hydrocarbons which, though generally gaseous under originaf reservoir

condltluns of tcmpcr;iturc and pressure, may be separated or extracted from the gas at the wcllhead and produced as condensate (also called ‘‘natural

gasol]nc ) and liquefied petroleum gas (LPG), the latter rcfcrrmg to butane and propane fractiorLs that arc separated from condensate and sold in bottled

form as fuel. Though NGLs share m~ny of the uscs :ind economic properties of crude 011, NGLs arc generally comidcred logctfrcr with natural gas reserves

(of which they are a constituent part in the reservoir) for the purposes of global or national energy supply analysis. This is defensible because all the

cconomlc properties of NGLs produced from a gi~cn gas ficl[i arc dctcrrnined by the general reservoir and other parameters of that field, so that the

‘‘wetness’ or richness m NGLs of a glvcn gas flcld is best treated as part of the quallty description of the gas field rather than as a separate resource.

For project-specific economic analysis, however, the NGL production stream is always given separate treatment because it is generally marketed very

differently from the ‘ ‘dry’ gas left over after (he Iquids have been rernovcd. Worldwide NGL reserves total about 65 billion barrels.
236 . Fueling Development: Energy Technologies for Developing Countries

followed an upward trend. While only 40 nations of

the world claimed to possess natural gas resources in

1960, 85 countries claimed natural gas reserves by

1987.15 Some observers have noted that natural gas

reserves in developing nations are underestimated

because the majority of discoveries have been a

by-product of the search for crude oil. There has

been little exploration for gas itself. The opportunities for discovering non-associated gas in the developing world have yet to be fully explored,16 

especially as gas costs are competitive and expected to

remain so.17 In the developing nations, a significant

amount of natural gas is lost through flaring

processes; in 1975, 80 percent of all natural gas

produced in oil producing developing nations was

flared. 18 In Nigeria, 97 percent of natural gas is

currently flared.

Aside from its relative abundance and competitive costs, gas also is attractive for its environmental

considerations. While coal produces 25 kilograms

(kg) of carbon per GJ (this number is a weighted

average of industry and utility), oil produces 19 kg

of carbon, and natural gas only 13.6 kg.

However, geologic promise is not a sufficient

condition for investment in exploration activity .19

Whether such promises lead to exploration and

production depends on a number of factors, including developments in technology and economic

incentives.

Oil and Gas Exploration and Production

Technologies

In the developing world, investment in petroleum

exploration and development is carried out (with a

few exceptions) by international oil companies,

many of which are American. American companies

are, therefore, key players in determining the type of

oil and gas supply technologies used. At the same

time, the developing countries offer a major market

for U.S. hydrocarbon development services.

The two major and complementary components

of exploration for oil and gas are characterization

and exploration drilling. Characterizing a reservoir

helps to determine the best area to drill, and material

uncovered by exploratory drilling helps characterize

in detail the subsurface.

Drilling can be the most expensive component of

exploration and development, costing anywhere

from 15 to 40 percent of offshore development costs,

and as much as 80 percent of the less expensive land

development costs.20 Disposal of wastes accounts

for a portion of these costs. Exploration and production activities produce brine, drilling muds-a

combination of water, clay, and various chemicals—

and rock cuttings that must be discarded. There may

be as much as 50 tons of mud to dispose of by the

time a well is completed.21 Offshore, these muds are

generally discharged into the surrounding waters.22

Onshore, the mud wastes are disposed of on land or

through reinfection processes. Land disposal of

wastes has to be managed carefully to avoid

contamination of ground and surface waters.

Technological advances have decreased the high

costs and mitigated the environmental problems

associated with exploration and drilling. These

exploration technologies are applicable to developing countries and are already used in some places.

United States companies enjoy the technological

lead in this area, particularly in identifying smaller

reservoirs. 23

Characterization technologies consist of compiling and analyzing geological and geophysical inforISworld Energy conference, Suney of World Resources 1989, p. 61

lb~saneh Mashayekhi ‘‘Nawal Gas Supply and Demand h kSS Developed Counties, ” Annuul Review of Energy, vol. 13, 1988, p, 122

171bid+

18Jae ~ond~~d John M. Reilly, Global ~~ergy: Assessing ~~e FUf~e (NCW York: Oxford University press, 1985).

19sW discussion inl-ku-ry G. Broadman “Determinants of Oil Exploration and Development in Non-OPEC Developing Countries, ’ Discussion Paper

D-1 14, Resources for the Puture, 1983, and “An Econometric Analysis of the Determinantts of Exploration for Petroleum Outside North America,”

unpublished manuscript.

mshell Bri~@ Sala, Producing Oil and Gas @ndon: Group ~blic Affs@ Shell ~ternational Petroleum company, Ltd. 1989), p. 2.

zlu~ted Nations Dep@ent of T~hnic~ Cooperation for Deve10pm~4 Energy andEnvironment: 1mpczcts and Confro/s mew Yo~~: Octob~

1990), p. 15.

22u.s. Dep~ent of Ener~, ~sis~t s~re~ for the Environment, office of T&hnoIogy Impacts, Environmental Data Energy Technology

Churactenzations: Perroleum, April 1980, p. 1-9, 1-10.

~RCG/Hagler, Bailly, Inc., WaSh@tOU DC, “U.S. Exports of Oil and Gas Exploration and Production Equipment and Services, ” a &aft paper

prepared for the Agency for Irnernational Development OffIce of Energy, 1990, p. 6.
———

Chapter 7--Energy Resources and Supplies ● 237

mation on a given reservoir. Characterization enhances three important stages of exploration. In the

first stage, specialists choose the location for “appraisal wells” (wells that define a reservoir and

provide data for more detailed characterization). In

the second, they perform the detailed geological

characterization and analysis, including the likelihood of finding a commercially viable well. And

finally, if hydrocarbons are found, they assess the

properties of the reservoir that will affect production.

Advances in these three stages of geophysical

research greatly enhance the likelihood of successful

drilling. The costs of this sophisticated research have

declined so that these technologies increasingly are

used worldwide.24 Lowered costs may allow marginal or small fields, often found in developing

countries, to be economically viable. In addition,

detailed knowledge of a reservoir before production

can lessen negative environmental impacts, including contamination of subsurface water supplies.

The principle characterization tool in the three

stages of exploration is Computer-Aided Exploration and Development (CAEX), also called 3-

dimensional seismic modeling. 3-D seismic modeling is based on information on regional and reservoir

geology, as well as material samples from a particular site. Petrophysical studies provide data on types,

porosity, hydrocarbon saturation, permeability and

capillary pressure of the reservoir rock, as well as on

the nature of trapped hydrocarbons.25 A detailed

analysis of extremely small fossils, found on the

surface or in wells, helps identify precise rock

intervals and ages. Geochemical tests are used to

predict the existence and thermal maturation qualities of rocks that may hold oil.26

The 3-D seismic studies take this geophysical and

geological data, process them on a minicomputer,

and turn the data into ‘‘reservoir maps. ’ The maps

describe the “trends in sand quality, structural

properties, and tectonic history” of an area, providing a 3-D picture of the reservoir.27 A second

“reservoir simulation” model, derived from the

geological model, tests and forecasts the production

performance of a reservoir. Although the simulation

model usually requires computers that may not be

widely available to developing countries, other

stages of characterization are within reach. In

addition, material left-over from older, ‘ ‘unsuccessful” drilling can be used in the analysis, expanding

the knowledge base of a reservoir without the

expense of acquiring new raw data.28

The oil business is almost by definition a risky

one. No matter how sophisticated the techniques for

evaluating the possibility of a find, the final answer

can only come through the expensive process of

drilling a well. Worldwide, about 9 out of 10

exploratory wells are dry or recover only subcommercial quantities or qualities of hydrocarbons.

Improved drilling technologies, by reducing the

element of risk, can enhance the discovery of

commercially viable oil and gas wells. Exploration

drilling has especially benefited from advanced drill

bits, slim hole drilling, directional drilling, and

measurements-while-drilling.

●

●

Advanced drill bits. Drills must be sharp and

durable to cut through rock, and they must also

carry the rock cuttings and drilling muds out of

the well to the surface. A sharp drill bit allows

a high penetration rate, and a faster drilling

process. Drill bit durability also speeds the

process by cutting the number of times drilling

must stop for replacement of worn bits. In the

past, there was a trade-off between durability

and sharpness, but advanced drill bits allow for

both, decreasing overall drilling time and costs.

American companies have the technological

lead in advanced drill bits.29

Slim hole drilling. A simple and highly costeffective drilling technology is slim hole drilling. Reducing the size of a bore hole reduces

the costs of drilling a well for exploration or

production by up to 50 percent.30 Bore holes are

lined with heavy steel pipes, which are cemented into place to prevent collapse or con24GofioL op. Cit., fOOhIOk g> p. 11.

fishe~ Bfiefixlg service, op. cit., footnote 20, p. 1.

‘2bGoflon, op. cit., footnote 8, p. 11.

27Shell Briefing Service, op. cit., footnote 20, p. 1.

~Gofion, op. cit. footnote 8, p. 11.

NRCG/Hagler,B~lly, ~c, op. cit., foohote 23, p. 8.

~She~ Briefing se~im, op, cit., footiote 20, p. 2.
238 ● Fueling Development: Energy Technologies for Developing Countries

●

.tamination from surrounding fluids. Both the

process and materials can be costly, and a

smaller hole cuts costs. Although some of the

detritus brought up out of a bore hole is

analyzed, much is waste. Slim hole drilling is

environmentally desirable as it reduces the

amount of waste muds and rock cuttings-as

much as 70 percent. Characterization information can be used to determine the smallest hole

that can be drilled without compromising

effectiveness in gathering core material or

conveying gas and oil.

Directional drilling. In the past, drilling was

only vertical, chiefly leading to the discovery of

deposits oriented along the vertical bore hole.

Some deposits, however, deviate from the

vertical pattern. New drilling technologies

allow for flexible directional or horizontal

drilling, which allows the drill to probe horizontally into previously inaccessible wells.

Directional drilling is already being used in

developing countries. For example, the American company Amoco extensively used horizontal drilling offshore in China in 1989.31

In exploratory drilling, whether exploring for

appraisal or for an actual deposit, constant measurements are necessary. The angle, depth, and diameter

of the bore hole must be monitored, mostly by

tracking the position of the bit.32 Information on the

condition at the far end of the hole also needs to be

measured. Conventionally, drilling is periodically

halted and directional surveys and wireline logging

(lowering special measuring instruments into the

drill hole) are used to determine when drilling is

complete. A new technology for this process is

‘ ‘measurement-while-drilling. With this technology, the measurement instruments are incorporated

into the drill above the bit, transmitting information

to the surface while the drill is in operation.

Measurement-while-drilling (MWD) allows for continuous drilling, which saves money, and provides

more information than conventional wireline logging, MWD can provide detailed directional surveys

and data on the environment surrounding the drill,

including electrical resistivity, density, natural gamma

ray radiation, and porosity .33

Drilling technologies benefit exploration, but in

many cases, they also benefit production. Directional drilling is a particularly useful new technology for recovering oil and gas. When a bore hole

passes through a deposit, oil or gas flows through a

perforated casing at the bottom of the pipe. Conventional vertical drilling may bypass horizontally

deposited wells, causing only a small amount of the

deposit to flow through the perforations. Such fields

are therefore abandoned. If further recovery is

attempted with the conventional technology, numerous vertical bore holes have to be drilled, driving up

production expenses and increasing environmental

risks. With directional drilling, however, these

horizontal deposits can be recovered by drilling one

well, making previously unproductive fields more

accessible and attractive.

For offshore production, extended-reach wells are

drilled diagonally from a platform, allowing access

to a larger area than vertical drilling allows. Ocean

platforms are expensive to construct and maintain,

especially in deep water. Extended-reach can cut

costs by reducing the number of platform installments required for one field.34

A key stage in the production process is recovery,

or drawing the deposit from underground to the

surface. Oil and gas will flow from a reservoir at

varying rates, depending on the environment around

the deposit and the bore hole. An ideal reservoir

environment would include: a fairly simple layout

that enables easy drilling access to the deposit;

highly permeable rock; crude oil or gas with low

viscosity; and natural pressure in the reservoir

exceeding that in the bore hole.35

In such an ideal case, oil or gas can flow unaided

to the surface. This ‘‘primary recovery’ involves

natural drive mechanisms, naturally occurrin g factors that help push oil and gas upward. Such

mechanisms ‘‘account for more oil production than

all other recovery methods combined.”36 In order

for gas or oil to flow into the bore, the pressure in the

~lGorton, op. cit., footnote 8, p. 11.

32RCG/H~gler, Bailly, Inc., op. cit., footnote 23, P. 7.

~lshell Briefing Service, op. cit., footnote 20, p. 2.

~RCG/Hagler,Bailly, Inc., op. cit., footnote 23, P. 7.

Jsshell B~eflng Service, op. Cit., fOO~Ote 20, p. 4.

Wbid.
Chapter 7----Energy Resources and Supplies . 239

surrounding rock must be more than that in the bore.

This natural drive can be enhanced by artificial lift,

which consists of reinfecting gas into the oil flowing

in the bore. Injecting gas enhances the pressure in the

reservoir, reducing the amount of natural drive

needed for an upward flow.

Well-stimulation technologies, such as fracture

stimulation and matrix stimulation, by improving

the permeability of the reservoir rock, also enhance

drive. Fracture stimulation involves actually cracking the rock by forcing fluid into the well at high

pressures, The cracks are propped open with a fine

sand, keeping the channels to the well open when the

applied pressure is released.37 Matrix stimulation

involves injecting a chemical solution into the rock

to dissolve any material blocking the pores. Fracture

stimulation is very expensive, and both techniques

must be applied carefully to avoid environmental

damage.

Many oil and gas fields in developing countries do

not have ideal conditions, A “tight’ or less than

ideal reservoir may require extra energy to move the

hydrocarbons to the surface. A growing proportion

of the world’s oil supply, particularly in the developing countries, comes from such ‘ ‘tight’ reservoirs .38

Conditions also become tight in older reservoirs, as

natural drive flags. A deposit extracted in these cases

is considered a ‘‘secondary recovery. ’ ’39 Although

the oil industry has the know-how to make a tight

reservoir more productive, these technologies are

not often applied in developing countries, for

economic rather than technical reasons.40

Secondary or enhanced oil recovery technologies

include thermal, gas, chemical, and microbial methods. Thermal oil recovery is the most common, and

has been used in some developing countries. In some

fields, the crude oil can be too viscous to flow out of

the rock formation. Steam or hot water can be

injected down the well, and the heat will decrease oil

viscosity and increase the flow rate. The gas method

is used when medium or light viscosity oil gets

trapped in pores during oil flows. The injection of a

gas into the bore can displace the residual oil, and

move it upward. Enriched hydrocarbon gas, carbon

dioxide, and nitrogen have all been used.

Chemical enhanced oil recovery is less common.

The natural drive mechanisms begin moving oil

when a well is drilled; underlying water displaces

the oil, providing the drive upward. A gas cap lying

above the oil may similarly force the oil upward in

the well. When entrained water is not providing

enough natural pressure (in an old well, for example), chemicals can be added. The chemicals modify

the water, changing the way the oil is displaced and

moved through the reservoir rock, These chemical

methods are technically difficult to execute, and can

be especially threatening to the subsurface environment.41

Although the United States leads in enhanced oil

recovery technologies, low oil prices have limited

the market for such techniques. In some cases,

however, foreign projects have been led by foreign

companies. For example, steamflood enhanced recovery in Venezuela is operated by the Venezuelan

companies Lagoven, Maraven, and Corpoven.42

Offshore Production

Since the construction of the first offshore platform in 1947, offshore oil production has come to

account for a growing share of world production, A

number of innovations are lowering the costs and

difficulties of offshore production, and the United

States has the lead in most of these technologies.43

There are offshore fields in many developing countries, and in particular, Brazil and Mexico have used

new technologies.

371bid.

