Communications

construct for use in a long-term planning exercise? It was concluded that it is not and that long-run price elasticities may differ by a factor of between two and three from the value implied in the official forecasts. Making only a modest adjustment reduced energy demand in the year 2000 by 15% while raising the elasticity by a factor of just over two actually eliminated the growth in primary energy demand altogether.

Quite simply, then, there is the interesting prospect of a 'low energy future' that requires no active policy measures to bring it about. Nonetheless, it seems likely that an active policy would ensure the adjustment which it has been argued would come about through price changes.

One final word of caution. Like all prescriptions the one suggested here is not without dangers. It remains necessary to ask what happens if we are wrong. To that end the concept of ' insurance' technologies remains important, as does the retention of a skilled workforce which is able to respond to demand increases should they occur. Perhaps the general import is that there is far more flexibility in energy planning than has hitherto been thought to be the case for the next two decades. Thereafter one has to bear in mind that conservation, however brought about, has a 'once-for-all' characteristic. No doubt further conservation can and will occur beyond 2000 but at a decreasing rate. That places the onus on supply expansion in the period beyond 2000 and raises all the problems of how to sustain that supply capability before that period.

D avid Pearce Department of Political Economy

University of A berdeen Aberdeen, UK

The views expressed here are entirely the author's and must in no way be taken to reflect opinions in any government department with which the author may be associated. 1 Department of Energy, Energy Policy: A Consultative Document, Cmnd 7101, HMSO, London, 1978. 2 Energy Commission, Working Document on Energy Policy, Energy Commission Paper No 1, Department of Energy, London, 1977. 3 Energy Commission, Energy Forecasts:

A Note by the Department of Energy, Energy Commission Paper No 5, Department of Energy, London, 1978. 4 Depa r tmen t of Energy, Energy Forecasting Methodology, Energy Paper No 29, HMSO, London, 1978. s D e p a r t m e n t of Energy, Energy Projections 1979, Department of Energy, London, October 1979. 6 Department of Energy, op cit, Ref 4. 7 The energy coefficient is defined as

e = ~ E / AGDPGDP

ie it is the elasticity of energy demand with respect to GDP. 8 The 'policy gap' is the new name for the previous 'energy gap', the latter terminology being abandoned when it was recognized that, ex post, supply must equal demand. 9 Department of Energy, op cit, Ref 4. lo Department of Energy, Report of the Working Group on Energy Elasticities, Energy Paper No 17, HMSO, London, 1977. Work by Michael Common at the University of Stirling suggests that this v iew is, in any event, incorrect. 11 For the Department of Energy v iew see

Department of Energy, op cit, Ref 4, paras 20-22. Note also that before the 1979 revisions to the forecasts, the average energy coefficient over 1960-73 was a surprisingly good estimator. 12The equation omits any negative feedback between energy prices and GDP which some commentators regard as important. See for example L.G. Brookes, 'Energy policy, the energy price fallacy and the role of nuclear energy in the UK', Energy Policy, Vol 6, No 2, June 1978, pp 94-106. However, Pindyck has suggested a model for measuring energy price impacts and shows that they cannot exceed the percentage share of energy expenditure in GDP. Using Pindyck's model my own calculations indicate a negligible impact on GDP of the Department of Energy's assumed energy price rises. See R.S. Pindyck, The Structure of World Energy Demand, MIT Press, Cambridge, MA, 1979. 13 R.S. Pindyck, op cit, Ref 12, p 118. 14 Ibid, p 160 (for residential demand), p 181 (for the industrial demand estimate) and p 232 (for the transport estimate). 15 N.D. Uri, 'Energy substitution in the UK, 1948-64' , Energy Economics, Vol 1, No 4, October 1979, pp 241-244.

