Energy planning, sustainability, renewable energy, portfolio, systems approach
Adequate energy supply has become one of the vital components of human development and economic growth of nations. In fact, major components of the global economy such as transportation services, communications, industrial processes, and construction activities are dependent on adequate energy resources. Even mining and extraction of energy resources, including harnessing the forces of nature to produce energy, are dependent on accessibility of sufficient energy in the appropriate form at the desired location. Therefore, energy resource planning and management to provide appropriate energy in terms of both quantity and quality has become a priority at the global level. The increasing demand for energy due to growing population, higher living standards, and economic development magnifies the importance of reliable energy plans. In addition, the uneven distribution of traditional fossil fuel energy sources on the Earth and the resulting political and economic interactions are other sources of complexity within energy planning. The competition over fossil fuels that exists due to gradual depletion of such sources and the tremendous thirst of current global economic operations for these sources, as well as the sensitivity of fossil fuel supplies and prices to global conditions, all add to the complexity of effective energy planning. In addition to diversification of fossil fuel supply sources as a means of increasing national energy security, many governments are investing in non-fossil fuels, especially renewable energy sources, to combat the risks associated with adequate energy supply. Moreover, increasing the number of energy sources also adds further complication to energy planning. Global warming, resulting from concentration of greenhouse gas emissions in the atmosphere, influences energy infrastructure investments and operations management as a result of international treaty iv obligations and other regulations requiring that emissions be cut to sustainable levels. Burning fossil fuel, as one of the substantial driving factors of global warming and energy insecurity, is mostly impacted by such policies, pushing forward the implementation of renewable energy polices. Thus, modern energy portfolios comprise a mix of renewable energy sources and fossil fuels, with an increasing share of renewables over time. Many governments have been setting renewable energy targets that mandate increasing energy production from such sources over time. Reliance on renewable energy sources certainly helps with reduction of greenhouse gas emissions while improving national energy security. However, the growing implementation of renewable energy has some limitations. Such energy technologies are not always as cheap as fossil fuel sources, mostly due to immaturity of these energy sources in most locations as well as high prices of the materials and equipment to harness the forces of nature and transform them to usable energy. In addition, despite the fact that renewable energy sources are traditionally considered to be environmentally friendly, compared to fossil fuels, they sometimes require more natural resources such as water and land to operate and produce energy. Hence, the massive production of energy from these sources may lead to water shortage, land use change, increasing food prices, and insecurity of water supplies. In other words, the energy production from renewables might be a solution to reduce greenhouse gas emissions, but it might become a source of other problems such as scarcity of natural resources. The fact that future energy mix will rely more on renewable sources is undeniable, mostly due to depletion of fossil fuel sources over time. However, the aforementioned limitations pose a challenge to general policies that encourage immediate substitution of fossil fuels with renewables to battle climate change. In fact, such limitations should be taken into account in v developing reliable energy policies that seek adequate energy supply with minimal secondary effects. Traditional energy policies have been suggesting the expansion of least cost energy options, which were mostly fossil fuels. Such sources used to be considered riskless energy options with low volatility in the absence of competitive energy markets in which various energy technologies are competing over larger market shares. Evolution of renewable energy technologies, however, complicated energy planning due to emerging risks that emanated mostly from high price volatility. Hence, energy planning began to be seen as investment problems in which the costs of energy portfolio were minimized while attempting to manage associated price risks. So, energy policies continued to rely on risky fossil fuel options and small shares of renewables with the primary goal to reduce generation costs. With emerging symptoms of climate change and the resulting consequences, the new policies accounted for the costs of carbon emissions control in addition to other costs. Such policies also encouraged the increased use of renewable energy sources. Emissions control cost is not an appropriate measure of damages because these costs are substantially less than the economic damages resulting from emissions. In addition, the effects of such policies on natural resources such as water and land is not directly taken into account. However, sustainable energy policies should be able to capture such complexities, risks, and tradeoffs within energy planning. Therefore, there is a need for adequate supply of energy while addressing issues such as global warming, energy security, economy, and environmental impacts of energy production processes. The effort in this study is to develop an energy portfolio assessment model to address the aforementioned concerns. vi This research utilized energy performance data, gathered from extensive review of articles and governmental institution reports. The energy performance values, namely carbon footprint, water footprint, land footprint, and cost of energy production were carefully selected in order to have the same basis for comparison purposes. If needed, adjustment factors were applied. In addition, the Energy Information Administration (EIA) energy projection scenarios were selected as the basis for estimating the share of the energy sources over the years until 2035. Furthermore, the resource availability in different states within the U.S. was obtained from publicly available governmental institutions that provide such statistics. Specifically, the carbon emissions magnitudes (metric tons per capita) for different states were extracted from EIA databases, states’ freshwater withdrawals (cubic meters per capita) were found from USGS databases, states’ land availability values (square kilometers) were obtained from the U.S. Census Bureau, and economic resource availability (GDP per capita) for different states were acquired from the Bureau of Economic Analysis. In this study, first, the impacts of energy production processes on global freshwater resources are investigated based on different energy projection scenarios. Considering the need for investing on energy sources with minimum environmental impacts while securing maximum efficiency, a systems approach is adopted to quantify the resource use efficiency of energy sources under sustainability indicators. The sensitivity and robustness of the resource use efficiency scores are then investigated versus existing energy performance uncertainties and varying resource availability conditions. The resource use efficiency of the energy sources is then regionalized for different resource limitation conditions in states within the U.S. Finally, a sustainable energy