381bid.

~~~c distinction betw~n prim~ and second~ recovery is not always clearcut. For example, tilCid lift and well stimulation ~e sometimes

considered technologies for secondary recove~.

4oGofion, op. cit., footnote 8, p. 13.

41~ere ~e Ofier ]C~S ~ommon techniques, Mimobl~ tCchno]o@eS ~e still ~ tie labomto~ stage, ~ough there may be some tiited field testing.

This method consists of rejecting microbes into the reservoir. These microbes generate carbon dioxide vapor pressure that forces the oil out. This

technology could be difficult in practice as conditions in rcscrvoir%no air and the presence of metal-are hostile to microbes. There is no evidence

to date to suggest that this could be done cost effectively. Another enhanced recovery technology that is not widely used is in situ combustion. Similar

to the thermal technologies, this involves burning some of the oil in the reservoir to generate heat and decrease the viscosity of heavy crude. One method

for doing this is to inject air underground, causing the combustion of a small amount of the oil.

42 RCG/Hagler, Bailly, Inc., op. cit., footnote 23, p. 9.

43~c unlte~ states dms not have a t~chnological lead in multipha.$e pumping. RCG~ag]er, Ba.illy, hc., op. cit., footnote 23, p. 11.
240 . Fueling Development: Energy Technologies for Developing Countries

Conventional offshore technologies can be very

expensive, especially in deep or rough water.

Traditionally, offshore production has required the

installation of permanent platforms with heavy

equipment and crew accommodations. Vertical drilling brings up deposits of oil, mixed with the gas and

other liquids often found in association with oil. Oil

has to be separated on the platform and then pumped

through underwater pipes back to shore for further

refining. Undersea maintenance of the platforms

also is costly. Wastes from offshore drilling, including residual oil, are often dumped back into the

ocean. There is some evidence that drilling and

production waste may be harmful to aquatic life. Oil

leaking and spilling from these operations makes up

about 10 percent of all oceanic oil pollution.44

Almost all aspects of offshore production have

been affected by recent innovations. In some developing countries, production costs may be reduced by

using tankers as floating storage for offshore production. This system is called ‘‘single-point mooring. ”

Single-point mooring may be especially valuable for

the small or marginal fields that become unfeasible

with the added costs of subsea pipelines. This

system may, however, increase the likelihood of

minor oil spills as oil is transferred from the platform

to the ship.

Platforms no longer have to be rigid structures

attached to the sea floor. Lighter platforms can float

on the surface, held in place by cables fastened to the

sea floor. This tension leg platform design with a

simplified deck or ‘‘topsides’ reduces the cost and

complexity of offshore production. Temporary drilling, also called jack-up rigs, packaged rigs, or

semisubmersible tenders, are particularly costeffective. Such rigs reduce capital costs by up to 25

percent, and operating costs by up to 40 percent.45

Staffing an ocean platform is expensive, and the

work is difficult and involves risks. The introduction

of lighter and less complex rigs allows for easier

operation and maintenance. In addition, two technologies allow for automated platforms: remotely

operated vehicles and multiphase pumping. Remotely operated vehicles are underwater maintenance robots that repair subsea pipes and valves.

Multiphase pumping eliminates the need for crews

to separate the oil from its accompanying liquids.

Multiphase pumps can pump oil, gas, and other

condensates back to land-based production facilities. With such pumps, small platforms can be

located further from shore.%

Weather satellites can also lower the costs of

offshore production. Strong ocean currents and

inclement weather can halt drilling and maintenance

programs. Advanced weather and ocean current

forecasting can help prevent “downtime in drilling

and production operations. ’ ’47

Natural Gas

Hydrocarbons that exist in a gaseous state at

atmospheric conditions of temperature and pressure

are called natural gas. While gas is in many ways as

useful as crude oil, it is definitely the poor relation

of the hydrocarbon family, with relatively low

exploitation in the developing countries. Frequently,

natural gas is discovered in connection with oil. In

many developing countries, however, there is little

production infrastructure for gas. Gas may then be

burned off, or a well yielding gas maybe treated as

a “dry hole. ” The most significant technological

change for developing countries may be developing

the infrastructure for recovering and refining natural

gas.

The high start-up costs of conventional gas

production technologies have discouraged many

developing countries from utilizing gas reserves.

Imminent technological innovations may lower

these costs, however. Characterization and exploration technologies as well as multiphase pumping

already have contributed to lower costs. One technology that may encourage the use of gas is

conversion of gas to electricity through combinedcycle or advanced steam injected gas turbines (see

ch. 6). Conversion to electricity eliminates the need

for expensive pipelines and can help turn resources

into commercially viable reserves.

Natural gas liquids (NGLs) or liquid hydrocarbons, though generally gaseous under original reser-

~u~ted Natiom Dep~ment of Te~~~~ Cooperation for Developmen~ Environ~nta~Energy: lmPacts ati Conrrofs ~ew Yodc, NY: October

1990), p. 15.

dsshe~ Briefing Service, op. cit., fOOtnOte 20, p. 3.

~Ibid.

dTRCG/Hagler, Badly, Inc., op. cit., footnote 23, p. 11.
Chapter 7-Energy Resources and Supplies ● 241

voir conditions of temperature and pressure, may be

separated or extracted from the gas at the wellhead

and produced as condensate (also called ‘‘natural

gasoline’ ‘). Lower cost and smaller scale technology

is becoming available for removing natural gas

liquids from gas that was previously being flared or

simply shut in. The presence of such liquids is of

considerable economic importance to a domestic gas

project as they can be sold as oil and thus generate

foreign exchange earnings. Natural gas liquids can

also be produced as liquefied petroleum gas (LPG)

and sold in bottled form as fuel. Both natural gas

liquids and liquefied petroleum gas can be used for

conventional services such as heating and transportation. The Nigerian government is studying plans

for a dramatic increase in liquefied petroleum gas

supplies, and countries such as Equatorial Guinea,

although with much more limited supply and market

possibilities, also are investigating such possibilities.

There are a few projects in the United States for

extracting coal-bed methane gas that could be

applied in the developing world. This technology

consists of drilling just above a coal bed and

injecting a mix of water and gas into the well. The

injection creates a cavity at the bottom of the well.

Once the water is pumped out, methane flows in

through a perforated casing that allows gas in while

keeping coal out.48 Currently, however, this technology is costly and is supported in the United States

through special tax credits.

Whether burned as NGL or in a gaseous state, gas

retains an important distinction from other hydrocarbons. Natural gas combustion releases less greenhouse gas, such as carbon dioxide, and less localized

pollution than do crude oil and other fossil fuels.

Natural gas will gain attention as a relatively clean

fuel, since ‘‘environmental concerns are likely to be

among the strongest influences acting on the oil and

gas industry in the next decade. ’ ’49

Institutional Issues

Despite the geological promise for oil and gas

discoveries in the developing countries, the density

of wells drilled averages just 7 per 1,000 square

miles in non-OPEC developing countries compared

with a world average of 109.50 Furthermore, within

the developing countries, much of the exploration

takes place in countries where resources already

have been developed. One recent study of exploration by the international industry in the 66 Lome

Convention countries (which constitute a representative sample of the African, Caribbean, and Pacific

(ACP) countries) reported that exploration in ACP

countries is almost wholly confined to countries

already producing oil, particularly Nigeria, Cameroon, Congo, Gabon, Angola, and Trinidad.51

Only 12 of the 66 countries studied had produced oil

to date, and those 12 received all but a negligible

amount of the total investment in seismic surveys

and exploration drilling. Although they overlie

extensive sedimentary basins, the ACP countries

remain, with some notable exceptions, among the

least explored countries.52

In the developing world, investment in petroleum

exploration and development is carried out, with the

exception of a few large-population countries like

Mexico and Venezuela, by international oil companies. The cash and foreign exchange position of

low-reserve developing countries does not lend

itself to such capital-intensive high-technology and

high-risk investments.

During the high-energy-price era of the mid1970s and early 1980s, a number of developing

countries with proven or potential hydrocarbon

reserves formed or expanded national oil companies

such as CEPE in Ecuador, YPF in Argentina,

Braspetro in Brazil, Petronas in Malaysia, Pertamina

in Indonesia, and NNPC in Nigeria. In the mid1980s, however, increasing debt and general budgetary pressures led many of these governments to

moderate their policies towards foreign investment.

Algeria and Burma have invited the international

industry to apply for exploration and production

aHayes, Thomas, “Drillers Find Coalbeds Yield Gas and Profits, ” The New York Times, Dec. 26, 1990, p. D3.

@Shell Briefing hViCf3, Op. Cit., P. g.

%R. Ve&Ve&, pe~oleum ad GW in Non-opec Developing COUIltm’t?S.’ 1976-1985, Staff Working Paper No. 289 (Washington, DC: World Be

1978), p. 9.

51A. Fee, “oil and Gas Exploration and Production in the ACP Countries,” OPEC Review, vol. ~. No. 2, summer 1989, pp. 137-151.

jzIbid, p. 141.
242 . Fueling Development: Energy Technologies for Developing Countries

rights, and Venezuela has begun to discuss the

possibility of allowing foreign companies to form

joint ventures for the implementation of secondary

recovery schemes on some of the country more

mature oilfields. Algeria has also expressed interest

in similar schemes.

There are several factors affecting companies’

decisions to invest. Oil is a risky business: no matter

how sophisticated the techniques used, oil and gas

can only be found by expensive drilling. In the long

run, the value of a successful case must be large

enough to accommodate the exploration risk and

cost of roughly nine dry wells.

In addition to the technical risks there is a host of

risks referred to as ‘ ‘country, ’ ‘ or political risk.

These risks, which are not intrinsic to the oil

business, include “war, riot, and civil commotion.”

Violent local turmoil can damage property, halt or

disrupt operations, or threaten the safety of a

company’s employees. Nationalization can mean

the sudden involuntary divestiture of the foreign

assets of a corporation in favor of the local government. Private interests also are wary of “creeping

nationalization, the gradual process of the host

state exerting greater control over operations and

extending its share of ownership and/or of profits.

There are dramatic examples of how “war, riot,

and civil commotion’ have disrupted oil and gas

development. Chevron has been waiting since the

early 1980s for the situation in southern Sudan to

stabilize to begin the development of substantial oil

reserves discovered there. Meanwhile, the nearly $1

billion invested to date by Chevron and former

consortium members is immobilized. Exxon, Royal

Dutch/Shell and others are similarly engaged in

Chad. Instability in Mozambique has hindered

exploration efforts in that country, and in neighboring landlocked Malawi. Operations in northern

Somalia have been suspended pending stabilization

of the situation there.

On the other hand there are several examples

where development has continued throughout periods of instability. Chevron has been producing oil

offshore at Angola’s Cabinda enclave throughout

the past decade of instability and guerrilla warfare.

Nigeria’s frequent coups d’etat have taken place

without disturbing the activities of the numerous oil

multinationals producing Nigeria’s high quality

crude oil. Though an oil company is likely to prefer

a stable political situation over an unstable situation,

one analysis concluded53 that political risk has only

a slight influence on decisions to engage in geophysical testing and exploratory drilling.

The other major factor in deciding to undertake

investment in exploratory activities in developing

countries is the economic incentive. Most modern

legislative systems reserve the State’s sovereignty

over petroleum operations. Most governments, however, reserve the right to contract with foreign

companies for exploration and production of petroleum. The contract also includes terms under which

country and company will share the net income, or

rent, of the project.

The concession agreement was the most common

arrangement before and immediately following the

Second World War. More recently, these agreements have given place to the production sharing

agreement, which provides that hydrocarbons extracted by the private companies be shared with the

government or the national oil company according

to predetermined rates. Other countries, notably in

Latin America, have adopted a third category of

arrangement called the service contract, which

specifies that the contractor will spend certain sums

to explore and, if successful, develop and produce

hydrocarbons. In return, he will recover his expenses

plus some profit by means of a service fee, which is

sometimes calculated as a percentage of costs

incurred or as a percentage of production achieved .54

Companies now generally prefer production-sharing

when given the choice.

In the industrial oil-producing countries (e.g., the

United Kingdom or Norway), taxation of petroleum

activities is now almost wholly profit-related. Profitrelated taxation has an important advantage for

developing countries as it favors exploration for and

development of small, high-cost, or otherwise marginal deposits—precisely the type of resource typical of oil-importing developing countries. As the

investor does not begin paying a significant amount

of tax or other consideration to the state until he has

a positive cumulative cashflow (with allowance for

5~Broad~~ op. cit., footnote 19.

~~e latter formula occurs mainly in the so-called ‘‘service contracts with risk’ and the bottom-line eeonomic difference between them and

production-sharing agreements is negligible.
Chapter 7--Energy Resources and Supplies ● 243

depreciation), he will have an incentive to develop

almost any field that has economic value. Such a

system could also be important to the increasing

numbers of smaller independent oil companies,

which seek low-cost licenses and smaller developments at lower costs than would the majors.

The measures currently used by most developing

countries (royalties or flat proportions of gross

production), however, bear no relation to profitability. 55 The effect of profitability-insensitive systems

is to achieve higher effective tax rates from small or

marginal fields than from large, profitable ones. As

a result, small fields go undeveloped and declining

fields are prematurely abandoned. This factor is all

the more important as oil companies in general have

little interest in pursuing the smaller end of the

probability spectrum and tend to be willing to forgo

the modest benefits to be derived from developing

marginal accumulations.

The Special Characteristics of Gas

Despite the obvious advantages of gas, industry

and lesser developed countries’ (LDC) governments

have found it difficult to take the steps necessary to

bring about a significant increase in the development

of gas reserves in countries not now consuming

natural gas. There are a number of reasons for this

low

●

●

●

●

level of resource development:

due to its physical characteristics, gas is expensive to transport, requiring high front-loaded

capital investment (pipelines from producing to

consuming regions, or costly facilities and

tankers to liquefy and transport the gas internationally).

whereas markets for oil are well developed,

markets for gas have typically to be developed

at the same time as the resource is developed,

adding to the total costs and complexity of the

project.

the sale of the gas gives rise to revenues in local

currency rather than foreign exchange, leaving

investors uncertain about their ability to repatriate profits. This last difficulty is especially

acute in the case of highly indebted developing

countries, where the bulk of scarce hard currency is earmarked in advance for debt service.

in many such countries, the fiscal/contractual

terms under which the gas was discovered by

foreign operators are inappropriate for the

special characteristics of gas. As a result,

companies tend to treat a gas discovery as a

“dry hole’ from their economic point of view.

Together, these factors lead many developing countries to import large quantities of crude or fuel oil to

generate electricity, even though they possess reserves of natural gas that could do this more

economically and with less harm to the global and

local environment.

Policy options

Exploration and production of oil and gas in

developing countries involves several main factors,

including resources, technological advances, contractual arrangements, and the special problems of

gas development. There are a number of possibilities

for stimulating or improving oil and gas development.

Oil companies are reluctant to engage in exploration in countries that do not now have production.

Part of this reluctance may be based on lack of

geological and other preliminary knowledge about

the resource base. The World Bank has addressed

this barrier by helping countries prepare prospectuses based on existing geological data and other

relevant material, thereby saving prospective investors the time and expense of collecting such information. This could be particularly useful for small

independents.

Some investors may shy away from developing

countries due to nontechnical risks such as nationalization and currency conversion and transferability.

Insurance against such risks can be obtained by U.S.

investors from the Overseas Private Investment

Corporation and from the Export-Import Bank

through its agent, the Foreign Credit Insurance

Association. The Multilateral Investment Guarantee

Agency, a new World Bank unit, also offers investor

insurance with fewer limitations on the nationality

of the investor and the nature of the investment.

Contract/fiscal questions often have been contentious. There may be room for the development banks

to act as impartial arbiters of disputes and to help

countries not experienced in oil and gas negotiations

to understand the issues so that they can work

towards satisfactory, long term agreements.

55A. Kemp, ‘‘Petroleum Exploitation and Contract Terms in Developing Countries After the Oil Price Collapse, “ Natural Resources Forum, vol. 13,

No. 2, khy 1989, pp. 116-126.
244 . Fueling Development: Energy Technologies for Developing Countries

If gas can displace more expensive fuels or if there

is potential for an export project, then a favorable

environment for investors is especially important.

Egypt, Tunisia, Pakistan and other countries have

adopted improved fiscal systems that have brought

about a dramatic increase in exploration specifically

for gas. The lowest income countries and highly

indebted countries will need to seek the assistance of

the international aid donors in order to secure the

“lumpy,” front-end investments needed to develop

gas fields. In 1989, the World Bank created a Natural

Gas Unit to bring increased gas projects to developing countries through preinvestment support.

Ultimately, the problem lies in altering a wellestablished system to take account of new needs. In

the oil and gas sector, the need for timely development of gas resources for local markets is foremost.

Closer collaboration among energy firms, governments, national operating entities, and providers of

finance and other services could facilitate the

process.

COAL

Coal is the most abundant fossil fuel in the world.

According to the United Nations, coal reserves are

currently about 10 times as large in energy content

as world oil and gas reserves combined.56 Due to its

abundance and relatively low price, coal is widely

used in those countries with domestic coal reserves.

Coal does have some drawbacks, however; it is

expensive to transport, it cannot easily be converted

to a liquid transport fuel, 57 and it is a major

contributor to several environmental pollutants,

including NOX

, SOX, CO2, and particulate. These

pollutants have a deleterious effect on local and

global environmental quality and on human health.

Due to its availability and low price, coal will

continue to be widely used as a fuel in the near

future. Currently, China and India-by far the

largest coal producers in the developing world—

produce and consume large amounts of relatively

low quality coal. From 1983 to 1986, coal production in China and India increased on average about

6.6 and 7 percent a year respectively, higher than the

Table 7-2—Developing Countries With Significant Coal

Reserves or Coal Consumption

Proved reserves in place Consumption

Country (million metric tons) (PJ/year)

China . . . . . . . . . . . . . .

India . . . . . . . . . . . . . .

South Africa . . . . . . . .

Korea, DPR . . . . . . . . .

South Korea . . . . . . . .

Brazil . . . . . . . . . . . . . .

Mexico . . . . . . . . . . . . .

Viet Nam . . . . . . . . . . .

Colombia. . . . . . . . . . .

Zimbabwe . . . . . . . . . .

Indonesia . . . . . . . . . . .

Mongolia . . . . . . . . . . .

Chile . . . . . . . . . . . . . .

Swaziland . . . . . . . . . .

737,100

27,912

115,530

2,300

200

3,088

2,401

312

2,073

2,500

23,232

12,000

4,579

2,020

17,858

4,178

3,111

1,457

912

395

189

147

135

120

66

61

55

NA

Criteria for inclusion: Proved reserves in place of greater than

2,000 million metric tons, or consumption greater than 100

PJ/year. Proved reserves in place include anthracite, bituminous,

sub-bituminous, and lignite.

NA = not available.

SOURCE: United Nations, 1986 Energy Statistics Y&wbook, United Nations, New York, NY, 1988, pp. 58-85, 424427.

world average annual production increase of about

4.1 percent over that same period. Rapid increases in

production have been due to growing populations

and lack of energy alternatives. Many other developing countries with coal reserves are facing similar

circumstances, and projections show coal use in the

developing world doubling over the next 30 years.

Coal Reserves and Consumption in the

Developing World

Coal reserves worldwide are quite concentrated,

with just three countries-Chin“ a, the former Soviet

Union, and the United States-possessing about

two-thirds of the world’s coal.58 In the developing

countries, large coal reserves are found in China,

India, Indonesia, and S. Africa, with the reserves of

these four countries accounting for about 97 percent

of developing-country proved recoverable reserves.

Other developing countries with significant coal

reserves include Mongolia, Chile, Brazil, Zimbabwe, Mexico, North Korea, Colombia, and Swaziland (see table 7-2). Coal consumption does not

correlate directly with coal reserves, as some coun56(J~ted Natio~, 1986Energy ~ta~~~c$ yearbook (New York NY: u~t~N~o~, 1988), pp. 4M26. ~OV~ resew~ of anthracite, bituminous,

subbituminous, and lignite.

57co~ liquefaction, ~dely u~d ~ S. ~~convefls cod ~to a liquid fiel which CaII ~u~ for ~port.~Sprocess is relatively expensive ~d

complex.

58Ufit~ Natiom, ~986Energy ~ta~~~c~ yearbook, op. cit., foo~ote 56, pp. 424-426. Prcw~ ~semes of ~t-h.mci~, bituminous, subbituminous, d

lignite.
Chapter 7-Energy Resources and Supplies . 245

Photo credit: U.S. Agency for International Development

India and China account for most developing-country coal

use, though several other countries have deposits.

tries with coal (e.g., Indonesia) have not so far

developed it extensively. China, India, South Africa,

North Korea, and South Korea are the largest coal

consumers in the developing world.

Coal varies considerably in quality. Hard coal

(anthracite) and soft coal (bituminous) have higher

calorific values than lignite. While the Central

African Republic, Ecuador, Ethiopia, Haiti, and

Mali all possess coal resources, all has been identified as lignite. The seventh largest coal producer in

the developing world, Thailand, only produces

lignite coal. For many developing countries, therefore, other resources may be more attractive than

coal, Brazil, for example, has substantial recoverable coal reserves, but produces a relatively small

amount, Brazil’s coal is low quality lignite, with

little export potential. Moreover, for domestic use,

Brazil has access to other high quality resources,

such as oil and hydropower.

The relative importance of coal as a commercial

energy source is shown in table 7-3. In China, India,

and South Africa, coal is the single largest commercial energy source. Electricity generation and industry are typically the large coal users. In some

countries, coal is also used in transportation. In

South Africa, for example, coal liquefaction (a

chemical process for turning coal into a liquid fuel)

accounts for 21 percent of coal use. Liquefaction is

too expensive and complex, however, to be a viable

technology for most developing countries. In India

and China, consumption by steam locomotives

accounts for a substantial part of coal use. In China,

the residential sector uses about 35 percent of

China’s coal (mostly for space heating and cooking).

Coal Production

As the bulk of coal use in the developing world

occurs in India and China, this discussion focuses on

coal production in these two countries. Coal mining

and processing in China varies in scale and technological sophistication. Large, state-run mines account for about 44 percent of coal production. These

mines are becoming mechanized rapidly—in 1981,

18 percent of these mines were fully mechanized, by

1988 this number had climbed to 31 percent.59 The

remaining 56 percent of China’s coal comes from

village and individual mines, which are typically

small, labor-intensive, dangerous to work in, and

environmentally damaging.

Coal mining affects land, air, and water quality.

The extent of the environmental impacts depends

largely on the mining techniques used, though in any

case, fugitive dust emissions and leaching from

tailings contribute to local air and water pollution.

Mining methods are selected according to the depth

of the coal, the thickness of the seams, and/or the

availability of capital and equipment. The underground mining that accounts for about 95 percent of

China’s coal production can cause land subsidence

and acid drainage, which can contaminate local

water supplies and damage aquifers. In addition,

underground mines involve hazardous conditions

for miners.

China has plans to increase the relative share of

surface mining. Surface mining can require the

removal of large amounts of top soil and overburden,

leading to soil erosion, siltation, and water contamination, In many cases, soil productivity permanently

diminishes. The increase in surface mining planned

in China could lead to an annual destruction of

nearly 150,000 ha by the year 2000.61 Fortunately,

much of China’s planned increase in mining is in

SpMinis~ of Energy, People’s Republic of China, “Energy in ChiIM, ” 1989.

‘Vaclav Smil, ‘<China’s Energy, ” contractor report prepared for the Office of Technology Assessment, 1990, p. 62,

611bid.
246 . Fueling Development: Energy Technologies for Developing Countries

Table 7-3-Coal Use (1985)

Coal as a percent of Coal use breakdown (percent)

Country total commercial energy use Electric Industry Residential Other

China . . . . . . . . . . . . . . . . . . . . . . . 76.8 18 46 25 11

India . . . . . . . . . . . . . . . . . . . . . . . 56.5 40 39 2 19

South Africa. . . . . . . . . . . . . . . . . 85.3 49 17 1 33

United States . . . . . . . . . . . . . . . . 24.7 83 13 <1 4

SOURCE: International Eneregy Ageney, Wor/dEnergy Statistics andBa/arrces 1971 -1987( Paris: Organization for Eeonomic Cooperation and Development,

1989), pp. 366, 384, 204; International Energy Agency, Energy Balances of OECD Countn”es 1970/1985 (Paris: Organization for Economic

Cooperation and Development, 1987), p, 541~- - ‘

-

arid or semi-arid areas that have little or no arable

farmland. 62 Even though the surface mines will lead

to significant land loss and degradation, such surface

mines could be an improvement over underground

mines currently in production. Although these mines

produce badly needed coal with relatively little

capital, they produce coal of poor quality at great

risk to laborers and make inefficient use of the coal

resource.

Coal in China is typically low sulfur (less than 2

percent) and high ash (more than 20 percent).63 Low

sulfur coal emits less SOX, a component of acid rain.

Ash is incombustible material (rocks, dirt, and other

contaminants), which requires transportation and

disposal but gives no energy. Due to the low

mechanization rate and existence of many small,

manual mines, Chinese coal has as much as 30 to 40

percent incombustible waste.64 Simple coal cleaning

to remove gross impurities could decrease transportation costs and allow for the use of more advanced

coal burning technologies.

In India, over 80 percent of total coal output is

produced by Coal India Limited-a government

agency. The remainder is produced by both private

and government-owned mines.65 Mining in India has

traditionally been similar to that in China; highly

labor-intensive and underground. India has, however, made a shift to mechanized, open-cast mining

and is beginning to move to longwall mining.66

These methods of mining are feasible as much of

India’s coal is in thick seams near the surface. The

sulfur and ash content of India’s coal varies, but on

average Indian coal is medium sulfur and high

ash—rocks, dirt, and other incombustible material.

The expansion of longwall mining in India has

been slow. In addition to unexpected geological

difficulties, longwall mining in India may have

lacked sufficient scale and concentration to provide

adequate learning and adapting of the needed

equipment to Indian conditions. It also appears that

the transfer of this technology (under the British

bilateral aid program) was ineffective as it did not

include adequate incentives for the primarily British

equipment manufacturers to participate and ensure

success of the technology, Even more important in

the poor performance of the Indian coal industry in

general have been other management and engineering failures, including extensive political interference in managerial decisions, inadequate capital

investment, and lack of wage incentives.67

Coal Cleaning Techniques

Coal cleaning refers to processing of the coal

before it is burnt. Coal can be cleaned at the mine, at

the power plant, or in-between, using a variety of

methods. If a significant fraction of the overall

weight is removed in cleaning, transport costs can be

reduced. Environmental costs likewise can be lessened through cleaning; fly ash is emitted during

combustion as particles, some of which contain

harmful trace elements, sulfates, and nitrates.68

Particulate contribute to haze and poor local air

8.

621bid,

fISIDEA, ( ‘Clean COal Technologies for Developing CoUtrieS, ” contractor report prepared for the Office of Technology Assessment, May 1990, p.

~Vaclav Smil, op. cit., footnote 60, p. 23.

65A. Desai, “Energy, Technology and Environment in Indi&” contractor report prepared for the Office of Technology Assessment 1990, p. 16.

661b;d.

671bid,

@ufited Nations Dep~ment of Tccbnicat Cooperation in Development, op. cit., P. 49.
Chapter 7-Energy Resources and Supplies ● 247

quality and they can be a health risk, causing

pulmonary irritation and respiratory disease. Cleaning prior to combustion can reduce the amount of

airborne particulate. Coal cleaning also can improve power plant availability,69 as the use of dirty

coal contributes to power plant breakdowns .70 In one

test, a 1 percent drop in ash due to coal cleaning led

to a 2 percent increase in plant availability .7* In

another example in India, plant availability increased from 73 to 96 percent when coal with 40

percent ash was cleaned to 32 percent ash.72

Coal cleaning processes are, in order of increasing

complexity and cost, physical, chemical, and biological. Physical cleaning is simply removing the

noncoal particles, such as dirt, stones, pyritic sulfur,

and other contaminants. Physical cleaning can

remove about 60 percent of ash, as well as about 10

to 30 percent of sulfur.73 Fly ash must be disposed of,

usually by land application, though ash can be mixed

into construction material. About 40 percent of coal

used for electricity in the United States receives

physical cleaning, most of which occurs at the

minemouth. 74 In India, none of the coal used for

electricity generation is cleaned, although there are

plans to implement some washing of coal for

electricity.

75 In China, about 18 percent of all coal is

cleaned. 76 Costs for simple physical cleaning are

estimated at about $6/ton, and by one estimate is

cost-effective for the transport savings alone, whenever transport distances are greater than about 600

kilometers (km).77

Advanced cleaning processes include chemical

and biological cleaning, both of which use various

processes to remove organic sulfur and other contaminants. These processes may be able to remove

up to 99 percent of ash and 90 percent of sulfur,78 but

their commercial availability and costs are unclear.

As the largest industrial producer of coal, the

United States has developed extensive coal production and combustion technologies, Although many

of the advanced technologies, such as chemical

beneficiation, are too costly for developing countries, there may be a future market. DOE has a new

program to explore these export opportunities in

developing countries for American coal-based technologies, including clean coal technologies.

BIOMASS RESOURCES

Biomass provides about 14 percent of the world’s

energy and 35 percent of the total energy supply in

developing countries. Overall, Africa obtains about

two-thirds of its energy from biomass, Asia about a

third or more, and Latin America about one-quarter.

Some developing countries are almost wholly dependent on biomass for energy; Ethiopia, Nepal, and

Tanzania, for example, rely on biomass for 90

percent or more of their energy supply. In rural and

poor urban areas of most developing countries,

biomass is often the only accessible and affordable

source of energy. As discussed elsewhere, harvesting biomass for use by small industries and in urban

areas plays an important role in the traditional rural

economy, particularly in employment for the poorest. 79

Demand for biomass will rise in the future. The

rural and urban poor populations in developing

countries are growing rapidly and are unlikely to

make a quick transition to cleaner, higher quality

fuels. Therefore, subsistence-level populations will

require increasing biomass supplies to meet household and small industry needs.

Biomass, as it is currently used (see chs. 3 and 4),

is often a dirty and low efficiency fuel. In the future,

an increasing amount of biomass could be converted

WIDEA, op. cit., footnote 63, P. 34.

7oAv~ab11ity is & ~out of tie ~ ~wm plant iS operating divided by tie amo~t of tie tie plant would operate if it WOlhd pdeCdy.

711DEA, op. cit., footnote 63, p. 34.

7ZIDEA, Op. cit., footnote 63, P. 35.

73u.s. J_Jep~~~~t of Enmn, A~~i~~nt Seae- for Fossil Energy, C/can Coa[ Technology, DOE/FE-0217P, revhed Januq ] 99 ~ , p. 13.

Wbid.

TsTa~ Enera Re~eU~h ~titute, Ten’ Energy~araDirec(ov~n~~’< .Tr~OO~ ]988 (New Dew, bdia: Urhnak and bind, 1988) p. 41.

76Mfi~@J of Ener~, people’s Rq~blic of -,Energy in c~in~, 1989, op. cit., fOOtIIOte 60, p. 17.

TTIDEA, op. cit., foomote 63, P. 36.

78u.s. Dep~ment of fier=, Assis@nt S~e@-y for Fossil Energy, op. cit., p. 14.

79u.s. Congress, OffIce of Technology Assessment Energy in Developing Counrn”es, OTA-E-486 (Washington DC: U.S. Gove~ent Prinfig

Office, JanumY 1991).

297-929 - 92 - 17 - QL : 3
248 . Fueling Development: Energy Technologies for Developing Countries

to a cleaner, higher quality fuel using the processes

described in chapter 6. Biomass could be burned

directly for process heat and electricity, fermented or

hydrolyzed to form alcohol fuels for transport,

thermochemically gasified or anaerobically digested

to produce gas for direct use or to generate electricity, or converted to charcoal for high temperature

process heat for industries. These uses could increase commercial demand for biomass resources.

The potential biomass resource base is enormous.

The biomass energy theoretically available worldwide from residues alone is equal to about 85

exajoules (81 quads), 25 exajoules (24 quads) from

crop residues, and 30 exajoules (29 quads) each from

forest residues and animal dung.80 Dedicated energy

crops could add significantly to the resource base.

There are a number of advantages to increasing

the use of biomass. If produced on a sustainable

basis, biomass would not add to greenhouse emissions and could improve local environments through

reduced emissions of SOX. Fuel switching to biomass could also reduce energy import dependence

and stimulate rural development.

Increased use of biomass for energy also has

potential disadvantages. Use of these resources will

require careful consideration of environmental impacts, especially the risks of negative effects on soil

and water availability and quality. Increased use of

biomass for energy also raises social equity issues,

including the possibility of growing fuel for the rich

rather than food for the poor and exacerbating

inequalities between landowners and landless.

Increasing biomass availability on a sustainable

basis requires considerable effort. In light of all their

needs, developing countries may not view the

enhancement of biomass resources as a priority.

Therefore, development of these natural resources

cannot occur independent of the larger context of

development.

Nonetheless, there are a number of opportunities

for expanding the use of biomass resources in an

environmentally and economically supportable fashion. In the near term, greater use of industrial wood

wastes, some agro-processing wastes, and some

agricultural residues are feasible options. In the mid

term, careful management and use of natural forest

resources could provide additional energy supplies.

In the long term, there are opportunities for growing

woody or herbaceous crops for energy production.

Agricultural/Industrial Residues

In the near term, agricultural and industrial

residues 81 are the most promising bioenergy resource. The biomass residues from agricultural and

industrial (e.g., forest products industry) processing

can be used to provide power in the form of process

heat or electricity. These resources already are used

to a limited extent for such purposes in most

industrialized and developing countries, though they

usually could be used more extensively and efficiently (see also ch. 4 for the pulp and paper industry

and ch. 6).

The availability of field wastes raises the issue of

‘‘determining g when a waste is really a waste.”82 In

developing countries, the potential availability of

field residues varies widely. Worldwide estimates

for annual residue production are 3.1 billion tonnes

of food crop residues and 1.7 billion tonnes of

animal dung,83 but it is not known how much of this

amount is actually available for use as fuel. In

wood-scarce areas such as China, Pakistan, Bangladesh, and parts of India, agricultural residues are

often already heavily used as cooking fuels in rural

households. Agricultural residues also can be

plowed into fertilize fields. Decomposing crop and

animal wastes add both nutrients and fibrous matter

to the soil. As soil degradation and erosion are

chronic problems in many parts of the world,

collection of agricultural residues has to be managed

so that fields are not deprived of these resources.

In many cases, however, there is room for

multiple uses of these residues. The portion of crop

residues recycled for fertilizer and soil stability may

actually be small, due to the physical difficulty of

replowing. Farmers using hand implements may

burn or landfill residues, particularly dry residues

such as coconut shells, rather than replowing them.

If this is so, then using some of the residues for fuel

W.O. Hall, “Biomass Energy,” Energy Policy, October 1991, pp. 711-737.

slForest residues will be discussed under the ‘‘forest management’ heading.

82 WIillia -y,Bioenergy ad Econo~”c Development: planning for Bio~s Energy Programs in the Third World (Boulder, CO: WestView

Press, 1985), p. 65.

83G.w. Bamard, “Use of Agricultural Residues as Fuel,” Bioenergy and the Environment (Boulder, CO: Westview Press, c. 1990), p. 87.
Chapter 7--Energy Resources and Supplies . 249

will not hurt the productivity of the soil.84 However,

availability of residues for combustible fuel will still

be site specific. For example, in some places field

residues may have other uses such as fiber or fodder.

Residues might be used for thatching, or sold to

small industries, such as paper manufacturers .85

Dung is important to agricultural productivity

both as a fertilizer and in maintaining soil structure.

Using dung for fuel (or occasionally as a building

material) raises issues similar to those concerning

field residues. Collecting dung from grazing animals

is time-consuming and much of the dung may just be

left where it falls. Moreover, dung that sits in the sun

before being plowed under can lose as much as 80

percent of its nitrogen content, a key soil nutrient in

dung.86 In contrast to direct burning of dung for fuel,

biogas digesters allow use of dung for fuel while still

retaining (or even improving) its value as a fertilizer

if applied to fields and plowed in.87

Densification of agricultural and forestry residues

to briquettes or pellets increases the energy content

per unit volume, reducing transport and handling

costs. These reduced costs can help to open commercial markets for residues and therefore stimulate

demand for these resources. For example, the cost of

delivering briquettes to Addis Ababa in Ethiopia

from a farm 300 km away would be about one-third

the cost of delivering baled wheat straw. The

processing costs can be considerable, however,

limiting the use of densified fuels to rural and urban

industries and middle to high income households in

countries where other fuel prices are high.

In Ethiopia, for example, agricultural residues

from small farms are currently used as a fuelwood

substitute throughout the country. At least 3.3

million tons of surplus coffee, cotton, wheat, and

maize residues are produced annually, including

surpluses from State-owned lands. Although costs

for densifying and transporting residues are site

specific, costs for Ethiopia are summarized in table

7-4. The “ready-to-burn” costs at the market are

equivalent to unprocessed crude oil prices of $15 to

$20 per barrel. For industrial use, agricultural

residue briquettes can be produced and delivered to

users in Addis Ababa at a lower cost than most other

industrial fuels.

In Sri Lanka, on the other hand, the delivered cost

of coir dust (derived from coconut husks) briquettes

is more than three times that of fuelwood per unit

weight and the energy cost per unit of energy content

is twice that of fuelwood. Sri Lanka has, however,

large coir dust resources with an energy potential of

84 million GJ (80 trillion Btus).88 Fuelwood resources are predicted to dwindle in Sri Lanka, so coir

dust briquettes may become an economically viable

alternative. In general, briquette and pellet costs will

vary considerably according to the densification

process, the scale of processing, and the original

biomass feedstock.

Expanded use of agricultural residues and dung

requires careful planning, whether for household use

or when briquette for commercial use. The availability of some agro-processing residues, however, is

less constrained by competing uses and environmental concerns. Residues resulting from industrial

processes, such as bagasse from sugar refining or

sawdust from sawmills, present a ‘‘ready’ resource.

89 Many developing countries already use

these resources for energy, though often inefficiently. Improvements in system efficiencies could

enable industries to sell to the grid some of the power

they produce from residues.

In summary, the overall picture for increased use

of agricultural and industrial residues is mixed. Field

residues are a promising resource, especially when

briquette, but they must be carefully collected to

protect agricultural and livestock productivity. Other

competing uses of the field resources also must be

taken into account. Waste-to-energy schemes for

using residues are, however, an immediate opportunity for developing countries. In fact, many developing countries already take advantage of this econom-

‘Ibid., p. 93.

851bid., p. 94.

861bid., p. 93.

87Mmy f~fic~ ~ tie developing world cm not afford s~lclent ~vestock to supply the~ OWII biogm ne~s, however. III order to meet coohlg needs