Renewable energy sources for Egypt On the basis of present consump t i on pa t te rns and reserve est imates, Se l im Estefan predicts tha t Egypt and o ther deve lop ing count r ies wi l l face severe fossil fuel supp ly p rob lems unless they invest n o w in rapid d e v e l o p m e n t of r enewab le sources. He ou t l ines some of the Egypt ian renewab le energy pro jects cur rent ly u n d e r w a y or be ing studied, and argues tha t the i m m e d i a t e exp lo i ta t ion of ind igenous renewab le sources is bo th econom ica l l y feasib le and can be ach ieved w i t h ex is t ing techno logy .

Total world reserves of oil are estimated at 500 billion (109) bbl, and world consumption of oil is 20 billion bbl/year, t Even at a constant rate of consumption, this oil reserve could last only 25 years. However, world consumption is increasing and the effect of this exponential growth is striking. There is one inevitable conclusion: if present trends continue the world will face severe oil supply problems sometime around the end of the century. The rivalry of the USA and the USSR over the world's remaining oil reserves could result in military conflict in the Middle East, the vital and chief source of energy for the Western World and the centre of the world's most intense ethnic conflicts.

The development of renewable sources is urgently required. 2 A new

UN agency is required to initiate an in ternat ional emergency energy programme. The aim of this programme should be to develop new supplies of reasonably priced energy using state of the art technology. The technology must also be compatible with the existing infrastructure.

Prospects for Egypt

The consumption of fossil fuel in Egypt has increased considerably in the period 1952-77 and is likely to continue to grow in the future (see Table 1). Therefore Egypt, like many other developing countries, urgently requires the development of domestic energy sources, principally based upon simple technology. Renewable energy systems could be deployed on a massive scale at

248 ENERGY POLICY September 1980

relatively low cost and with minimal risks. Egypt's present technological infrastructure is based upon local fluid fuels and clean gaseous fuels suitable for use on a small scale with minimal pollution levels. But such fuels may be in short supply in the future if unconventional sources such as biomass are not used. Increased coal use can cause serious environmental problems through the associated rise in carbon monoxide and sulphur dioxide levels. In the long term, the most desirable sources for Egypt would appear to be: solar energy; wind energy; hydropower; ocean thermal energy conversion (OTEC); and geothermal sources. These have relatively minor environmental problems and may be deployed as follows:

• Solar energy may be used for heating, for cooling, and for operating solar thermal electric plants. 3

• Wind power can be used for pumping and for generation of electricity. 4,5

• Water power can be used for electricity generation and on farms.

• OTEC plants may be used for desalting sea water, for generating electric power, and for the electrochemical production of synthetic fluid fuels, such as methanol and hydrogen, from sea water. 6

• Geothermal steam can be used to operate electric power plants. 7

Egypt should minimize its use of fossil fuel and maximize its use of solar energy. A moral decision must be made to the effect that coal and oil are used only for the manufacture of chemicals and never as fuel.

A side effect of providing 'clean' energy would be to create more employment. Furthermore, an energy surplus can be regarded as an investment because it provides for future generations a society which can be self-sustaining. With existing technology, and nothing new, many of the technical and economic problems of developing countries can be solved.

Solar and wind energy

Otto Smith, during his meeting with President Sadat in late June 1978

discussed the possibility of installing multimodular solar thermal electric plants in the Egyptian Western Desert to provide electric power for reclamation and development of desert land. s Another potentially fruitful project has also been planned for the design of wind turbines along the Egyptian Mediterranean shore to provide the surplus electric power required for mechanization of Egyptian farms. A government spokesman said negotiations were concerned with a provisional settlement with the US Agency for International Development to help finance preconstruction activities such as feasibility studies and engineering design.

OTEC and geothermal

OTEC plants produce power and fresh water by using heat engines to harness the small thermal difference between the sun-heated surface of tropical seas and the colder deep water. 9 With a temperature difference of 20°C between surface and deep layers (usually 500 to 1 000m depth), power can be generated together with desalinated water. With a temperature difference of only 10-15°C, desalination can take place but no power generation. OTEC plants can also be used to produce ammonia, hydrogen and methanol as well as industrial products such as aluminium and fertilizers.

