Chapter 1
Introduction
Technology provides the means for modifying the natural environment for human purposes providing basic requirements like shelter, food, warmth, as well as communications, transport and a range of consumer products and services. All of these activities have some impact on the environment. Energy resources are an obvious example of limited resources whose use can have major impacts. Energy use is now central to most human activities and many of the environmental problems could be described in terms of energy-getting and energy-using technologies. The most obvious environmental impacts are the physical impacts of mining for coal and drilling for oil and gas, and distributing the resultant fuels to the point of use. However, increasingly it is the use of these fuels that presents the major problems ( 2003).Burning these fuels in power stations to generate electricity, or in homes to provide heat, or in car engines to provide transport, generates a range of harmful gases and other wastes, and also, inevitably, generates carbon dioxide, a gas which is thought to play a key role in the greenhouse global warming effect. The pattern of energy production has undergone some significant changes in recent years, particularly in relation to electricity generation in some of the industrialized countries, with gas beginning to replace coal (2003). Electricity like other energy resources has become important resources for man. The production of such resource can have varying effects to the environment. That is why governments devise means to monitor the consumption of electricity and other energy resources. This study will focus on the different methods for forecasting electricity consumption.
Problem Statement
Like other countries, Hong Kong has raised its concern for the consumption of electricity. The concern of Hong Kong leads to the need to know methods to identify the electric consumption. This paper will determine different methods for forecasting electricity consumption in different markets such as commercial, industrial, residential, export, street light and etc. This paper will study different model features for forecasting electricity consumption and then choose some suitable models for implementation of forecasting electricity consumption.
Research Questions
In order to complete the goals of this particular academic activity as well as to set the objectives of the study, the following research questions will be presented and discussed in the entirety of the research paper focusing on the study the different methods to measure electricity consumption. Such information can be acquired through answering the following questions:
Objectives of the study
The research questions referred to the information that the researcher intended to question while the objectives will focus on the problems that should be clarified in order to gather the intended information. The aims and objectives of the study include
Importance of the Study
The study is important to Hong Kong and other nations since they can compare the methods to measure electricity consumption and how they respond to changing electricity consumption in their countries. This study can provide to the government of Hong Kong and other nations, the ability to gauge how useful the methods to measure electricity consumption are. With the establishment of the goals given, this study may also be of importance to the goals that have been set. By fulfilling the aims that were stated in the objectives section, this study will be helpful for other researchers who may be focusing on unique means of measuring electricity consumption. The data that will be gathered will be helpful for researchers in establishing related studies that will help in determining the best method to use The notable significance of this study is the possibility that other researchers may be able to use the findings in this study for future studies that will create a huge impact in society. This study’s findings can be used for other findings that might prove to be helpful in introducing the change the world needs. The research and analysis methods that this study will use need to be credible because it will help researchers in knowing how to look for particular information and then know how to analyze them. It is through this that researchers will then be able to find out how they will be able to focus on their investigation on a particular instance and also know the possible methods that they may choose in the possible time that they may choose to conduct another study. Thus, another significance of this study is to serve as a guide for researches that focus on the analysis of a country’s venture into strategies that will help it maintain its dignity, image and global competitiveness.
Structure of dissertation
There are different chapters for this project. Each chapter has a different focus for a specific course of action that will benefit the study. The different chapters will contribute to the success of the study and it can be used as a starting point for further studies. The first chapter was the introduction part wherein general ideas and goals of the study were discussed. The second chapter will be the literature review part. The second chapter used various resources to gather necessary data. This data have a relation to the goal of the paper which is to study the different means to measure electricity consumption in Hong Kong. The literatures presented will come from books and other sources that are deemed to be helpful in the advancement of awareness concerning the subject. The third chapter will focus on discussing the instruments and methods used for the study to be a success. The fourth chapter will focus on the presentation of demographic data, the ideas of the respondents, and analysis of data. The fifth chapter will demonstrate how the results from the researches link to the literature review results. The last chapter will focus on discussing the Summary of the data acquired, Conclusions and Recommendations.