with biogas, a typical family would need three head of cattle. Few families in the developing world can afford to own or feed so many cattle. See ch.

6 for more detail. David Pimentel, personal communication, Apr. 23, 1991.

88v,R. N~yMa, woodE~~~g~ ~y$~emfor RUr~/ u~~ other ]~~~SffieS @a@ok: Food and Agriculture organization C)f the Utitti Nations),

p. 15 and p. ~.

E~fifim Ramsay, op. cit., footnote 83, p. 66.
250 ● Fueling Development: Energy Technologies for Developing Countries

Table 7-4-Production Cost Estimates for Commercial Scale Crop Residue Briquetting in Ethiopia

(US$ (1983)/ton of product)

Residue

(1) (2) (3)

Corn and sorgum Wheat and barley

Stage of production Cotton stalks stover straw

ically viable resource, though in an inefficient

manner in many instances. Overall, residues present

both near and longterm resource expansion possibilities.

Forest Management

Forests are an important resource for developing

countries. Woodlands furnish fuelwood, timber,

fiber, food products, fodder, pesticides, and medicine. Forest products are the main industrial base for

a number of developing countries, and many subsistence populations depend on natural woodlands for

their livelihood. Forests are also an integral part of

the ecosystem, promoting healthy soils, maintaining

diverse plant and animal life, regulating the flow of

water, and controlling flooding and other potential

hazards. 90 Moreover, tropical forests in developing

countries are critical to global environmental quality; these forests store a significant share of the

world’s carbon stock.

Despite the importance of forests to developingcountry economies and environments, many natural

woodlands are being depleted faster than they can

regenerate. Management techniques can slow the

degradation of forests, however, and still allow for

commercial and small-scale harvesting.

Commercial and subsistence wood harvesters

need different forest management strategies. Generally, rural subsistence farmers cause relatively little

damage to forests when they are collecting wood.

These farmers tend to take dead wood or cut

branches and leaves from trees, often lacking even

the tools for cutting whole trees. In some cases,

farmers may use hedges and other vegetation

growing on their farms for fuel. A study of West Java

found, for example, that three-fourths of all the fuel

collected came from within family courtyards and

gardens, and two-thirds of this fuel was branches and

twigs.91

~.S. Congress, OffIce of Technology Assessment, Technologies to Sustain Tropical Forest Resources, OTA-F-214 (Springfield, VA: National

Technical Information Service, March 1984), p. 10.

91M. Hadi Soesastro, “Policy Analysis of Rural Household Energy Needs in West Jav%” Rural Energy to Meet DevelopmentNeedk: Asian Village

Approaches, M. Nurul Islam, Richard Mome, and M. Hadi Soesastro (eds.) (Iloulder, CO: WestView Press, 1984), p. 114. See also, U.S. Congress, OffIce

of Technology Assessment, Energy in Developing Counrries, OTA-E-4S6 (Washingto~ DC: U.S. Government Printing OffIce, January 1991), p. 119.
—

Chapter 7-Energy Resources and Supplies . 251

In cases where farmers are cutting down whole

trees, a number of techniques are available to

minimize damage. ‘‘Thiming” (cutting trees selectively) may actually stimulate growth in the remaining forest as there is less competition for nutrients,

light, and water. “Pollarding" (cutting off branches

and twigs, rather than felling whole trees) can also

stimulate forest growth by reducing competition for

nutrients, water, and light.

In contrast to the rural foragers, commercialized

fuelwood and charcoal harvesters routinely fell

whole trees, damaging or even clear-cutting entire

forests. Even so, there are techniques, such as

thinning or cutting in strips rather than clear-cutting

a whole area, to minimize damage. After harvesting,

forest lands can be reseeded or replanted. Adequate

maintenance or upgrades of cutting and harvesting

equipment also minimizes damage to trees and soil

surrounding the logging site. 92 Better charcoal

conversion processes could decrease the number of

trees cut. In the long run, though, commercial

logging for fuel may sometimes be demand-constrained as consumers switch to other fuels when

wood becomes scarce and prices climb .93 There is no

guarantee, though, that this will occur early enough

to prevent serious damage to forest resources in

some areas.

Putting forest management techniques into practice can be difficult. Intervention by governments or

nongovernmental organizations often is required.

Governments can encourage forestry techniques

through taxes on wood and charcoal, tax incentives,

laws, and enforcement of laws.94 Governments and

nongovernmental organizations can teach forest

management techniques through extension staff and

forestry projects. These measures have proven

difficult to instill in the past. Taxes or laws requiring

certain forestry practices tend to be difficult and

costly to enforce and forestry projects often fail

when overseas funds dry up.95 Management techniques may have limited success in conserving

forests because forests are usually cleared to make

room for migrants, agriculture, and livestock,96

rather than by fuelwood gatherers.

Energy Crops

Some developing countries already successfully

grow crops dedicated to energy production. Energy

crops can be divided into two broad categories;

herbaceous field crops and woody biomass plantations. These crops can be planted as separate lots or

fields devoted to energy production or as stands

‘‘intercropped’ between other crops and around

residential areas. Five key variables govern the

viability of woody and field energy crops: technical

feasibility; availability of suitable land; economic

viability; implementation; and environmental impacts. 97

Technical Feasibility

Research and development on plant species and

methods of planting have greatly enhanced the

technical feasibility of energy cropping. Energy

crops are highly site specific, however; species that

respond well to test conditions may be vulnerable to

92u.s, conge~~, Office of Tec~oloH Asse~~~ent, changing By Degrees: ~fepS t. Reduce Greenhouse Gases, OTA-O-48L (wdlklgtO~ D. C.: U.S.

Government Printing Off’ce, Februaq 1991).

Q3u,s. Conwess, office of Technology Assessment, Energy in Developing Countries, Op. Cit., foo~ote 79, p. 119.

~Keiti openshaw and Charles Feinsteiq World Bank, Industry and Energy Deptiment, “Fuelwood Stumpage: Considerations for Developing

Country Energy Planning,” Industxy and Energy Department Working Paper, Energy Series Paper No. 16 (Washington DC: World Bati June 1989).

95Paul Ker~off, Agro~ores~V in Afi’ca: A Sumey of proJect Ex~erience @ndon: Panos Publications, Ltd., 1990).

%For more det~l on deforestation, see us. con~ess, office of Te&3010~ Assessment, Energy in D~e[oping Cowlfries, op. Cit., fOO~Ote 79, ch.

5.

QTDavid Hall, “Biomass, Bioenergy and Agriculture in EMope, “ Biologue, vol. 6, No. 4, September/October 1989.
252 ● Fueling Development: Energy Technologies for Developing Countries

actual site conditions. Flexibility of a given species

in different environments is one of the most important technical characteristics for energy crops in

developing countries.98

For woody biomass plantations, other desirable

characteristics include fast growth; high density

(high heat value per unit of volume); robustness

(ability to withstand weather, pests, and disease);

nitrogen fixing capability (a trait that reduces the

need for fertilizer); and good potential for coppicing

(ability to regrow from stumps). Since 1978, the U.S.

DOE has supported research and development of

Short Rotation Intensive Culture (SRIC) woody

energy crops that incorporate most of these features.

SRIC plantations consist of a fast-growing single

tree 99 species (a “monoculture’ ‘), planted in carefully spaced patterns, harvested in 3 to 10 year

cycles, and intensively managed.l00

DOE and other researchers have tested a wide

variety of species and found them to be appropriate

for SRIC plantations. 101 Although some Species

native to the region in question can be used,

especially in the tropics, exotic species with particularly favorable characteristics are often brought in.

Especially versatile species include acacia, grevillea, eucalyptus, calliandra calothyrus, populus (poplar), salix (willow), sesbania, and leucaena.l02 Leucaena, native to Central America and Hawaii, is

especially popular for energy crops because it is

drought tolerant, coppices readily, has the highest

measured yields of any tree species, has a very high

density, and is a good source of wood and foliage for

fuel, fodder, construction, or pulp.103 Even leucaena

does not universally grow well, however. A project

supported by the Cooperative for American Relief

Everywhere to grow leucaena leucocephala, calliandra calothyrus, and sesbania sesban in Ethiopia:

. . . showed abysmal growth. It was a painful lesson

in the risks of putting too much trust in the textbook.

One project worker said, “I was devastated when

leucaena didn’t work. We inoculated it, we did

everything to make it grow, and it was like we were

growing a dwarf variety.”l04

Even the most versatile, fast-growing, and resilient species may not grow well in any given

environment. Monoculture short-rotation forests

are susceptible to a variety of hostile environments.

Poor soil characteristics, harsh microclimates, pests,

fires, weeds, and diseases may all devastate or stunt

plantation growth. There is some evidence that

monoculture plots are more susceptible than the

more diverse natural stands, in which some trees

may have characteristics that ward off disease or fix

nitrogen in the soil, protecting the surrounding trees.

In many cases, monoculture trees perform better in

trials because they are nurtured under very controlled situations on small plots, conditions that are

hard to replicate in the field.105 Other technical

problems resulting from monoculture SRIC plantations include possible exhaustion of the land and

loss of biodiversity.l06

Bioengineering has the potential to overcome

some of these problems, such as vulnerability to

pests and environmental stress. Desirable characteristics, such as nitrogen fixation and fast growth, also

may be augmented through bioengineering.107 Bioengineering technologies that have proven successful in some cases are cloning and hybridization.108

For example, the U.S. DOE has produced hybrid

black cottonwoods that have yields that exceed those

of the parent stock by a factor of 1.5 to 2.109 Genetic

engineering of trees is a relatively new field, however.

In comparison, agricultural biotechnology is much

further advanced. Technology transfer from agricul98W. R-y, op. cit., footnote 82, P. 58.

~h tbis sectiou references to trees include shrubs.

loou.s. Congress, Mice of TwhoIogy Assessmen4 op. cit., footnote 79, p. 214.

Iolw.~y, oP. cit., footnote 82, pp. 71-87.

1021. St~_~Lc ‘Modern Wood Fuels,“ Bioenergy and the Environment (BouIder, CO: Westview Press, c, 1990), pp. 61-65.

103WMY, op. cit., footnote 82, P. 8S0

l~p. KermOf, op. cit., footnote 95, p. 83.

los~wud A. ~nse~ “SRrc yields: A @k to tie fi~,” lmpublitied IllN3USCrip~ 1990, p. 3.

106u.s. Con=ess, me of T~~olo~~=s~en~ op. cit., footnote 92, p. 223.

Io7_y, op. cit., footnote 82, P, 88”

108~~ H. ~te, ~wence P. A~On et. & “Bioenergy Plantations in Northeastern North Arneric4° paper presented at Energy from

Biomass and Wastes XV in Washingto% DC, Mar. 25, 1991, p. 10.

lo9~p A. Abelso~ “Impmv~ YieldS Of Biomass, “ Science, vol. 252, No. 5012, June 14, 1991, p. 1469.
Chapter 7--Energy Resources and Supplies ● 253

ture will speed SRIC genetic engineering, but only

to a point; trees and shrubs have unique characteristics, including a long breeding cycle.110 Nonetheless, the potential to increase yields through

biotechnology is enormous-according to one researcher, even more significant than the successes

already achieved in agricultural genetic engineering.111

Field crops dedicated to energy production in the

developing world have focussed in part on starches

or sugars that can be fermented to alcohol fuels. For

example, Brazil grows a large amount of sugarcane

exclusively for production of ethanol. In temperate

climates, other crops that can be grown for energy

include cereals, pasture plants, cassava, sugar beet,

sweet sorghum, potatoes, oilseed crops, Jerusalem

artichoke, and Japanese knotwood. Crops with high

oil contents can be grown for conversion to vegetable oils, and some experimentation has occurred

with hydrocarbon-producing species, such as euphorbia lathyrus, in arid or semi-arid regions.112 “Energy

grasses, ’ often indigenous grasses that will grow on

marginal land, are also feasible. These grasses

generally have high nitrogen requirements, however, and would need to be ‘intercropped’ between

nitrogen-fixing trees or crops.113

A technical barrier for developing countries is that

much of the research and development on energy

crops does not reflect developing-country needs and

conditions. For example, there is little research and

development on tree species indigenous to developing countries.l14 In practice, determining the Viability of indigenous species for energy crops may be a

trial and error process. More demonstration and

in-the-field testing of SRIC and engineered species

would increase their effective deployment in developing countries. Even though more research and

development could certainly enhance energy cropping, however, current knowledge suggests that

prospects for high-yield SRIC plantations and field

crops in developing countries are encouraging.

Availability of Suitable Land

To be a reliable source of energy, biomass

plantations would require significant amounts of

land, especially as biomass conversion is energy

intensive. For example, with short-rotation intensive

culture trees, about 8 percent of the energy provided

would have to be used to plant, harvest, and dry the

trees. About one-third of the energy then would be

lost if the wood were converted to a liquid or gaseous

fuel. Conversion to other forms, such as charcoal,

involve even higher losses (the majority of charcoal

kilns in Minas Gerais, Brazil have conversion

efficiencies of about 50 percent, for example).115

To break even economically, plantations would have

to be large and may require fertilizer and other inputs

to achieve a sufficiently high level of productivity.

In many countries, plantations of this size and

productivity would have to compete with agriculture

for the same land resources and inputs. According to

the United Nations Food and Agriculture Organization (FAO), 46 percent of the developing countries

surveyed already lack sufficient land resources to

support their populations at low levels of agricultural inputs.116 With projected population growth

and the contined low agricultural inputs, 55 percent

of the countries would lack sufficient land resources

to feed their populations by 2000.117 According to

the FAO’s analysis, Central and South America are

the regions most likely to be able to support energy

crops. Many of the most populous African countries,

however, lack sufficient land resources to sustain

their populations, let alone energy crops given

current low levels of agricultural inputs. For the

countries with insufficient land resources for energy

cropping, small scale agroforestry projects, discussed below, may still be viable.

For countries with adequate land resources, a

growing market for biomass resources could have

national and local benefits. Developing countries

could save foreign exchange dollars now spent on oil

ll~wwd A. &M~ op. Cit., fOO~Ote 105, p 12.

11 l~id.

1121. Stjemquist, “Modem Wood Fuels,” Bioenergy and the Environment (Boulder, CO: Westview Press, 1990), p. 70.

IIJtiSay, op. cit., foomote 82, pp. 59-60.

114Cynthia C. Cook and Mikael GruLAgroforestry in Sub-SaharanAfiica:A Farmer’sPerspective (WashingtOrL DC: The World B@ 1989), p. 37.

1lSJ. w~en~ey, Lynn L. Wrightt et~.. “HardwoodEnergy Crops: The Technology of Intensive Culture, ‘‘Journal ofForestry, vol. 85, pp. 17-28.

1 IGufi@d NatiO~ Food ~ Agriculture G-“ 4 Potential Population Supporting Capacities of Lundsin the Developing World, Tecimieal Report

of Project INTf15/P13 (Rome: United Nations Food and Agriculture Organization% 1982), Table 3.4, pp. 134-136.

1 IT~id.
254 c Fueling Development: Energy Technologies for Developing Countries

imports and reinvest the money within the country.

Local economies could benefit by growing biomass

as a cash crop, stimulating rural development. There

are, however, risks. New technologies could lead to

an increase in deforestation if they rely solely on

existing biomass resources.

Economic Viability

The expenses involved in establishing energy

crops include land opportunity costs, the cost of

inputs, and the costs of maintaining, harvesting, and

transporting the crops. For energy crops to be viable,

the price at which the fuel can be sold must exceed

the sum of these costs. If this is not the case, energy

crops may still be viable if other benefits justify the

costs, or if there is an external source of financial

support, such as an international aid organization.

In rural areas, with woodlots meant for local fuel

uses, trees may be planted on farms without many

inputs and with almost no mechanization, particularly where there is subsistence farming. Transportation costs may also be irrelevant as many of the

products (poles, fodder, fuelwood) will be used

locally, rather than transported and sold in markets.

In these cases, economic viability may be determined by number of hours spent rather than mone-

@ Y gain. The World Bank estimates that an

attractive time savings to farmers would involve a

rate of return greater than 30 percent.118

Large scale woody plantations have mixed economic results. Many plantations, particularly community woodlots, fail economically for a number of

reasons. The returns on planting trees for energy are

inherently long term; the time between planting and

harvesting is 3 to 10 years. Farmers, community

members, and other investors are generally reluctant

to make the investment due to this long lead time,

particularly with current low prices for other forms

of energy, including gathered wood.119 On the other

hand, tree plantations with multiple end-uses—trees

that provide fruit or timber-may well be economically viable, as is the case in Gujarat, India.120

Another plantation strategy could be large industries growing trees specifically to support industrial

processes. There are examples of such industrially

dedicated plantations. A study of Sri Lankan industries using wood for fuel concluded that 49 percent

of the total fuelwood consumed came from manmade rubber plantations. Another 2 percent came

from other forest plantations.121

Markets are the key to economic viability, and

yet, according to one analyst, ‘‘it is probably a safe

guess . . . that more renewable energy projects have

come to grief through omitting a thorough investigation of potential markets than through any other

cause. ’122 Generalizing about markets for energy

crops is extremely difficult, however. There are

scant data available and there are significant differences between commercial and noncommercial

markets, rural and urban markets, and markets in

different regions and nations.

In rural areas, “non timber products tend to be

marketed locally and in a decentralized manner, [so]

their value is generally hard to recognize and

assess. 123 Wood is gathered from the forests for

“free,” so developing a market for marginal small

scale industrial and residential users would be

difficult. In some rural areas with scarce wood

resources, however, there is a small market for

wood, and in such areas, wood is an important source

of income. Even with scarcity, local subsistence

populations are likely to substitute other forms of

energy-such as crop residues-rather than pay

cash for wood fuel. Some communities have been

encouraged to pursue social forestry, or community

woodlots, but returns often are insufficient to attract

investment-either time or money.l24

Markets also can be created, as is the case with

field energy crops for ethanol fuels in Brazil (see ch.

6). Through a mixture of price controls, subsidies,

and tax breaks, the Brazilian government has been

118c. cook and M. GIUL op. cit., footnote 114, p. 13.

ll~wy,op. cit., footnote 82, P. 167’

IzQid.

121v,R, Na~y*,woodEnerg~Sy~te~f~rR~r~l ~~otherl~~”es:sri~~ @~gkok: United Nations Mod ~dA@d~0~-tion),

pp. 20-21.

122WWY, op. cit., footnote 82, P. 161.

123u.s. conge~~,mm of T~~ology Assessmen~ op. cit., footnote 92, p. 221.

124Smuel F. B~d~Bioenergi~ing R~ra/D~el~p~nt,~pubfishcd uu~lipt, February 1988, p. 1.
Chapter 7---Energy Resources and Supplies . 255

able to create and maintain a market for fuel

ethanol. 125 Few developing counties can afford to’

run programs on this scale, though. Other smaller

scale market interventions are possible, however.

For example, a tobacco company in Kenya in effect

creates a market for woodfuels by placing the

farmers under a contractual obligation to plant trees.

Farmers must demonstrate that they grow a certain

number of trees before the tobacco company will

purchase tobacco from those farmers.126

Urban areas of developing countries often depend

on a commercialized fuelwood and charcoal market.

Many urban residents still rely on wood and charcoal

for fuel. As fuelwood generally is not located close

enough to cities for collection, supplies are purchased. Often, these supplies originate in distant

areas. A study of fuelwood use in two Indian cities

revealed that in one Indian city, Bangalore, one-half

of the fuelwood consumed was transported from

between 120 and 300 km away and 17 percent from

as far as 700 km from the city borders. In another

Indian city, Hyderabad, about 55 percent of all

fuelwood supplies were brought in from forests over

100 km away. 127 Transportation infrastructure is

therefore an important precursor for an urban

fuelwood market. In Thailand, for example, transportation systems are fairly well developed and a

large segment of the urban population derives its

energy from tropical forests located far from the

cities. 128

The introduction of the technologies discussed in

chapter 6 could improve the economic viability of

both field and woody energy crops, by making

biomass resources competitive with fossil fuels in

the provision of such desirable energy carriers as gas

and electricity. As these biomass conversion technologies become available, they may well create a

market for biomass resources.

Implementation

There are two different types of energy crop

planting schemes; dedicated energy crops and plants

or trees intercropped between agricultural crops. In

the former case, crops or trees are planted exclusively for energy production. In the latter case, also

referred to above as "agroforestry," the provision of

fuel is a secondary reason for planting the trees or

crops. Implementation issues differ for these two

scenarios.

In the past, tree-planting schemes (both for large

scale plantations and for smaller scale agroforestry)

in developing countries sometimes have been introduced without adequate attention to local needs and

local environments. As a result, these schemes have

needed extensive infrastructures to initiate and

maintain and, with some exceptions, have resulted in

widespread failures.129

Experience suggests that dedicated energy crops

and agroforestry have a better chance of success if

the local farmers are intrinsic to the process. Tree

schemes that cost the farmers time, money, and land

without any clear benefits require extensive, costly,

and long-term intercessions from governmental or

nongovernmental organization extension staff. Even

with incentives and proper training, farmers may not

be attracted to energy cropping.

Given the land availability and economic viability

problems discussed above, farmers will weigh the

advantages of biomass against the other possible

uses for the limited land available. Energy projects

designed by outside experts often fail because they

do not respond to local priorities.130 Sometimes,

afforestation strategies are based on wrong assumptions. For example, it has been assumed that local

people would use wood resources until the resource

was completely, irreversibly depleted. In many

lz5Marcia Goweq “Biofuel v. Fossil Fuel Economics in Developing Countries,” Energy Policy, vol. 17, No. 5, October 1989, p. 460.

126p. Kerkhof, op. ~it., fw~ote 95, p. 63. Al~ough ~s progr~ has resulted in successti tree ~0~ the farmers continue tO CUt the Ilahld grow

for wood, preferring to use the cultivated trees for poles.

lzT~woor Maq Joy Dunkerley, Armdya Reddy, ‘‘Fuelwood Use in the Cities of the Developing World: Two Case Studies from India, ’ Natural

Resources Forurn, United Nations, 1985, p. 207.

128No=n Myers, The Primq Source: Tropica[ Forests and our Future (New York: W.W. Notion and CO) 1984)! P, 119.

129P Kerkhof op. Cltc, foo~ote 95; C. Cook and M. Gm~ oP, cit.> ‘oo~ote 114.

130 Steven Meyers and G~ald ~ac~ U.S. Dq~ment of Energy, Oak Ridge Nation~ ~~mtory, OffIce of Scientilc and Technical hlfOllI1.lltiO~

Biomass Fuels in the Developing Counm”es: An Overview (Oak Ridge, TN: U.S. Department of Energy, 1989).
256 ● Fueling Development: Energy Technologies for Developing Countries

developing countries, however, local populations

respond of their own accord to woodfuel shortages.

131 In these cases, building on the foundation

already provided by local practices will speed and

ease project implementation. Increasingly, developingcountry governments and foreign donors are realizing that local knowledge and aspirations must be

included if these projects are to be successful and

that the problem of biomass energy must be considered in the broader context of development.

Environmental Impacts

With sound management, environmental impacts

of energy cropping can be minimal or even favorable. 132 Environmental problems associated with

energy crops are very similar to those associated

with agricultural crops, with the degradation of soils

being a key risk. Although specific problems and

benefits vary, the general environmental benefits

and costs are valid not only for the developing

countries, but also for the industrial nations.

If grown sustainably, biomass energy does not

make a net contribution to the buildup in atmospheric C02 from anthropogenic sources. When trees

are harvested, a certain amount of stored carbon is

released. If vegetation with comparable carbon

storage is replanted, carbon emissions resulting from

the decomposition, combustion, or harvest of the

original trees may be offset.133

Large-scale woody plantations or energy field

crops can further offset carbon emissions if they

replace fossil fuels.134 Biomass also contains little

sulfur, so combustion produces less sulfur oxides

than are emitted during fossil fuel (especially coal)

combustion.

135 Sulfur oxides are a component of

local air pollution and acid rain, and a serious

problem in many cities in developing countries136

(see figure 7-l).

Negative local environmental impacts of biomass

depend on the crop grown, the site characteristics,

and the circumstances. Impacts can range from

“minor changes, easily accommodated within the

existing ecosystem,’ to “major changes drastically

altering the site or its surroundings.’’137 Effects of

energy cropping can include soil erosion, increased

water runoff, loss of soil nutrients and organic

matter, negative effects on hydrologic systems, and

reduction in biological diversity as fast-growing

monoculture are substituted for indigenous vegetation .

138

Although these effects are site and crop specific,

changes in the soil are very likely to occur. Soil is

composed of mineral matter and organic matter,

largely from decaying trees or animals. Removing

the original trees will therefore change the composition of the soil by changing the organic component.

In most forest ecosystems, the decaying vegetation

contributes organic matter and helps stabilize soils.

Soil is extremely slow to reform; forests are estimated to take 1,000 years or more to reform 2.5

centimeters of soil.139 Clearing a site for an energy

crop and then leaving the soil exposed before or

during planting can result in significant soil erosion.

Removing forest debris and interrelated ecosystems

also can lead to erosion. The soil and water runoff

can hurt local hydrological systems by increasing

the levels of sedimentation in the water. Runoff

polluted by herbicides, pesticides, and fertilizers can

exacerbate the damage to aquatic ecosystems and

foul “ drinking water.

Soil conservation techniques, such as terrace and

contour planting, can moderate or mitigate these

131u.s. CoWess, Office of Technology Assessmen~ op. cit., footnote 79, p. 119.

lszJ~es p~ztor ~d Lars A. KristofersoU “Bioenergy and the )ihvhtIment--the challenge, ’ Bioenergy and the Environment (Boulder, CO:

Westview Press, 1990), p. 28.

lsqFor more on he ~~oncycle and he vfibl~tit eff~tc~bon rel~~ by ~ees, -U.S.Covess, (Mf& of Technology Assessment Changing

By Degrees: Steps to Reduce Greenhouse Gases, op. cit., footnote 92, ch. 7,

l~D.Oo ~, HOE. M@c~ andKHo Willims, ‘coo~g~e Greenhouse with Biomass Energy,’ ‘Nature, VOI. 353, No. t5gg9, $Wt.s, 1991, PP. 11-12;

D.O. Hall, H.E, hfynic~ and R.H. Williams, ‘‘Alternative Roles for Biomass in Coping with Greenhouse Warming, ” Science and Global Security, vol.

2, 1991, pp. 1-39.

lsss~uel F. Rdd~ op. cit., footnote 126, p. 2.

136Formom ~o-tiononwllution fimbiow~mbustio~ s~c~+ z ~d q ~du.s. Cowess, Offlceof Technology Assessmen~ Op. Cit., fOOtiO@

79.

INWiUiam Rarnsay, op. cit., footnote 82, p. 91.

138 David ~ente~ ~W~com.m~c~on, Apr. 23, 1991.

ls~avldpim~tel, ~nF.Wmeke, eta “F~V~usBio~sfiel: Socimnomic ~dfivtinmentiimpacts illtheuflitd SWeS, B@,~%

and Kenyq” Advances in Food Research (New Yorlq NY: Academic Press, Inc, 1988), p. 216.
—.

Chapter 7---Energy Resources and Supplies ● 257

Figure 7-l—Sulfur Dioxide Levels in Selected Cities, 1980-84

Shown is the range of annual values at individual sites and the composite 5-year average for the city.

WHO Guideline 40-60 ug/m3

1 Concentration (ug/m3

) 10 { . 100

I I I I I I I I I I I I I I I I I I I I I I

Key

1. Milan

2. Shenyang

3. Tehran

4. Seoul

5. Rio de Janeiro

6. Sao Paulo

7. Xian

8. Paris

9. Beijing

10. Madrid

11. Manila

12. Guangzhou

13. Glasgow

14. Frankfurt 

15. Zagreb

16. Santiago

17. Brussels

18. Calcutta

19. London

20. New York City

SOURCES: Worfd Health Organization and United Nations Environment Fund, G/oba/ Po//ufiorI andl-1.sdh (London: Yale University Press, 1987), figure 2.

effects. However, “because of their high labor or

capital costs, many of these techniques are only of

interest to large-scale biomass energy production

schemes." 140 For small scale biomass planting,

agroforestry can be an alternative. Soil has been

estimated to erode 12 to 150 times faster than it is

formed world wide, with the bulk of losses due to

agricultural crops. 141 Trees, bushes, and grasses

planted among crops and around houses can stabilize soils, slow erosion rates, and provide fuel.

Intercropped vegetation also can enhance the organic makeup of the soil since some tree and bush

species contribute or ‘‘fro’ important soil nutrients,

such as nitrogen.

Energy cropping and agroforestry also can alter or

destroy ecosystems. To make plantations economically viable, fast growing crops generally have to be

planted, particularly if biomass is to be a fossil fuel

substitute. Monoculture short-rotation intensive culture plantations usually best meet this need. These

monoculture plantations often replace diverse tree

and plant species, however, which were a habitat for

diverse animal and insect populations. Not only will

the various flora be lost, most of the fauna may not

be able to survive in the new habitat.142 Planting

strategies exist that maintain biological diversity,

such as multiple species cropping or retaining

patches of old growth within the plantation. These

strategies are likely to mean lower crop yields,

though. 143 Although agroforestry also may rely on

exotics, there is better potential to maintain the

indigenous species. Since the trees usually are

planted for multiple purposes, fast growth is not

essential to economic viability.

Energy cropping must be carefully planned and

implemented in order to minimize negative environmental impacts. With such careful planning, crops

and agroforestry have the potential to benefit local

and global environmental quality by stabilizing

soils, adding soil nutrients such as nitrogen, and

acting as a net carbon sink.

140D.R. Newman and D.O. Hall, ‘‘Land-Use Impacts,’ Bioenergy and the Environment (Boulder, CO: Westview Press, 1990), p. 242.

IA~D Pimentel, op. cit., footnote 141, p. 216.

142J.H. Cook and J. Beyea, “Preserving Biological Diversity in the Face of Large-Scaie Demands for Biofueis, ’ paper presented at the Energy fbm

Biomass and Wastes Conference XV, Washington DC, Mar. 25, 1991, p. 3.

1431bid., p. 5.
258 . Fueling Development: Energy Technologies for Developing Countries

Conclusions

Biomass resources are extremely important to

developing countries. Urban and rural subsistence

populations rely on biomass for fuel and are likely to

continue relying on biomass in the future. Small and

large scale industries already use biomass and could

use it more in the future. The present resource base

may not be able to support this increasing demand

from a growing population.

There are a number of strategies for enhancing the

biomass resource base. In the near term, use of

processing wastes is the most promising opportunity. United States industries have extensive experience in this area and could provide assistance and

exports to developing-country industries. In the

future, briquetting field residues, managing existing

forest resources better, and growing crops dedicated

to energy hold out the possibility of resource

expansion. The United States already encourages

developing countries to pursue these strategies

through the Agency for International Development,

the Department of Energy, the Peace Corps, and

other bilateral aid programs. All of these strategies

must be planned, however, with the larger developmental context in mind. Larger issues of deforestation, land ownership, rural development, and food

production need to be considered in allocating

project funds.
Chapter 8

Issues and Options

. & W@’it: Us. Agency for Internatjom/ Devdnmm..d
Contents

Page

INTRODUCTION AND SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .261

EXISTING U.S. PROGRAMS AND POLICIES FOR ENERGY

TECHNOLOGY TRANSFER AND DIFFUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263

The U.S. Policy Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .263

AID Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264

Multilateral Bank Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265

IMPROVING TECHNOLOGY TRANSFER AND DIFFUSION . . . . . . . . . . . . . . . . . . . . 269

Technology Transfer Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269

Improving the Institutional Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274

Providing Economic Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .276

Financing Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276

REDEFINING PRIORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .279

Enhancing U.S. Trade and Investment Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279

Reducing Poverty and Improving Social Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283

Protecting the Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .284

Setting a Good Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .285

Boxes

Box Page

8-A. AID Office of Energy and Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266

8-B. Multilateral Development Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267

8-C. The Global Environmental Facility (GEF) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269

8-D. The Department of Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272

8-E. programs for U.S. Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281

8-F. Examples of Import and Other Regimes Affecting the Transfer of Technology

in Selected Developing Country Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282

8-G. Tied Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284
.———. . —.

Chapter 8

Issues and Options

INTRODUCTION AND SUMMARY

Developing countries need energy services to

raise productivity and improve their standard of

living. But the traditional way of meeting these

energy needs, through increasing energy supplies

with little attention to the efficiency of energy use,

raises serious financial, institutional, and environmental problems. The magnitude of these problems

underlines the need for improving the efficiency

with which energy is currently used and produced in

developing countries.

This report has shown the potential for improving

energy efficiency through the adoption of proven

cost-effective technologies. For a wide range of

electricity using services, energy savings of nearly

50 percent and life cycle cost savings to consumers

of nearly 30 percent are possible with current or

near-commercial energy technologies. Energy efficiencies could be further improved by technologies

expected to be commercial in the near to midterm.

While the energy saving advantages of these

technologies are usually recognized, the common

perception is that their widespread adoption will not

occur because of their high initial cost, an important

consideration for poor, heavily indebted countries.

This study shows, however, that when the capital

requirements of both supply and end use technologies are combined-on a systemwide basis—higher

efficiency technologies reduce overall capital costs.

The higher capital costs of the energy efficient end

use equipment are more than offset by the lower

investment required for electricity generation.

Even with major end use efficiency gains, the

rising demand for energy services means that

increases in supply will also be required. Improved

supply technologies offer opportunities to augment

the efficiency of energy production and distribution,

while moderating environmental impacts. Recent

cost reductions in renewable technologies (e.g.,

wind turbines, photovoltaics, and biomass conversion) will encourage their increased use, and also

help improve rural energy supplies.

The rapid adoption of these technologies is,

however, being held back by a variety of technical,

institutional, and economic and financial barriers

that occur throughout the entire technology transfer

and diffusion process.

●

●

●

Technical. Many improved technologies,

though well established in industrial countries,

may not be well adapted to conditions in

developing countries. People in developing

countries may not be aware of new technologies or have access to the training necessary to

make effective use of new technologies

Institutional. Both public and private developers are organized to fund large scale conventional energy supply expansion rather than

demand side energy efficiency projects. Rules

and practices in the critically important electric

power sector often do not give efficiency and

renewable energy equal weight with conventional large scale supply options in providing

energy services.

Economic and Financial. Energy prices are

frequently subsidized in developing countries

and therefore provide neither the economic

incentives for energy efficient equipment, nor

adequate revenues for system expansion. Particularly in poor countries, consumers may not

have access to the capital needed for the higher

initial costs of energy efficient equipment

(even though these technologies reduce costs to

the user over the product’s lifetime, and lower

overall capital costs for the nation).

The United States has strong reasons for taking a

leadership role in policy changes to overcome these

barriers to rapid diffusion of improved energy

technologies.

International political stability depends on steady

broad-based economic growth in the developing

countries, which in turn requires economic and

reliable energy services. The developing countries

are of growing importance in global energy markets

and global environmental issues. Because of their

rapid population increase, the developing countries

are projected to account for over one half of the

increase in both global energy consumption and

associated CO2 emissions over the coming decades,

despite their low levels of per capita consumption.

Sharply rising demand for oil from the developing

countries contributes to upward pressure on interna-

–261 -
262 . Fueling Development: Energy Technologies for Developing Countries

tional oil prices. Developing-country debt, often

energy related, affects the stability of U.S. and

international banking systems. At the same time,

developing countries offer the United States major

trade opportunities in their large and expanding

market for energy technologies.

This chapter explores ways in which the United

States could contribute to more rapid technology

diffusion in developing countries, the policy mechanisms that could be used, and their relative costs and

benefits. A large number of U.S. programs already

influence or have the potential to influence technology adoption in developing countries, and many are

undergoing change--often at the instigation of

Congress. This chapter describes those programs

that appear, on the basis of our analysis of developingcountry needs and U.S. policy interests, to provide

the greatest opportunities for effective action. These

areas establish a framework for more detailed

program planning and analysis.

This is a timely moment for reviewing U.S.

policies towards the adoption of improved energy

technology in the developing countries. These countries are themselves demonstrating interest in seeking alternative ways of meeting the demand for

energy services, despite the difficulties inherent in

changing entrenched systems. Increased attention is

being given to politically sensitive questions of

energy price reform, improved management, and

operations efficiency in State-owned energy supply

industries. Several developing countries are taking

steps to encourage private investment in electricity,

and in oil and gas exploration and development.

Many developing countries now have capable energy research and policy institutions. Progress is also

being made on the environmental front. At present,

efforts are largely directed at local rather than global

conditions, though developing countries have also

participated in international environmental protection treaties. There is also evidence of change in

donor institutions. The bilateral donor agencies and

the multilateral development banks (MDBs) (of

which the most influential is the World Bank) are

beginning, often under pressure from Congress and

nongovernmental organizations (NGO), to incorporate environmental planning into their projects,

develop energy conservation projects, and encourage a larger role for the private sector. While many

problems remain, this momentum for change offers

a good opportunity for U.S. initiatives.

An analysis of possible U.S. actions to augment

the process of improved technology adoption and

diffusion provides a long list of policy options. The

following merit priority consideration:

●

●

●

●

●

●

●

●

Additional attention to energy efficiency, and

the environmental impacts of energy developments in current bilateral and multilateral

programs.

Encouragement of energy price reform in

developing countries, including assistance in

adjusting to the impacts of higher prices.

Rational energy pricing both encourages the

adoption of energy efficient equipment and

helps finance needed supply expansion. The

United States has a number of policy levers

(through bilateral and multilateral aid agencies,

and in debt negotiations) to achieve this objective.

Promotion of Integrated Resource Planning

(IRP) and associated regulatory reform to

provide incentives for investments in energy

efficiency as part of electricity projects. The

United States has experience with this approach in the electricity sector on which to base

technical assistance to developing countries.

Provision of technical assistance in a variety of

other areas of potential large impact. Examples

include environmental protection (an area of

growing concern in developing countries),

appliance efficiency, utility management, and

transportation planning.

Encouragement of private sector participation

(including the private sector of both the United

States and the developing countries) in energy

development. The United States has policy

levers through membership in MDBs and

programs for export and investment support.

The developing countries are indicating interest in further private sector development.

Help in building institutions in developing

countries, especially for technology development, adaptation, and testing.

Expansion of U.S. trade and investment programs, recognizing that U.S. energy related

exports and investment are an important channel for energy technology transfer to developing countries.

Setting a good example to the rest of the world

in energy efficiency and environmental protection. This provides credibility to U.S. policy

advice to others.
Chapter 8--lssues and Options . 263

Congress has already taken action in several of

these areas by promoting IRP, efficient energy

pricing, and consideration of environmental impacts

of projects. The implementation of these Congressional directives may need to be monitored.

Since efficient energy technologies often reduce

systemwide capital investment, redirecting capital