Many Arab countries are in urgent need of OTEC plants. Prefeasibility studies are being initiated in Egypt on the installation of open cycle OTEC plants along the Egyptian Red Sea shore and at Sinai ~° to provide such arid areas with plenty of fresh water and electric power. The hot concentrated effluent brine from sea water conversion in OTEC plants may be collected in solar evaporation ponds H to be further processed for the recovery of valuable marine chemicals. '2 In this way, a heavy chemicals industry could be set up in Egypt to meet increasing demand.

Although the quantity of energy which flows to the surface of the earth from deep within it is small compared to the solar influx, it is available in the form of steam in a few places, but hot water is much more common. Electric power plants operating on geothermal steam have been operating in some areas

Communications

Table 1. Egyptian fossil fuel consumption.

Fossil fuel Annual consumption (103 tonnes)

1952 1977 2000 Natural gas 34 250 Petrol 252 820 Fuel oil 700 4 000 Petroleum 9 000 50 000

for more than a decade. Recently a plant using hot water was built by the Magma Energy Corporation. This plant was built at a cost of only $500/kW, just one- third of the cost of a nuclear power plant, despite the fact that it is much smaller than any commercial reactor and has no nuclear-related risks. 13

It seems quite feasible to operate an electric power plant by using the geothermal hot water at Ain Sokhona near the Suez Canal. In this way, cheap electric power will soon be available at Sinai.

Fuels from wastes and biomass

The wastes produced by agriculture, forestry and towns could contribute a significant fraction of Egypt's energy needs in the next few years. These wastes can be fermented by solar photosynthesis to obtain methane. In the People's Republic of China small methane fermentation tanks are in widespread use, and they seem to be very successful.

Intensive investigations have now started in Egypt on the installation of large-scale fermentation systems to produce methane from municipal and agricultural wastes. After fermentation a carboniferous residue is left, which is high in carbon and low in hydrogen.

This carboniferous residue may be further processed into methanol by partial combustion and hydrogenation. The alcohol so produced is an ideal fluid fuel for running cars. Brazil has an active programme underway to replace petrol with ethanol produced from sugar and starch feedstocks. It would however be more profitable in developing countries to use inedible plant matter, such as lumbering wastes, bagasse and weeds, and these possibilities should be examined in the Egyptian case.

Biomass may contribute significantly in Egypt: perhaps 10% of its oil needs.

E N E R G Y P O L I C Y September 1 9 8 0 2 4 9

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The use of biomass in place of coal as a feedstock for fluid fuel production does not have some of the problems associated with coal useJ 4 Unlike coal, biomass does not produce large quantities of toxic vapours upon combustion. Moreover, the ashes or sludge left by combustion or fermentation of biomass do not cause disposal problems since they can be used as fertilizers for poor and desert land.

Conclusions

A renewable energy programme based on the technologies described above should be able to provide Egypt with large and reliable supplies of 'clean' energy at no more than the cost of conventional fossil fuel resources, and in forms which are compatible with Egypt's existing energy infrastructure. Such sources can also ensure the solution of the waste disposal and the environmental pollution problems which exist in Egypt and other developing countries.

Selim F. Estefan National Research Centre

Cairo, Egypt

E. Beniot and D.F. Mayer, An Emergency Energy Program, Technical Report, US

Department of Energy, Washington, DC, 1978. z N. Milleron, 'Large-scale energy sources, Chemical and Engineering News, 2 August 1976, p 3. 30.J.M. Smith, 'Near term solar electricity', Solarcon Times, 19 August 1977, p 7. 40.J.M. Smith, 'Sow wind turbines and reap the wind', paper to International Symposium Workshop on Solar Energy, 16-22 June 1978, Cairo, Egypt. S D. Lieu, 'A windmil l for residential electricity', California Engineer, Vol LV, No 2, April 1977, p 7. 6A.D.K. Laird and B. Beorse, private communication, Sea Water Conversion Laboratory, University of California, Berkeley, USA, and Beniot and Mayer, op cit, Ref 1.