Chapter 2
Literature Review
Hong Kong
Hong Kong remains wrapped in an enigma. Its intermediaries of capital, who include traders, financiers, and corporate managers, have made Hong Kong the pivot of decision-making about the exchange of capital within Asia and between that region and the rest of the world (2000). Yet, for 150 years, this tiny island and adjacent peninsula could not even lay claim to status as a city-state. When Britain declared sovereignty over Hong Kong in 1841, after taking it from China under the terms of the Treaty of Nanking that settled the Opium War, the government and merchants had to build a town. The British viewed Hong Kong as their emporium of trade in the Far East, but they did not aspire to transform it into a commercial-military power. The impetus for Hong Kong’s return to China rested in the ticking clock of an obscure treaty from 1898 when Britain acquired the New Territories; the lease terminated on July 1, 1997 ( 2000).Hong Kong has survived the challenge of the 1997 Handover from British to Mainland Chinese control and the economic reversal caused by the unrelated events of the Asian financial downturn and the September 11 disaster. Although the latter has had more impact on the lives of everyday people, the Handover was a cause for a certain amount of nervousness about the future with concerns raised about change to civil, administrative and economic freedoms. The passing of colonialism has allowed some examination of Hong Kong cultural identity in government programs and through other venues, but much of the focus has been on maintaining its economic advantage in the region as the economy has slowed in growth (2004).
Moreover, the tourism market appeal of Hong Kong as a brand changed after the Handover, causing some disappointment among economic forecasters and tourism authorities. A number of aggressive new marketing strategies have been adopted, which present an artificial summary of its cultural identity, race relations and attitudes to colonialism (2004). Hong Kong is one of the two special administrative regions belonging to China. Hong Kong over the years has developed into a leading financial theater through the economic changes it made in the region. The defense of Hong Kong’s territory and foreign affairs lies on the Central people’s government but its internal issues and problems is managed by the government it has created. Hong Kong is on the continuous path for improvement. Hong Kong has created changes on some of its landmarks and physical features this contributed to the state becoming a tourist destination. Being a tourist destination means more consumption of electricity.
Hong Kong Economy
On the question of the economic situation there is greater cause for concern, and there is the distinct possibility that here the pessimists are gaining the upper hand, at least in the short term. There can be no question that Hong Kong’s economy has carried hidden structural weaknesses for some time, and that these are now being exposed. Hong Kong has lost virtually its entire manufacturing base to China, and there is little doubt that this pattern will continue into the future given the mainland’s comparative advantage in land and labor factor costs (2000). Externally, the position of the pessimists also seems to be gaining ground. The large re-export component of the Hong Kong economy is highly vulnerable to external developments. The improvements in the standard of professionalism of Chinese producers make it less necessary to ship goods initially to Hong Kong, for quality inspection, packaging and overseas transportation, on the way to their final destination. It is reasonable to assume that the lucrative margin earned on consumer goods by Hong Kong middleman will certainly decrease over time ( 2000).
The likely eventual agreement for direct air and sea links between the mainland and Taiwan thus bypassing Hong Kong will also have a significant negative impact on economic activity in Hong Kong. The effects of continued growth and success of Shanghai, and other mainland coastal areas, should also not be underestimated. By the time of the handover, the Hong Kong economy was very strong. Growth remained around 6 per cent per annum, and unemployment was low. The only significant problem was the property market, which had clearly been bubbling up for the previous few months. All of this suggested that the economy ought to be fairly well protected against speculation (2000). Hong Kong stood out as the only open economy in the region that had not suffered devaluation. Suddenly, its own US billion reserves did not look so impregnable and even though the obstacles for speculators were large, the very challenge encouraged some of them because the HK dollar would have to settle at a much lower level against the US dollar if the peg to the US dollar were broken. The profits for speculators would then be correspondingly greater and it might easily lead to a further round of devaluations in the region, with renewed opportunities for speculative profits. Given all the recent turbulence in the world and especially the region’s financial markets in recent years, it is impossible to guarantee that the peg will survive forever at its current rate (2000).
With regard to the Hong Kong economy, there is a clear commitment from Beijing in the Basic Law to maintain after 1997 the capitalist economic and trade systems practiced in Hong Kong, and to retain Hong Kong’s free port status and free trade policy, which includes the free movement of goods and capital. Further, the Hong Kong Special Administrative Region (HKSAR) government will be committed to safeguard the free operation of financial business and the free flow of capital within, into and out of Hong Kong. Hong Kong will be allowed to raise its own taxes and control revenue. The Hong Kong dollar will continue to circulate and remain freely convertible to the US dollar and other hard currencies. Within this framework, decisions on economic, trade, monetary and fiscal policies are to be taken by the HKSAR without any necessity for these policies to be adjusted in line with those in operation in the rest of mainland China (2000).Since the return of Hong Kong to mainland China, the issue of Taiwan has received increased attention on both sides of the Taiwan Strait. With Hong Kong being an SAR of mainland China, Hong Kong-Taiwan relations naturally constitute a special component of cross-Strait relations. Hong Kong’s Chief Executive has expressed a strong desire to improve cross-Strait relations and is willing to facilitate mainland China Taiwan exchanges through Hong Kong ( 2000).