funds from supply expansion to energy efficiency

projects could free resources for additional investment in energy services. Even so, the rapid rise in

demand for energy services may require more

investment than that projected to be available. High

levels of support will continue to be needed from the

MDBs and other bilateral and multilateral financial

institutions. At the same time supporting actions

(e.g., debt negotiations, macroeconomic reform, and

privatization) will be required to encourage increased private sector participation.

Several of the options for accelerating the adoption of energy efficient technology imply an increase

in U.S. bilateral assistance. While increases in

bilateral aid run counter to efforts to control budget

expenditures, the share of bilateral aid (particularly

in the U.S. Agency for International Development

(AID)) directed to energy is at present low in relation

to: 1) total bilateral assistance; 2) the share of energy

in the aid efforts of other donors; 3) the potential

importance of developing countries as markets for

U.S. exports of improved energy technologies; and

4) the contribution of developing country energy use

to global Warming. The current geographical distribution of AID energy expenditures is concentrated

in the Near East. This distribution may not adequately reflect the totality of U.S. policy interests.

EXISTING U.S. PROGRAMS AND

POLICIES FOR ENERGY

TECHNOLOGY TRANSFER

AND DIFFUSION

Technology transfer can be influenced through a

variety of channels, both public and private. (See

table 8-1.) These channels are:

. capital projects financed by development agencies,

. intergovernmental agreements on research and

development,

. foreign investment and direct export sales, and

. training and technical assistance carried out by

both the private sector and the government.

The U.S. Policy Framework

A substantial number of U.S. agencies already

have programs and activities for energy technology

transfer. These include: AID; the Trade and Development Program (TDP); the Departments of Energy,

Commerce, and the Treasury; the Overseas Private

Investment Corporation (OPIC); the Export-Import

Bank (Eximbank); the Small Business Administration; and the U.S. Trade Representative (USTR).

Through membership in international organizations,

notably the multilateral development banks (MDBs)

and United Nations (UN) programs, the United

States exercises additional influence. Further, a

number of industry groups and NGOs are also active

in this field.

These agencies and organizations cover a wide

range of technology transfer and diffusion activities:

research, development, and demonstration; project

loans and grants; education, trainin g, technical

assistance; information services; policy advice; and

support to exports and private investment. Although

the U.S. policy infrastructure for promoting energy

technologies is largely in place, it has not in the past

focused on efficiency and is only now beginning to

accept efficiency as an important theme. In general,

the U.S. energy technology transfer “program”

lacks a consistent mandate. Efforts in energy are

normally a small, low priority component of agency

budgets.

Efforts have been made to coordinate some

aspects of these numerous programs through formal

and informal charnels. For example, Congress in the

Renewable Energy Industry Development Act of

1983 initiated a multiagency committee-the Committee on Renewable Energy Commerce and Trade

(CORECT) to promote exports of U.S. renewable

energy technologies (see box 8-D below). A U.S.

General Accounting Office (GAO) evaluation of

CORECT’S activities, currently underway, will

provide guidance on whether CORECT can serve as

a model for other areas such as energy efficiency and

the environment.

Despite the large number of programs, the current

level of U.S. bilateral aid for energy (see table 8-1)

is modest. The main bilateral aid agency is the U.S.

Agency for International Development (AID). Annual AID energy expenditures, largely grants, amount

to $200 million, compared with MDBs’ energy loans

of $5 billion annually. The relatively small scale of

297-929 - 92 - 18 - QL : 3
264 ● Fueling Development: Energy Technologies for Developing Countries

Table 8-l-Overview of Organizational Functions Relating to Energy Technology Transfer

NA. Not available or not applicable.

%awrence Berkeley Laboratory, Energy Technology for Developing Countries: Issues for the U.S. National Energy Strategy, U.S. Department of Energy,

Deeember 19S9, p. 17.

U.S. bilateral assistance for energy suggests that the

sums available will continue to be used to greatest

effect by:

●

●

●

●

using grant monies to promote technical assistance and institution building for technology

transfer and diffusion;

introducing energy efficiency and related environmental considerations into broader international policy discussions where the U.S. voice

carries considerable weight;

bringing influence to bear on the activities of

the multilateral development banks, whose

expenditures represent a major force in developing country energy decisionmaking; and

developing cooperative approaches with other

bilateral donors and lending agencies, and the

private sectors in both the United States and

developing countries.

AID Programs

AID is the major conduit for U.S. bilateral energy

support. However, energy accounts for a relatively

small share, about 3 percent, of AID’s total annual

economic assistance. Obligations have been declining in real terms in recent years-horn$214 million

in fiscal year 1990 to $177 million in fiscal years

1991 and 1992.1 Beginnin g in fiscal year 1991,

assistance for East European countries is included in

this total. Less than one-half of 1 percent of Agency

staff are full-time, direct-hire energy experts.

AID assistance is concentrated in projects in

Egypt and Pakistan,2 which are the only two

Iu.s. ~nm~ ~o~~ OffIce, Foreign Assistance: AID Energy Assistance and Global Warming, GAO/U. S. AID-91-22 1 (Washington, DC: U.S.

General Accounting OffIce, July 1991), p. 2.

Wunding to Pakistan has been suspended because of that country’s nuclear weapons program.
Chapter 8--Issues and Options . 265

countries to have major efficiency projects. In 1980,

annual AID energy funding to Africa was just over

$1 million. Latin America also receives little attention from AID for energy (under 6 percent of AID’s

total energy expenditures) despite strong U.S. interest in trade and investment markets in this area,

The remainder of AID energy expenditures is

devoted to a centralized Office of Energy and

Infrastructure that provides energy planning and

policy advice on an agency-wide basis, supporting

country missions with advice and training. In fiscal

year 1990, the Office had a $15.4 million budget,

which was increased to $20 million in fiscal year

1991 or about 8 percent of total AID energy

assistance.

The Office of Energy and Infrastructure conducts

a variety of policy, training, technical assistance, and

institution building programs (see box 8-A). The

Office of Energy and Infrastructure also coordinates

a number of programs with other government

agencies (e.g., the Department of Energy National

Laboratories), multilateral aid donors, and private

organizations (e.g., Bechtel and the American Wind

Energy Association).

Congress has expressed a high level of interest in

AID energy and environmental activities. For example, Congress has directed AID to encourage energy

pricing reform, end use energy efficiency, Integrated

Resource Planning (termed “least cost planning”),

and renewable energy; and to increase the number

and expertise of personnel devoted to these areas.

AID has also been directed to include global

warming considerations in its energy assistance

activities. In particular, Congress requested AID to

identify key developing countries in which changes

in energy and forestry policies might significantly

reduce greenhouse gas emissions.

Multilateral Bank Activities

The multilateral development banks (MDBs)

operate major energy programs mainly devoted to

large-scale conventional energy supply projects.

Through their lending policies, the MDBs influence

energy technology transfer to developing countries

and in general play a major role in determinin g the

types of energy projects that will be developed.

Among the multilateral donors (see box 8-B), the

World Bank has the largest single energy program,

providing three quarters of total multilateral energy

lending, The World Bank exercises considerable

influence in the energy sector of developing countries through its own loans and through the leveraging effect of its lending activities. For example, in

1989, World Bank energy sector loans of $3.8 billion

together with Inter-American Development Bank

(IDB) loans of $407 million formed part of the

financing of 33 projects whose total cost was $25

billion. In addition, the World Bank has a large

lending program in areas (e.g., transportation, industry, and urban development) that closely affect the

way energy is used. Through these activities the

World Bank has a good opportunity to act in an

integrated fashion over many relevant sectors. It is

also influential in setting policy guidelines.

The World Bank and other development banks

have traditionally concentrated on large scale conventional energy supply projects. These include

centralized electricity generation projects, and coal,

oil, and gas production and processing. Few energy

projects have been devoted to efficiency or the

development of renewable energy resources, other

than large scale hydroelectric. In their 1989 lending

program, for example, MDB support for solar,

geothermal, and wood-based energy projects accounted for less than 1 percent of total energy

lending.3

Recently, often under pressure from Congress and

NGOs, the World Bank has devoted more attention

to energy efficiency considerations (mainly in the

electricity sector) and has set up a special task force

to examine efficiency efforts within the World Bank.

The World Bank/UNDP Energy Sector Management

Assistance Program (ESMAP) has been reorganized. As a program outside the main geographical

departments that are largely responsible for project

development, ESMAP could be well placed to

develop innovative energy efficiency and renewable

energy programs of broad application throughout the

bank lending program. On the other hand, its

isolation from the project development process

could also diminish its effectiveness. By recently

joining ESMAP, the United States has increased its

voice in this potentially innovative program and

could bring its influence to bear on improving the

3u,s. )??p~fi Come. for Renewable E~~gy, Energy ~nding at the world Bank and Inter-American Development Bank (&k@Ou VA: J~u~

1990), p. 20.
266 . Fueling Development: Energy Technologies for Developing Countries

Box 8-A—AID Office of Energy and Infrastructure

The Office of Energy and Infrastructure has five basic goals: increased consideration of environmental criteria;

increased technical efficiency and financial performance of energy systems; greater private enterprise involvement

in energy development and management; expanded use of suitable indigenous energy resources; and enhanced

availability of energy for sustained rural development. To implement these goals, the Office currently supports the

following projects.

Energy Policy Development and Conservation Project

This project includes the following elements: advancing the Multi-Agency Group on Power Sector Innovation

(MAGPI); promoting least-cost investment planning; improving efficiency and performance of electric power

systems in developing countries; encouraging price reform policies; developing institutions to promote technology

innovation and commercialization programs such as Program for the Acceleration of Commercial Energy Research

(PACER) in India; conducting technology assessment and prefeasibility studies, including options for rural power

delivery; and developing a program in environmental management.

Energy Conservation Services Project

This project includes: promotional and planning activities related to energy efficiency as a response to global

warming; energy efficiency in electric power systems; and efficiency in the industry, buildings and transportation

sectors. Through this program, the Office of Energy is participating in the design and implementation of the Global

Energy Efficiency Initiative and a PACER building energy efficiency project.

Renewable Energy Applications and Training (REAT) and Biomass Energy Systems and Technology

(BEST) Projects

These programs are both aimed at stimulating the use of renewable energy in development projects. REAT

addresses the commercialization of renewable energy projects through the following elements; preinvestment

studies; feasibility studies; training and informational activities in cooperation with the U.S. Export Council for

Renewable Energy; participation in the FINESSE (Financing of Energy Services for Small-Scale Energy Users)

program; and coordination with multilateral banks and bilateral donors through the MAGPI mechanism. BEST

focuses on promoting biomass energy development, programs of applied biomass research; a Venture Investment

Program; and information dissemination, including workshops.

Private Sector Energy Development (PSED) Project

The PSED Project is intended to catalyze policy changes that will enhance private sector involvement in the

energy sector through the following means; conferences and workshops in assisted countries and in the United

States; technical assistance; dissemination of Private Power Reporter, a publication based on an in-house database

of project opportunities; financial support for feasibility studies; and coordination with other bilateral donors,

multilateral development banks, and the private sector.

Conventional Energy Technical Assistance (CETA) Project

The CETA project is directed at transferring U.S. advances in energy technology to developing countries in

the areas of resource assessment and development, and technology innovation. In the latter case, CETA has targeted

coal combustion technologies, particularly atmospheric fluidized-bed combustion and integrated coal gasification

combined cycle. CETA will be phased out in 1991, and the Energy Technology Innovation Project (ETIP) will take

its place. ETIP will add a Clean Energy Technology Feasibility Study Fund; a focus on energy efficiency

improvements in supply and distribution in the power sector (complementing the Energy Conservation Service

Project); transfer of rehabilitation technologies; and workshops aimed at institutional reform in the power sector.

Energy Training Program

The Energy Training Program offers short-term (2 to 7 months) training to governmental, parastatal, and

private employers in developing countries in the following categories: energy policy and analysis; indigenous fossil

fuel development; power industry development; energy conservation and efficiency; alternative energy systems;

environmental policy and regulation; pollution-control systems; and data collection and analysis. Through the

Energy Training program, the Office of Energy also trains USAID personnel (in Washington and in overseas

missions) in environmental topics, including the relevance of least-cost planning, efficiency, and renewable

resources. In addition, the Office of Energy and Infrastructure works closely with AID missions to implement

country specific programs and projects.

SOURCE: U.S. Agency for International Development Bureau for Science and Technology, OffIce of Energy, “Program PlarL’ for f~cal years

1990-1992.
Chapter 8--Issues and Options ● 267

Box 8-B—Multilateral Development Banks

Multilateral agencies are international organizations with a consortium of member nations or contributors. The

United States participates in several multilateral organizations, principally as a member or majority contributor to

four multilateral development banks (MDBs). Most of these agencies are associated with the United Nations. U.S.

membership in each organization resulted from congressional legislation, and Congress annually passes new

legislation to renew subscriptions of funds to the banks or to suggest policy direction to the U.S. representative. The

Department of the Treasury has oversight of U.S. directors of the MDBs, and the Department of State has oversight

of the U.S. participation in the UN, through the U.S. Ambassador to the United Nations.

The World Bank

The World Bank Group is an independent organization under the United Nations and is the largest multilateral

development bank. It supports the majority of developing country loans, accounting for around 75 percent of all

MDB loans made to developing countries. There are four interrelated organizations that are part of the World Bank

Group: the International Bank for Reconstruction and Development, the International Development Association,

the International Finance Corporation, and the Multilateral Investment Guarantee Agency.

The International Bank for Reconstruction and Development (IBRD) finances its loans through its own

borrowings on the world capital markets, through retained earnings (approximately $1 billion in 1990) and through

repayments on loans. IBRD loans carry near-commercial interest rates, repayable over a 15 to 20 year period. IBRD

loan decisions are based on economic considerations and “prospects for repayment.”l In 1990, IBRD loans

amounted to a total of about $15.2 billion, comprised of 121 projects.

The International Development Association (IDA) targets countries that cannot afford to pay the near-market

interest rates of the IBRD loans. Currently, countries with $580 or less annual per capita GNP (1987 dollars) are

eligible for IDA loans. Internationally, IDA is the largest source of multilateral development bank lending on

‘‘confessional’ terms. In 1990, IDA credits totaled over $5.5 billion, distributed through 101 projects. Credits were

granted most heavily in Africa, with $2.7 billion distributed among 67 projects.

The top four lending sectors-agriculture, energy, structural adjustment, and transportation-account for over

50 percent of IBRD/IDA (referred to subsequently as “World Bank”) loans. In fiscal year 1990, 16 percent of the

World Bank’s loans went to the energy sector, making energy second only to agriculture. Over two-thirds of World

Bank energy sector loans are to the power sector (notably hydropower), and most of the rest to oil and gas

exploration and development. Structural adjustment is the fastest growing sector, accounting for 15 percent of Bank

lending in recent years. Typical conditions of structural adjustment loans relate to macroeconomic reforms, such

as pricing policies, including energy prices.

The International Finance Corporation (IFC), an independent affiliate of the World Bank promotes private

sector investment by providing long term loans and risk capital without government guarantees to private sector

companies. Of the 125 IFC projects in fiscal year 1990, 6 were energy related, and amount to an IFC investment

totaling $140 million in loans and $40.8 million in equity and syndications. Three projects were in oil exploration,

two in electricity transmission and/or distribution, and one in hydro. The majority of IFC’s investments are in local

financial institutions, such as banks and credit unions.

The Multilateral Investment Guarantee Agency (MIGA) aims to stimulate foreign direct investment in

developing countries by providing guarantees to foreign investors against losses from noncommercial risks. MIGA

was initiated in 1988 and has guaranteed a total of $132.3 million for four projects, with the projects totaling $1.04

billion in direct foreign investment. One project is energy related, an investment by GE of the United States in a

lighting product manufacturer in Hungary.

The Regional Development Banks

The regional development banks, the Inter-American Development Bank, the Asian Development Bank, and

the African Development Bank, all conform to the World Bank model. Each makes loans to developing country

members and each has a confessional arm that makes grants and loans to the poorest member countries.

(continued on next page)
268 . Fueling Development: Energy Technologies for Developing Countries

Box 8-B—Multilateral Development Banks--Continued

The Inter-American Development Bank (IDB) annually makes loans amounting to about one-tenth of the

World Bank’s total, with lending in fiscal year 1989 around $2 billion. The United States has the single largest

subscription. About 25 percent of the IDB’s loans, about $407 million in fiscal year 1988, go to the energy sector.

IDB’s energy lending closely parallels that of the World Bank; large hydropower projects usually receive the most

funding, followed by fossil fuel generation and exploration, electricity transmission and distribution, and oil and

gas development.

Japan and the U.S. contribute equal amounts to the Asian Development Bank. In fiscal year 1988, ADB made

$2.8 billion in loans, with $392.14 million going to energy projects. The projects included oil and gas exploration;

transmission and distribution; and one hydropower project.

The African Development Bank with its confessional arm, the African Development Fund (AfDB/AfDF),

dispensed about $2.2 billion in loans and grants in fiscal year 1989. AfDB/AfDF lends for energy projects as part

of the public utilities sector. In fiscal year 1989, the public utilities sector comprised 18.2 percent of the Bank’s loans

and grants. The near-commercial loans for energy totaled $185.4 million in fiscal year 1989, with confessional loans

totaling $69.7 million, and one grant of $900,000 for a joint water supply/power project in Sudan.

Iworld B@ Receti World Bank Activities in Energy (WdiI@OIL w:mtoba 1992), P. 2.

SOURCE: Ofi3ce of Technology Assessme@ 1992.

interaction between ESMAP and the Bank operational department.

World Bank energy project lending usually contains requirements to increase energy prices to cover

long term marginal costs, as well as other policy and

institutional reform conditions. A more active role in

energy efficiency, however, may be useful. Past

experience in removing market distortions in power

sector pricing and increasing competition and operating efficiency indicate that it may take many years

to improve the functioning of the energy market.

The new Global Environmental Facility (see box

8-C) provides an opportunity for additional energy

efficiency projects. The criteria governing lending

under this fund, however, appear to exclude energy

efficiency projects that would be cost effective if

energy prices reflected long term production costs.

Such an interpretation risks excluding many energy

efficiency projects from consideration. It is as yet

too early to assess the operational impacts of these

rules.

Despite these initiatives, energy efficiency still

receives minor attention. This appears to be the

result of three factors: First, energy efficiency

projects are more diverse and complex than conventional energy supply projects and harder to put into

a project format for lending. Second, results of

energy efficiency initiatives are hard to forecast and

incorporate in supply plans. Third, past emphasis in

favor of traditional supply-side projects is difficult

to change. Given the importance of efficiency, it is

of particular concern that there is no clear organizational center of expertise within the World Bank to

support implementation of energy efficiency projects.

Even with energy efficiency improvements, energy supplies in developing countries will need to

increase, and MDBs will continue to be influential

in the choice of technology. Increased utilization of

natural gas offers both a cost effective and environmentally attractive opportunity for developing countries. However, a variety of economic and institutional factors (see ch. 7) have constrained its

development. Oil exploration in many developing

countries has also lagged. There is a role here for the

MDBs to stimulate hydrocarbon development by

helping provide information on geological prospects, insuring foreign investors, and providing

assistance in developing satisfactory long term

agreements between oil companies and developing

countries.

In recognition of the MDBs role in energy

lending, Congress has taken an active interest in

their activities. Congress has instructed the U.S.

Executive Directors to the MDBs to take into

account end use energy efficiency and renewable

energy in making decisions about new energy

projects. Congress has also addressed the issue of

bundling (or combining) small energy projects into

large projects on the financial scale usually handled
.

Chapter 8--Issues and Options ● 269

Box 8-C—The Global Environmental Facility (GEF)

The GEF is a pilot program administered by the World Bank intended to provide grants or confessional loans

to developing countries to help implement programs of global environmental protection. Four areas are included

in the GEF:

1. Protection of the Ozone Layer,

2. Limiting Emissions of Greenhouse Gases,

3. Protection of Biodiversity, and

4. Protection of International Waters.

The second area, Limiting Emissions of Greenhouse Gases, is particularly related to energy supply and use. Energy

efficiency and renewable energy are to be included under certain circumstances.

The World Bank, United Nations Environment Program, and United Nations Development Program jointly

implement the GEF. The World Bank takes primary responsibility for project definition, evaluation, and lending.

The initial 3 years of the GEF is considered a pilot program period, with an expected $1.5 billion budget. The United

States has committed $150 million for GEF ‘‘parallel” financing through AID for the initial 3-year period.

While the GEF is intended to address areas of global concern, substantial overlap with issues of substantial

national environmental self-interest are also eligible. Eligibility criteria incorporate three types of projects: a)

Projects economically viable on the basis of domestic benefits and costs to the country itself, but which would not

proceed without GEF involvement; b) investment that is not justified in economic terms if full costs are borne by

the country itself; and c) investment that is justified in the country context, but the country would have to incur

additional costs to derive the full global benefits. It was intended that the GEF operations complement but not

substitute for actions that could be supported under existing programs.

SOURCE: OffIce of Technology Assessmen~ 1992.

by the large development banks. It has done this by IMPROVING TECHNOLOGY

directing the Treasury Department to work with

borrowing countries to develop loans for bundled TRANSFER AND DIFFUSION

projects on end use energy efficiency and renewable

energy. In further action to facilitate development of

small scale projects, the 1989 International Development and Finance Act (PL 101-240) requires the

U.S. Executive Directors of MDBs to promote

increased assistance and support for nongovernmental organizations.

This survey of current policies and programs with

respect to the accelerated diffusion of improved

energy technologies to developing countries suggests two broad types of policy options (options 1 to

3 of table 8-2). The first is to give the U.S. program

greater cohesion by establishing and strengthening

coordinating bodies in selected areas such as energy

efficiency and environmental protection activities.

The second is to monitor the implementation of

existing congressional directives to AID and the

executive directors of the MDBs with regard to

energy efficiency, energy pricing, renewable, the

bundling of small scale projects, and the role of

NGOs in project lending. It maybe that there is less

need for additional directives than effective implementation of existing ones,

Three main categories of barriers to the accelerated adoption of improved energy technologies in

the developing countries have been identified. These

are technical barriers relating to the technologies

themselves, institutional barriers, and economic and

financial barriers. The following sections examine

current U.S. activities and policies that help to

remove these barriers and discuss options for

improving their effectiveness.

Technology Transfer Support

Technology consists not just of the appropriate

hardware, but also the knowledge and training

necessary to use it effectively. In addition to

technology research, development, and demonstration, the dissemination of information about technology and training in its use is also important to

technology transfer.

Research, Development, and Demonstration

Since scale of production, skills, relative prices,

and raw materials often differ among the developing

countries, technology developed in the industrial
270 ● Fueling Development: Energy Technologies for Developing Countries

Table 8-2-Options

Structure of existing programs for energy technology transfer and diffusion

1. To increase the cohesion and effectiveness of U.S. efforts, the Committee on Renewable Energy Commerce and Trade (CORECT)

could be considered as a model for energy conservation and environmental programs.

2. The effects of previous congressional directives regarding energy efficiency, energy pricing, integrated resource planning,

renewable, the bundling of small scale projects, and the role of non-governmental organizations in project lending could be monitored.

It may be that there is less need for additional directives than effective implementation of existing ones.

3. Recognizing the need for continued conventional energy supply development, the MDBs could further encourage natural gas

development in the developing countries.

R&D and demonstration

4. The Department of Energy and associated National Laboratories could increase efforts to develop or adapt energy efficient

technologies for developing country use in close cooperation with the U.S. technical community.

5. In order to integrate industrial country research, development and demonstration more closely with the needs, conditions, and

expertise of the developing countries, special institutes (analogous to the Consultative Group for International Agricultural Research

institutions) for that purpose could be established in the developing world.

Information dissemination

6. Ways could be examined of improving developing country access to, coordinating, and expanding, technology databases, especially

in defined areas of priority need (e.g., in electrical power generation and transmission and distribution system efficiency; renewable;

oil and gas exploration and development; clean coal power generation; energy environmental control technology; and transport system

efficiency).

Training and technical assistance

7. AID could be encouraged to hold more regionally based or in-country training, thus stretching available budgets, extending the

language coverage of the courses, and strengthening the growing number of energy institutions in the developing countries.

8. The U.S. executive directors of MDBs could be requested to ensure that energy sector loans, as appropriate, incorporate provisions

for training.

9. The donor agencies could be encouraged to pay particular attention to training needs in the electricity sector of developing countries.

institutional reform in developing countries

10. DOE could provide additional support for Integrated Resource Planning and related regulatory reform to the bilateral and multilateral

donor agencies, including drawing on the substantial experience of the various State and regional authorities (e.g., the California

Energy Commission and Pacific Northwest Coordinating Council) and utilities, which have been at the forefront of this effort.

11. The growing interest in privatization in the electric utility sector of developing countries could be encouraged, again drawing on U.S.

experience.

Providing incentives for the adoption of improved energy technologies

12. The multilateral donors, AID, and U.S. negotiators in debt negotiations could be encouraged to include energy pricing issues in their

economic reform efforts. This is an opportune time as many of the developing countries are expressing interest in moving towards

market-based systems.

13. AID could be requested to make greater efforts to provide technical assistance on pricing reform and the development of energy

efficiency standards, drawing on U.S. experience.

Financing issues

14. Consideration could be given to increasing the share of energy in total bilateral and, which is low in relation to other major donors.

15. AID and the MDBs and other bilateral agencies could be requested to investigate ways of overcoming the initial higher costs of energy

efficient equipment to end users, and to consider mechanisms for bundling a large number of small projects into larger projects

consistent with MDB scale of operation.

U.S. trade and investment

16. Existing trade and investment support programs (including those of the United States and Foreign, Commercial Service, Trade and

Development Program, and U.S. Trade Representative for energy could be expanded.

17. Additional efforts could be made in existing trade support programs to respond to the special needs of small to medium scale

companies.

18. The extent to which the present trade and investment support agencies are able to support new forms of finance such as project and

nonrecourse finance could be investigated.

Poverty and rural energy needs

19. Bilateral and multilateral donor agencies could undertake additional activities to improve access of both the rural and urban poor to

improved forms of energy.

20. Donor organizations could examine ways to seek more effective means to deliver technical assistance to the urban and rural poor,

including through NGOs and nonprofits with demonstrated ability to deliver technical assistance and financing at the local level.

Protecting the environment

21. AID and EPA could be requested to provide additional technical assistance to developing countries for environmental planning. Efforts

could be made to ensure an effective degree of coordination under EPA’s leadership of U.S. environmental activities in the developing

countries.

22. in connection with longer term issues of global sustainability, the appropriate level of funding for family planning, how these funds

should be distributed, and under what restrictions, if any, they should be distributed could be further examined.

Setting a good example

23. The United States could set a good example to the rest of the world by improving energy efficiency at home.

24. The State Department, as requested by Congress, could ensure that U. S. facilities abroad, particularly those in developing countries,

are highly energy efficient and take advantage of renewable energy sources where feasible. U.S. embassies, office buildings, and

residences could serve as show pieces for advanced U.S. energy efficient technologies, such as highly efficient air conditioners, heat

pumps, household appliances, insulation standards, solar systems, and cogeneration.
Chapter 8--Issues and Options . 271

countries may need considerable adaptations to

developing country conditions. Examples of potential areas for RD&D include high reliability rural

off-grid power using indigenous fuels and renewable

energy, and more efficient end use devices such as

lighting systems and refrigerators.

The Department of Energy (DOE), with the

associated National Laboratories, is the center of

energy research and development in the U.S. Government (see box 8-D). DOE is currently active in

fossil energy technology, notably clean coal technology. DOE has agreements with a number of countries for cooperative R&D carried out through

exchanges of information and research personnel. In

addition, DOE’s National Laboratories work directly with public and private organizations in

developing countries. For example, Oak Ridge

National Laboratory has undertaken studies on

institution building, technical assessments, energy

efficiency improvements, and fossil energy options

in a wide range of developing countries. Lawrence

Berkeley Laboratory focuses on global climate

change and energy efficiency in buildings, working

especially with China and Association of Southeast

Asian Nations (ASEAN) countries. Argonne National Laboratory is active in energy system planning. Los Alamos has specialized in geothermal

energy R&D, directed at Central America and the

Caribbean nations. Sandia National Laboratory,

working through its Design Assistance Center, has

worked in transferring photovoltaic technologies to

Latin America. The National Renewable Energy

Laboratory (formerly the Solar Energy Research

Institute) conducts research in a wide range of

renewable energy technologies.

Further cooperation between U.S. Government

agencies and between these agencies and the MDBs

is possible (see option 4 of table 8-2). DOE, for

example, could develop simplified procedural mechanisms and an experience/technology inventory,

whereby other agencies and MDBs might more

readily access DOE laboratories’ resources.

In order to integrate industrial country energy

RD&D more closely with developing country needs

and to give the developing countries greater influence in defining their R&D agendas, consideration

could be given to establishing or supporting special

institutes for that purpose (see option 5 of table 8-2).

An example of an analogous effort for agriculture is

the Consultative Group for International Agricultural Research (CGIAR). This is an the agricultural

research network which links a series of research

institutes in different parts of the world. An energy

“CGIAR” could set up centers of research and

development, technology demonstration and evaluation, and pilot projects in developing countries.

Such centers could be staffed by scientists from

both the industrial and developing countries, and

draw on existing institutions with relevant experience. Feedback between the developing countries

and technology research institutions in such a

system could be much closer than is often the case

at present, taking advantage of developing countries’ greater local knowledge and growing expertise

in energy technologies. These centers could help

create in the developing countries an institutional

ability to conduct successful R&D and achieve its

commercialization. The centers could be funded

through a variety of sources-bilateral and multilateral donors, foundations interested in energy and

rural development, and some industries who might

find work on the adaption of their products to

developing country conditions a stimulus to future

sales. Debt swaps could also be used as a source of

funds. 4

Information Dissemination

Despite efforts to improve access to information

on energy technology, there are still reports from

developing countries of inability to obtain, assess,

and utilize technical information.

Responsibility for information dissemination is

now divided among several U.S. agencies, including

the Departments of Commerce and Energy. The

Trade and Development Program has an ‘‘Industrial

Equipment Familiarization Program” that assists

foreign buyers to locate U.S. technology. Several

private sector organizations are also active. For

example, the U.S. Export Council for Renewable

Energy (US/ECRE) provides information on small

scale, renewable energy systems, and the International Institute for Energy Conservation (IIEC)

provides information on energy efficiency technologies. Several U.S. utilities have provided information and assistance to ‘sister’ utilities in developing

@eorge E. Brom Jr. and Daniel R. Sarewi@ “Fiscal Alchemy: Transforming Debt Into Researck” Issues in Science and Technology, vol. VHI,

No. 1, Fall 1991.
272 . Fueling Development: Energy Technologies for Developing Countries

Box 8-D—The Department of Energy

The Department of Energy has a number of international activities. These include over 30 direct agreements

with private or public organizations in developing countries (mostly the Newly Industrialized Countries)l as part

of its international energy research and development cooperation activities. These bilateral agreements usually

consist of collaborative R&D and exchanges of technical information, accounted for almost entirely as “in-kind

contributions of staff effort. ” Although there is joint research on geothermal energy (in Mexico, for example) and

renewable, most of the present bilateral agreements involve fossil fuels. In addition, through the Assistant Secretary

for Fossil Energy, DOE supports a $1.1 million program aimed at stimulating the export of coal-based technologies

to developing countries, emphasizing clean coal technologies. Of this total, $750,000, plus funds from AID and

TDP, support prefeasibility studies by U.S. companies. The Assistant Secretary for Fossil Energy also chairs a Coal

Export Initiative Program for the coordination of governmental agencies involved in coal export issues. Agreement

to share information on clean coal was reached with Chile and Costa Rica and all 75 AID countries were assessed

as possible candidates for cooperative efforts in the field of power generation and/or industrial utilization for clean

coal.

A recent initiative-the Export Assistance Program--was announced to add to the Department’s expertise in

promoting exports of U.S. energy goods, services, equipment and technology, working with ongoing activities of

the Departments of Commerce and State, and the U.S. Trade Representative. The Program will be managed by a

new office within the Office of International Affairs and Energy Emergencies, headed by a Deputy Assistant

Secretary who will serve as a U.S. energy industry international advocate and contact for information and action.

Promotional trips to Venezuela and Chile have already been made, and an annual Latin American Energy Forum

is in the planning stage.

DOE’s National Laboratories work directly with public and private organizations in developing countries as

well as in cooperation with U.S. governmental and multilateral groups. The National Labs spend about $10 million

annually to provide energy assistance to developing countries, and from 1986-1988, worked on 36 diverse projects.

In addition to some DOE funds, the laboratories receive substantial support from AID, the World Bank, the

International Atomic Energy Agency, the Environmental Protection Agency and other outside sources.

The Department of Energy also leads the Committee on Renewable Energy Commerce and Trade (CORECT),

a multi-agency committee initiated by an Act of Congress2 that includes AID, the Departments of Commerce, State,

and Treasury, the Export-Import Bank, Overseas Private Investment Fund, the Trade and Development program,

the U.S. Trade Representative and the Small Business Administration. CORECT promotes trade of U.S. renewable

energy technologies through a variety of activities: (see below). CORECT's current funding level is about $1.5

million. CORECT helps fund the U.S. Export Council for Renewable Energy, formed by 9 national renewable

energy trade associations to promote exports, which in turn provides industry direction for the Committee.

CORECT’s activities include:

●

●

●

●

●

Financing Energy Services for Small-Scale Energy Users (FINESSE)-Financing Task Force. The World

Bank and CORECT are working closely together on this effort to improve credit accessibility for small-scale

energy users who may be unable to attract the attention of multilateral donors and are unable to support the

high interest rates of commercial banks.

Pacific Rim Initiative. This initiative has involved identification of markets and was followed by

identification of specific project opportunities, initially focusing on Indonesia and the Philippines.

One-Stop Application. CORECT is coordinating the U.S. government agencies necessary to develop a

simplified form and procedures for obtaining support from Eximbank (team leader), the Trade and

Development program, Small Business Administration, Overseas Private Investment Corporation and AID.

Integrated Electric Utility Program. The goal of this program is to encourage the consideration and use of

decentralized energy systems for delivering electric power in developing countries.

Design Assistance Center of Sandia National Laboratory. The Design Assistance Center at Sandia works

with industry and users in the photovoltaics area to provide feasibility studies, system specifications,

procurement document preparation, design evaluation, and education and training assistance.

1~-aBcr~ley ~bor~ory, E~r8y Technol~gyfor D~eloping Countries: lssu~for the U.S. iVational Energy Strategy (Btic4~,

CA: Deeember, 1989), p. 20. LBL lists Brazil, M% South Korea, PRC, Venezuela and Egypt as Newly Industrial&d countries.

z~e R~~~le Energy Indushy Development M of 1983.

SOURCE Off”ce of Technology %sessmen$ 1992.
—

Chapter 8--Issues and Options ● 273

countries. The United Nations serves an informational function in development countries. For

example, the UN Industrial Development Organization provides information on industrial energy

conservation.

Ways of improving access to and coordinating

these databases and of expanding these services

could be explored. Of particular importance are

areas such as electrical power generation, transmission and distribution system efficiency, small scale

renewable, oil and gas exploration and development, clean coal power generation, energy environmental control technology, and transport system

efficiency (see option 6 of table 8-2).

Training and Technical Assistance

Training and technical assistance are integral

parts of technology transfer. Without good training,

efforts to transfer technology hardware are frequently ineffective. The transfer of renewable energy and energy efficiency technologies requires

skills to evaluate their appropriateness, cost-benefit,