planning framework is developed based on Modern Portfolio Theory (MPT) vii and Post-Modern Portfolio Theory (PMPT) with consideration of the resource use efficiency measures and associated efficiency risks. In the energy-water nexus investigation, the energy sources are categorized into 10 major groups with distinct water footprint magnitudes and associated uncertainties. The global water footprint of energy production processes are then estimated for different EIA energy mix scenarios over the 2012-2035 period. The outcomes indicate that the water footprint of energy production increases by almost 50% depending on the scenario. In fact, growing energy production is not the only reason for increasing the energy related water footprint. Increasing the share of water intensive energy sources in the future energy mix is another driver of increasing global water footprint of energy in the future. The results of the energies’ water footprint analysis demonstrate the need for a policy to reduce the water use of energy generation. Furthermore, the outcomes highlight the importance of considering the secondary impacts of energy production processes besides their carbon footprint and costs. The results also have policy implications for future energy investments in order to increase the water use efficiency of energy sources per unit of energy production, especially those with significant water footprint such as hydropower and biofuels. In the next step, substantial efforts have been dedicated to evaluating the efficiency of different energy sources from resource use perspective. For this purpose, a system of systems approach is adopted to measure the resource use efficiency of energy sources in the presence of trade-offs between independent yet interacting systems (climate, water, land, economy). Hence, a stochastic multi-criteria decision making (MCDM) framework is developed to compute the resource use efficiency scores for four sustainability assessment criteria, namely carbon viii footprint, water footprint, land footprint, and cost of energy production considering existing performance uncertainties. The energy sources’ performances under aforementioned sustainability criteria are represented in ranges due to uncertainties that exist because of technological and regional variations. Such uncertainties are captured by the model based on Monte-Carlo selection of random values and are translated into stochastic resource use efficiency scores. As the notion of optimality is not unique, five MCDM methods are exploited in the model to counterbalance the bias toward definition of optimality. This analysis is performed under “no resource limitation” conditions to highlight the quality of different energy sources from a resource use perspective. The resource use efficiency is defined as a dimensionless number in scale of 0-100, with greater numbers representing a higher efficiency. The outcomes of this analysis indicate that despite increasing popularity, not all renewable energy sources are more resource use efficient than non-renewable sources. This is especially true for biofuels and different types of ethanol that demonstrate lower resource use efficiency scores compared to natural gas and nuclear energy. It is found that geothermal energy and biomass energy from miscanthus are the most and least resource use efficient energy alternatives based on the performance data available in the literature. The analysis also shows that none of the energy sources are strictly dominant or strictly dominated by other energy sources. Following the resource use efficiency analysis, sensitivity and robustness analyses are performed to determine the impacts of resource limitations and existing performance uncertainties on resource use efficiency, respectively. Sensitivity analysis indicates that geothermal energy and ethanol from sugarcane have the lowest and highest resource use efficiency sensitivity, respectively. Also, it is found that from a resource use perspective, ix concentrated solar power (CSP) and hydropower are respectively the most and least robust energy options with respect to the existing performance uncertainties in the literature. In addition to resource use efficiency analysis, sensitivity analysis and robustness analysis, of energy sources, this study also investigates the scheme of the energy production mix within a specific region with certain characteristics, resource limitations, and availabilities. In fact, different energy sources, especially renewables, vary in demand for natural resources (such as water and land), environmental impacts, geographic requirements, and type of infrastructure required for energy production. In fact, the efficiency of energy sources from a resource use perspective is dependent upon regional specifications, so the energy portfolio varies for different regions due to varying resource availability conditions. Hence, the resource use efficiency scores of different energy technologies are calculated based on the aforementioned sustainability criteria and regional resource availability and limitation conditions (emissions, water resources, land, and GDP) within different U.S. states, regardless of the feasibility of energy alternatives in each state. Sustainability measures are given varying weights based on the emissions cap, available economic resources, land, and water resources in each state, upon which the resource use efficiency of energy sources is calculated by utilizing the system of systems framework developed in the previous step. Efficiency scores are graphically illustrated on GIS-based maps for different states and different energy sources. The results indicate that for some states, fossil fuels such as coal and natural gas are as efficient as renewables like wind and solar energy technologies from resource use perspective. In other words, energy sources’ resource use efficiency is significantly sensitive to available resources and limitations in a certain location. x Moreover, energy portfolio development models have been created in order to determine the share of different energy sources of total energy production, in order to meet energy demand, maintain energy security, and address climate change with the least possible adverse impacts on the environment. In fact, the traditional “least cost” energy portfolios are outdated and should be replaced with “most efficient” ones that are not only cost-effective, but also environmentally friendly. Hence, the calculated resource use efficiency scores and associated statistical analysis outcomes for a range of renewable and nonrenewable energy sources are fed into a portfolio selection framework to choose the appropriate energy mixes associated with the risk attitudes of decision makers. For this purpose, Modern Portfolio Theory (MPT) and Post-Modern Portfolio Theory (PMPT) are both employed to illustrate how different interpretations of “risk of return” yield different energy portfolios. The results indicate that 2012 energy mix and projected world’s 2035 energy portfolio are not sustainable in terms of resource use efficiency and could be substituted with more reliable, more effective portfolios that address energy security and global warming with minimal environmental and economic impacts.
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Doctor of Philosophy (Ph.D.)
College of Engineering and Computer Science
Civil, Environmental, and Construction Engineering
Length of Campus-only Access
Doctoral Dissertation (Open Access)
Dissertations, Academic -- Engineering and Computer Science, Engineering and Computer Science -- Dissertations, Academic
Hadian, Saeed, "A Systems Approach To Sustainable Energy Portfolio Development" (2013). Electronic Theses and Dissertations. 2938.