A focus on the technical efficiency of energy systems leads to a more careful analysis of the structure of the energy sector of an economy which devotes more attention to the complex conversion processes of energy flows and distinguishes between energy services and energy flows.
Energy enters an economy as primary energy E in the form of coal, crude oil, natural gas, uranium, hydropower, biomass and other energy resources.
The transformation system converts primary energy to energy for final consumption or end-use energy F in the form of coal products, gas, oil products, electricity and heat. Conversion and distribution losses are an indicator of the efficiency of the transformation system. The application system in households (appliances, cars) and industries (motors, heaters) converts end-use energy to useful energy U. Application losses are an indicator of the efficiency of the application system. Primary energy, end-use energy and useful energy are energy flows usually measured in thermal equivalents like joules, oil equivalents or coal equivalents. In Austria, for example, out of 100 units of primary energy only 72 are available as end-use energy and only about 40 serve as useful energy. The missing 60 energy units indicate the technical potential for improving the efficiency of the energy system. The ultimate aim of an energy system is to provide energy services S. These may be thermal services, such as providing a certain amount of heated space for residential use, mechanical services, like mobility of persons or commodities in a transport system, or chemical services in the production process of a chemical fibre.
Energy services cannot be measured as energy flows. Distinguishing between energy flows and energy services leads to a number of important conclusions.
• The relevant indicators to measure the contribution of the energy sector to economic wealth are energy services rather than energy flows. Energy flows are at best a proxy indicator of economic development.
• There is in most cases a wide range of possible substitutions between energy flows, capital and labour to provide the amount of energy services needed.
• Measures to promote energy efficiency should as far as possible be directed towards energy services rather than energy flows.
• The mix of energy flows and other factors of production to provide energy services depends in a market economy on the relative prices of energy flows and the other factors.
• Energy statistics, unfortunately, do not yet reflect this distinction between energy flows and energy services. It is rather difficult to obtain data on useful energy and even more difficult to obtain information about energy services.
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