applications, and local manufacturing prospects.

Implementation of rural and small scale energy

technology transfer, in particular, requires sustained

and concentrated attention to improve local human

capability: foreign technical assistance is generally

both less effective and too expensive to be a practical

long term vehicle for support.

AID sponsors an Energy Training Program that

includes academic advanced degrees and in-service

and industry fellowships. A recent evaluation of the

project 5 found widespread satisfaction with the

program among former attendees, while also suggesting several new directions. These include training in environmental assessment and management,

general management training, local/indigenous resource utilization, coal resource development and

contracting, and energy project financing.

Energy training programs might be expanded to

meet the needs of non-English speaking participants,

Neither the French-speaking West African countries

nor the Latin American countries appear to be

adequately supported in AID training. One option is

to hold more regionally based or in-country training.

This would stretch available budgets and stimulate

the growing number of energy institutions in the

developing countries. Private voluntary organizations (PVOs), many of which have long histories of

operations in developing countries, can play a role

here. In recent years, AID has enrolled PVO support

on an increasing scale, taking advantage of their

experience and generally lower costs. Training

programs might benefit from the wide experience of

U.S. companies in training associated with their

foreign operations in developing countries.

Increased emphasis on training can yield important benefits to the United States. It creates awareness of U.S. technology and services. At times when

capital project aid is severely constrained, training

may be one of the more cost-effective, long term

trade strategies.

In the MDBs, training is largely associated with

specific projects or, as in the case of the World

Bank’s Economic Development Institute, as part of

specially designed economic development courses.

Considering the importance of investment in human

capital, much greater attention to this function

appears warranted. It has been observed in many

projects, for example, that training funds are often

either not used fully by governments or not used

effectively, due to a lack of government priority on

training or lack of a training plan. Most existing

loans could incorporate a more comprehensive

treatment of training needs.

The deteriorating performance of the electric

utility sector is attributed in part to poor management and maintenance. This suggests the need for

greater attention to training across the entire spectrum of activities, from power operational efficiency, to billing and collection of revenues, to

diesel maintenance and lineman training.

While promotion of operational efficiency improvement may appear more appropriate for agencies with large capital programs such as the World

Bank, areas that require intense technical assistance,

training, and institutional development may in fact

be much better suited to an aid agency with grant

funds like AID. Expanded cooperation in these areas

between AID the World Bank, and other MDBs,

could be beneficial (see options 7, 8, and 9 of table

8-2).

sDevelopment Sciences, hC., “An Evaluation of the Conventional Energy Training Program and the Energy Training Program for the U.S. AID

Offke of Energy,’ Washington, DC, Jan. 12, 1990, pp. 23-24, 31-34.
274 . Fueling Development: Energy Technologies for Developing Countries

Improving the Institutional Framework

In many developing countries there are numerous

opportunities for improving the economic and institutional framework for energy sector development.

The present system, particularly in the electricity

sector, often discourages energy efficiency and

small scale decentralized energy facilities. The

decision process is usually biased towards large

scale supply options even when efficiency improvements and small scale renewable are more beneficial. Furthermore, private sector investment has had

little role in electricity sector development. These

issues are of growing concern because of the serious

deterioration in the electricity sector in many developing countries and the prospect of a major shortfall

in the financial resources available for supply

expansion.

The Regulatory Framework

Decisions on how to provide energy services are

made independently by suppliers and users. This

leads to a “disconnect” in the system, which

discourages energy efficiency. On the one hand,

purchasers faced by high interest rates and low

incomes opt for low first cost, typically low energy

efficiency equipment. Moreover, frequently subsidized electricity prices provide users with little

incentive to invest in efficiency. Suppliers of electricity, on the other hand, face a number of incentives, financial or otherwise, that encourage supply

expansion rather than efficiency improvements.

One means of overcoming the system obstacles to

energy efficiency is the use of Integrated Resource

Planning (IRP)--an expanded form of least cost

planning--in project design. 6 Traditionally, least

cost planning techniques focused on a limited range

of large scale conventional supply technologies,

such as coal-or oil-fired generation. Forecasts of

electricity demand were seen as a given, not subject

to influence. This process has now been expanded in

many utility service areas in the United States to

include consideration of demand. Thus, energy

efficiency investments are balanced on a costbenefit basis with new supply additions, including

nonconventional supply options such as privately

generated renewable energy. This system can be

used in both publicly and privately owned utilities,

and its value is being increasingly recognized by

analysts and policymakers in developing countries.

It is important to realize that Integrated Resource

Planning systems will require substantial reform in

the regulatory structures if they are to be effective.

Furthermore, support activities such as data gathering, metering, demonstration, standards, financing,

and incentives will need to be developed.

United States agencies are already providing

advice on the long term planning of the energy

sector, often at the instigation of Congress. For

example, legislation has directed AID to focus on

IRP (termed “least cost energy planning"), end use

energy efficiency, and renewable energy. These

elements are contained in two of the AID Office of

Energy Programs: the Energy Policy Development

and Conservation Project and the Energy Conservation Services Project. The implementation of these

congressional directives could be examined.

The United States could make further contributions to establishing appropriate regulatory systems

in the developing countries. U.S. State and regional

utility regulatory apparatus have played a leading

role in the development and application of IRP (as in

California and the Pacific Northwest). Programs of

demand-side management have been operating for

several years. In these programs, utilities give

financial incentives (rebates and special rates) to

consumers to make greater investments in high

efficiency equipment.

The Department of Energy has an Integrated

Resource Planning program, whose annual appropriations were recently increased from $1 to $3

million. This program works closely with the

national laboratories to provide U.S. utilities with

data and analysis. The results of these activities

could be further incorporated into bilateral energy

programs, and could contribute to MDB programs

(see option 10 of table 8-2).

Realistically, effective implementation of IRP

will require additional resources. These include

grant or technical assistance funds to perform the

necessary surveys, studies, and pilot demonstrations

and provide guidance of regulatory reform. Such

support is of particular importance as developingcountry utilities do not have prior experience with

s~temt~ Resource PI arming should be distinguished from least-cost supply-side pl arming that includes supply-side options only. The term

Integrated Resource Planning, covering both the supply and end use of energy, will be used here.
Chapter 8--Issues and Options . 275

this approach to planning, and are likely to have very

limited experience with efficiency programs in

general. They may also be highly risk averse, with

very limited financial and staff resources available

for experimentation, and no established regulatory

structure to oversee and stimulate full implementation of these innovations. Risk sharing by the MDBs

or bilateral donors could also be an effective means

to stimulate demand-side actions.

The role of the World Bank is critical in this area.

Recognizing this key role, Congress has already

instructed the executive directors of the MDBs to

promote end use energy efficiency and renewable

energy in decisions on new projects, and to incorporate IRP in their project planning. The implementation and effectiveness of these directive may need to

be examined.

Role of the Private Sector

Much of the energy sector, particularly the

electricity sector, is government owned, controlled,

and operated in the developing countries. There is

increasing interest in developing countries, however, in opening up part or all of the energy sector to

private investors (see option 11 of table 8-2). This

interest is based on a number of considerations:

●

●

●

A

the need to attract funds both from domestic

and foreign investors for system expansion,

the need to introduce an element of competition

into this sector and achieve better utilization of

existing capacity, and

the desire to gain access to new technologies.

considerable effort has already been made to

increase the role of the private sector in electricity.7

These efforts vary from-outright sale of State owned

facilities to the private sector (as in Chile) to the

more typical opening of the grid to small private

generators as was done in the United States under the

Public Utility Regulatory Policies Act (PURPA)8. 

9

U.S. and multilateral agencies are assisting in this

process. The AID Office of Energy, for example,

supports private sector energy initiatives by providing information on PURPA type legislation, helping

to develop private energy policies and projects,

cost-sharing feasibility studies, and collecting and

disseminating information.10 There may however,

be a gap in complementary in-country or AID

mission programs, where the actual delivery of

technical assistance, training, and other resources is

most important.

The United States is a leader in the field of private

power production, with valuable experience under

PURPA of providing access to the grid to small

private producers. Like IRP, PURPA-type legislation changes utility rules to help correct the bias in

favor of large conventional generating facilities. The

benefit of this experience could be made readily

available to developing countries under AID or other

programs.

The World Bank also has programs to promote

privatization. A privatization group, applicable to all

industries but of particular importance to energy,

assists in developing the legal and statutory framework for regulation of private investments. The

program helps in the formulation of divestiture

policies for the public sector and provides technical

assistance as needed to support privatization. Bank

lending and cofinancing arrangements are also

designed to support privatization as appropriate.

Assistance is given in structuring agreements that

serve as the security package for investors, lenders,

and governments. Critical to the success of privatization and private capital mobilization are programs

that guarantee payments for investors if their power

purchase contracts are not honored. Agencies such

as MIGA can play a role here.

A major element of the broad private sector power

strategy is development of the local capital market,

TJ~es B. Sulliva% ‘private power in Developing Countries: Early Experience and a Framework for Development’ AnnualReview of Energy ~990,

vol. 15, pp. 335-363.

8~e ~bllc Utiities R~@atoW pollcie~ Act of 1978 (PURPA) rqfies utilities to purchase eleC(riC@ from c@@hlg facilities at avoided COSt.

Whe appropriate system and the mix of public and private elements in it will, however, be country specific. A recent World B@ review found thaC

public ownership could be as effective as private ownership, and that good performance was generally found to be related to management capacity and

the degree of autonomy. Common features of successful power companies were found to be their relative autonomy of management, procurement and

staffing functions; sound professional and nonpolitical organizational structure; appropriate tariff policy that takes economic costs into account; and

operation on sound commercial principles. W. TepLitz-Sembitzky, “Regulatio% Deregulation or Deregulation: What Is Needed in the LDCS,” Energy

Development DivisioL World Bar& Energy Series Paper #30, World BanlG July 1990.

10~e~jorcen~~ytidedprows~~MD for fiplemen~g ~ese objectives me the B~au for Science ~d Technology, OfflCe Of Energy,

Private Sector Energy Development (PSED) projec~ and some aspects of AID centrally funded projects such the Renewable Energy Applications and

Training projec~ Energy Conservation Services Project, and Biomass Energy Applications and Training.
276 . Fueling Development: Energy Technologies for Developing Countries

both to supply needed local currency inputs and also

to vest continued control in local hands. The

International Finance Corporation, part of the World

Bank family, is one of the few donor program

devoted to the encouragement of developingcountry private sector activities. The International

Finance Corporation is a natural vehicle to stimulate

the development of private sector energy supply and

end use energy service initiatives.

Providing Economic Incentives

In addition to institutional barriers, economic

systems frequently do not provide sufficient incentives to encourage the rapid diffusion of energy

efficient technology or small scale renewable. High

interest rates faced by consumers discourage purchase of initially high cost yet efficient equipment.

Heavy reliance on indirect taxes often means high

tariffs on imported equipment. The operation of

energy markets is hampered by price controls, price

distortions, and cross subsidies. Subsidized prices

may make energy more affordable to low income

groups, but do not encourage efficient use of energy

or provide adequate revenues for system maintenance or expansion.ll

Issues of energy pricing are frequently addressed

in programs of general macroeconomic and energy

sector reform by international and bilateral agencies.

In recent years, the World Bank has increased the

scale of its structural adjustment programs, which

now account for 15 percent of total World Bank

lending. While designed to improve the health of a

country’s economy generally, such programs often

include specific requirements to reform energy and

other pricing systems and to improve the working of

capital markets. World Bank energy sector loans

typically include energy pricing reform.

Congress has also instructed AID to pay attention

to energy pricing in its energy programs. The

renegotiation of developing country public and

commercial debt can be used as a vehicle for

leveraging economic and energy sector reform (see

option 12 in table 8-2). In so far as these actions

reduce inflation and real interest rates and make

energy prices reflect their long term supply costs,

they improve the incentives to adopt energy efficient

equipment and renewable.

Efficiency standards have played an important

role in U.S. energy policy, but have received less

attention in developing countries. U.S. experience

could be useful to developing countries as they

formulate energy efficiency (and environmental)

standards. Efficiency standards could also be useful

to developing countries to offset the impact of

energy price reforms-a politically sensitive issue.

If higher efficiency equipment can be introduced at

the same time that energy prices are raised to reflect

their true cost, the total cost of the service to the

consumer need not rise (see option 13 in table 8-2).

Financing Issues

The lack of finance is often perceived to be a

major barrier to the introduction of energy efficient

and renewable energy equipment as well as to

supply expansion. On the supply side, funds for

energy sector development come from both public

(about two-thirds) and private (one-third) sources.

On average, about one-half of total investments for

energy supply is in the form of foreign exchange (see

table 8-2).

Bilateral aid from all sources accounts for only a

small part of total developing-country energy investments. Although AID budgets have remained steady

in real terms in recent years, the U.S. share of global

foreign aid has declined. Any increase in overall aid

budgets would run counter to efforts to control

Federal spending, but the continuation of current

trends will reduce U.S. influence in the development

assistance forum and in related trade issues. Increased aid could reverse this trend and possibly

leverage increased contribution from other bilateral

donors. Alternatively, the share of energy in the

existing AID budget could be increased, reflecting

rising concern about global environmental issues,

the reduction of global poverty, and the increasing

demands on current budgets from new programs

directed to Eastern Europe (see option 14 of table

8-2).

The MDBs already operate large energy programs

in which they are presently, partly in response to

congressional initiative, raising the energy efficiency component and incorporating environmental

considerations. In addition, the Global Environmental Facility could, if interpreted more broadly to

include efficiency projects, increase the resources

11~~, @fm ~ ~@~te ~venum led t. shomges or ~el~ble supp~es of energy and ~~uendy reduce job opportunities, subsidies Cm

ultimately darnage those elements of the population they were designed to protect.
Chapter 8--Issues and Options . 277

Table 8-3-Estimate of Investment in Commercial Energy Supplies in Developing

Countries, Early 1980’s (billions of 1982$)

Electricity Oil and gas Coal Total

Foreign exchange: external

borrowing . . . . . . . . . . . . . . . . . 11 4.2 0.5 1 9.7a

Foreign exchange: other . . . . . . . 0 16.3 0.5 16.8b

Local , ... , . . . . . . . . . . . . . . . . . . 19 10.5 3.0 32.5

Total . . . . . . . , , . . . . . . . . . . . . . . 30 31.0 4.0 65,0

aOf which:

export related . . . . . . . . . . . . . . . . . . . . . . . . . 5.1

multilateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9

bilateral ................,.. . . . . . . . . . . . 1.5

financial institutions . . . . . . . . . . . . . . . . . . . . . 5.2

15.7

bResidual, assumed private investment and expenditure of cantnes own fOreigfl reserves.

SOURCE: Based on data in World Bank, Energy Transition in Developing Counfries, Washington, DC, 1983, pp. 68,69.

available for energy efficiency and small renewable

energy projects. The increasing demands on World

Bank and AID for funds for the countries of Eastern

Europe and the Soviet Union, however, could come

at the cost of assistance to developing countries.

Though public sector funding has provided about

one-third of the foreign exchange costs of overall

energy supply investments and a large part of

electricity investments, there is general agreement in

many developing countries that the private sector

must play a larger role in the future. The interest in

more private sector participation stems from both

the shortage of public funds to finance development

and the belief that competition from privately owned

facilities will improve energy sector performance,

The United States has a number of long standing

programs to encourage U.S. private sector investment and trade. In addition, the U.S. supports a

variety of activities to bolster investment reforms

and build local capital markets in developing

countries. Activities in this area include: investment

reform developed by the Inter-American Development Bank under the Enterprise for the Americas

Initiative, IFC programs, and World Bank and

International Monetary Fund economic adjustment

projects. While designed for broader purposes,

progress in this area will also benefit the energy

sector.

High levels of debt in developing countries

(currently about $1.3 trillion)12 limit the resources

available for investment in energy and other development sectors, and discourage private sector investment. Official debt traditionally accounts for a

high share (75 percent or more) of total debt of the

poorest countries. Most OECD governments, including the United States, have provided, and are

continuing to provide, debt relief to poor African

countries.

Among the middle income highly indebted countries, however, the share of official debt rose from 22

percent in 1982 to 37 percent in 1988 as private

borrowing fell sharply in the 1980s.13 Private debt

still, however, accounts for the largest part of

developing-country debt. In recent years, this debt

has been reduced somewhat either under the Brady

Plan or market based conversion procedures .14

Debt forgiveness, renegotiation, or restructuring

provide an opportunity for conditionality-debt

written down and interest forgiven to the extent that

debtor governments undertake to fulfill certain

agreed conditions such as increasing domestic

energy prices. Debt for nature conversions are often

a part of these transactions. The debt for nature

model could equally be applied to debt for energy

efficiency. Similarly, debt swaps could be used to

fund support of energy technology research, development, and demonstration.15 Additional requirelzKarin Lissakers, “Debt and Energy,” contractor report prepared for the Office of Technology Assessment, January 1991, Table 1.

13K. L1ss~Hs, ~id

14~e ~ti~te of ~temtio@F~nces es~tes tit debt obligations we~ reduc~ by $18 billion in 1988 tiOUgh debt equity swaps, Other Iod

currency conversions and private sector restructuring. Institute of International Finance, Inc., “Improving the Official Debt Strategy: Arrears Are Not

the Way, ” Washington, DC, 1990, figure 2.

ISBro~ op. cit., footnote 4.
278 . Fueling Development: Energy Technologies for Developing Countries

ments could include establishing domestic revolving

finds for energy conservation investment. Debt

restructuring, by improving the investment climate,

encourages the repatriation of capital (as has recently taken place in Mexico) and the resumption of

new foreign investment (as in both Mexico and

Brazil). This is increasing resources available for

investment in energy.

The financing problem concerns not only the total

amount of resources available, but also the tailoring

of these resources to energy sector needs and

opportunities. For example, World Bank lending

usually consists of a small number of large scale

conventional supply projects rather than a large

number of small projects, as typical of energy

conservation and small scale renewable projects.16

Changes in funding procedures will be needed to

better match the requirements of new types of

projects.

The total life cycle costs of energy (particularly

electricity) efficient equipment are generally lower

than those of inefficient equipment. The first costs of

efficient equipment to end users, however, are

usually higher, even though total systemwide capital

costs—including both utility and end user capital

investment-are lower. This is an important deterrent in countries where capital is scarce and expensive. Further, adoption of electricity-using energy

efficient equipment shifts investment from utilities

that usually have easy access to relatively low cost

capital to the individual consumer who usually faces

higher interest rates. This situation calls for innovative financing mechanisms. These could include the

development of intermediary institutions or service

companies to finance the initial higher capital cost to

the end user through the subsequent electricity

savings; or action by the utilities (through loans,

rebates, etc.) to assume part of the higher initial costs

to the consumer (see option 15 of table 8-2).

A second characteristic of energy efficiency is the

need to influence a large number and variety of

consumers, from large energy intensive industries to

individual householders. This wide range underlines

the importance of broad incentive measures such as

energy price reform, equipment or appliance standards, and innovative financial mechanisms. There

will also be new supply side actors—promoters of

private power schemes and small scale decentralized

renewable. Some of these actors are likely to be

smaller in scale then traditional suppliers, and will

lack the traditional suppliers knowledge of the

special conditions of developing country markets,

financial resources, and established relations with

large banking systems. Special banking facilities

grouping a series of small projects together in a way

that would make them suitable for traditional

banking procedures would be useful (see option 15

of table 8-2). There may also be a need to redistribute

funds within the usual project cycle, with a larger

share of the resources in the prefeasibility and

feasibility stage than is usual in well-established

systems.

Ultimately, it is the developing countries themselves that provide the bulk of resources for energy

sector investment. At present, these resources come

from the public sector as most energy supply

facilities (the electricity sector, oil and gas in many

countries) are public sector enterprises. Many developing countries are experiencing severe financial

stringency, however, and are unlikely to be able to

meet the increasing financial demands of the energy

supply sector from traditional sources. This is

particularly acute in the electricity sector, which in

many developing countries is running at heavy

financial losses. Given the scale of investment

requested, the developing countries will need to both

improve the revenue situation of public supply

enterprises and attract private capital into the energy

sector. Many of the new initiatives (e.g., energy

efficiency improvements, new power generation,

and development of new natural gas or renewable

energy resources) might best be undertaken by the

private sector.

IGM~tilater~ orga~tions fiid it easier to fund large rather than small projects because: 1) A loan for a given amount CODSiStig Of a kge number

of small projects is inherently more information and management intensive, and therefore collectively have higher staffiig requirements than a similar

loan covering only one projwt. 2) Small projects require budgets and staff from multiple program areas, which is often dii31cult to achieve in existing

organizational structures, 3) Many new smaller-scale technologies may not be known to staff or, even if knovvrL may be felt to be too risky given the

existing state of knowledge and experience to recommend to recipient countries. 4) Small scale technology generally does not involve large scale projects

and therefore may not be politically attractive to borrowers. 5) Project appraisal methodologies are incompletely developed and have a bias against

renewable technologies and conservation. The lack of integrated least cost energy planning at the national level results in bias towards supply investments.

6) Consemation involves direct intervention into spedlc industry production processes, which runs counter to World Bank funding policies.
Chapter 8--Issues and Options ● 279

REDEFINING PRIORITIES

priorities in foreign policies are constantly changing, especially in the present climate of global

political and economic uncertainty. In recent years,

a number of issues of U.S. policy concern have

emerged that are closely connected with energy.

These include: U.S. trade and international competitiveness; environmental problems; and growing

poverty in many developing countries despite rapid

rates of economic growth.

Enhancing U.S. Trade and

Opportunities

Investment

Much U.S. technology transfer to developing

countries occurs through private sector exports of

machinery and equipment and the transfer of equipment and know-how associated with private foreign

investment. U.S. based companies account for a

significant part of the oil and gas exploration in

developing countries. They are also taking a keen

interest in new opportunities for foreign investors in

gas and electricity development in the developing

countries.

Expanding markets for energy technology in

developing countries offer an important opportunity

for U.S. industry and exporters.17 In recent years,

however, the U.S. share of global markets for major

items of energy equipment has been declining (see

table 8-4). Several factors have contributed to this

decline. U.S. investors and exporters frequently

encounter difficulties operating in developing countries. Some of the smaller U.S. companies lack

experience in international markets. A lack of open

markets in energy technology and market distortions, including anticompetitive practices by OECD

competitors and greater direct financial support by

other governments, compounds the difficulty. These

practices hurt not only the United States, but may

also be disadvantageous to the developing country.

In some cases, the developing country may be

obliged to accept less than optimal technologies or

may accept a wide range of incompatible equipment,

complicating training and spare part problems.

Trade and Investment Support Programs

A number of programs have been developed to

support the U.S. private sector in technology transfer. These programs cover: trade and investment

support through market information, finance, and

insurance facilities; trade policies to establishing fair

and open competition in export markets and protection for U.S. exporters; and removal of restrictions

on certain commodities and markets (see box 8-E).

One option for Congress would be to expand such

programs (see option 16 of table 8-2). Support could

be increased for the overseas activities of the United

States and Foreign Commercial Service (US& FCS),

which is responsible for much of the overseas export

promotion undertaken by the Federal Government.18

Compared with many of its trading partners, the

United States devotes only modest resources to

export promotion abroad. For example, Japan has

about 5,000 overseas commercial officers, the UK

and France 400 or more, compared with the United

States’ 200, despite its much larger economy.

The Trade and Development Program could also

be increased in size to better match the efforts of U.S.

competitors. There are several areas where TDP

might expand their promotion of energy projects.

For example, it appears that the demand for TDP

financial support for definitional missions and

prefeasibility studies is substantially in excess of

TDP resources, even without a substantial outreach

and promotion effort. Given the high multiplier in

trade and/or investment benefits from TDP expenditures and the substantial industry support for these

activities, funding could be increased.

These trade support programs have in general

responded to the increased interest in conservation

technologies and renewable, and environmental

impacts of energy technologies, but could do more

(see option 17 of table 8-2). Many programs were

originally set up to promote exports made in

connection with large conventional supply projects.

170nc report, ‘ ‘Opportunities in the Worldwide Overseas Power Generation hlarke~’ prepared for the U.S. Agency for Lntemational Development

Office of Energy by RCG/Hagler Bailly Inc., estimates that over the next 20 years, the United States could sell about $94 billion of power equipment

to the developing world (page 4). A companion report, ‘‘U.S. Exports of Oil and Gas Exploration and Production Equipment and Semices, RCG/Hagler

Bailly, Inc., for U.S. Agency for International Development, drafc Exhibit 2, suggests a market for U.S. exports of oil and gas exploration and production

equipment and services of an additional $110 billion, of which a substantial share would occur in developing countries. Expanding markets in energy

conservation equipment could also result in 1arge U.S. exports.

18~~ OptIon is also di~~u~s~ in US Congress, Office of Technology Assessment, ~nterflutiotld COmpetidOn in se~ices. OTA-r~-s2s

(Washington, DC: U.S. Government Printing OffIce, July 1987), ch, 10.

297-929 - 92 - 19 - OL : 3
280 . Fueling Development: Energy Technologies for Developing Countries

Table 8-4-Share of United States in Selected Global Exports

(as a percent of the total world market)

1976 1980 1985 1987

Steam boilers:

Us. . . . . . . . . . . . . . . . . . . . . . . . .

Japan . . . . . . . . . . . . . . . . . . . . . .

Germany . . . . . . . . . . . . . . . . . . . .

Heating, cooling equipment

Us. . . . . . . . . . . . . . . . . . . . . . . . .

Japan . . . . . . . . . . . . . . . . . . . . . .

Germany . . . . . . . . . . . . . . . . . . . .

Pumps for liquids:

Us. . . . . . . . . . . . . . . . . . . . . . . . .

Japan ..,...... . . . . . . . . . . . . .

Germany . . . . . . . . . . . . . . . . . . . .

Pumps:

Other U.S. . . . . . . . . . . . . . . . . . .

Japan ..,...... . . . . . . . . . . . . .

Germany . . . . . . . . . . . . . . . . . . . .

Switchgear:

Us. . . . . . . . . . . . . . . . . . . . . . . . .

Japan . . . . . . . . . . . . . . . . . . . . . .

Germany . . . . . . . . . . . . . . . . . . . .

Electric distributing equipment:

Us. . . . . . . . . . . . . . . . . . . . . . . . .

Japan . . . . . . . . . . . . . . . . . . . . . .

Germany . . . . . . . . . . . . . . . . . . . .

Electrical machinery:

Us. . . . . . . . . . . . . . . . . . . . . . . . .

Japan . . . . . . . . . . . . . . . . . . . . . .

Germany . . . . . . . . . . . . . . . . . . . .

17.8

11.0

25.1

19.2

21.8

18.0

14.9

36.0

9.6

11.3

29.0

14.5

23.0

10.8

17.6

20.7

14.9

15.5

17.9

18.2

15.6

14.1

15.9

17.3

21.3

6.0

25.5

18.8

7.9

23.2

19.3

10.2

23.8

13.5

8.8

29.1

24.1

5.8

22.9

20.4

9.1

19.8

16.4

14.8

22.8

12.4

13.2

22.2

14.2

10.0

24.2

13.4

12.3

22.6

15.9

15.8

20.6

13.1

17.1

22.7

11.6

13.8

15.7

10.0

17.5

15.0

16.2

15.1

12.3

16.3

11.5

13.9

17.2

12.7

23.7

16.0

15.5

18.4

16.6

21.5

15.8

13.0

21.4

18.2

SOURCE: United Nations, Department of international Economic and SociaI Affairs, Statistical Office, Sfatistica/

Yearbook(NewYork, NY: United Nations, 1988), various issues.

These were

accustomed

primarily done by large corporations

to dealing in foreign markets and aware

within the U.S. system that facilitates this financing.

Both TDP and OPIC appear to be moving in this

direction. OPIC, for example, has taken the initiative

in establishing several equity investment funds.

These could serve as model mechanisms to stimulate

commercial capital flows to the developing countries. Broadening Eximbank’s authority to support

project finance could also assist in stimulating new

U.S. energy sector technology transfer and investment.

—

of the official programs available. Exports of renewables and conservation equipment and services,

however, may in many cases be made by small

companies, unfamiliar with foreign markets and

government programs. Program responses to this

new clientele include providing increased prefeasibility and feasibility funding needed by small

companies, and simpler application procedures.

CORECT for example, is promoting a standardized

application form for all of its member agencies.

Another development, which may require changes

in existing programs, is the growth of project or

limited recourse financing arrangements (see option

18 of table 8-2), projects in which the U.S. investor

does not receive formal sovereign guarantees. This

is an attractive form of financing for developing

countries as it does not add to their official debt

burden. As purchases of energy equipment and

services looking increasingly to sellers to organize

financing, it is important to establish a framework

Ensuring Competitive Markets for U.S. Exports

U.S. exporters and investors may encounter uncompetitive practices in developing-country markets. The U.S. Trade Representative conducts bilateral and multilateral trade negotiations to reduce or

eliminate trade and investment barriers. These

include: lack of guarantees for intellectual property

rights, restrictive import licenses, and high tariffs

(see box 8-F). USTR resources could be expanded to

better respond to these and many other trade related

issues now facing the nation. Additional responsibil-
Chapter 8--Issues and Options ● 281

Box 8-E—Programs for U.S. Trade and Investment

The Agency for International Development (AID) supports prefeasibility funding studies and sponsors reverse

trade missions and an energy and environmental training program for host country nationals. AID maintains a

private power database, which includes a compilation of information relevant to private sector power activities for

selected countries. 1 It consists of information in five categories: government policy, private project opportunities,

project commitments, country specific points of contact, and a general country private power related bibliography.

The primary intended beneficiaries of this information are U.S. project developers.

The Department of Energy supports exports through its Export Assistance program and CORECT and by other

means (see Box 8-D).

In the Department of Commerce, the Office of International Major Projects (OIMP) functions as a facilitator

for U.S. architectural, engineering, and construction industries in the promotion of exports for major projects

overseas, mainly in developing countries, in addition to the export assistance activities of the United States and

Foreign Commercial Service. The Trade and Development Program (TDP) in the U.S. International Development

Cooperation Agency (whose focus is primarily on large public sector projects) provides support for definitional

missions, feasibility studies, technical symposia, orientation visits by high-level government officials, and plans to

initiate training activities. In addition, TDP operates an Investor Assistance Program, which offers feasibility study

support on a cost-sharing basis, and the State Initiative Program, which is authorized by Congress up to $5 million

to develop a cooperative program with State agencies. The program has concentrated on information dissemination,

including, for example, support to the California Energy Commission in its export promotion activities. The U.S.

Trade Representative formulates overall trade policy and conducts bilateral and multilateral trade negotiation,

including the removal of barriers to U.S. exports,

U.S. private investment and exports are also supported by a number of autonomous agencies. The

Export-Import Bank (Eximbank) is an independent U.S. Government agency, chartered under the Export-Import

Bank Act of 1945, that helps finance and facilitate the sale of U.S. goods and services to foreign buyers, particularly

in developing countries through direct loans, guarantees, and insurance. The 1990 Foreign Operations

Appropriations Act (Public Law 101-167) instructed Eximbank to direct not less than 5 percent of its financial

assistance in the energy sector to renewable energy projects. This goal has probably been exceeded. In fiscal year

1989, the Eximbank provided final commitments to support $2.1 million in renewable energy projects (i.e.,

hydroelectric, photovoltaics) and had pending commitments for an additional $11.8 million. Assuming pending

commitments are finalized, Eximbank’s fiscal year 1990 support for renewable energy projects would represent 7.4

percent of its total energy sector support. The Private Export Funding Corp. (PEFCO) is closely related to Eximbank

although it is a private corporation owned by 62 investors, mostly commercial banks. It makes medium and long

term loans to borrowers in foreign countries for U.S. goods and services, using unconditional Eximbank guarantees.

The Overseas Private Investment Corporation (OPIC) is an independent corporation created by Congress. It

directly finances projects sponsored by U.S. private investors in over 100 developing countries and provides

insurance against political risks for U.S. private investments in those countries. It can provide direct loans of up to

$6 million to small and medium-sized firms and investment guarantees for up to $50 million. OPIC is developing

a privately owned and managed Environmental Investment Fund for business enterprises in developing countries

(and Eastern Europe) that involve renewable energy, ecotourism, sustainable agriculture, forest management, and

pollution prevention. OPIC hopes to capitalize the fund with $60 million of equity raised from U.S. businesses and

institutional investors and $40 million in OPIC-guaranteed long-term debt.

In addition to federally sponsored programs, several States have initiated programs centered on export

promotion. The geographical focus varies from State to State. New York tends to pursue trade in Europe and Japan,

California and the Pacific Northwest are turning more to the Pacific Basin, and Florida focuses on Latin America.

California has been especially active in export promotion through various programs, including one that guarantees

export loans given by commercial banks and supports trade missions, and others through the California Energy

Commission. Since 1986, the California Energy Commission (CEC) has supported an Energy Technology Export

Program, designed to facilitate exports by California firms.

lp~iPP~e~, WSQU Cosa ~ca, Jamaic& and India, with plans to add Hnd~d ~donesia.

SOURCE: Office of Technology Assessmen4 1992.
282 . Fueling Development: Energy Technologies for Developing Countries

Box 8-F—Examples of Import and Other Regimes Affecting the Transfer of Technology in

Selected Developing Country Markets

Brazil: U.S. merchandise exports to Brazil in 1989 were $4.8 billion, with imports of $8.4 billion. Brazil’s

import policies have been characterized as forming substantial pervasive barriers to U.S. exports. Restrictive import

licensing policies have been particularly effective barriers. Tariffs have recently been reduced, from about the range

of 40 to about 25 percent ad valorem, taking into account exemptions. Government procurement in many cases is

still restricted to national firms; the United States has in response prohibited U.S. Government awards to Brazilian

suppliers. Brazil has various export subsidy programs, and lacks intellectual property protection for some classes

of goods. Provision of services by non-Brazilian firms is also restricted in some areas, for example in construction

engineering and architectural, data processing, and telecommunications areas. Foreign investment is prohibited in

several areas including petroleum production and refining, public utilities, and various other “strategic” industries.

India: In 1989, U.S. merchandise exports to India were $2.5 billion, versus imports of $3.3 billion. India is

characterized as having a complex and comprehensive web of market access barriers, which are a serious barrier

to U.S. firms. Indian tariffs are exceptionally high, with a weighted average level of 118 percent. Import licensing

requirements are considered particularly effective trade barriers. They are limited to end users, not distributors, and

require in many cases a certification that the product is not available from domestic sources. Government

procurement discriminates against foreign suppliers. India appears to have expanded its export subsidy program.

The USTR has judged that intellectual property protection in India is inadequate. Policies also severely limit

potential U.S. investment. Criteria in many cases are unpublished, and decisions are made on a case-by-case basis.

Pakistan: The United States had a trade surplus with Pakistan in 1989, with merchandise exports of $1.1

billion, versus imports of $523 million. Both import bans and high tariffs inhibit U.S. exports. Export subsidies of

various types are common. Intellectual property protection is judged to be inadequate, with the USTR continuing

to seek improvements. Investment barriers face foreign investors, both in terms of a location policy promoting

dispersal, an indigenization policy requiring a gradual deletion of imported components, and cumbersome approval

policies. Technology licensing restrictions also exist through limits on license fees and approval procedures.

SOURCE: Off& of the U.S. Trade Representative “Foreign Trade Barriers” 1990 Trade Estimate Report, US Government Riming Oftice,

1990.

ities arising out of the proposed U.S.-Mexican Free that it may accept the cheapest offer even if for

Trade Area, and the Enterprise for the Americas

reinforce this argument.

The issue of “level playing fields” in international energy technology export markets and international competitiveness has become of major

concern to Congress and the American people in

recent years. There are widespread perceptions and

reports of our frequent inability to offer terms in

export markets as attractive as those of our competitors (Japan, Germany, France, Italy, the UK) because

of the use of ‘mixed credits’ and the practice of tied

aid. Mixed credits occur when apart of the total costs

of a commercial export transaction is covered by

confessional rates, thus resulting in a lower average

cost to the recipient country. The advantage of

mixed credits to the donor country is that it

frequently secures an export order; the disadvantage

is that this order is partly subsidized by the taxpayer.

The recipient country benefits from goods that are

