Week 1-2

Question 1

Systems thinking

Answer 1

A way of thinking about, and a language for describing and understanding, the forces and interrelationships that shape the behavior of systems.

Question 2

Energy

Answer 2

o Total volume or stock of energy available to do work
o Volume concept, denominated in Joules, Kwh
o Energy = Power * Time
o It’s energy if you can burn it
o Non-renewable resources are stock-limited

Question 3

Power

Answer 3

o Transformation of energy, rate of flow in the system
o Power = Energy/ Time
o MW, Joules/Second
o Device/ thing that transforms energy in power, e.g. engine, pipeline, NG well,
LNG terminal
o Renewable resources are flow-limited

Question 4

1st law of thermodynamics

Answer 4

law of conservation of energy, ins & outs must be the same in the end

Question 5

2nd law of thermodynamics

Answer 5

: “entropy” (Infogehalt) increases, energy flows form hot to col, losses accumulate
• As we transform energy, we occur losses. Only useful energy is lost, total energy cannot be lost (1st law)
•

Question 6

Systems

Answer 6

consist of stocks, flows and feedback loops (Rückkopplung)

Question 7

Feedback loop

Answer 7

o Communication mechanism btw stocks & flows, taking in data about the state of the system
o We transform energy, by incurring costs, to increase it in value (to do useful work). Ideally, you have to increase the value so much that the costs are less than the value, that’s called a feedback loop.
o Stabilizing and goal seeking: system that detects when stocks are too low, causes increases in inflows or decreases in outflows
o Reinforcing and runaway: causes a system that is out of balance to go further in that direction (positive feedback)
o Feedback loops only affect future behavior

In physical, exponentially growing systems, there must be at least 1 reinforcing loop driving the growth and at least 1 balancing loop constraining the growth, cause no physical system can grow forever.

Question 8

• Capital that matters in the energy system

Answer 8

o Human capital (labor)
o Financial capital
o Physical capital (infrastructure and all that goes along with it)
o Intellectual capital (knowledge and technology needed to innovate and create)
o Political (regulation, permits)
o Natural (energy resources, water, land, raw materials)

Question 9

Total energy use (E)

Answer 9

E= P * E/P

Question 10

Energy use per capita (E/P)

Answer 10

E= P* GDP/P * E/GDP

-> energy use per unit of income

Question 11

Energy Intensity

Answer 11

E/GDP

Question 12

Productivity of energy

Answer 12

GDP/E

Question 13

Stocks

Answer 13

o Foundation of any system, you can see, feel, count or measure at any given time
o Stocks change overtime through the actions of a flow (1st derivative)
o Stocks change slowly because flows take time to flow
o A stock can be increased by decreasing its outflow rate, as well as by increasing its inflow rate

Question 14

Flows

Answer 14

Infrastructure of the energy system. Actions/devices that change energy over time
Usually expressed as rate (Electricity/hour)

Question 15

Stabilizing/ goal seeking loop

Answer 15

keeps things in certain range (negative feedback)

Question 16

Reinforcing / runaway loop

Answer 16

pushes things to extremes (positive feedback)

Question 17

System purposes

Answer 17

Need not be human purposes and are not necessarily those intended by any single actor within the system

Question 18

• Resource Limits/constraints in the E system

Answer 18

o Oil stocks and reserves are unevenly distributed (highest in middle east) + not enough res.
• Energy security issues (the oil trade makes us dependent)
o All Coal is local + not enough atmosphere
• Its less mobile than liquid or gas fuels
o Natural gas reserves are concentrated + not enough resources
o Hydropower resources (best in mountains) + not enough sites
o Wind resources + not enough sites
• Location dependent (good on the coasts and in the upper plains)
o Biomass resources (location dependent- good in the upper mid-west) + Hydrogen is not a “source”, requires energy to produce it
o Geothermal potential: (better on west coast)
o Solar Resources- best in SW of US
• Ratio of useable solar to our energy needs: 7,000:1
o Fuel prices are rising and becoming more volatile (inconsistent)

Question 19

Value

Answer 19

o Value- Surplus = Price = Costs + Profits
o amount of benefit that the customer receives from the purchase or use of of a good/service. It is the highest at final consumption.