It is expected that the interaction of the mainland, Taiwan, and Hong Kong will create better understanding, promote mutual benefits, and reduce misconceptions, thus reducing the scope for conflict. Hong Kong’s return to mainland China in July 1997 can be seen as an opportunity for both Taiwan and China to develop their ways of interacting, with Hong Kong as intermediary. Pending establishment of the three direct links across the Strait, or the final unification of Taiwan and mainland China, it may be expected that Hong Kong’s role will continue well into the future ( 2000). Hong Kong’s economy is one of most improved in the world. It survived different threats and problems to its economy. It was able to withstand the different changes and challenges that its government has undergone.
Emerging economy
From an economic point of view, the most significant developing countries are those whose economies are ‘emerging’ both in terms of market opportunity and in the sense that they are coming out from the constraints of state administration and restrictions on foreign trade. These economies are now seeking to modernize rapidly with the assistance of foreign governments and companies (1998). The faster rate of growth in emerging countries starts from a less-developed economic base, which means that they manifest a high level of demand for both consumer and industrial products and services. Their economies therefore offer the most significant opportunities for companies from the developed countries to expand their markets (Child & Faulkner 1998).
While acquisitions are generally the favored mode of expansion into developed-country markets, cooperative forms such as joint ventures tend to be the most prevalent in emerging economies. This is partly a result of host government preferences for local firms to share in the ownership of foreign funded ventures in the expectation that such participation will increase their opportunities to acquire new technology, management skills, and other expertise. It also reflects a frequently found preference among foreign investing companies, at least in the early years, to reduce their exposure to risk, and to co-opt the assistance of a local partner in navigating through an unfamiliar environment. The cultural and institutional features of the emerging economy are normally quite different from those of the foreign partner’s home country and this creates additional complexity for that partner (Child & Faulkner 1998). Secondly, the nature of partner objectives and the achievement of complementarily between them differ from those applying to most alliances between partners from developed countries. Thirdly, the differences between emerging and developed countries in culture and environment, together with the fact that in some cases the emerging economy has a colonial legacy with the sensitivities attaching to this, can give rise to special difficulties in the process of managing alliances ( 1998).
When one country is said to be an emerging economy it means that it has passed the different economic challenges that they have encountered. The emerging economies have come back from problems in their economies and they find ways to conquer such problem. Major emergent economies are on the fast track to economic growth but yet beset by critical challenges to the sustainability of their business environment. Hong Kong is an emerging economy it has faced different kinds of economic problems over the years. It is still facing some of the economic problems and they are finding solutions for it. The blockages for the continuous growth of the countries ‘economy is the corruption happening in the country, its lack of drive to live up to the things expected of them and the different debts they have incurred over the years. The different blockages should not be a problem for the country; it is supposed to be a challenge to them so that in the future the country will be economically mature.
Competitive economy
Even in advanced countries technological developments, where they tend to increase the degree of complementarily between different investment decisions, may have a profound effect on market structure. There exist between the firms in a modern competitive economy complex interrelationships of ownership and control, which are abstracted from in much of our more formal analysis; their justification derives, in part, from the need to co-ordinate complementarily activities. And the optimum size of the firm may be determined, not so much by the scale economies associated with any particular operation, but by the number of operations which require planned co-ordination (1997). Nevertheless, as we have seen, all the forces do not work in the direction of integration. The inevitable imperfection of the entrepreneur’s knowledge, both about technical conditions and about the prospects of other firms, checks his willingness both to make long-term binding commitments and to throw in his lot with that of others. The counterpart of entrepreneurial reluctance to make binding commitments will be a policy of deliberately limiting the degree of integration provided for in the plan (Richardson 1997).