cheaper than they would be in the absence of mixed

credits. The disadvantage to the recipient country is

technical, maintenance, or other reasons another

choice would have been preferable. Tied aid occurs

when donors provide aid to developing countries on

condition that the necessary goods and services are

bought from the donor country rather than through

open competitive bidding on the world market.

While there appears to be general agreement on

the competitive advantage that mixed credit and tied

aid has given other nations vis-a-vis U.S. exporters,

the extent of this impact is controversial (see box

8-G). Various limiting terms and conditions governing tied-aid credits have been negotiated by the

United States to reduce the incidence of tradedistorting credits by competitors. The “Arrangement on Guidelines for Officially Supported Export

Credits’ agreement of March 1987, amended in July

1988, governs OECD member practices. The “arrangement requires, for example, that tied-aid

credit packages should include a substantial grant

element (a minimum 35-percent grant for middleincome LDCs and a 50-percent grant for low-income
Chapter 8--lssues and Options ● 283

LDCs). The OECD rules also require advanced

notification of tied-aid credit deals. The purpose of

these arrangements is to discourage mixed credit

financing by increasing their cost to the donor

country.

The United States has recently initiated a more

active policy. In 1986 Congress authorized a 2-year,

$300 million tied-aid War Chest as part of the

Export-Import Bank Act Amendments (Public Law

99-472). Due to the failure to establish clear

violations, a limitation of the fund to defensive

purposes only, and a generally negative view of use

by the Administration, the War Chest was seldom

used up to 1989. In September 1990, in support of

negotiations on tied-aid credits, the Administration

indicated that it had decided to use all available

budgetary resources, including the War Chest. In

fiscal year 1991, $500 million19 has been allocated

to a tied-aid pool for enhancing U.S. industrial

competitiveness. The focus is to be on Indonesia,

Pakistan, the Philippines, and Thailand. Project

sectors targeted include electric power as well as

telecommunications, transportation, and construction equipment. Two recent energy projects for

which the War Chest has been used are the Uruguay

Power Project (versus a French 35 percent grant

tied-aid credit offer, with the U.S. bidder ultimately

winning this contract); and the Philippines BargeMounted Power Plant, where the offer is opposing

Japanese and British confessional offers.

Even in the absence of tying, U.S. exports of

energy technologies might still encounter difficulties. U.S. competitors allocate a large share of their

aid funds to the energy sector and to capital

infrastructure. In contrast, the United States directs

a larger fraction of aid for structural development

and policy reform. AID capital project support has

largely disappeared except for the programs in Egypt

and Pakistan. In these two cases, the large-scale use

of Economic Support Funds occurs without tying to

U.S. procurement.

Effective tying may also require the development

of complementary institutional structures. In its

current form, tying has been found to be ineffective

in some cases in stimulating new markets for U.S.

goods, and has sometimes complicated and hindered

project operations.

20 A recent GAO21 report found

evidence of U.S. source and origin requirements

requiring “countless waivers in Egypt for lack of

interest on the part of U.S. suppliers or unavailability

of certain commodities from U.S. sources. Furthermore, the Cargo Preference Act to ship in U.S. flag

vessels cost up to 5 times that of non-U.S. flag

vessels and at times caused lengthy delays while

shipments were consolidated for shipment in U.S.

vessels. Increasing the project element in economic security funds also requires substantially

more up-front planning and analysis.

Reducing Poverty and Improving

Social Welfare

The reduction of poverty is a central aim of U.S.

foreign assistance. Despite rapid rates of economic

growth experienced in the developing countries

from the 1950s to the end of the 1970s, the numbers

of people living in poverty in the developing world

continued to increase. In recognition of the need for

special programs targeted at the poor, Congress

directed AID to pay increased attention to the

development problems of the poorest of the poor.

Fulfilling this policy objective has implications for

energy, which is an essential component in meeting

basic needs. While reliable supplies of high grade

commercial fuels are essential for raising productivity and living standards, they are currently used

primarily by the modern urban sector of the economy. However, many of the developing world’s

population live in rural areas with low standards of

living based largely on low resource farmin g. Rural

populations have little access to commercial fuels

and technologies and only limited connection with

the modern economy.

Additional attention to energy for rural development could be considered (see option 19 of table

8-2). Rural industry is a major user of biomass

energy in rural areas and an important source of rural

employment and cash income; its energy needs also

19$1~~liOn fi~~E~}sti~d.~dc~editfid, $300 million in ~M.~manteed commerci~ lo~, and $1(K) from AID Economic SUppOfi F~ds.

201 ‘Delivery tie of us q~pment~been long, and inoperative U.S. ve~cles, p~ps, and otier equipment titter the Sdlel fOr Want Of Spare pm,

maintenance stills, oroperatingfunds. . . In addition, these “buy American ‘‘ requhments have led to use of inappropriate capital-intensive technologies

. . . [and] greatly diminished its value to them Oess developed countries].’ U.S. Congress, OffIce of Technology Assessment, OTA-F-308, Continuing

the Commitment; Agn”culfurul Development in the Sahel (Springfield, VA: National Technical Information Service, 1986), p. 105.

21u.s. ~ner~ Accounting Office ‘‘Foreign Assistance; AID Can Improve Its Management of Overseas Contracdng’ GAO/NS~-9 1-31, October

1990, pp. 23-24.
284 ● Fueling Development: Energy Technologies for Developing Countries

Box 8-G—Tied Aid

According to one studyl the tied-aid affected market for telecommunications, power generation, computers,

and transportation is considerable, estimated to be about $10 to $12 billion per year, with losses to U.S. exporters

on the order of $2.4 to $4.8 billion. Furthermore, according to this report, long run costs could be much greater. An

earlier Eximbank report,2 on the other hand, estimates a substantially lower figures, $400 to $800 million per year.

Other factors, however, suggest that losses may be greater than those estimated by Eximbank:

● Tied-aid credits (which include a 35 percent grant element) have substantial distributive impacts since they

go heavily to middle-income developing countries. Given limited total aid dollars, this allocation subtracts

from the confessional resources available for poorer countries.

. The closure of the European and Japanese markets for heavy electrical equipment to foreign competition as

matters of national policy, appears to produce financial surpluses to the domestic supply industries of these

countries, which are then available to underwrite export sales to the United States and developing-country

markets.

● Use of tied engineering and consultancy services, a practice widely used by the Japanese, results in

specifications favoring donor’s suppliers. Partly as a result, some 85 percent of partially untied development

assistance (about 37 percent of Japanese ODA loans) results in procurement from Japan, and for fully untied

loans (62 percent of Japanese ODA loans) about 60 percent of procurement is in Japan. Furthermore,

Japanese ODA is largely devoted to project assistance and relies heavily on loans (about two-thirds at near

market rates).

. Frequent failure of OECD competitors properly to follow notification procedures for tied-aid credits leads

to a competitive advantage.

IErnMt H< ~wg, “me Tied Aid Credit Issue, “ Center for Strategic and International Studies, Washington DC, 1989.

2Expom.~pofi Ba~ “Report t. be U.S. Congress on Tied Aid Credit Practices, ” Washingto% DC, AP~ 1989.

merit attention, The improved economics of decen- and social issues related to energy use and supply in

tralized renewable, such as photovoltaics or minihydro, suggest renewed emphasis on the institutional obstacles that deter diffusion. The domestic

energy needs of the urban poor are currently

receiving little attention, even though energy used

for cooking contributes heavily to poor urban air

quality in many areas.

AID funding of energy projects targeted at the

poor is modest. In the decade of the 1980s, for

example, total AID energy funding to Africa was

just over $1 million annually. Application of the

technologies suggested above will require a variety

of complementary inputs, which AID could facilitate, including policy reform, credit programs, and

technical assistance.

Rural energy receives relatively little attention

from the MDBs as well. The World Bank, which

earlier in the 1980s had substantial lending programs

for rural electrification, has reduced the number of

projects in recent years. The recent reorganization of

ESMAP may lead to lessened interest in energy

projects for the rural and urban poor, As previously

constituted, ESMAP contained a special household

energy unit that addressed the technical, economic,

lower income urban and rural households and in

rural industries. The reorganized ESMAP will deal

only with commercial fuels and confine itself to

fewer “priority’ countries. This reorganization is

expected to promote better energy sector planning in

the selected countries and be more instrumental in

increasing investments, but could result in less of a

role than before in rural and household energy

supplies.

One of the problems in rural energy projects is

securing the high level of technical assistance

needed. Donor agencies could examine ways of

delivering such technical assistance through nongovernmental organizations with demonstrated ability to deliver technical assistance and financing at

the local level (see option 20 of table 8-2).

Protecting the Environment

Congress has become increasingly concerned

with the problem of achieving sustainable economic

growth in developing countries and the growing role

of developing countries in global environmental

problems. This concern is expressed in directives to

AID and MDBs to take into account environmental
Chapter 8--Issues and Options ● 285

impacts in their developing country programs.

Progress in these efforts may need to be monitored

(see option 21 of table 8-2). There may also be a need

to coordinate the activities of the many U.S.

agencies and NGOs that have environmental activities in developing countries. The CORECT program

or others could serve as a model. The Environmental

Protection Agency may be a logical host for such a

program (see option 21 of table 8-2).

Environmental protection in many countries is

still in its infancy due to competing economic and

social priorities, limited resources, and lack of

knowledge and experience in environmental management and protection. The policy infrastructure

for environmental protection is as yet poorly developed, There is a need for technical assistance and

advice to support environmental impact monitoring

and mitigation strategies and to establish the government policies and institutions for environmental

protection (see option 21 of table 8-2), The United

States could help provide technical assistance in

these areas.

One of the obstacles to securing environmental

protection in all countries is that the cost of

environmental damage is typically not included in

prices, nor is use of natural resources included in the

current system of national accounts. Unsustainable

exploitation of forests for timber exports, for example, appears in the current system of national

accounts as increases in the gross domestic product,

while ignoring any environmental damage associated with this exploitation and the reduction of the

natural resource stock. Congress has already instructed the U.S. Ambassador to the United Nations

to adopt economic accounting procedures that include natural resource values and services in the UN

accounting system. The UN has agreed to incorporate these concepts to the extent possible in its next

revision of its standardized national accounts system, which serves as the national accounting model

for all market or mixed economies.

Concern over global warming focuses particular

attention on large carbon dioxide emitters including

both industrial and developing countries-China,

India, Brazil, Indonesia, and Mexico. The United

States, however, does not have a strong bilateral

relationship with all of these countries. Congress

recently directed AID to help key low and middleincome countries likely to become major emitters of

greenhouse gases whether or not they are currently

AID countries. The United States is also cooperating

with the Global Environmental Facility through a

special AID program.

Population plays a major role in long term environmental sustainability. Under the Foreign Assistance Act as amended in 1965, the U.S. position

was that family planning could be considered an

important contributor to economic development and

improved health and nutrition.22 Most nations now

firmly support family planning assistance. At the

World Population Conference held in Mexico City

in 1984, however, the United States reversed this

position and introduced new restrictions on family

planning assistance in AID. Two important international population assistance programs lost U.S.

funds-the International Planned Parenthood Federation, and the United Nations Population Fund

(UNFPA). According to the UNFPA, more assistance, particularly for family planning services, is

needed to ensure the stabilization of the world’s

population. The additional direct cost of providing

contraceptive services would be under $1 billion per

year, but several billion dollars per year would also

be needed for a range of supporting activities such as

education women’s programs, and research and

development (see option 22 of table 8-2).

Setting a Good Example

U.S. commercial energy consumption per capita

is almost 15 times higher than the average per capita

consumption for all developing countries, and over

60 times higher than in the poorest developing

countries. Strong efforts to improve efficiencies, and

the use of renewable energy at home are needed to

provide credibility to U.S. policies in developing

countries (see options 23 and 24 of table 8-2).

Evidence of energy efficiency gains in the United

States is provided by the leveling of energy consumption after 1973—a marked change from the

previous steady annual increases. Since 1986, however, energy consumption has been rising steadily,

in virtual "lockstep" with the gross national product

22P.J. Donaldson and C.B. Keely, ‘‘Population and Family Planning: An International Perspective, ‘‘ Family Planning Perspectives 20(6):307-311 ,320

(Novcmber/December 1988; U.S. Congress, Library of Congress, Congressional Research Service, “International Population and Family Planning

Programs: Issues for Congress, ’ IB85 187 (Washington, DC: Mar, 30, 1990); U.S. Congress, Office of Technology Assessment, Changing by Degrees:

Steps to Reduce Greenhouse Gases, OTA-O-482 (Washington, D. C.: U.S. Government Printing Office, February 1991).
286 ● Fueling Development: Energy Technologies for Developing Countries

and posting substantial increases in per capita

consumption. Further efforts to achieve perceptible

and measurable improvements in energy efficiencies

in the United States would reinforce policies designed to improve energy efficiencies in developing

countries. Such actions to improve efficiency at

home would have collateral economic, energy security, environmental, and competitiveness benefits

for the United States. Also, an expanding market for

energy efficient technologies lowers manufacturing

costs, thus adding to U.S. competitiveness. A

particularly useful initiative could be to ensure, as

requested by Congress, that U.S. facilities in developing countries are highly energy efficient and take

advantage of renewable energy sources where feasible. U.S. embassies, office buildings, and residences

could serve as showpieces for advanced U.S. energy

efficient technologies.
Appendixes
Appendix A

Capital and Life Cycle Costs for Electricity Services

This appendix calculates the capital and life cycle costs

of providing electricity services to users. This is done in

three stages. First, a general framework for calculating

costs is presented. Second, the capital cost of providing

electricity supplies is determined. Third, the total systemwide—including both electricity supply and end-use

equipment-capital costs and life-cycle operating costs

are determined for standard and energy efficient equipment.

General Framework for Calculating Costs

All costs are in constant 1990 U.S.$. Where necessary,

other currencies are converted to U.S.$ in the year cited

and then the U.S.$ are deflated to 1990 values using GNP

deflators. The factors used to convert foreign currencies

to U.S.$ are generally market exchange rates as these are

capital goods.

Capital costs are calculated using a simple capital

recovery factor (CRF) method.1 This method divides the

capital cost into an equal payment series—an annualized

capital cost-over the lifetime of the equipment. For

example, the CRF for a 30-year lifetime and a discount

rate of 7 percent is 0.080586. A $1,000 widget then has an

annualized capital cost of $80.586, including interest

payments and in constant dollars, each year of its 30-year

expected lifetime.

In the base case, a uniform real discount rate of 7

percent is used for both the supply and end-use sectors.

The discount rate used is intended to be the equivalent of

a societal discount rate. In comparison, the real cost of

capital in the United States averaged about 3 percent

between 1950 and 1980, rising briefly to nearly 10 percent

in 1983, before dropping back to about 6 percent and

below from 1987 onward.2 Capital costs in developing

countries vary widely. Sensitivity analyses, discussed

below, examine the effect of varying the discount rates

and other parameters for both the supply and end-use

sectors,3

The total systemwide capital cost of each energy

service and each choice of equipment to deliver that

service is determined by adding: 1) the annualized capital

costs of the end-use equipment, and 2) the corresponding

annualized capital costs for the electricity supply system

needed to power the end-use equipment. This latter value,

(2), is determined by averaging the number of kWh used

over the year by the equipment to get an equivalent

average kW demand and then multiplying by the corresponding annualized cost of electricity supply per kW of

delivered power (as determined in detail below).

Note, however, that the capital cost of delivering a kW

of power is substantially greater than the cost of a kW of

supply capacity. This is due to the additional capital costs

of, e.g., coal mining equipment, transmission and distribution equipment, etc. that are needed on the supply side;

because supply equipment can deliver only a fraction of

its rated capacity due to maintenance needs, breakdowns,

imperfect matching of the demand to the available

capacity, the need to maintain reserve capacity, etc.; and

because of losses in the system before the power is

delivered to the consumer.

More sophisticated analyses of capital and operating

costs are possible.4 These include, for example, taking

into account the higher cost of delivering electricity

during the peak of the system load. Such refinements are

avoided here in order to make the presentation as simple

and transparent as possible, while still presenting reasonable estimates of the relative costs of different means of

delivering desired energy services.

Finally, the following estimates of capital and lifecycle

operating costs have a number of highly conservative

factors built in. The cost of electricity supply is estimated

on the low side. In particular, factors that lower the

estimated cost of electricity supply include low assumed

values for the capital costs of coal mining, utility

generation plants, transmission and distribution equipment, and other capital investments; high assumed values

for the capacity utilization levels of generation equipment

and Transmission and Distribution (T&D) equipment;

and low assumed losses in T&D systems; among others.

These are detailed in the following section.

In contrast, the cost of end-use efficiency is intentionally estimated to be higher than it is likely to be in

practice, specifically:

i~lc cm = {1( 1+1)” )/{ ( l+l)n_ I ] where i is tie discomt rate and n is the lifetime or period of capital recovev of the sYstcm.

2Margarct Mcndcnhall Blair, ‘‘A Surprising Culpril Behind the Rush to Leverage, ’ The Brookings Re\’ieut, Winter 1989/90, pp. 21.

~Additio~l facto~—such as Ievelizing increasing real costs of inputs like labor, energy, etc.; shadow pricing/opportunity costs; economies of scale

and learning; byproduct credits; environmental costs; etc.—are not included in order to keep the model calculations as simple M possible so as to clearly

show the overall driving financial forces in the system.

JE]cc~c Power Research Institute, ‘ ‘Technical Assessment Guide: E1cctricity Supply, ” and ‘ ‘End-Use Technical Assessment Guide, ’ various

volumes, Palo Alto, CA various years; Jonathan Koomey, Arthur H. Rosenfeld, and Ashok Gadgil, “Conservation Screening Curves to Compare

Efticicncy Investments to Power Plants, ’ Energy Policy, October 1990, pp. 774-782.

–289–
290 ● Fueling Development: Energy Technologies for Developing Countries

Direct Substitutions Only. Only direct substitutions of more efficient for less efficient end-use

equipment are considered. This excludes many

highly capital-conserving and life-cycle costeffective investments, such as insulating buildings,

using improved windows, daylighting, improved

industrial processes, and many others.

No Synergisms. Synergisms between efficient equip

ment are excluded. For example, high efficiency

lights, refrigerators, and other equipment reduce heat

loads in buildings that must otherwise be removed

by ventilation and air conditioning systems. For each

kW of internal heat load that is avoided, roughly

one-third kW of electricity required by an air

conditioner to remove this heat is saved.

No Downsizing Credits. With more efficient lights

and refrigerators, etc. lowering internal heat gains,

the size of the needed air conditioner to cool the

space can be reduced. Similarly, with more efficient

pumps/fans, ASDs, etc. the size of the motor needed

could be reduced. Such downsizing is not considered

here.

No Credit for Manufacturing Volume. Margins

for efficient equipment are sometimes larger than

those for standard equipment. Manufacturing costs

for efficient equipment may also be higher than for

standard equipment due to the smaller production

volumes. The impact of such learning can be

substantial. As shown in chs. 2 and 3, the real cost of

refrigerators in the United States declined by a factor

of 5 between 1950 and 1990 due to improved

materials and manufacturing methods. No credits

were given for expected cost reductions at higher

volume production or for reduced manufacturer

margins. 5

Capacity Increments. Capacity increments are

assumed to be added as needed rather than in large

lumps as is the case in reality. This reduces the

effective cost of supply.

Together, these low-side supply costs and high-side

end-use costs are intended to bias the case against efficient

equipment in order to be as conservative as possible. Even

under these circumstances, energy efficient equipment

shows systemwide capital savings, life-cycle operating

savings, and energy savings as illustrated in various

figures in chs. 1,2, and 3.

Capital Costs of Electricity Supplies

This section calculates the cost of delivering a kW of

electric power to the end-user. Capital costs for electric

power systems are usually cited in terms of $/kW of

electricity generation capacity. Such figures are substantial understatements of the full capital costs of delivering

electricity supplies.

Typical capital costs for generation capacity range from

$500/kW for a conventional gas turbine used for providing peak power to over $2000/kW for current nuclear

power plants and even higher for current photovoltaic

systems. The World Bank estimates that developing

countries, under current power expansion plans, will

invest $775 billion (1990 U.S.$) during the 1990s for 384

GW of additional capacity, including generation, T&D

and other capital expenditures or $2,018/kW total. This

cost is divided into 60-percent generation, 31-percent

T&D, and 9-percent general.6

This overall figure of $2,018/kW total assumes that

existing plant and equipment can be used more intensively than at present,7 a highly desirable opportunity.

Without this credit, the World Bank estimates the capital

cost of new capacity at $2,618, including generation,

T&D, and other capital expenditures, or $1,568/kW for

generation equipment alone (assuming the same percentage breakdown as above). Corresponding estimates of the

capital cost of new generation equipment from the World

Energy Conference are $2,310-$2,770 (1990 U.S.$),

shown in table A-l,8 and costs for the United States are

shown in table A-2. It should be noted that the capital

costs of fossil steam and gas turbine plants listed in table

A-2 are “recommended best practice” estimates and do

not include any contingency for unexpected costs (or

savings) incurred in actual field construction. The costs of

capacity for various generation technologies are examined in more detail in chapter 6 and appendix B.

Estimates of generating capacity alone do not, however, reflect the full capital cost of delivering electricity

supplies to users. First, the capacity to produce electricity

is not the same as actually producing it. Typical baseload

coal-fired plants, for example, might be available for

operation 70 percent of the time. The remaining 30

percent of the time they are shut down for routine

maintenance or due to breakdowns. Additional generating

capacity is needed to make up this shortfall.

In operation, electric power systems normally maintain

a “spinning reserve’ of perhaps 5 to 7 percent of the

sNote, however, tit a comwt reti xnarkup of 100 percent over estimated manufacturing cost W* ~~ed for r~g-tors.

6~~A.M~reand &Orge smi@ ‘‘c~i~ fipendi~es for Elec~c Power in @ Developing Coutries in the 1990S,” WSShhIgtOU ~ World

Bank+ February 1990, Industry and Energy Department Working Paper, Energy Series Paper No. 21 (Washington, DC: World B@ February 1990).

Tspwfidly, it ~smestitreseme Cqacitim cm be rtxtuc~ from the 1989 level of 42.5 percent to a 1999 level of 36.3 per~nt. S* MOOE ~d

Smit.lL op. cit., annex tables 2.1 and 2.2.

Sworld Energy Conference, “Investment Requirements of the World Energy Industries, 1980-2000,” hmdo~ 1987.
Appendix A-Capital and Life Cycle Costs for Electricity Services . 291

Table A-l—Capital Costs of Delivered Electricity Supply

World Bank parameters World Energy Conference

Lowa

Highb

Low High OTA base case

Coal mining and transportc 

. . . . . . . . . . .

Generation . . . . . . . . . . . . . . . . . . . . . . . .

Capacity factor . . . . . . . . . . . . . . . . . . . . .

T&D loss . . . . . . . . . . . . . . . . . . . . . . . . .

Capacity needed . . . . . . . . . . . . . . . . . . .

Firm kW . . . . . . . . . . . . . . . . . . . . . . . . . .

T&D . . . . . . . . . . . . . . . . . . . . , . . . . . . . . .

T&D loss . . . . . . . . . . . . . . . . . . . . . . . . .

Capacity factor. . . . . . . . . . . . . . . . . . . . .

Capacity needed . . . . . . . . . . . . . . . . . . .

T&D Capacity., . . . . . . . . . . . . . . . . . . . .

Othercapital e

. . . . . . . . . . . . . . . . . . . . . .

Total cost ($/delivered kW) ..,......

!$551kW

$363

$4,257

$126/kW

$471

$5,572

$55/kw

NA

$8,484

$126/kW

NA

$11,012

$55/kw

$337

$4J62

Table A-2—Typical Capital Costs and Capacity Factors for Existing U.S. Electricity

Generating Plants, 1990 U.S.$

Capital cost, Capacity factor, T&D lossa

Prime mover $/kW capacity percent percent

Fossil steam . . . . . . . . . . . $1,536 b50 6

Gas turbine . . . . . . . . . . . . $ 500’ 7 6

Nuclear . . . . . . . . . . . . . . . $2,580 d 62e

6

Hydroelectric . . . . . . . . . . 33 6

aT&D IOSS is the U.S. average of about 6 percent.

bAverage cost of 300 MW ~al-f ired steam plants in the Unitd States under EpRl r~rnmended practice, table 7-4,

EPRI.

cAverage ~st of ~nventional simpie and ~mbined cycle gasturbines Operating On distillate or natural gas, exhibits

1S19, EPRI.

dNote that this is the average ~st for the 63 nuclear power plants put into operation in the united States since 1975.

Dollars are mixed current dollars over the construction period and then discounted from the date of operation to 1990

U.S.$. Consequently, the costs are somewhat underestimated. The comparable average cmt for all 108 U.S. nuclear

power plants in operation is $1,834. The estimated cost for an advanced reactor design has been estimated by EPRI

at approximately $1,667.

eNote that a 10-year unweighedaverage, 1980-1990, capacity factor for nuclear plants is 58.8°/0. The figure shown iS

for 1989. Energy Information Administration, “Monthly Energy Review,” May 1991, U.S. Department of Energy,

DoE/EIA-oo35(91 /05)

~oo variable to be readily quantified here.

SOURCE: Steam andgasturbine capital costs are from the Electric Power Research Institute, “Technical Assessment

Guide: Electricity Supply, 1989,” EPRI P-6587-L, vol. 1, Rev.6, September 1989, Palo Alto, CA.; Nuclear

power costs are from Energy Information Administration, “Nuclear Power Plant Construction Activity, 1988,”

DO13EIA4473(88); capacity factors are from: Energy Information Administration, “Annual Energy Review,

1989,” U.S. Department of Energy, 1989, tables 89, 93.
292 . Fueling Development: Energy Technologies for Developing Countries

system load in order to handle normal short-term fluctuations in demand.

Excess generation capacity is also built into the overall

system in order to handle peak loads—for example, on

exceptionally hot summer days when everyone with an air

conditioner turns it on. Typical reserve margins on

well-run systems might be 20 to 30 percent greater than

the maximum peak load including the spinning reserve.

That reserve margins aren’t larger than this--corresponding to the plant availability cited above, or 43

percent (1/0.7)--is because some of the routine maintenance of the plants can be scheduled during nonpeak

times and because some of the peak is met by using

additional equipment specifically designed just for peak

loads, such as low capital cost—but high fuel cost—gas

turbines.

Finally, because generation equipment comes in large

units, there is typically a stairstep increase in system

capacity above overall demand.

As a consequence of these considerations, the typical

power system produces electricity at only a fraction of the

capacities of its individual plants. For example, the

average (weighted by country) generation capacity factor—measured as the ratio of actual gross generated kWhs

divided by the potential kWhs generated by the power

plant if it ran at full capacity all the time-across 98

developing countries is 36 percent. (This very low

generation capacity factor reflects serious institutional

and operational problems in many of these power

systems. These issues are discussed in ch. 6.) In comparison, the generation capacity factor of the United States9

was 46 percent in 1989. Only 10 of the developing

countries reviewed by the World Bank had generation

capacity factors of greater than 50 percent. For example,

Brazil had 50 percent, China 55 percent, Colombia 57

percent, Egypt 59 percent, and Kenya 52 percent.10

This average generation capacity factor includes both

peaking and baseload power plants. Actual operating

experience for different types of prime movers is shown

in table A-2 for the United States. Generation capacity

factors ranged from 7 percent for gas turbines, to 50

percent for fossil steam, to 62 percent for nuclear plants.

Corresponding generation capacity factors for prime

movers in India are shown in table A-3. Low generation

capacity factors increase the capital cost of delivering

electricity to users.

Table A-3-Capacity Factors for Electricity y

Generating Plants in India

Prime mover Capacity factor

Coal-steam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.2%

Nuclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.8%

Oil and gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.5°/0

Hydro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.5%

SOURCE: Ashok V. Desai, “Energy, Technology and Environment in

India,” contractor report for the Office of Technology Assessment, Deeember 1990.

Second, to determine the capital cost of supplying

electricity to users, the large losses of electricity between

the plant and the customer must be considered. Transmission and distribution losses in developing countries

include both technical losses and nontechnical losses due

to billing errors, unmetered use (theft), and other factors.

Technical losses of 15 percent are typical. This relatively

high level of loss is due to poor system power factors, long

low voltage lines to dispersed consumers, inefficient

equipment, and other factors. System improvements can

reduce this high level of loss, but it will probably remain

higher than the 6 percent typical for the United States due

to the large dispersed rural demand likely in the future.

Nontechnical losses are not considered here.ll To deliver

1 kW of power to a consumer, then, requires 1.18 kW of

power to be generated at the utility when 15-percent

transmission and distribution losses are included. Assuming an optimistic 50-percent generation capacity factor

and with 15-percent T&D losses, to deliver 1 kW of power

on average to consumers, a generation capacity of 2.36

kW would be needed.

Third, estimates of the capital cost of generation

capacity alone ignore the cost of transmission and

distribution equipment to deliver it to customers. The

World Bank estimates the cost of T&D capacity in current

developing country expansion plans at $625 to $812/kW.

The World Energy Conference estimates the cost of new

T&D capacity at $l,900-2,770/kW. Costs in developing

countries are likely to be particularly high because of the

extension of electric power grids into rural areas, an

expensive undertaking. This capacity, too, must be

augmented by the T&D losses of 15 percent. In addition,

utilization capacity factors for T&D systems are often

quite low. Lines to residential areas are used primarily in

the evenings and on hot summer afternoons and the T&D

capacity is substantially underused the rest of the time.

Lines to commercial areas are used primarily during

weekdays, but carry little load during evenings and

gNote tit tie genemtion capacity factor for the United StNeS is net genelatiO n-not including the electricity consumed in operating the power

plant—rather than gross generation.

loJose R. Escay, world B@ Industry and Energy Dep@ment, ‘‘S~ Data Sheets of 1987 Power and Cornrnerciat Energy Statistics for 100

Developing Countries,” Industry and Energy Department working paper, energy series paper No. 23 (WashingtorU DC: World Bank, March 1990).

1 IMo~n M~s@@e, Joseph Gilling, Melody MaSOIL “A Review of World Bank tinding for Eleetric Power” (Industry and Energy Department

working paper energy series paper No. 2 (Washington, DC: World Ba~ March 1988), p. 33.
Appendix A--Capital and Life Cycle Costs for Electricity Services ● 293

weekends, etc. This results in an increased capital

investment per kW of electricity supply delivered to the

user.

Fourth, there are other capital costs associated with

electricity supplies, such as investment in buildings,

administrative support offices, etc. The World Bank

estimates these capital costs at 9 percent of the total

required investment, or $182 to $236/kW of capacity.

Fifth, the capital costs of producing the fuels to run

thermal power plants must also be included if the capital

costs of supply expansion is to be accurately depicted.

The World Energy Conference estimates the capital

investment in coal mining at $0.38 to $1.00/GJ (1990

U.S.$) 12 plus $0.20 to $0.33 per GJ13 for transportation

equipment. For thermal power plants with conversion

efficiencies of 33 percent, 1 GJ produces 92,6 kWh or

0.01057 kW-yr. This is equivalent to $55 to 126/kW of

annual electric power output,

The corresponding capital costs for oil production are

$0.80 to $1.10/GJ14 for exploration and production, and

$0.18/GJ 15 for downstream investment in storage tanks,

refineries, and transportation equipment, This is equivalent to $93 to $121/kW of annual electric power output.

For gas, the corresponding capital costs are $0.04 to

$0.16/GJ 16 for exploration and production, and $0.58 to

$1.12/GJ 17 for natural gas transport and distribution

infrastructure. For a thermal power plant with a conversion efficiency of 33 percent, this gives a capital cost of

$59 to $121/kW of annual electric power output. Obviously, for coal, oil, and gas there can be wide variations

from these estimates based on local conditions.

These capital costs and capacity factors can now be

used to estimate the approximate total capital cost of

supplying electricity, as shown in table A-1. Estimated

costs of a firm kW of power range from $4200 to over

$11,000. These values are comparable to those found in

more detailed analyses of electricity supply options in

India18 and in Brazil.19

To be as conservative as possible, OTA uses more

optimistic values for its base case than those found in or

estimated for developing countries or, indeed, the United

States (table A-l). The extent of this conservatism should

be noted.

First, OTA assumes a low capital cost for coal

production, This value is in part based on the World

Energy Conference assumption that intensive energy

efficiency improvements will reduce the elasticity of

energy use with economic growth in developing countries

to just 0.7—that is, that energy use will increase at just 70

percent of the rate at which developing country economies grow. In turn, this results in greater availability of

low cost coal supplies, according to the World Energy

Conference.

Second, OTA optimistically assumes that generation

capacity factors can be raised from the current average of

36 percent (by country) to 60 percent—a level higher than

those found in all but two of the 98 developing countries

reviewed by the World Bank.20 This is also better, for

example, than the 56-percent capacity factor projected for

Brazil by Eletrobras—the federal utility holding company—for the year 2010.21 The cost of new capacity was

chosen to be $1,536 corresponding to the estimates by the

U.S. Electric Power Research Institute for new coal-fired

steam plants constructed under “good’ practice conditions. 22

A more comprehensive analysis would examine the

capacity factors and costs for each component of the

electricity supply system, including base load and peak

load generation capacity.

12Tab1e 5.4 World Energy conference, 1987, op. cit., footnote 8. Excludes SOUti Af~ca.

IsTable 5.7 divid~ by Table 5.2 World Energy Conference, 1987, ibid.

IdTable 3,2 of Wor]d Energy Conference, 1987, ibid.

IsTable 3.5 of World Energy Conference, 1987, ibid.

l~able 4.3 World Energy Conference, 1987, ibid.

ITTable 4.7, World Energy Conference, 1987, ibid.

18 Amulya K umar N. Rcddy et al., “Comparative Costs of Electricity Conservation: Centralized and Decentralized Electricity Generation, ’ Economic

umi Political Weekly (India), June 2, 1990, pp. 1201-1216.

lgJose Goldemberg and Robert H. w~i~, ‘‘The Economics of Energy Conservation in Developing Countries: A Case Study for the Electrical Sector

in Brazil, ‘‘ in David Hafemeister, Henry Kelly, and Barbara Lwi, ‘‘ Energy Sources: Consemation and Renewable,” American Institute of Physics,

New York, NY, 1985.

z~ote tit cape Verde ~cfieved a generation capacity factor of 76 percent and Madagascar achieved a level of 64 percent. These ~gh capaciv factors)

if correctly reported, are probably unique to these very smalt systems and may be due to the lack of reserve margins, not meeting peak loads, having

little or no backup capacity, or other unusual features. See Jose R. Escay, op. cit., footnote 10.

ZIHoward S, Geller, ‘ ‘Electricity Conservation in Brazil: Status Report and Analysis,’ Contractor Report for the Office of Technology Assessment,

November, 1990.

‘2zFor conceptu~ c]~ty ad agafi t. be ~ consemative as possible in estimating Costs, th adJKiS ass~es a high genemtion ~PacitY ‘actor ‘or a

baseload coal plant operating under near ideal conditions of almost constant load. This should be contmsted with a typical electric power system which

includes a variety of different baseload and peaking plants with differing capitat, operating and maintemnce, and fuel costs; availabilities and effective

capacity factors; and efficiencies.
294 . Fueling Development: Energy Technologies for Developing Countries

Third, OTA assumes that nontechnical losses can be

ignored and that even with extensive rural electrification

T&D losses can be lowered by one-third, from the current

15 percent to 10. In the much longer term, increasing

urbanization and various technical improvements may

make further reductions possible.

Fourth, OTA assumes that T&D capacity is used at 75

percent of its limit and ignores the frequently low level of

utilization in many parts of a typical T&D system, as

noted above.

Together, these considerations indicate that the OTA

base case is likely to be substantially conservative in its

estimate of the capital costs of electricity supply systems.

Calculating Operating Costs for Electric

Power Systems and End Use

To determine life-cycle operating costs, it is necessary

to know the full cost of electricity, including capital,

operations and maintenance, fuel costs, and other factors.

Electricity costs for new supplies are estimated at

$0.09/kWh for the residential and commercial sectors

(1990 U.S.$) and $0.07/kWh for the industrial sector. The

lower cost for industry reflects the greater concentration

of use-allowing the purchase of bulk supplies, reduced

T&D costs, lower administrative overheads, and other

benefits.

These values correspond to the 1987 OECD weighted

average electricity price of $0.087/kWh (1990 U.S.$).

Electricity prices charged in developing countries, however, have a weighted (by electricity sales) average price

of $0.048/kWh (1990 U.S.$) but have a marginal cost of

production of $0.094/kWh assuming a high 60 percent

average system capacity factor. 23 Expected costs of $0.09

to $0.13/kWh (1990 U.S.$) are listed by Jhirad for some

18 commercially available technologies running at a high

capacity factor of 75 percent corresponding to baseload

applications. Gadgil and Januzzi give marginal costs of

production of $0.09/kWh and $0.12/kWh for India and

Brazil respectively.24 OTA has thus chosen the current

average cost of electricity or lower in order to be

conservative. A more detailed examination of electricity

costs are given in ch. 6.

Systemwide Capital and Operating Costs

To complete the analysis, systemwide capital and

life-cycle operating costs can now be calculated for

standard and energy efficient equipment. A level of

services corresponding to a U.S. or Western European

standard of living is assumed, as described below and

summarized in table A-4. Parameters for each energy

service are shown in tables A-5 through A-14 together

with notes providing context. The corresponding summary values of systemwide capital, life-cycle operating

costs, and electricity use are shown in tables A-15 and

A-16.

Residential households are assumed to have five

persons; capital costs of end-use equipment are allocated

equally among them to get per capita capital and life-cycle

costs.

The following discussion of costs is not inclusive.

There are many related costs that are not included as they

are assumed to be the same for both the standard and the

energy-efficient cases. Examples include the wiring,

switches, and related capital components within the

home, business, or industry-note, particularly, that for

industry these related components such as switchgear,

pipes and ducts, and related process equipment are a very

substantial part of the total systemwide costs; labor and

other costs associated with actually putting equipment

into service; and many other costs. There are also many

other cases where energy efficient equipment is not

considered or where it is left out due to it not being cost

effective. Several examples are listed below.

Cooking25

Cooking levels are scaled by efficiency factors from

those currently observed in developing countries-6 GJ

per person per year when using wood with a stove thermal

efficiency of 17 percent. This corresponds to an electricity

consumption in the all electric household of about 2250

kWh/household-year. This is slightly lower than the 2500

kWh/yr observed in, for example, Guatemala (see ch. 2),

but is substantially higher than the 700 kWh/householdyear observed in the United States. The dramatically

lower residential household energy consumption for

cooking in the United States is due to a number of factors,

including: 1) smaller households--e.g. two people--than

assumed here; 2) extensive dining out or purchase of

zJC~c~at~ from Annex 9 of A. Mashayekhi, “Review of Electricity Tariffs in Developing Countries During the 1980s,” Industry and Energy