Beniot and Mayer, op cit, Ref 1. 80.J.M. Smith, private communication, Electrical Engineering Department , University of California, Berkeley, USA, and Smith, op cit, Ref 3. 9 Laird and Beorse, op cit, Ref 6. 10 S.F. Estefan, 'The thermal energy of sea water as an inexhaustible source of power and fresh water along the Egyptian Red Sea shore', Journal of the Islamic Banks, No 3, September 1978, p 58 (in Arabic). ~1 S.F. Estefan, 'Modell ing of solar evaporation pond systems', Karl und Steinsalz, Vol 7, No 10, 1979, p415 . 12 S.F. Estefan, 'Minerals recovery from Egyptian salines', Materials and Society, Vol 3, No 3, 1979, p 281 and S.F. Estefan, 'New Egyptian resources of potable water and marine chemicals', Chemistry andlndustry, 7 February 1976. 13 Beniot and Mayer, op cit, Ref 1. 14 C.C. Burwell, 'Solar biomass energy', Science, 10 March 1978.

Letters to the editor Nuclear capital cost escalation Dr K.R. S h a w argued in the December 1 9 7 9 issue of Energy Policy, tha t nuc lear p o w e r was l ikely to become uncompe t i t i ve w i t h coal if cur rent cost esca la t ion t rends con t inued. He ci ted cost esca la t ion in the Wes t German nuc lear p r o g r a m m e as ev idence. Here Professor U. Hansen d isputes tha t nuc lear p o w e r is l ikely to be more expens ive than coal in the German case. This is f o l l o w e d by a reply f rom Dr Shaw.

In his article, 1 Dr Shaw reports that the economic choice between nuclear and fossil energy is still an issue in Germany. This certainly was an issue back in 1977, when the discussion was prompted on the one hand by the rises in capital costs of nuclear power plants and on the other by the coal industry's fear of losing out in the electricity market. In the meantime the issue has been resolved. Three major studies

published between 1977 and 1979 clearly demonstrate the economic

advantages of nuclear electricity generation over coal for baseload operation. 2 The political emphasis on the highest possible utilization of domestic energy resources, as well as delays in the nuclear construction programme, have led to agreements between the coal industry and the utilities to increase the amount of coal fired in power stations in Germany.

The capital costs of nuclear power plants are not unique in rising faster than inflation - so have the costs of other things, like oil for instance, or coal for that matter. There is, however, a very important difference to note. The contract price in the tenders for large PWRs have in Germany increased by nearly 8% per year in real terms during the period 1975 to 1979, but when construction has started on a particular station, the increases have been more modest, and once finished, the increases are nil. In comparison, a fossil fired station, although having also experienced cost increases over the years, will then just start to feel the impact of inflation. The costs of fuel, the single largest item in the generating costs, will, if past experience is anything to go by, continue to become more expensive year by year for the whole of the operating lifetime of the station.

To illustrate these effects, I would like to quote some figures from our study on generating costs2 A PWR starting operation in 1980 will have involved an investment in excess of 2 000 DM/kWe, whereas the figure for a coal fired station with flue gas scrubbers (50% volume flow) is in the range 1 300 to 1 400 DM/kWe. The' costs of constructing new stations scheduled for service in the mid-1980s will naturally be higher. Assuming capital charges of 14.5% per year, fuel costs of $45/1bU308 and 200 DM/tce the generating costs for baseload operation, 7000 hours/year, work out at 7.5 Pf/kWh for the nuclear and 10.8 Pf/kWh for the coal fired station, see

Table 1. Electricity generating costs in Pf/kWh for the first year of operation and levelized over the operating lifetime of 25 years, assuming 6% per year inflation rate.

7 000 hours/year 5 000 hours/year 3 000 hours/year First year Levelized First year Levelized First year Levelized

Nuclear 7.5 9.4 9.7 12.8 14.9 17.5 Coal 10.8 17.9 12.5 20.0 16.3 24.7

2 5 0 E N E R G Y P O L I C Y S e p t e m b e r 1 9 8 0