Question 20

Surplus

Answer 20

o what I am willing to pay over what the price is

Question 21

Fungible goods

Answer 21

Goods are only fungible if they are identical in
o WHAT - Type and Quality (wholesale vs. residential prices)
o WHERE – Location (transportation costs)
o WHEN – Point in Time
o HOW CERTAIN – Certainty of availability (subsidized vs. unsubsidized)
• Subsidies: Price= Costs + Profits – Subsidies

Question 22

Fully-loaded costs

Answer 22

o Internal costs should be fully baked in, not external costs
o Variances for future expectations must be accounted for in total costs somewhere
o Stranded costs: issue of fairness when system changes occur.
• Existing investments in infrastructure for the utility may become redundant in a competitive environment

Question 23

Stranded costs

Answer 23

When competitive markets are set up, certain assets may become uneconomic or no longer needed - > these asset are called stranded assets. The associated investments that are paid off over years (like debt) and these ongoing costs are called stranded costs.

Question 24

Subsidies

Answer 24

o lower the producer costs or consumer prices below the preexisting market level (usually lower production costs and increase activity levels)
o can be a volume constraint, min. standard, behavior constraint, policy constraint or support from market
o Hard to correct for or remove effect of subsidies because they already exist and are embedded in today’s architecture
o Price = Costs + Profits – Subsidy

Question 25

Transformation of Energy

Answer 25

has to create value: Exploration and discovery, production or harvesting, preparation, transport or storage, further processing, purification, and conversion, distribution, utilization, recovery, destruction, decontamination, or storage of by-products and waste.
o Transformations of Coal: Coal–fired Generators, Coal Conveyers, Mining Trucks, Rail Freight, Barges
o Transformations of Petroleum: Drilling rigs, Pipelines, Tankers, Ports, Canals, Refineries, Fueling Stations
o Transformations of Natural Gas: Pipelines, Distribution, LNG Terminals, Tankers, Burners, Underground Storage
o Transformations of Electricity: Generators, Transmission Lines, Transformers, Meters, Batteries, Devices
o Transformations of Biofuels: Harvesting Equipment, Crushers, Blenders, Delivery Tankers, Engines

Question 26

Infrastructure

Answer 26

literally, the connecting elements between two or more parts of transformations which can be measured by some rate of transformation or power rating.

Question 27

Forecasting

Answer 27

• A forecast usually asserts that both the model and the input assumptions are right, and therefore the output is expected to approximate future reality.

Question 28

Scenarios

Answer 28

• Scenarios have similar modeling techniques, but they are formulations of the work that suggests a model is sound, but the input assumptions are either uncertain or are presented for illustrative purposes.

Question 29

Auction

Answer 29

o Rules by which trade or exchange happens within a market

Question 30

Constraints

Answer 30

o In our system, constraints are perceived to come from what economists call scarcity

Question 31

Leverage Points

Answer 31

Because systems are interconnected, any point can be affected by many others. Not all of these will have an equal effect as the strength of the transformations may vary, particularly across a number of relationships or structural elements. Identifying where small efforts in one part of the system can create major change in other parts of the system allows for the observation of leverage points. 


Question 32

Root cause

Answer 32

When trying to explain the reason that certain observations occur, there are many levels on which that explanation can proceed. Sometimes there is an immediate reason, but that reason is usually motivated by other, deeper relationships in a system. An apt analogy is evaluating the symptoms versus the disease, and uncovering the underlying “root cause” of the observed phenomenon can be enabled using system dynamics. 


Question 33

Clearing Price

Answer 33

In an auction, bidders continue to bid prices until they are no longer willing to go higher, and then the winner is the one who bid the highest price and the bid becomes the clearing price.