Department working paper, energy series paper No. 32, World Banlq Washingto~ DC November 1990.

MA. Mas&ye~, Ibid. David J. Jhirad, ‘‘Innovative Approaches to Power Sector Problems: A Mandate for Decision Makers,” (New Delhi, India:

PACER Conference, Apr. 24-26, 1990, U.S. Agency for International Development, Washington, DC) A more general discussion of electric power

pricing issues can be found in Mohan Munasinghe, “Electric Power Economics” (Lcmdoq England: Butterworth & Co, 1990). Ashok Gadgil and

Gilberto De Martin“ o Januzzi, “Consemation Potential of Compact Fluorescent Lamps in India and Brazil,” Lawrence Berkeley Laboratory, report No.

LBL-2721O, July 1989.

zSAddltionalde~ on cooking cm be fo~d ~ Samuel F. Baldwi~ ‘ ‘Cooking Technologies, * Office of Technology Assessment, staff working paper,

1991.
Appendix A--Capital and Life Cycle Costs for Electricity Services ● 295

Table A-4-Assumed Levels of Electricity y Services and Other Parameters

Energy service Level of service provided

Residential/commercial . . . . . . . . Five people per household.

Cooking . . . . . . . . . . . . . . . . . . . . Comparable to cooking energy requirements in developing countries today, scaled by efficiency. This

results in per capita consumption levels somewhat above those observed in the United States (see text

for details). Cooking energy is allocated 75 percent to electric resistance/gas stoves in the

standard/high-efficiency cases, respectively, and 25 percent to microwave ovens in both cases.

Water heating . . . . . . . . . . . . . . . . 50 liters of water heated 30 °C per day, corresponding to the U.S. level of hot water usage.

Lighting . . . . . . . . . . . . . . . . . . . . . Lighting levels at the midrange of industrial countries. Residential lighting is the equivalent of six hours

of lighting by 60 W incandescent bulbs (four hours with one bulb and two hours with a second) per capita

per day. Commercial and industrial lighting is equivalent to 10 hours, 260 days per year by 4 standard

40 W fluorescent per capita.

Refrigeration . . . . . . . . . . . . . . . . One 510-liter top-mount freezer, automatic defrost refrigerator, corresponding to the most popular type

in use in the United States.

Air conditioning . . . . . . . . . . . . . . 1,200 kWh of electricity for cooling (SEER=8) annually per capita. This is slightly lower than the 1,400

kWh/year used per capita in the United States.

Electronic information

services . . . . . . . . . . . . . . . . . . One color TV used about 5 hours per day.

Industrial motor drive . . . . . . . . . . Industrial motor drive power consumption of 300 W/capita in the base case, comparable to the 308 W

used in the United States.

NOTE: This does not cover all energy services, nor all costs associated with a particular energy service.

SOURCE: Office of Technology Assessment, 1992.

Table A-5-Cooking, OTA Base Case Parameters

Stove parameters Fuel parameters

Stove/fuel Lifetime Capital cost Efficiency Capital cost Total cost

Standard case:

Electric resistance . . . . . . . . . . . . . . . . . . . . . 15 $ 7 5 63% $335/kWa$0.09/kWh

($10.6/GJ) ($25/GJ)

Microwave . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 $250 580/0 same same

High efficiency case:

LPG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 $ 5 0 58% $1/GJ/yr $7/GJ

Microwave . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 $250 580/o above above

SOURCE: Note that the same discount rate of 7 percent real is used to calculate a capital recovery factor for the given stove lifetime. The CRF is then used

to annualize all capital costs. Energy consumption is scaled by the relative efficiencies of the stoves from a baseline value of 6 GJ/capita (30

GJ/household) with a 17 percent eff icient wood stove. The electric resistance stove then uses the kW equivalent of 1.6 GJ.

aTh;s is the annualized cost per kw over the 30-year lifetime of the utility power plant, using a total ~st per delivered kw of $4,162 a.s in table A-1 .

bNote that this is the estimated thermal effi~ienq of a microwave; in practice, a microwave can realize Overall coo~ng efficiencies substantially higher than

conventional cooking devices, particularly for baking.

SOURCE: Office of Technology Assessment, 1992.

‘‘take-out meals rather than cooking at home; 3)

extensive use of highly processed foods such as “minute’ rice or TV dinners, etc. rather than cooking

unprocessed grains for long periods at home; 4) greater

use of high-value foods such as meats that typically do not

require as much cooking energy to prepare as unprocessed

grains; and others,

In the standard efficiency case, an electric resistance

stove provides 75 percent of the required cooking energy

and a microwave oven provides the remaining 25 percent.

In the high efficiency case, an LPG stove substitutes for

the electric resistance stove—reducing upstream capital

costs and cutting primary energy consumption by twothirds, and a microwave oven again provides the remaining 25 percent. Natural gas could readily substitute for

LPG, but upstream capital costs for installing and

maintaining a pipeline distribution system would vary,

depending on the total demand. In the industrial countries,

the large winter space heating requirements help justify

the high capital costs of a natural gas distribution system.

The high efficiency case summary values for electricity

consumption do not include the LPG used for cooking

(capital and operating costs for the LPG system are

included in the totals, however). If the total systemwide

297-929 - 92 - 20 - QL : 3
296 . Fueling Development: Energy Technologies for Developing Countries

Table A-6-Costs, Efficiencies, and Lifetimes for Alternative Cooking Technologies

Efficiency Stove

Stove System capital cost Lifetime Fuel cost

Technology percent percent $ years $/GJ

—Traditional stoves

Dung . . . . . . . . . . . . . . . . . . . . . . . . . . .

Agricultural residues . . . . . . . . . . . . . .

Wood . . . . . . . . . . . . . . . . . . . . . . . . . .

Wood (commercial) . . . . . . . . . . . . . . .

Charcoal . . . . . . . . . . . . . . . . . . . . . . .

Improved biomass stoves

Wood . . . . . . . . . . . . . . . . . . . . . . . . . .

Charcoal , . . . . . . . . . . . . . . . . . . . . . .

Wood II . . . . . . . . . . . . . . . . . . . . . . . .

Liquid stoves

Kerosene wick . . . . . . . . . . . . . . . . . . .

Kerosene pressure . . . . . . . . . . . . . . .

Alcohol Wick . . . . . . . . . . . . . . . . . . . .

Alcohol pressure . . . . . . . . . . . . . . . . .

Gas stoves

Central gasifier . . . . . . . . . . . . . . . . . .

Site gasified . . . . . . . . . . . . . . . . . . . . .

Biogas . . . . . . . . . . . . . . . . . . . . . . . . .

LPG . . . . . . . . . . . . . . . . . . . . . . . . . . .

Natural gas . . . . . . . . . . . . . . . . . . . . .

Electricity

Resistance . . . . . . . . . . . . . . . . . . . . . .

Microwave . . . . . . . . . . . . . . . . . . . . .

Solar

Solar box oven . . . . . . . . . . . . . . . . . .

11-15

13-17

15-19

15-19

19-23

10-14

12-16

14-18

14-18

8-12

0.00

0.00

0.00

0.00

3.00

0.00

0.00

0.00

1.50

4.00

—

—

2

27-32

29-34

40-44

26-31

13-17

38-42

6.00

8.00

10.00

2

3

3

1.50

4.00

1.50

40-45

45-50

40-45

45-50

36-41

41-45

33-37

37-42

20.00

40.00

20.00

40.00

10

10

10

10

5.00

5.00

10.00

10.00

55-60

40-45

55-60

55-60

55-60

39-42

39-44

54-59

48-53

53-58

20.00

50.00

20.00

50.00

20.00

10

4

10

20

20

1.50

1.50

(j-y-y

7.00

1.50

60-65

55-60

17-21

16-20

75.00

250.00

15

15

25.00

25.00

25-30 25-30 25.00 5 0.00

~hereare substantialcapital costsforthefuelsystem,aswell aslargeamountsoflaborinvolved incoilectingthebiomassanctdung tobeputintothedigester.

For adetailed discussion ofthis data, including fuel cycle capital costs, see Baldwin, below.

SOURCE: Samuel F. Baldwin, “Cooking Technologies,” Office of Technology Assessment, U.S. Congress, staff working paper, 1991.

middle of the range of lighting levels currently provided

in the industrial countries (see ch. 3). No additional use of

daylighting or other such techniques is considered. This

lighting is assumed to be provided by two 60 W

incandescents-one burning 4 hours and one 2 hours each

day-within the home for each person and by, on average,

a bank of four standard 40 W fluorescent tubes with

conventional core-coil ballasts in the commercial and

industrial sectors for each person that are used 10 hours

per day, 5 days per weelq 52 weeks per year. Obviously,

there will also be other lights that are used for short

periods of time--such as in a hall closet, etc.—that are not

included in the analysis here.

The energy efficient case assumes the use of 15 W

compact fluorescent lamps to directly replace the 60 W

incandescent; and the use of two 32 W high efficiency

fluorescent lamps with electronic ballast and a mirrored

glass reflector to directly replace the bank of four 40 W

standard fluorescent lamps. Data for the efficient fluorescent lamp case is shown in table A-9. To the extent that

the assumed utilization rates are relatively low—for

example, using one incandescent/compact fluorescent for

2 hours per day and the commercial/industrial fluorescent

just 10 hours per day (particularly in industry it might be

energy consumption values are converted to their primary

energy equivalents, using a fuel to end-user conversion

efficiency of 33 percent, then the high efficiency case

primary energy consumption—including LPG—increases to 34.3 GJ. The corresponding ratio of primary

energy use between the efficient and standard cases

(efficient case divided by standard case) is 59.4 percent,

compared to their ratio for electricity y consumption of 57.4

percent.

Water Heating

The OTA base case assumes that each household will

use 250 liters of 50 ‘C water daily for a per capita

consumption of 50 liters per day. The standard efficiency

equipment is an electric resistance storage water heater;

the efficient case is a solar water heater with a storage tank

and electric resistance heater backup. The solar water

heater is assumed to provide 85 percent of the household

water heating requirements on an annual average,

Lighting

The OTA base case assumes that residential, commercial, and industrial lighting services will total about 30

million lumen hours per person per year. This is in the
Appendix A--Capital and Life Cycle Costs for Electricity Services . 297

Table A-7—Water Heating, OTA Base Case Parameters

Water heater parameters

Lifetime Capital cost Efficiency Solar fraction

Water heater years $ percent percent

Standard case:

Electric resistance. . . . . . . . . . . . . 13 360 100’ —

Intermediate ease:

Heat pump water heater. . . . . . . . 13 800 2oob —

High efficiency case:

Solar water heater. . . . . . . . . . . . . 13 1,125 1 00’ 85

alt is assum~ that I oo percent of the electric energy is converted into heat in the water. Standby losses are inch.ded

in all cases.

b~e heat Purnpwater heater is assumed to heat water using half the electricity used by the electric resistance heater.

‘The solar water heater obtains 85 percent of water heating needs from sunlight; the remaining 15 percent is provided

byabackup electric resistance heating coil with 100 percent eff iciency, The solar water heater isathermosyphon type

with a flat plate collector and a storage tank.

SOURCES: Sunpower, Ltd., Barbados, installed cost October 15, 1990; Howard S. Geller, “Residential Equipment

Efficiency: A State-of-the-Art Review,” American Council for an Energy-Efficient Economy, Washington,

DC, Contractor Report for the Office of Technology Assessment, May 1988; and Howard S. Geller,

“Efficient Electricity Use: A Development Strategy for Brazil,” American Council for An Energy Efficient

Economy, Washington DC, and Contractor Report for the Office of Technology Assessment, 1991.

Table A-8—Lighting, OTA Base Case Parameters

Lamp Parameters

Lifetime Capital cost Efficiency Useful output

hours $ lumens/W lumens

Residential:

Standard case:

Incandescent . . . . . . . . . . . . . . . . 1,000 0.5 12 —

Intermediate case:

Halogen . . . . . . . . . . . . . . . . . . . . . 3,500 1.50 16 —

High efficiency case:

Compact fluorescent . . . . . . . . . . 10,000 15.00 48 .

Commercial:

Standard case:

fluorescent . . . . . . . . . . . . . . . . . . . 10,000 43.00 56 2,260

High efficiency case:

Advanced fluorescent. , . . . . . . . . 10,000 68.00 83 2,100

SOURCES: Residential Iampcostsarefrom Gilberto De Martino Januzzi et al., “Energy-Efficient Lighting in Brazil and

India: Potential and Issues of Technology Diffusion,” Apr. 28, 1991, draft, and from manufacturer data.

Commercial and Industrial lamp data is from table A-9, below.

used for longer periods than that)--this increases the

effective capital and life-cycle operating costs of the

efficient equipment relative to the standard lighting

equipment.

Refrigeration

The OTA base case assumes a U.S. style (18 cubic feet

or, equivalently, 510 liter adjusted volume) top-mounted

freezer with automatic defrost that consumes 955 kWh/yr.

This is a much larger refrigerator and has more features

(particularly automatic defrost) than those generally in

use in developing countries today, but is likely to become

more popular in the future as the economies of developing

countries grow. It is also much more efficient (taking into

account its larger size and added features) than refrigerators commonly sold in developing countries today, but is

comparable in size and efficiency to new refrigerators

sold in the United States. The average U.S. refrigerator,

however, has much lower efficiency than this one. This

biases the case against more efficient equipment relative

to actual existing conditions.

The energy-efficient refrigerator chosen for comparison is technology “I” listed in ch. 3, which uses

evacuated panel insulation and higher efficiency compressors, evaporators, and fans than the base case. Much

larger and cost-effective improvements in refrigerator

performance are possible as discussed in ch. 3.

The capital cost of these refrigerators is assumed to

have a retail markup of 100 percent over the factory cost.

This is somewhat lower than the 124 to 133 percent
298 . Fueling Development: Energy Technologies for Developing Countries

Table A-9-Cost and Performance of Commercial

Lighting Improvements, Brazil

Table A-l O-Refrigeration, OTA Base Case

Parameters

Performance

Power input . . . . . . . . . . . . . . .

Rated light output . . . . . . . . . .

Useful light output . . . . . . . . . .

Capital costs

Lamps . . . . . . . . . . . . . . . . . . . .

Ballasts . . . . . . . . . . . . . . . . . . .

Reflectors . . . . . . . . . . . . . . . . .

Subtotal . . . . . . . . . . . . . . . . . .

Annualized capital costs . . . . .

Annual energy use

Direct electricity use . . . . . . . .

Air conditioning energyc 

. . . . .

Total electricity use . . . . . . . . .

Utility costsd

Capital investment . . . . . . . . .

Annualized capital cost . . . . . .

Annual electricity costs . . . . . .

System wide costs

Total annual capital cost. . . . .

Total annual operating

cost . . . . . . . . . . . . . . . . . . . .

Standarda Efficient b

Refrigerator parameters

192 W

10,800 Im

2,260 Im

60W

5,000 Im

2,100 Im

Retail Annual

capital energy

Lifetime cost consumption

Technology a

years $ kWh

507 kWh

142 kWh

649 kWh

$296.00

$23.85

$58.41

$36.5 0

$71.10

$5.80

$28.65

$33.95

$68.40

$20.18

158 kWh

44 kWh

202 kWh

$92.00

$7.41

$18.18

$27.60

$38.40

NA = not applicable.

%ased on four 40 Wtubes with conventional core-coil ballast in a standard

fixture with completely exposed lamps.

bBaS~ on two 32 w high effidency tubes with electronic ballast and with

a mirrored glass reflector. Useful output is so high because of: (1) the

narrow 32 W tubes trap less light in the fixture; (2) the electronic ballast

operates at high frequencies and raises nominal output of the tube; (3) the

mirrored reflector increases useful light output, etc.

~his is the amount of air conditioning power needed to remove the heat

generated by the lights. This synergism is not included in the OTA

analysis.

dwility ~sts are set at estimated marginal prices rather than prevailing

average prices in Brazil which may be undervalued. Thus, capital

investment is based on $4,000 per delivered kW and electricity prices are

set at $0.091kWh.

SOURCE: Adapted from Howard S. Geiler, “Efficient Electricity Use: A

Development Strategy for Brazil,” American Camcil for an

Energy Efficient Economy, Washington, DC 1991. Contractor

report to the Office of Technology Assessment, November

1990.

markup assumed by the U.S. Department of Energy,26 but

is believed representative of the lower overheads that can

be expected in a developing country.

Commercial refrigeration systems are not considered in

the OTA scenarios, but information on efficiency improvements in these systems is presented inch, 3.

Standard case:

A . . . . . . . . . . . . . . . . . . 20

Intermediate case:

B . . . . . . . . . . . . . . . . . . 20

c . . . . . . . . . . . . . . . . . . 20

D . . . . . . . . . . . . . . . . . . 20

E . . . . . . . . . . . . . . . . . . 20

F 20

G “:::::::.’.’:::::::: 2 0

H . . . . . . . . . . . . . . . . . . 20

495.00

495.20

498.40

506.00

514.20

534.00

550.50

561.20

955

936

878

787

763

732

706

690

Efficient case:

I . . . . . . . . . . . . . . . . . . 20 635.70 577

More advancedb

J . . . . . . . . . . . . . . . . . . 20 746.20 508

K . . . . . . . . . . . . . . . . . . 20 781.56 490

NOTE: A constant retail madwp of 100 percent over f~tow Prices was

assumed. This is somewhat Iowerthan the retail mark~p’s assumed

forthe United States by the Department of Energy, butcorresponds

to lower overheads in developing countdes.

aspmif~ de~ptions of these technologies are listed In chapter 3, table

3-13.

hhese were not considered in the OTA high efficiency scenario because,

even though they appear to be cost effective on a Iifecyde basis, they have

substantially higher capital costs due to their projected use of two

compressor systems.

SOURCE: Twhnical Support Document: Energy Conservation Standards

for Consumer Products: Refrigerators and Furnaces (Washington, DC: U.S. Department of Energy, November 1989) publication DOE/CE-0277. See also Table 2-13.

Air Conditioning

The OTA base case averages the use of two air

conditioners for both residential and commercial cooling

over the five persons per household. One is smaller, at 2

tons equivalent capacity, and uses a relatively low 4000

kWh/year; the other is larger, at 3 tons, and uses a higher

8000 kWh/yr.27 Combined, these might correspond to a

household and a small office demand, respectively.

Larger offices, however, would have substantially lower

per occupant air conditioning costs and higher efficiencies than those assumed here due to economies of scale in

the equipment and much higher capacity factors than

those assumed here. The assumed base case efficiencies

were, in both cases, an SEER of 8, which is comparable

Z6U.S. Department of Energy, ‘‘Technical Support Document: Energy Conservation Standards for Consumer Products: Refrigerators and Furnaces;

Lncluding: Environmental Impacts and Regulatory Impact Analysis,” report No. DE9MI03491, November 1989.

27A ton of M con~tio~g is tie cooling power provided by melting 1 ton-2000 pounds-of ice over a 24-hour period. This fi @valent to 200

Btu per minute or 12000 Btu/hour of heat removal, equivalent to 0.211 (h4J)/rninute or 12.66 MJ/hour. The energy efficiency mtio of an air conditioning

unit is its cooling capacity in Btu per hour divided by its required power input in watts. Thus, an air conditioner with an EER of 8,0 requires 426.5 watts

of energy input to remove 3412 Btu/hour of heat from a building, or equivalently, to remove 1 kW of heat input. An air conditioner with a 2-ton capacity

operating continuously consumes (2 tons) *(12000 Btu/hr)/8=3 kW of power, or 26,280 kWh@.r. At an annual energy consumption of 4000 kWh/yr,

it is then operating at an annual average capacity factor of 15 percent. A 3-ton air conditioner consuming 8,000 kwh per year has a capacity factor of

20 percent.
. .

Appendix A--Capital and Life Cycle Costs for Electricity Services . 299

Table A-1 l—Air Conditioning,OTA Base Case Parameters

Air Conditioner Parameters Average

Retail power

Lifetime capital cost consumption

years $ SEER watts

Low load: 2 ton

Standard case . . . . . . . . . . . . . . . 15 1,400 8 456

Intermediate case . . . . . . . . . . . . 15 1,700 10 365

15 2,000 12 304

High efficiency ease. . . . . . . . . . . 15 2,300 14 261

High load: 3 ton

Standard case . . . . . . . . . . . . . . . 15 2,100 8 913

Intermediate case . . . . . . . . . . . . 15 2,400 10 730

15 2,700 12 608

High efficiency case. ... , . . . . . . 15 3,000 14 521

NOTE: Costs are based on a flat rate of $700 per ton of cooling power and $150 per SEER above an SEER of 8,

corresponding roughly to U.S. retail prices installed. Power consumption is in watt--averaged over the

year—and is based on the average energy use of 4000 kWh in the low-load case, scaled by SEER using an

SEER of 8 for the baseline, and 8000 kWh annual energy use in the high load case, also scaled by SEER.

SOURCE: Office of Technology Assessment, 1992.

Table A-12—Color Television, OTA Base Case Parameters

Color Television Parameters

Retail Annual energy

Lifetime capital cost consumption

years $ kWh/yr

Standard Case. . . . . . . . . . . . . . . . . . . 10 .$316 .00 205

Intermediate case 1., , . . . . . . . . . . . 10 $320.30 184

Intermediate case 2 . . . . . . . . . . . . . . 10 $322.90 176

High efficiency case. . . . . . . . . . . . . . 10 $323.50 171

NOTE: The assumed lifetimes of 10 years are somewhat longer than the observed lifetime in the U.S. of 7 years.

Efficiency improvements include reducing standby power by replacing voltage dropping resistor with a

transformer; replacing the surge protection resistor and adding output taps on the power suppfy; and in the high

efficiency case, replacing the picture tube with a slightly higher efficiency picture tube. Much larger efficiency

improvements may be readily and cost-effectively achieved.

SOURCE: Technical Support Document: Energy Conservation Standards for Consumer Products: Refrigerators,

Furnaces, and Television Sets (Washington, DC: U.S. Department of Energy, November 1988) publication

DE89-002738.

to the average for new room air conditioners sold in the

United States in 1988, and slightly lower than the SEER

of 9 for new central air conditioners (see ch. 3).

These levels of air conditioning are then divided by five

(per household) to get the corresponding per capita costs

and energy use; these values are then divided in half to

reflect an overall average air conditioning penetration of

50 percent of households and offices. In the base case, per

capita electricity consumption for air conditioning is then

about 1,200 kWh/year. This is comparable to the 1,400

kWh/year used per capita in the United States for cooling

residential and commercial buildings (this includes buildings with no air conditioning and cooler climates as well)

and is in the same range as that observed in some

developing countries for those with air conditioners (see

ch. 3).

In hot, humid climates, however, air conditioning loads

can be substantially higher than those assumed here. In

Florida, for example, air conditioning loads on uninsulated concrete block houses were 8200 kWh/yr--twice

the assumed levels here. In large buildings, there is

typically a cooling demand year around in order to

remove internal heat gains-from lights, people, etc.—

which increases the capacity utilization of the air conditioner and improves the cost effectiveness of high

efficiency units compared to the values assumed here.

Overall, air conditioning loads could easily dwarf most

other electricity demands in hot, humid climates. They are

intentionally kept comparable to other demands here,

because there is little available data to project future air

conditioning demand in developing countries, and because the case presented was intended to be as conserva-
Table A-13-industrial Motor Drive, OTA Base Case Parameters

Industrial motor drive parameters Annual Power

Motor Motor Pump ASD energy consumption by

lifetime capital cost capital cost capital cost consumption Weighting size class

years $/hp $/hp $/hp kWh/yr-motora by motor watts

Standard case:

1 hp . . . . . . . . . . . . . . . . 15 218.00 75 NA 3,621 0.036283 15

10 hp . . . . . . . . . . . . . . . . 19 56.30 75 NA 30,390 0.007782 27

30 hp . . . . . . . . . . . . . . . . 22 41.03 75 NA 86,341 0.003956 39

100 hp . . . . . . . . . . . . . . . . 28 43.53 75 NA 283,116 0.002506 81

200 hp . . . . . . . . . . . . . . . . 29 37.5 75 NA 560,752 0.002155 138

Efficient case:

1 hp . . . . . . . . . . . . . . . . 15 294.00 90 543.00 70%* 0.036283 10.5

10 hp . . . . . . . . . . . . . . . . 19 71.40 90 359.70 70% 0.007782 18.9

30 hp . . . . . . . . . . . . . . . . 22 49.70 90 203.60 70% 0.003956 27.3

100 hp . . . . . . . . . . . . . . . . 28 46.96 90 135.75 70% 0.002506 56.7

200 hp . . . . . . . . . . . . . . . . 29 41.24 90 111.07 70% 0.002155 96.6

NA - Not applicable.

SOURCES: Motor lifetimes and weighting factors are derived from table A-1 4. Motor costs are from Marbek Resource Consultants, Ltd., “Energy Efficient Motors in Canada: Technologies, Market

Factors and Penetration Rates,” Energy Conservation Branch, Energy, Mines and Resources, Canada, November 1987; Pump (fan) costs are very rough estimates from various

manufacturers data sheets-note that these rests can vary dramatically depending on the particular type of pump and application; ASD costs are from Steven Nadel, et al., “Energy

Efficient Motor Systems: A Handbook on Technology, Programs, and Policy Opportunities,” (Washington, DC: American Council for an Energy Efficient Economy, 1991). System

engineering and installation costs are assumed to be the same for both standard and energy efficient ~ses, corresponding to the situation where there is considerable practical

experience with high efficiency systems and the development of effective design rules and procedures.
— —

Appendix A--Capital and Life Cycle Costs for Electricity Services . 301

Table A-14-Characteristics of U.S. Motor Population, 1977

Electric motor size, horsepower

<1 1-5 5.1-20 21-50 51-125 >126

Total number, millions . . . . . . . . . . . 660.0 55.0 10.5 3.3 1.7 1.0

Average life, years. . . . . . . . . . . . . . . 12.9 17.1 19.4 21.8 28.5 29.3

Weighted average size, hp . . . . . . . . 0.3 2.1 11.9 32.5 86.7 212.0

Average efficiency, % . . . . . . . . . . . . 65.0 77.0 82.5 87.5 91.0 94.0

Average load, %full load . . . . . . . . . . 70.0 50.0 60.0 70.0 85.0 90.0

Average capacity factor, 0

/0. . . . . . . . 3.5 7.0 17.4 27.7 37.5 43.2

Total annual use, 109 kWhr . . . . . 30.5 33.9 103.4 155.2 337.7 573.3

SOURCE: Samuel F. Baldwin, “Energy Efficient Electric Motor Drive Systems,r’ Thomas B. Johansson, Birgit Bodlund, and Robert H. Williams, eds., .E/ecttitity:

Efficient End-Use and New Generation Tec#mologies and Their Planning Implications (Lund University Press, Lund Sweden, 1989).

tive as possible-higher air conditioning loads weight the

case even more heavily in favor of more efficient air

conditioning equipment. Finally, it must be noted that

many techniques, such as building insulation, improved

window technologies, and many others, are generally

much more cost effective than even the high efficiency air

conditioner case presented here (see ch, 3). Again, these

alternatives were not examined, both to keep the standard

and efficient cases strictly comparable and to be as

conservative as possible.

Electronic Information Services:

Color Television

The OTA Base Case assumes the use of 19-inch to

20-inch color TVs for about 5 hours per household per

day. The standard TV uses about 109 W of power; the

efficient TV uses about 91 W of power. As discussed in

ch. 3, much greater efficiency improvements are possible

using Complementary Metal Oxide Semiconductor (CMOS)

electronic devices and power management techniques

and, in the future, converting to flat panel displays.

Industrial Motor Drives

The OTA base case assumes the use of standard

efficiency motors, pumps, fans, and other equipment. The

size class of motors is weighted by U.S. data, as shown in

table A-14, Motor costs and efficiencies are discussed in

ch. 4.

The energy-efficient equipment case assumes that

average savings of 30 percent are realized (a 30 percent

reduction in energy consumption), compared to the base

case through the use of energy-efficient motors, high

efficiency pumps/fans, adjustable speed drives, and the

28 The corresponding elimination of throttling valves.

capital costs of motors and Adjustable Speed Drives

(ASDs) is listed by size; the capital costs of high

efficiency pumps/fans were assumed to be 20 percent

greater than standard equipment. The same weighting by

size class is used as for the Base Case. No credit is given

for potential reductions in the size (and cost) of efficient

equipment. No consideration is given to the potential for

optimizing the sizes of pipes or ducts, etc., or for

improved design rules or other changes. Again, these

various assumptions combine to make the case for energy

efficient equipment conservative.

Summary

The results of these cases can now be summed as

shown in tables A-15 and A-16, These data form the basis

of the summary graphs shown in chs. 1 through 4 for the

systemwide capital and life-cycle costs of electricity

services.

Sensitivity Analysis

Each of the various parameters can now be varied to

determine the sensitivity of the analysis to the input

values. The results of such a sensitivity analysis are

shown in table A-17. This sensitivity analysis shows that

the above estimates of systemwide capital costs, life-cycle

operating costs, and electricity consumption are fairly

insensitive to the input values.

In order to erase the overall capital savings advantage

of more efficient equipment: the discount rate for

end-users would have to be raised to 2.3 times that for

utilities; the marginal cost of efficient equipment would

have to be increased by 70 percent over observed values;

28A ~orc ~omewative ~~~uption would be tit ~o.thirds of the motor ~ve systems could & retrofit and achieve such 30 perCent energy SaVhlgS

while one-third could not be usefully retrofit in terms of cost or energy efficiency (the motor systems might already operate at full constant load with

high efficiency). Such an assumption obviously dom not reduce the economic or energy savings for the two-thirds of the motors that could be retrofit,

but does change the total economy-wide energy and lifecycle and capitat cost savings realizable (the numerator is decreased by the change in motor drive

systems retrofit while the denominator remains the same). The overall impact is to reduce society-wide energy savings from 47 percent in the case of

all motors retrofit to 43 percent if two-thirds of the motors are retrofit; lifccycle cost from 28 percent to 25 percent; and capital savings from 13 percent

to 11 percent.
302 ● Fueling Development: Energy Technologies for Developing Countries

Table A-15-Summary Results for Standard Equipment

Capital costs

End-user Utility System Operating cost Power Fuel

Standard system $/capita $/capita $/capita $/capita Watts GJ

Cooking . . . . . . . . . . . . . . . . .

Water heating . . . . . . . . . . . . .

Lighting . . . . . . . . . . . . . . . . . .

Refrigeration . . . . . . . . . . . . .

Air conditioning . . . . . . . . . . .

Information services . . . . . . .

Industrial motor drive . . . . . . .

Total . . . . . . . . . . . . . . . . . .

7.14

6.80

14.31

9.34

38.43

9.00

9.80

94.81

17.74

25.72

24.15

7.31

45.95

1.57

100.63

223.07

24.87

32.52

38.45

16.66

84.38

10.57

110.43

317.87

48.82

67.25

71.06

26.53

146.43

12.69

193.76

566.54

52.9

76.7

72.0

21.8

137.0

4.7

300.0

665.0

0.0

NA

NA

NA

NA

NA

NA

0.0

NA D not applicable.

NOTE: Many related capital costs, particularly for industrial motor drive, are not included as they are assume to be the same in both the standard and the energy

efficient eases,

SOURCE: Office of Technology Assessment, 1992.

Table A-16-Summary Results for Energy Efficient Equipment

Capital costs

End-user Utility System Operating cost Power Fuel

Energy efficient system $/capita $/capita $/Capita $/capita Watts GJ/year

Cooking . . . . . . . . . . . . . . . . .

Water heating . . . . . . . . . . . . .

Lighting . . . . . . . . . . . . . . . . . .

Refrigeration . . . . . . . . . . . . .

Air conditioning . . . . . . . . . . .

Information services . . . . . . .

Industrial motor drive . . . . . . .

Total . . . . . . . . . . . . . . . . . . . .

6.43

21.23

25.34

12.00

58.19

9.21

25.44

157.87

6.05

3.78

7.23

4.42

26.26

1.31

70.44

119.48

12.48

25.02

32.58

16.42

84.45

10.52

95.88

277.34

26.83

30.12

42.34

22.39

119.91

12.29

154.21

408.09

14.1

11.3

21.6

13.2

78.3

3.9

210.0

352.24

1.3

NA

NA

NA

NA

NA

NA

1.3

NA - not applicable.

NOTE: Many related capital costs, particularly for industrial motor drive, are not included as they are assumed to be the same in the standard and

energy-efficient cases.

SOURCE: Office of Technology Assessment, 1992.

the demand for a given piece of efficient equipment would

have to be cut nearly in half; or the marginal efficiency

gain of more efficient equipment would have to be

reduced by one-third. 29

Similarly, to erase the overall life-cycle cost savings

advantage of more efficient equipment: the discount rate

for end-users would have to be raised to over five times

that for utilities; the cost of electricity would have to be

reduced to less than one-third of its marginal cost of

production; the marginal cost of efficient equipment

would have to be increased by 2.5 times; or the marginal

efficiency gain of more efficient equipment would have

to be reduced by over two-thirds.30

Of particular interest in this sensitivity analysis is that

real consumer discount rates must be raised to 2.3

times--or 16 percent real-that for utilities (at 7 percent)

in order to erase the systemwide capital cost advantage of

energy efficient equipment; and the discount rate must be

raised to over five times--or 38 percent real-that for

utilities to erase the life-cycle cost advantage of efficient

equipment. Some will respond that observed capital costs

to end-users can be that high in developing countries. This

is true. Such high rates are not primarily due to the

difficulty of administering large numbers of loans or other

such factors, however, but rather are due to institutional

mechanisms that route, often intentionally, capital from

end-users to large capital users such as utilities. These

mechanisms include taxes on end-users, but tax breaks for

utilities; low-interest loans or special financial bonds for

utilities; or other such proactive mechanisms. Unintentional impacts of these mechanisms include capital

shortages in end-user markets due to the large demand for

capital by utilities and other public or favored sectors. As

noted in chs. 1 through 4, however, even if consumers had

access to capital at rates comparable to those available to

2~e ~nethird fiwe d~S not include c~~, for which tie shift from elec~c resis~ce burners to ~ burners provides particukuly large Uipitd

savings. If cooking is includecl the marginal efficiency gain of energy-efficient equipment would have to be reduced by two-thirds overall in order to

erase the capital saving advantage of energy efilcient equipment.

30Ag~4 ~s d~s not included COOk@, ~above.
Appendix A--Capital and Life Cycle Costs for Electricity Services ● 303

Table A-17—Sensitivity Analysis

Required value to

erase system capital Required value to erase

cost advantage of Iifecycle cost advantage of

Parameter Baseline efficient equipment efficient equipment

Discount rate for end-use sectorsa . . . . 7% 16% 38%

Electricity cost:

Residential/commercial . . . . . . . . . . . $0.09/kWh NA $0.028/kWh

Industrial . . . . . . . . . . . . . . . . . . . . . . . $0.07/kWh NA $o.021/kwh

Marginal cost of efficient

end-use equipment . . . . . . . . . . . . Tables A-5 to A-14 70% increase over baseline 250% increase over baseline

Load factor . . . . . . . . . . . . . . . . . . . . . . . . Tables A-5 to A-14 55% Of baseline load 25% of baseline load

Marginal efficiency

Advantage of efficient

end-use equipment . . . . . . . . . . . . Tables A-5 to A-14 66% of baseline efficiency 29% of baseline efficiency

advantageb

advantage

NA - not applicable.

awhile keeping utility discount rate at 7 perC9nt.

bhis does not include cooking as the shift from electrii resistance to gas burners results in efficiency gains and corresponding capital and Iifecycle savings

irrespective of the relative efficiency factor.

SOURCE: Office of Technology Assessment, 1992.

utilities, there are a number of market failures which

would impede the purchase of efficient end-use equipment by end-users.

If real discount rates increase for both the utility and the

end-user, the capital savings realized by installing efficient equipment increase. For example, increasing the real

discount rate for both utility and end-user from 7 to 15

percent increases the relative capital savings of efficient

equipment from 12.75 percent to 17 percent.

From a societywide perspective, failure to invest in

energy efficient equipment thus results in substantially

higher systemwide capital costs, life-cycle operating

costs, and energy consumption—with all its related

environmental impacts--than necessary. A more optimal

allocation of capital to end-use efficiency would require

changes in institutional mechanisms. Certainly, administrative overheads associated with oversight of large

numbers of small loans will lead to higher discount rates

than those for the utility sector, but they are unlikely to be

twice as high, let alone the five times as high needed to

erase the overall cost savings of efficient equipment found

in this analysis. Such institutional mechanisms might

range from channeling capital through utilities for purchase of efficient end-use equipment by end-users, to

mandated efficiency standards, Combinations of these are

being used in the United States and other industrial

countries.

It is also useful to put the marginal cost of energy

efficient equipment in the context of the overall decline in

the real cost of consumer goods. As shown in chs. 1 and

2, the real cost of refrigerators in the United States

declined by a factor of five between 1950 and 1990 due

to improvements in materials and in manufacturing

technologies. Averaged over this 40-year period, this is a

12.5 percent annual decline in real cost. In comparison,

the energy-efficient equipment costs end users about 67

percent more than standard equipment, or the equivalent

of about 5 years worth of manufacturing improvements.

Finally, it must be noted that these changes to erase the

systemwide capital cost and life-cycle cost advantages of

energy efficient equipment are on top of the highly

conservative choices of parameters used in the OTA base

case standard and energy efficient equipment scenarios.

Based on these considerations, it appears that the overall

conclusion—that energy efficient equipment can reduce

systemwide capital costs and lifecycle operating costs-is

robust,
Appendix B

Electricity Supply Technologies

On-Grid Electricity Supply Technologies

Table B-1 summarizes key characteristics for on-grid

electric generating technologies. Representative values

are shown; specific cases may vary considerably from

these estimates.

Factors listed in this table include the following:

●

●

●

●

Application: Base, intermediate, or peaking. Base

load plants provide the slowly varying baseline

power demanded by the grid and account for the bulk

of the power supplied. Because of the large amount

of power they supply, low cost fuels such as coal

or—in some cases-nuclear are preferred for these

plants. Because of the difficulties inherent in using

these fuels, base load plants are generally large and

capital intensive. Intermediate and peaking plants

are chosen to be successively less capital intensive as

they are used for shorter periods, such as for the

afternoon peak demand due to air conditioning loads

or the early evening peak due to residential lighting

demand. To minimize capital costs, more expensive

fuels, such as oil or gas, are generally used, and the

plants are installed in smaller units.

Capital Costs. Costs shown are nominal values;

these costs will vary widely depending on local

conditions, specifics of the technology, and other

factors. Many of these cost estimates are from

Electric Power Research Institute, Technical Assessment Guide (TAG), Report No. EPRI P-6587-L, Palo

Alto, CA, September 1989; other cost estimates have

been developed by OTA from various sources. All

costs are deflated to December 1990 U.S. dollars.

Note that the capital costs listed here do not include

mining, transmission and distribution, administration, or other overhead capital costs, and are not

adjusted for capacity factors as is necessary to

account for full systemwide costs as done in

appendix A.

operating Requirements. Estimated heat rates

(Btu/kWh) are from the Electric Power Research

Institute (TAG) where available; other heat rate or

thermal efficiency (in percent) estimates have been

developed by OTA from various sources. Heat rates

or efficiencies will vary depending on specifics of

the technology, fuel quality, and other factors.

Fuel. Plants listed as using ‘‘distillate’ can often use

natural gas as well. Fuel costs are from the Electric

Power Research Institute (TAG), and are for U.S.

delivery in 1990. Availability of petroleum-based

fuels varies with world market conditions; if a

●

●

●

●

The

domestic source is used then availability may be

much improved.

Total Costs. Levelized capital costs assume the

discount rate, lifetime, and capacity factors shown;

results are sensitive to all these assumptions. O&M

costs are estimated by OTA based on information

from manufacturers, consultants, utilities, and others. Both fixed ($/kW-yr) and incremental ($/kWh)

O&M costs are included; fixed O&M costs are levelized using the capacity factor. Fuel costs are based on

given fuel prices and heat rates, Note that these costs

are lower than the total systemwide costs estimated

in appendix A due to assumed high capacity factors

here (70 percent) for individual plants rather than

typical system capacity factors of 60 percent or less

as assumed in appendix A, and because other cost

components such as coal mining, transmission and

distribution, and operating overhead are included in

appendix A but are not included here.

Time Requirements. Installation lead times are

typical values for the time from decision to build to

actual operation. These values are strongly affected

by site-specific permitting and other regulatory

considerations.

Environmental Impacts. Air indicates the relative

quantity of NOX

, SOX, and particulate emission, per

kWh; it does not include C02 emissions, which are

highest for coal-based technologies, followed by oil,

natural gas, and others. Water requirements indicate

the relative quantity of water needed to operate the

plant. Solid and liquid waste products indicate the

volume of waste products which must be handled.

Infrastructure Requirements. In general, large

(over 100 MW) plants will require river or rail

access.

technologies evaluated in table B-1 include the

following with the listed parameters:

●

●

●

●

●

Conventional Combustion Turbine. Based on an

80 MW unit.

Conventional Steam Plants. Values for coal plant

are based on a 300 MW subcritical plant using West

Virginia bituminous pulverized coal without flue gas

desulfurization (FGD).

Hydroelectric Plants. Costs may vary widely,

depending on local conditions.

Advanced Combustion Turbine. Based on a 140

MW unit.

Combined Cycle. Based on a 120 MW unit using

distillate fuel.

-304-
Appendix B-----Electricity Supply Technologies ● 305

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306 ● Fueling Development: Energy Technologies for Developing Countries

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Appendix B----Electricity Supply Technologies . 307

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Appendix B-Electricity Supply Technologies ● 309

Table B-2—Nominal Parameters for Selected Off-Grid Generating Technologies

Diesel Micro-hydro Photovoltaics Wind

Capital cost ($/kW). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700 2,000 1 0,000’ 5,000b

Lifetime (years). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 20 30 20

Discount rate (percent) . . . . . . . . . . . . . . . . . . . . . . . . . 7 7 7 7

Levelized capital cost ($/kW) . . . . . . . . . . . . . . . . . . . . 100 190 800 470

Capacity factorc (percent) . . . . . . . . . . . . . . . . . . . . . . . 20 20 20 20

Capital cost ($k/Wh) . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.06 0.11 0.46 0.27

O&M ($/kWh) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.02 0.02 0.005 0.01

Fuel ($/kWh)d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.23 0.00 0.00 0.00

System lossese (percent) . . . . . . . . . . . . . . . . . . . . . . . 5 5 10 10

Total cost ($/kWh) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.33 0.14 0.51 0.31

NOTE: Numbers may not add due coextensive rounding.

a photov~ltai~ ~st~ include $6,~0 per Peak kw for the panel, $2,000 for the balance of system costs, and $2,M0 for batteries at-id their rep{aCGmentS (eVery

5 years over the 30 year life of the system).

bwjnd ~sts in~jud~ $3,~0 per peak kw for the turbine ad ba]an~e of system, and $1 ,~(1 for batteries and their repl~ements (every 5 years over the 20

year life of the system). C The ~pa~ty factor is list~ as Permnt but might equally well ~ given in terms Of annual kwh Output per kw capacity, A capacity factor Of 20 pWCWlt then

corresponds to 1,750 kWhlkW,

dFor diesel priced at $0.50 per liter.

esystem Iosse$ include batte~ losses for pv and wind systems, and other system losses for diesel and hydro equipment.

SOURCE: Office of Technology Assessment, 1992. Sources forcostsare discussed in chapter 6and are based primarily on retail quotes from manufacturers

and distributors, where available. Developing country costs may be higher due to increased transportation costs, and due to duties and taxes. Costs

shown here are for low-volume production, however, and higher volumes may allow for lower per unit costs.

Fluidized Bed. Based on a 200 MW unit with a

circulating atmospheric bed using Illinois bituminous coal.

Life Extension. Costs and other attributes vary

widely.

Municipal Solid Waste. Based on a 40 MW mass

burn technology.

Steam Injected Gas Turbine. Based on a 100 MW

unit.

Advanced Batteries. Based on a 5-hour, 20 MW

unit.

Advanced Nuclear. Based on a 600 MW light water

reactor with passive safety features.

Binary Geothermal. Based on a 54 MW unit.

Compressed Air Energy Storage. Based on a rock

formation cavern, using an electric compressor and

a 110 MW combustion turbine. Approximately 10

hours of storage provided. Each kWh of output

requires 0.76 kWh electric input plus 4,000 Btu of

fuel.

Fuel Cell. Based on a phosphoric acid fuel cell with

4 units at 25 MW each.

Integrated Gasification Combined-Cycle. Based

on a 400 MW plant using bituminous coal.

Pumped Hydro. Based on a conventional above-

-ground 3 by 350 MW unit.

Solar Photovoltaics. Based on a flat plate technology. Note that the costs of solar photovoltaic systems

are largely scale independent.

Wind Turbine. Based on a farm of three hundred

250 kW units.

● Solar Thermal. Based on a parabolic trough/natural

gas hybrid. Note that the relatively high capacity

factor is due to use of natural gas cofiring to

supplement insolation.

Off-Grid Electricity Generating Technologies

A variety of technologies are available that can provide

electricity at (remote) sites that are not connected to the

electric power grid. Two sets of calculations are of

interest. First, how do the costs of these various technologies compare. Four technologies-diesel engine generator sets, micro hydroelectric plants, flat panel photovoltaics, and wind turbines-were selected to illustrate this

representative calculation. Second, how do the costs of

these technologies (including battery storage, as needed)

compare with the cost of extending the grid and providing

on-grid generation.

In order to compare the cost of power from these

various technologies, estimates were made for the lifecycle costs of a 10 kW peak capacity electricity generating

system with storage. Nominal parameters and results are

shown in table B-2 and a sensitivity analysis is shown in

table B-3. These results are also shown in figures in

chapter 6.

As can be seen in table B-2, where available, microhydroelectric power can be relatively lower in cost and

wind power comparable in cost to diesel systems,

Photovoltaic systems tend to be higher in cost for the

baseline parameters chosen. The costs of power are highly

sensitive, however, to fuel costs in the case of diesel
310 ● Fueling Development: Energy Technologies for Developing Countries

Table B-3-Sensitivity Analysis for the Cost of Selected Off-Grid Generating Technologies

Diesel Micro-hydro Photovoltaics Wind

Baseline: total cost ($/kWh) . . . . . . . . . . . . . . . . . . . . .

Variable: fuel cost

Baseline: $0.50/liter . . . . . . . . . . . . . . . . . . . . . . . . .

$0.75/liter . . . . . . . . . . . . . . . . . . . . . . . . .

$1.00/liter . . . . . . . . . . . . . . . . . . . . . . . . .

Variable: discount rate

3 percent . . . . . . . . . . . . . . . . . . . . . . . . .

Baseline: 7 percent . . . . . . . . . . . . . . . . . . . . . . . . .

10 percent . . . . . . . . . . . . . . . . . . . . . . . . .

15 percent . . . . . . . . . . . . . . . . . . . . . . . . .

$0.33/kWh $0.14/kWh $0.51/kWh $0.31/kWh

0.33

0.45

0.57

0.14

0.14

0.14

0.51

0.51

0.51

0.31

0.31

0.31

0.32

0.33

0.33

0.35

0.10

0.14

0.16

0.21

0.33

0.51

0.67

0.96

0.22

0.31

0.38

0.51

NOTE: Parameters are based ontable B-2.

SOURCE: Office of Technology Assessmen~ 1992.

Table B-4—Nominal Costs and Break-Even Distances for Grid Extension

Diesel Micro-hydro Photovoltaics Wind Grid + extension

Baseline: total cost ($/kWh)a . . . . . . $0.33/kWh $0.14/kWh $0.51/kWh $0.31/kWh $0.07/kWh + $O.032/kWh-km

Break-even distance (kilometers)

Variable: grid extension

Baseline: $ 4,500/km . . . . . . . . .

$ 7,000/km . . . . . . . . .

$ 9,000/km . . . . . . . . .

$10,000/km . . . . . . . . .

$13,000/km . . . . . . . . .

Variable: discount rate

3 percent . . . . . . . . . .

Baseline: 7 percent . . . . . . . . . .

10 percent . . . . . . . . . .

15 percent . . . . . . . . . .

8.1 km

5.2

4.0

3.6

2.8

2.1 km

1.3

1.0

0.9

0.7

13.9 km

8.9

6.9

6.3

4.8

7.5 km NA

4.8

3.8

3.4

2.6

10.4

8.1

6.8

5.3

1.8

2.1

2.2

2.4

10.8

13.9

15.7

17.8

6,6 NA

7.5

8.0

8.6

NA - not available or not applicable.

%seline values for remote generation technologies are listed in table B-2; baseline parameters for on~rid generation are$1500/kW capadty, 30 year lifetime,

7percent discount rate, $0.01/kWh for O&M, $0.02/kWh for fuel (fuel priced at $2.00 per million Btu and a heat rate of 10,000 Btu/kWh), and an actual capacity

factor of 60 percent in operations, with power routed to the site at the same rate as generated by the remote technologies; baseline values for grid extension

were $4500/k~responding to a singl-wire earth return (a very Iowcost system), a lifetime of 20 years, a discount rate of 7 percent, and an annual O&M

cost of 3 percent of the initial capital cost.

SOURCE: Office of Technology Assessment, 1992.

systems, and to discount rates in the case of photovoltaic,

wind, and hydro systems (see table B-3).

Actual costs may vary considerably from the parameters chosen in tables B-2 and B-3. Other factors are also

important in choosing a system for remote generation.

Many regions will not have access to good micro-hydro

or wind resources. Diesel systems require timely delivery

of fuel, spare parts, and competent maintenance for

reliable operation; in many areas these factors are not

available. Finally, photovoltaic systems, though expensive, may have substantial advantages over diesel systems

by not using fuel, having few or no moving parts, and

requiring little maintenance.

These systems can also be compared to the cost of

extending the electric power grid and providing on-grid

generation capacity. There are two components of cost

that must then be considered: the cost of conventional

on-grid generation as detailed in table B-1, and the cost of

the grid extension itself.

As detailed in Chapter 6, the cost of grid extension

ranges from $4,600 to nearly $13,000 per kilometer for

single phase systems, depending on the terrain, the precise

type of system, and a host of other factors. O&M costs

range from 2 to 4 percent of the capital cost.

By equating the cost per kWh of the remote generation

to the cost of the grid technology plus grid extension, an

approximate “break-even” distance can be calculated.

For distances less than the break-even distance, it will

then be lower cost to extend the grid; for distances greater

than the break-even distance, it will be lower cost to install

a remote generation technology. Note, however, that there

are many caveats to this highly simplified analysis. The

capacity of grid extension may be much greater than that

assumed here for the remote generation technologies, or
Appendix B-electricity Supply Technologies . 311

may be upgraded more easily. On the other hand, remote Results of such a calculation are shown in table B-4. As

generation technologies may be more reliable than seen there, the most sensitive factor is the cost of the grid

extending the grid with lines easily downed during extension itself. Breakeven distances are not particularly

storms. A much more detailed analysis is required for sensitive to the discount rate as both grid extension and reactual implementation of a real system.l mote generation require large upfront capital investments.

I For ~ sll~uy more det~led adysis, see Chandra Shekhar Sti and T~a c~~a Kandpal> ‘‘Decentralized v Grid Electricity for Rural India,’

Energy Policy June 1991, pp. 441448.

297-929 - 92 - 21 - QL : 3
Appendix C

Conversion Factors, Abbreviations, and Glossary

Conversion Factors

Area

1 kilogram (kg)=

2.20 pounds (lb)

1 pound (lb)=

0.454 kilogram (kg)

1 quad (quadrillion Btu)=

1.05x 1018 Joules (J)

1.05 exajoules (EJ)

3.60xl05 metric tons, coal

1.72x 106 barrels, oil

2.36x10 S metric tons, oil

2.83x101° cubic meters, gas

1.07x1012 cubic feet, gas

2.93x 102 terawatthours

1 liter (1)=

2.64x10 -1 gallons (liquid, U. S.)

6.29x10-3 barrels (petroleum, U. S.)

1X10-3 cubic meters (m3

)

3.53x10-2 cubic feet (ft3

)

1 gallon (liquid, U.S.)=

3.78 liters (1)

2.38x10-2 barrels (petroleum, U. S.)

3.78x10-3 cubic meter (m3

)

1.33x10-] cubic feet (ft3

)

1 barrel (bbl) (petroleum, U.S.)=

1 .59x102 liters (1)

42 gallons (liquid, U. S.)

1.59x10-1 cubic meters (m3

)

5.61 cubic feet (ft3)

From Centigrade to Fahrenheit:

((9/5) X (T))+ 32 = ° F

1 acre=

0.405 hectare (ha)

1.56x10-3 square miles

4.05 square kilometers (km2)

1 hectare=

0.01 square kilometer (km2)

3.86x10-3 square miles

2.47 acres

Weight

1 metric ton (ret) (or “long ton”)=

1,000 kilograms or 2,200 lbs

1 short ton=

2,000 pounds or 907 kg

Energy

1 kilowatthour=

3.41x 103 British thermal units (Btu)

3.6x10 6 Joules (J)

1 Joule=

9.48x10 -4 British thermal unit (Btu)

2.78x10 -7 kilowatthours (kWh)

1 British thermal unit (Btu)=

2.93x 104 kilowatthours (kWh)

1.05x103 Joules (J)

Volume

1 cubic meter (m3)=

1X103 liters (1)

2.64x102 gallons (liquid, U. S.)

6.29 barrels (petroleum, U. S.)

35.3 cubic feet (ft3)

1 cubic foot (ft3

)=

2.83x101 liters (1)

7.48 gallons (liquid, U. S.)

1.78x10-1 barrels (petroleum, U. S.)

2.83x10-2 cubic meters (m3

)

1 cord wood=

128 cubic feet (ft3) stacked wood

3.62 cubic meters (m3

) stacked wood

1 dry (i.e., no moisture) ton of wood

Temperature

From Fahrenheit to Centigrade:

(5/9) X (oF - 32)= °C

Temperature changes:

—To convert a Centigrade change to a Fahrenheit change:

9/5 x (change in ‘C) = change in ‘F

–-To convert a Fahrenheit change to a Centigrade change:

5/9 x (change in ‘F) = change in °C

—Example: a 3.0 °C rise in temperature = a 5.4 OF rise in temperature

–312–
— .—— —— . .

Appendix Conversion Factors, Abbreviations, and Glossary . 313

Abbreviations

AC —Alternating current

ACEEE —American Council for an Energy Efficient

Economy

ADB —Asian Development Bank

ADF —African Development Foundation

AFBc —Atmospheric fluidized bed combustion

AfDB —African Development Bank

AfDF —African Development Fund

AID —Agency for International Development

ASD —Adjustable speed drive

ASEAN —Association of South East Asian Nations

ASHRAE —American Society of Heating, Refrigeration

and Air-Conditioning Engineers

ASTRA —Centre for the Application of Science and

Technology to Rural Areas

BEST —Biomass Energy Systems and Technology

(AID)

BIG/GT —Biomass gasifier/gas turbines

BOF —Basic oxygen furnace

BOS —Balance-of-system

Btu —British thermal unit

CAEX —Computer aided exploration and

development

CAFE —Corporate average fuel efficiency

CEST — Condensing-extraction steam Turbine

CETA —Conventional Energy Technical Assistance

(AID)

CFCs —Chlorofluorocarbons

CGIAR —Consultative Group on International

Agricultural Research

CH4 —Methane

CKD —Completely knocked down kits

CNG —Compressed Natural Gas

CO* —Carbon dioxide

CORECT —Committee on Renewable Energy

DC

DOE

DRI

DSM

EAI

EDI

EPA

EPDCP

EPRI

Esc o

ESMAP

ETIP

Commerce and Trade

—Direct current

—Department of Energy

—Directly reduced iron

—Demand side management

—Electric arc furnace

—Enterprise for the Americas Initiative

—Economic Development Institute (World

Bank)

—Environmental Protection Agency

—Energy Policy Development and

Conservation Project (AID)

—Electric Power Research Institute

—Energy service companies

—Energy Sector Management Assistance

Program

—Energ-yTechnology Innovation Project (AID) -. -.

Eximbank —Export-Import Bank

FAO —Food and Agriculture Organization

F Bc —Fludized bed combustion

International System of Units (SI): Prefixes

EXAMPLES: 1 Teragram or Tg (1012 or 1,000,000,000,000 or 1 trillion

grams); 1 megawatt+dectric or MWe (1W or 1,000,000 or 1

million watts-electric).

EXCEPTION: 1OIS (1,000,000,000,000,000) British thermal Units (BtU) is

not generally referred to as a PBtu. Instead it is known as a

quad, or one quadrillion Btu’s.

FCIA —Foreign Credit Insurance Association

FGD —Flue gas desulfurization

FINESSE —Financing of Energy Services for Small

GAO

GATT

GDP

GEEI

GEF

GNP

HVAC

IBRD

IDA

IDB

IEA

I Fc

IGCC

IIEc

IPcc

ISTIG

JIT

LCP

LDC

LPG

LWR

MAGPI

MDB

MIGA

NGL

NGO

NIC

O&M

ODA

Scale Energy Users

--General Accounting Office

-General Agreement on Tariffs and Trade

-Gross domestic product

-Global Energy Efficiency Initiative

--Global Environmental Facility

-Gross national product

—Heating, ventilation, air-conditioning

equipment

—Inter-American Foundation

—International Bank for Reconstruction and

Development

—International Development Association

—Inter-American Development Bank

—International Energy Agency

—International Finance Corporation

—Integrated gasification combined cycle

—International Institute for Energy

Conservation

—Intergovernmental Panel on Climate

Change

—Intercooled steam injected gas turbine

—Just-in-time (inventory control)

—Least cost planning

—Lesser developed country

—Liquefied petroleum gas

—Light water reactor

—Multi-Agency Group for Power Sector

Innovation

—Multilateral development bank

—Most favored nation

—Multilateral Investment Guarantee Agency

—Measurement while drilling

—Natural gas liquids

—Non-governmental organization

—Newly industrializing country

—Operations and maintenance

-Overseas -.--..— Development Assistance — . ~
314 ● Fueling Development: Energy Technologies for Developing Countries

OECD -Organization for Economic Cooperation

and Development

OIMP -Office of International Major Projects (Dept

of Commerce)

OPEC -Organization of Petroleum Exporting

Countries

OPIC —Overseas Private Investment Corporation

PACER —Program for the Acceleration of

Commercial Energy Research (AID)

PC —Pulverized coal

PEFCO —Private Export Funding Corporation

PPP —Purchasing power parity

PROCEL —National Electricity Conservation Program

(Brazil)

PSED —Private Sector Energy Development (AID)

PURPA —Public Utilities Regulatory Policy Act

PV —Photovoltaic

PVO —Private volunteer organizations

R&D —Research and development

RD&D —Research, development and demonstration

REAT —Renewable Energy Applications and

Training (AID)

REDAC —Renewable Energy Design Assistance

Center (SANDIA)

SRIC —Short rotation intensive culture

STIG —Steam injected gas turbine

T&D —Transmission and distribution

TDP —Trade and Development Program

—Ultra high power furnace

UNDP —United Nations Development program

UNEP —United Nations Environment Program

UNFPA —United Nations Family Planning

Association

UNIDO —United Nations Industrial Development

Organization

USDA —United States Department of Agriculture

US/ECRE —United States Export Council for

US&FCS

USTR

VHF/FM

Renewable Energy

—United States and Foreign Commercial

Service

—United States Trade Representative

—Very high frequency/frequency modulated

—World Bank

Glossary

Appliance: Any household energy-using device.

Biodiversity: Biological diversity, i.e., the variety of

species in a given area.

Biomass: Technically, the total dry organic matter or

stored energy content of living organisms in a given

area. As used by OTA, biomass refers to forms of

living matter (e.g., grasses, trees, shrubs, agricultural

and forest residues) or their derivatives (e.g., ethanol,

timber, charcoal, dung) that can be used as a fuel.

Btu (British thermal unit): The amount of heat needed

to raise the temperature of 1 pound of water by 10F at

a specified temperature.

Capacity factor: The actual output of the generating

technology in kWh, divided by the theoretical maximum output of the technology operating at peak design

resource levels.

Capital cost: The investment in plant and equipment.

This includes construction costs, but does not include

operations, maintenance, or fuel/electricity costs.

Chlorofluorocarbons: Compounds containing chlorine,

fluorine, and carbon; they generally are used as

propellants, refrigerants, blowing agents (for producing foam), and solvents. They are identified with

numbered suffixes (e.g., CFC-11, CFC-12). They are

known to react with and deplete stratospheric ozone

and also are “greenhouse’ gases in that they effectively absorb certain types of radiation in the atmosphere.

Cogeneration: The simultaneous production of both

electric power and heat for use in industrial or

commercial/residential or other applications.

Commercial energy: Usually refers to coal, oil, gas, and

electricity on the basis that they are widely traded in

organized markets. These fuels are distinguished from

other fuels such as firewood, charcoal, and animal and

crop wastes, which are mostly described as ‘biomass’

in this report.

Deforestation: Converting forest land to other vegetation

or uses (i.e., cropland, pasture, dams).

Demand side management: The planning, implementation, and monitoring of utility activities designed to

encourage customers to modify their pattern of electricity usage.

Discount rate: The rate at which money grows in value

(relative to inflation) if it is invested.

Efficiency: For electricity generating technologies, efficiency is the actual output in kWh divided by the

energy consumed or used to produce that output. For

end use technologies, efficiency is often defined as the

ratio of output to input, but for some end uses (such as

transportation), more complex definitions are used.

Emissions: Flows of gases, liquid droplets, or solid

particles into the atmosphere. Gross emissions from a

specific source are the total quantity released. Net

emissions are gross emissions minus flows back to the

original source. Plants, for example, take carbon from

the atmosphere and store it as biomass during photosynthesis, and they release it during respiration, when

they decompose, or when they are burned.
Appendix C-Conversion Factors, Abbreviations, and Glossary ● 315

End use: Any of the services or processes (e.g., lighting,

refrigerant ion, mechanical drive) made possible

through the provision of energy (also see energy

services).

Energy carrier: A fuel-liquid, gaseous, or solid-or

electricity to provide energy.

Energy conversion: The process of converting energy

from one form to another, Often involves transforming

primary or raw energy to a high quality carrier, such as

gas or electricity.

Energy intensity: The amount of energy required per unit

of a particular product or activity. Often used interchangeably with ‘‘energy per dollar of GNP. ’

Energy services: The service or end use ultimately

provided by energy. For example, in a home with an

electric heat pump, the service provided by electricity

is not to drive the heat pump’s electric motor but rather

to provide comfortable conditions inside the house

(also see end use).

Feedback: When one variable in a system (e.g., increasing temperature) triggers changes in a second variable

(e.g., cloud cover) which in turn ultimately affect the

original variable (i.e., augmenting or diminishing the

warming). A positive feedback intensifies the effect. A

negative feedback reduces the effect.

Fossil fuel: Coal, petroleum, or natural gas or any fuel

derived from them.

Generating capacity: The capacity of a powerplant to

generate electricity, typically expressed in wattselectric (e.g., kWe or MWe).

Greenhouse effect: The effect produced as certain

atmospheric gases allow incoming solar radiation to

pass through to the Earth’s surface, but prevent the

(infrared) radiation, which is reradiated from the Earth,

from escaping into outer space, The effect responsible

for warming the planet.

Greenhouse gas: Any gas that absorbs infrared radiation

in the atmosphere.

Integrated Resource Planning (IRP): In energy planning, a cost-based ranking of all of the supply and end

use technologies that could provide an energy service,

beginning implementation with the lowest cost opportunities. Integrated Resource Planning changes the

regulatory framework in order to encourage utilities

and others to implement the least-cost demand and

supply options. Among other changes, regulators

allow utilities to earn income based on the net benefits

from investments in energy efficiency improvements,

Least cost planning: Often used interchangeably with

Integrated Resource Planning, though a more limited

frame of reference. The practice of basing investment

decisions on the least costly option for providing

energy services. It is distinguished from the more

traditional approach taken by utilities, which focuses

on the least costly ways to provide specific types of

energy, with little or no consideration of less costly

alternatives.

Life cycle or lifecycle operating cost: The cost of a good

or service over its entire life cycle.

Methane: A compound consisting of one carbon atom

and four hydrogen atoms; it occurs naturally, often in

association with coal and petroleum and as a byproduct

of the metabolic activities of some microorganisms; it

can also be synthesized artificially.

Monoculture: The exclusive cultivation of single species

(e.g., corn or soybeans), a common practice in modem

agriculture and energy forestry.

Natural gas: A naturally occurring mixture of hydrocarbons (principally methane) and small quantities of

other gases found in porous geological formations,

often in association with petroleum.

OECD: Organization for Economic Cooperation and

Development, an organization that includes most of

the world’s industrialized market economies. Members include Australia, Austria, Belgium, Canada,

Denmark, Finland, France, Germany, Greece, Iceland,

Ireland, Italy, Japan, Luxembourg, Netherlands, New

Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, and United States.

Primary energy: The term “primary energy” includes

fossil fuels (e.g., coal, crude oil, gas) and biomass in

their crude or raw state before processing into a form

suitable for use by consumers.

Reliability: Measured by the actual output of the generating technology in kWh, divided by the output that

would occur if the technology worked perfectly all the

time. As used in this report, reliability does not reflect

resource limits. The term availability is also used.

Reserves: The portion of a resource base that is proven to

exist and can be economically recovered (i.e., the value

of the product exceeds the production and transportation costs).

Residues: Agricultural or agroindustrial byproducts (e.g.,

sawdust, coconut shell, bagasse from sugar cane) that

can be used as fuel.

Resources: The total existing stock of a given resource--

including discovered and not yet discovered portions—

regardless of the economic feasibility of recovering the

resource. Also refers to subset of resources that have

been proven to a degree of certainty, which are likely
316 ● Fueling Development: Energy Technologies for Developing Countries

to be proved recoverable in the future based on a

defined set of technical and economic specifications.

Retrofit: To update an existing structure or technology by

modifying it, as opposed to creating something entirely new from scratch. For example, an old house can

be retrofitted with advanced windows or insulation to

slow the flow of heat energy into or from the house.

Sectors: Categories of end users or suppliers. The sectors

included in this report are residential, commercial,

industrial, agricultural, transportation, conversion, and

resources.

Sustainable: A term used to characterize human activities that can be undertaken in such a manner as to not

adversely affect the environmental conditions (e.g.,

soil, water quality, climate) necessary to support those

same activities in the future.

Systemwide: In the context of this report, an analytic

point of view that accounts for each interdependent

aspect of the process of producing, providing and using

energy.

Traditional energy: Typically, fuels that are gathered

and burned by individuals with little or no processing.

Some processed forms, such as charcoal, are included

in this definition.

Transport mode: The different means of transporting

people and freight within a system. This includes, road,

rail, and maritime transport.

Watt (W): A common unit used in measuring power (i.e.,

as the flow of energy overtime), equivalent to 3.41 Btu

per hour. Where an ‘‘e’ follows the unit (as in kWe or

MWe), the watt is in the form of electrical energy.

Where a ‘‘t” follows the unit (as in kWt or MWt), the

watt is in the form of thermal energy.
Index
—

Index

Acid rain, 4-5, 10, 11, 17,37, 246

Africa. See also specific countries

agriculture, 136, 140, 141

AID assistance, 265

biomass, 247

economic growth, 22, 103

electricity systems, 189

energy consumption, 22

energy crops, 253

industry, 103

microhydroelectric power, 206

oil imports, 26, 234

oil reserves, 234

paper mill capacity, 132

recycling aluminum, 130-131

residential electricity use, 48

steel production, 120

transport energy use, 23

urban population, 22

wind power potential, 202

Agency for International Development

congressional directives, 276, 283

energy-related projects, 13, 30, 258, 264-265, 276, 281, 284,

285

family planning, 285

geographical concentration of aid, 14

Office of Energy and Infrastructure, 265,266

training, 273-274, 281

Agriculture

energy use, 33-37, 103, 136, 139

environmental damage, 37, 38-39

improving efficiency, 103, 136-137

irrigation, 137-140

residues as fuel, 248-250

traction, 140-141

AID. See Agency for International Development

Air conditioning, 79-83, 114

Algeria, 22,241-242

Alternative fuels, 171-176

Amoco, 238

Analytical framework of OTA study, 19-20

Angola, 141, 242

Appliances

barriers to purchase of efficient appliances, 8, 83-84,87

demand, 29,48

energy use, 23, 47, 65

Argentina, 22, 151, 194, 241

Argonne National Laboratory, 190,271

Asia. See also specific countries

biomass, 247

coal consumption, 25

economic growth, 22

energy consumption, 22

irrigation, 137

oil reserves, 234

paper mill capacity, 132

residential electricity use, 48

transport energy use, 23, 155

wind power potential, 202

ASTRA. See Center for the Application of Science and

Technology to Rural Areas

Automobiles. See also Transport

electric, 176

environmental impact, 145, 148, 167, 172

improving efficiency, 145-150, 161-165

role of, 167

scrappage, 148, 161

Bangladesh, 36,248

Benin, 189

Bicycles, 155-156

Biogas, 215,219-222

Biomass Energy Systems and Technology Project, 266

Biomass fuels

barriers to new technologies, 12, 183,214,233

consumption, 23, 27, 91, 214, 247

conversion to gas and electricity, 179, 183, 215-222

conversion to liquid fuels, 179, 183, 222-227

energy crops, 233, 251-257

environmental impact, 233

forage v. purchase, 34-35

forest management, 250-251

improving efficiency, 10-11, 247-248

residues as energy, 233, 248-250, 258

sales and rural economies, 36-37, 39

shift from, 26, 28,47, 59, 179-180

stoves, 58, 64-65, 131

Supply, 25, 34-35, 36-37, 247, 248, 258

use in industry, 91

Bolivia, 91, 161

Botswana, 36

Brazil

agriculture, 103, 136

air conditioning, 79, 80

capital cost constraints, 136

cement production, 124, 125

charcoal production, 253

coal reserves, 244, 245

debt restructuring, 278

electric water heating, 60

electricity system, 48, 187

electronic ballasts, 71

energy consumption, 27

ethanol production, 174, 175, 224, 225, 254-255

foreign trade, 282

hydroelectric power, 190

industry, 91, 136

lighting, 69,70

motor efficiency, 107

nuclear power, 194

oil production, 239, 241

per capita income, 22

PROCEL, 85, 135

producer gas, 215

refrigerators, 72, 73-74

steel production, 117, 118, 119, 120-121, 122, 123

transport, 151, 158, 163, 166, 167, 169

urbanization, 22

–319–
320 ● Fueling Development: Energy Technologies for Developing Countries

Brookhaven/Stony Brook Energy Management Training Program, 190

Burkina Faso, 35, 189

Burma, 241

Buses, 145, 151, 152, 166, 167-168

CAEX. See Computer-Aided Exploration and Development

California, 199,200,202

Cameroon, 161,235,241

Canada, 114, 194

Capital Flight, 30

Capital investment

for efficient technologies, 9,52-53,76, 133-134, 136,261,

263,278

in energy supply systems, 180, 186,201, 208, 231,232,

278-279

projected, 4,7, 17, 29-30,48-49,231

Carbon dioxide

Coal and, 191, 193, 244

deforestation and, 40,42

fossil fuels and, 4,31, 37

gas turbines and, 197

geothermal power and, 199

natural gas combustion and, 241

vehicle, 172

Carbon monoxide, 145, 171, 172, 174

Cement, 5,28,32,94,95, 101

production, 123-127

Center for the Application of Science and Technology to Rural

Areas, 217, 221

Central African Republic, 245

Central America. See also specific countries

energy crops potential, 253

Oil imports, 26

CFCs, See Chlorofluorocarbons

CGIAR. See Consultative Group for International Agricultural

Research

Chad, 242

chemicals, 95, 101, 129-130

Chevron, 242

Chile, 214,244

China

agricultural residues, 248

agriculture, 103, 129, 138, 140-141

biogas, 219-222

capital cost constraints, 136

cement production, 125, 126

coal consumption and production, 10, 19, 25, 179, 231-232,

245-246,247

cogeneration, 197

electricity system, 187

energy consumption, 19, 23, 26-27, 32, 77

fluidized-bed combustion, 191-192

HVDC projects, 186

hydroelectric power, 190, 193-194,206

improving efficiency, 85, 135

industry, 22, 23, 91

irrigation, 138

nuclear power, 182, 195, 196

quality of life, 21-22

solar water heating, 60

space heating, 77, 78

steel production, 24, 117, 118, 121, 122, 123, 134

tractors, 140-141

transport, 155, 157-158, 159, 160, 161-163, 170

wind turbines, 202

Chlorofluorocarbons, 39

coal

clean, 190-191, 246-247

consumption and production, 10, 25, 179, 190, 231-232,

244-246

for electricity generation, 181, 191-193

environmental impact, 10, 11, 37, 190-191, 231, 245

and rail freight, 159

reserves, 244-245

Cogeneration, 197-198

Colombia, 60,244

Committee on Renewable Energy Commerce and Trade, 13,

263,280

Competitiveness, 4, 17,282-283,286

Compressed natural gas, 151, 174-175

Computer-Aided Exploration and Development, 237

Congo, 241

Consultative Group for International Agricultural Research, 271

Consumer goods

demand, 3,29,48, 100-101

energy for manufacture, 100

first cost, 8,50,67,81, 148

quality control, 131

Context of OTA study, 18-19

Conventional Energy Technical Assistance Project, 266

Conversion technologies. See also specific technologies or

energy sources

comparing, 180-181, 200-201, 209-211

improving efficiencies, 9-10, 183-190

Cooking, 23-24,47,50-60,214

Cooperative for American Relief Everywhere, 252

CORECT. See Committee on Renewable Energy Commerce and

Trade

Costa Rica, 136

Cote d’Ivoire, 186, 189,235

Crops for energy, 251-257

Debt, 3, 11,26,30,262,277-278

Deforestation, 4, 31,37,38,39,4042

Demand for energy

difficulties in meeting, 4,29-31, 181-182

factors increasing, 3,27-29,47-48, 179, 181

Developing countries

compared with industrialized countries, 21-22

defining, 21

developmental differences, 18,22

Diesel fuel

consumption, 155, 172

environmental impact, 145, 172

pricing, 148, 158, 164

Dominican Republic, 207, 210

Eastern Europe, 264,276,277

Economic development, 28,31-33

Ecuador, 60,241, 245

Egypt, 244,265,283

Electric motor drive systems. See Motor drive systems

Electric vehicles, 176
Index . 321

Electricity. See also specific production methods and power

sources

capital investment, 6-7, 48-49, 180, 186, 201, 208

cogeneration, 197-198

demand, 47-48, 181

efficiency improvements, 5-8, 182, 183-190

environmental issues, 189-190

generating system rehabilitation, 183-184

management improvements, 188-189, 273

options for new on-grid generation, 190-201

policy options, 182

private sector role, 275

rural electrification, 182, 201-212

system interconnections, 187-188, 189

system planning procedures, 188

transmission and distribution systems, 185-187

Electronic ballasts, 70, 71

Electronic equipment, 47,82-83

Employment, 11

Energy Conservation Services Project, 266

Energy Policy Development and Conservation Project, 266

Energy Sector Management Assistance Program, 265-269,284

Energy supply. See also specific energy sources

analytical framework, 19, 20

biases, 9

reliability, 11, 93, 180

sources, 10-11, 25-26, 179-180, 231-233

Energy use

analytical framework, 19-20

developing countries, 3-4, 17-19,26-27

patterns, 22-25

Environmental issues

benefits of energy supply technologies, 11

energy services and, 17, 37-42

environmental planning, 12-13

global, 4-5

policy issues and options, 261, 263,284-285

Environmental Protection Agency, 70

Equatorial Guinea, 235

ESMAP. See Energy Sector Management Assistance Program

Ethanol, 174, 175, 223-227, 255

Ethiopia, 164, 235, 245, 247, 249, 252

Export-Import Bank, 13,243, 263, 281

Export promotion, 32,33,279-280

Exxon, 242

Family planning, 285

FAO. See Food and Agriculture Organization

FBC. See Fluidized-bed combustion

FGD. See Flue gas desulfurization

Financial issues, 279-280. See also Capital investment; Debt;

Financial markets

Financial markets, 5, 17, 262

Finland, 111, 124

Flue gas desulfurization, 191

Fluidized-bed combustion, 9, 181, 191-192

Food and Agriculture Organization, 253

Forced outage rate, 184

Ford Motor Co., 131

Foreign Credit Insurance Association, 243

Forest management, 250-251

Formaldehyde, 174

France, 282

Freight transport

improving efficiencies, 156

modal shifts, 159-161

rail, 159

trucks, 156-159

Fuel cells, 200

Fuels, alternative, 171-176

Gabon, 235,241

Gas turbines, 9-10, 11, 12, 181-182

Gasoline, 145, 148, 155, 164, 172

GEF. See Global Environment Facility

General Motors, 164

Geothermal energy, 10, 198-199

Ghana, 188, 189

Global Environment Facility, 268,269,277, 285

Global warming, 5, 11, 17,37, 39-42

Greenhouse gases, 4, 17, 191

global climate changes, 39-42

transport systems and, 145, 172, 174, 175

Grid extension, 211-212

Guatemala, 60

Haiti, 245

Heating, 77-78

High voltage direct current, 186-187

H2S emissions, 199

Humanitarian issues, 4, 17, 283-284

HVDC. See High-voltage direct current

Hydrocarbons, 171

Hydroelectric power, 10, 37, 182, 193-194, 199,201

Hydrogen, 176

IAEA. See International Atomic Energy Agency

IFC. See International Finance Corporation

IGCC. See Integrated Gasification Combined Cycle systems

IIEC. See International Institute for Energy Conservation

Import duties, 148

Import substitution, 32

Imports, 25, 148, 180, 231,234

India

agricultural residues, 248

agriculture, 103, 137-138, 141

appliances, 72

biogas, 222

biomass, 254, 255

capital cost constraints, 136

cement production, 125, 133

coal consumption and production, 10, 19, 25, 179, 231-232,

245-246,247

cogeneration, 197-198

electricity system, 187, 217

energy consumption, 19, 23, 26-27

fluidized-bed combustion, 191-192

foreign trade, 282

gasifier-engine systems, 217,219,220

HVDC projects, 186-187

hydroelectric power, 190, 193

industry, 11, 22, 23, 180

irrigation, 137-138

lighting, 63,65-66

nuclear power, 194, 196
322 ● Fueling Development: Energy Technologies for Developing Countries

oil production, 234, 238

pricing, 134, 140

steel production, 24, 117, 118, 120, 121, 122, 123, 131

thermal efficiency, 183

tractors, 141

transport, 145,155,157,159,160, 161-163,165,169,170-171

water heating, 60

women’s role in rural areas, 36

Indonesia

biomass, 91

building efficiency standards, 135

capital cost constraints, 136

coal reserves, 244

energy consumption, 27

lighting, 69

oil development, 241

oil imports, 234

refrigerators, 73

steel production, 120

Industrial residues, 248-250

Industrialization, 32-33

Industry

barriers to efficiency, 132-134

energy use, 23, 24, 91

growth, 91

material usage, 130-132

modem, 94-103, 117-130

small scale, 91-94, 132-133

Infrastructure, 8,95, 117, 133, 148, 157, 158

Institutional issues, 11-12,30-31,261,274-276

Integrated Gasification Combined Cycle systems, 192-193

Integrated Resource Planning, 7-8,9, 13, 87-88, 188

Department of Energy, 274-275

promotion of, 262-263

Intergovernmental Panel on Climate Change, 40,41

International Atomic Energy Agency, 190

International Development Bank, 265,277

International Finance Corporation, 214

International Institute for Energy Conservation, 273

International Monetary Fund, 277

International Planned Parenthood Federation, 285

IPCC. See Intergovernmental Panel on Climate Change

Iraq, 1%

IRP. See Integrated Resource Planning

Irrigation, 137-140

Israel, 60

Italy, 282

Ivory Coast, 186, 189,235

Japan, 60, 118, 123, 124, 132,282

Just-in-time (JIT) inventory control, 132

Kenya

agriculture, 103, 136

biomass, 37

electricity system, 189

energy crops, 255

industry, 135

solar water heating, 60-61

thermal plant rehabilitation, 186

women’s role in rural economy, 36

Latin America. See also specific countries

agriculture, 141

AID assistance, 265

biomass, 247

energy consumption, 22

energy crops potential, 253

hydroelectric power, 190

industry, 103

microhydroelectric power, 206

oil exploration, 242

oil reserves, 234, 235

paper mill capacity, 132

residential use of energy, 48

transport energy use, 23

wind power potential, 202

Lawrence Berkeley Laboratory, 71,271

Liberia, 91

Lighting, 23,47,63-71,72

Liquefied natural gas, 175-176

Liquid fuels from biomass, 222-227

Los Alamos, 271

Madagascar, 235

Malawi, 36-37,242

Malaysia, 69,234, 241

Mali, 245

Material usage, 130-132

MDBs. See Multilateral development banks

Mechanical drive, 23, 24. See also Motor drive systems

Methane, 4, 10,41

Methanol, 151, 172-174,214, 222-223

Mexico

air conditioning, 79

automobile production, 163

coal reserves, 244

debt restructuring, 278

energy use, 26, 27

nuclear power, 194

oil reserves, 234, 235, 239

steel production, 120, 121, 122

transport, 167

Microhydroelectric power, 206-208

Middle East, 234

Mongolia, 203,244

Morocco, 202

Motor drive systems

adjustable speed drives, 107, 112-115

design, 104-107

energy use, 103-104

improving efficiency, 101, 117

motors, 107-108

pipes and ducts, 115-117

pumps and fans, 108-112, 138-140

systems, 117

test standards, 108

Mozambique, 235,242

Multilateral development banks, 262,263,264,285

activities of, 265-269

issues and options for the U. S., 12, 13, 14

technology transfer and, 269-279

Multilateral Investment Guarantee Agency, 243

Namibia, 235

National Renewable Energy Laboratory, 174,271
Index ● 323

National Rural Electric Cooperative Association, 190

Natural gas

compressed, 151, 174-175

environmental impact, 10, 11, 38, 241

liquefied, 175-176

production, 10, 190,240-241

reserves, 10, 235-236, 243

use in developing countries, 23, 25

Nepal, 247

Newly Industrializing Countries, 22. See also specific countries

Nigeria, 189,236,241,242

Nitrogen oxides, 4,9, 233,244

air pollution, 37, 39, 41

coal, 190, 191, 193

diesel vehicles, 145

gas turbines, 197

North Korea, 244, 245

Norway, 242

NRECA. See National Rural Electric Cooperative Association

Nuclear energy, 10, 11,37-38, 182, 194-196,201

Oak Ridge National Laboratory, 271

OECD. See Organization for Economic Cooperation and

Development

Ohio, 191

oil

consumption, 5, 17, 25, 37, 145, 155, 179, 232, 233-234

electricity generation, 190, 201

environmental impact of exploration, 236, 237

exploration and development, 10, 12, 234, 236-241

global markets, 3,5, 17

imports, 17, 25-26, 32, 148, 231, 234

institutional issues, 241-243

offshore production, 239-240

policy options, 243-244

refining, 182, 212-214

reserves, 10, 234-236

OPIC. See Overseas Private Investment Corporation

Organization for Economic Cooperation and Development, 28,

282-283

Overseas Private Investment Corporation, 13,243,263,281

Pakistan

agricultural residues, 248

AID assistance, 265,283

capital cost constraints, 136

electricity system interconnections, 189

foreign trade, 282

gas exploration, 244

generating system rehabilitation, 184

microhydroelectric power, 208

nuclear power, 194

Oil imports, 234

oil reserves, 235

reliability of supply, 11, 180

thermal efficiency, 183

Paper, 95, 101, 127-129, 132

Papua New Guinea, 62

Particulate, 172, 190, 244,246-247

Peace Corps, 258

Peru, 235

Philippines, 69, 125, 135, 194,217, 219, 234, 283

Photovoltaics, 10, 204-206, 207, 210, 211

Policy issues and options, 12-14,261-286

biomass, 183,258

electricity systems, 182

environment, 12-13, 284-285

humanitarian issues, 4, 17, 283-284

importance to Us., 4-5, 17

improving efficiency, 9, 269-279

industry, 134-136

Oil and gas, 243-244

programs for policy implementation, 263-269

residential and commercial energy use, 84-88

trade, 279-283

transport, 152-155

U.S. example, 285-286

U.S. policy framework, 263-264

Population control, 285

Population growth, 3,27-28, 36,38-39

Poverty. See Humanitarian issues

Pricing policies, 8,30

cost-plus pricing, 134

energy price reforms, 262-263, 276

subsidies, 29, 67, 84, 86, 140, 181, 261

Private sector role, 273,275-276

PROALCOOL (Brazilian Fuel Alcohol Program), 225

PROCEL (Brazilian National Electricity Conservation Program), 85, 135

Producer gas, 183,215-222

Public Utility Regulatory Policies Act, 197, 198,275

PURPA. See Public Utility Regulatory Policies Act

Quality control, 131-132

Quality of life, 21-22,33

Rail systems, 150, 151, 159-160, 168

Recycling, 130-131. See also Waste-to-energy technologies

Refrigeration, 29,47,71-77, 114,206

Reliability, 11,93, 180

Renewable Energy Applications and Training Project, 266

Royal Dutch/Shell, 242

Rural areas

economy of, 33-37

electrification, 182, 201-212

energy use, 11, 23, 24-25, 34-35

policy options, 283-284

traditional industries, 93

transport needs, 170

Sandia National Laboratory, 271

Scrubbers, 191

Senegal, 235

Short Rotation Intensive Culture crops, 252-253,257

Singapore, 69, 135, 151, 167

Small Business Administration, 13,263

Solar Energy Research Institute. See National Renewable

Energy Laboratory

Solar power

cooking, 58

thermal-electric technology, 200

water heating, 60-62

Somalia, 138,235,242

South Africa, 27, 120,244,245

South Korea

appliances, 74, 78, 83
324 ● Fueling Development: Energy Technologies for Developing Countries

automobiles, 163

building efficiency standards, 135

coal consumption, 231, 245

energy efficiency activities, 85

energy use, 27

industry, 91

nuclear power, 182, 194

quality of life, 21,22

steel production, 118, 120, 121, 122, 123

Southern California Edison, 114

Soviet Union, 234,244

Space conditioning, 47,77-82

Sri Lanka, 249,254

SRIC. See Short Rotation Intensive Culture crops

Steel, 24,28,94-102, 130

industry development, 32-33

industry importance, 117-123

Stoves, 24,56-60,61-62,64-65, 131

Subsidies, See Pricing policies

Sudan, 138, 235, 242

Sulfur dioxide, 9,37,39, 172, 233

biomass, 248

coal, 190, 191, 193, 244, 246

gas turbines, 197

Swaziland, 244

Sweden, 111, 191

Taiwan

appliance efficiency standards, 135

automobiles, 163

energy efficiency activities, 85

nuclear power, 182, 194

steel production, 33, 120, 121, 122

Tanzania, 126, 134, 189,235,247

Taxes and tax credits, 9,24, 136, 164,276

Technology transfer, 3,9, 13,261,263-279,282

Television, 29,82,83, 84

Thailand

air conditioning, 79, 81

automobiles, 161, 163

biomass, 91

building efficiency standards, 135

capital cost constraints, 136

energy crops, 255

energy use, 79

lighting, 69

microhydroelectric power, 208

Oil imports, 234

tractors, 140-141

Thermal efficiency, 183

Tied-aid, 282-283,284

Togo, 189

Toyota, 165

Trade and Development Program, 13, 263,279,281

Trade issues, 3,4, 17, 279-283

Traffic management, 151, 152, 167, 169

Training programs, 188-189, 190, 266,273-274

Transport. See also specific modes of transport

alternative fuels, 171-176

demand, 169, 176

in developing countries, 8, 23, 145, 155-156

environmental impact, 145, 172

freight; 156-161

improving efficiency, 8, 145-152, 156

land-use planning, 151, 167, 169, 176

nonmotorized, 151, 169-171

passenger, 161-169

policy options, 152-155

Trinidad and Tobago, 91,241

Trucks, 145, 156-159

Tunisia, 125,244

Turkey, 60, 125

Two- and three-wheelers, 165-166

United Kingdom, 194,242,282

United Nations, 13, 244,253, 263,273,285

United Nations Population Fund, 285

University of Pennsylvania, 190

Urbanization, 22, 28, 167, 169, 176

Uruguay, 136,283

U.S. and Foreign Commercial Service, 279

U.S. Department of Agriculture, 233

U.S. Department of Commerce, 281

U.S. Department of Energy, 71,232,233,252,258

information dissemination, 271,273

Integrated Resource Planning Program, 274

U.S. Export Council for Renewable Energy, 271

U.S. Trade Representative, 13,263,280-282

US/ECRE. See U.S. Export Council for Renewable Energy

United States and Foreign Commercial Service (US& FCS), 279

Utility planning, 188-189, 190

Vaccine refrigerators, 206

Venezuela, 12,22,27, 123,234,239

Ventilation, 78,79, 116-117

Volkswagen, 165

Volta River Authority, 188

Volvo, 164

Waste-to-energy technologies, 233,248-250,258

Water heating, 47,60-63

West Germany, 124,282

West Java, 250

Wind power, 10, 202-204, 210

Women

demand for appliances as women enter workforce, 29,48

role in rural labor, 35-36

World Bank, 4, 17, 186, 243, 274, 277. See also Multilateral

development banks

creation of Natural Gas Unit, 244

financing of preinvestment studies, 232-233

methanol export project, 214

World Energy Conference, 17,27,28,231,235

World Population Conference, 285

Zaire, 193

Zambia, 188

Zimbabwe, 188, 244