Question 34

Costs

Answer 34

All expenses that a producer has to pay in order to deliver their good/service to market

Question 35

Primary Energy Production

Answer 35

Bringing the raw material into the supply chain

Question 36

Secondary energy carriers

Answer 36

Primary energy is converted through various devices into secondary carriers of electricity and fuel, which are further used to create motion, light or heat for vehicles and buildings.

Question 37

Non-linearities

Answer 37

Sometimes, dramatic change can occur but only after a while and in a non-linear way. Systems often exhibit the behavior of maintaining themselves until certain thresholds are reached and then system dynamics can radically alter the behavior to a very different mode. Observing and predicting these non-linearities reveals much about the system itself. 


Question 38

Dose-Response curve

Answer 38

o Comes from examination of non-linearities in the medical field.
o It tries to understand the amount of treatment or medicine provided to patient (the dose) and what kind of reaction that creates in the patient (the response)

Question 39

Cartel

Answer 39

o Intentional anticompetitive collusion
o They intentionally restrict output based on some allocation mechanism across the cartel members with the hopes of increasing prices and profits

Question 40

Market failure

Answer 40

Relate to:
o Problems with internal market structure, where the conditions of 1) free entry and exit or 2) all agents acting as price takers fail to occur
o Problems of external market scope, when markets fail to include all of the effects of the participant’s behavior within them or conversely fail to include all participants that re involved in the use or allocation of resources within a market.
o Problems of information, where information is either costly or unavailable to market participants, which can be compounded by agency relationships, where one person is expected to act on behalf of another person
o Problems of market design introduced by government policy and regulation, though well intentioned, can cause both intended and unintended consequences on market function
Examples:
o Natural monopoly: declining cost industry
o Public goods
o Pricing in externalities
o Vola and diversifiable uncertainty
o Costly info or transaction
o Correct for existing policy distortions

Question 41

Myopia

Answer 41

Form of nearsightedness, where things are up close are much more clear than things that are far away.

Question 42

Administrative burden

Answer 42

Many initiatives are measures by how much of the resource that is being applied goes to meet the intended goal of the policy and how much is used to administer the program.

Question 43

Market intervention

Answer 43

market participants trying to affect outcomes of the markets, in which they operate
Methods of intervention
o	Direct investment
o	Codes and Standards
o	Information Sharing and Education 
o	Lobbying
o	Associations

Question 44

Lifecycle Analysis (LCA)

Answer 44

Method for assessing the total cost of owning a facility (from acquiring the facility to owning it, to disposing of a building or building system)

Question 45

Market distortive

Answer 45

externalities that allow producers to escape the full costs or prevent them from recovering the full benefits of their actions.

Question 46

Engine

Answer 46

device transforming some form of power into movement

Question 47

Motor

Answer 47

converts electricity into other forms of power

Question 48

Generation

Answer 48

process of generating electric power from other sources of primary energy

Question 49

Transmission

Answer 49

Bulk transfer of electrical energy, from generating power plants to electrical substations located near demand centers

Question 50

Distribution

Answer 50

Final stage in the delivery of electric power. Carries electricity from the transmission system to individual consumers

Question 51

Unintended consequences

Answer 51

unexpected effects of well-intentioned policy interventions on market behavior

Question 52

Natural monopoly

Answer 52

industry/ service for which a single provider is economically efficient (e.g. electric grid)

Question 53

Value added

Answer 53

net profit generated from the production of energy related activities through the supply chain

Question 54

Value at risk

Answer 54

amount of income and asset value exposed to changes in energy prices in a firm or economy

Question 55

Dependance

Answer 55

% of national energy balance that comes from or is sold outside the energy orders of the country. E.g. Europe’s dependance on Russia

Question 56

Value metric

Answer 56

a metric of energy, such as R-value of energy = measure of thermal resistance

Question 57

Externalities (positive and negative)

Answer 57

costs and benefits that are not internalized in the transaction and price. Thus they accrue to other people than those involved in the transaction.