Close complementarily between several investments is equivalent to a conductor of error; some degree of independence acts as insulation. The greater the extent to which the profitability or propriety of any one investment depends on others being implemented exactly according to plan, the wider will be the area over which the consequences of any particular failure will be felt. The absence of a sufficiently wide consensus about the profitability of simultaneous investment in related directions is also a check to concerted activity in both kinds of economy; in a planned system the combined investment can still proceed, provided the controlling authority issues the appropriate fiat. Whether this is a desirable outcome, however, depends of course on whether its assessment of the situation is correct (1997). Opinions about the best allocation of resources are weighted in a competitive economy by the wealth and the credit which those holding them can command; in a planned system, by the position of those holding them in the hierarchical structure. In a competitive economy, the command over resources exercised by any particular entrepreneur, and therefore the weight to be given to his estimates depends on the extent of his capital and of his credit (1997).
In the competitive economy, the ultimate tribunal is composed of particular owners of wealth who feel able to form an opinion on the matter (1997). To have a competitive economy means that the country can match with the kind of economy other emerging economies are having. It shows how well the country has performed and maintained its status. It shows how effective a country’s economic policies and procedures are. Hong Kong is attempting to be a competitive economy that can conquer any attempts to destabilize its economy and prevent it from gaining economic growth. The country can attain economic competitiveness through making sure that the tourist in the country remains high at the same time the country takes care of its environment.
Hong Kong and its management of the environment
Most governments now have environmental ministries and some kind of requirement for assessment of the environmental impact of activities prior to their being approved. In some instances, such initiatives have occurred only very recently and environmentalists wonder if they are adequate for the task. Hong Kong established an Environmental Protection Department, and has taken some steps to lessen air, noise, and water pollution (1993). Thus, noise controls were put in place, the use of high-sulfur fuels in factories was banned, and a clean-up plan was launched. Despite these efforts Hong Kong still looks, smells and sounds like a highly polluted city and will continue to do so for many years. Although widely recognized as a serious problem for decades, governments have provided only limited resources for dealing with the problem. This situation has improved slightly in recent years. The evaluation of energy policy needs to be conducted within a context that is more conscious of environmental issues. Governments must realize that environmental considerations, and their effect of energy, are just as much a limit to growth as transportation infrastructure or energy shortage itself (1993).
Portions of academia and the political elite recognize that economic development is not threatened by environmentalism; rather, long-term economic and political stability are threatened by a lack of attention to the environment. Only by grasping this dialectical relationship and carefully managing the environment can help modernization to succeed. Failure to do so will result in flood, drought, and blight: the familiar signs that the rulers have lost the Mandate of Heaven. Responsible businesses or countries have always sought to comply with the law and failure to do so can have disastrous consequences for the balance sheet (1993). Even minor breaches can damage profits beyond the cost of fines imposed. If the company is liable to pay compensation for damage caused it may be able to meet the costs of reparation from insurance. In terms of policy formulation, environmental issues have, in fact, been incorporated into government planning. Development plans have included a few clauses concerning forestry protection and conservation of natural resources, with a corresponding budget allocation. Policy is one thing, implementation is another. The distance from words to practices has been especially great (1993).
Failure in the implementation of environmental policies can be seen as resulting from the insincerity of the country’s decision makers, the inefficiency of government agencies, and widespread corruption. While some agencies have no direct administrative authority for managing the environment, the agencies with such authority are numerous and their actions are largely uncoordinated, with each perceiving environmental problems as only part of their other wider responsibilities. Moreover, these agencies have no authority to take legal action against violators. The common practice used in response to these problems is to set up additional agencies or committees and to draft additional ineffective regulations (2004). Countries like Hong Kong have been more responsive for calls to manage the environment.
The need to manage the environment
Life on earth has shown a surprising resilience in withstanding changes in the environment, and humanity in particular has adapted well to changing climate after the last glaciations some 10,000 years ago when most of the northern hemisphere was covered by ice and snow. However, all the natural changes in the environment, except natural disasters, occurred slowly over long periods of time, typically centuries. After the industrial revolution at the end of the eighteenth century, and particularly in the twentieth century, anthropogenic aggression to the environment has become more important due to population growth in developing countries and the enormous increase in personal consumption, mainly in the industrialized countries (2000). What characterizes these environmental changes caused by man is that they took place in a short period of time, typically decades. Broadly speaking all these problems have a multitude of causes, such as population increase, and the growth and changing patterns of industry, transportation, agriculture, and even tourism. The way energy is produced and used, however, is at the root of many of these causes (2000).
Energy sources are distributed around the globe in a fashion that is frequently not matched to the location of the consumption centers. Access and distribution to most of them creates numerous problems such as global insecurity, of which the volatile political situation of the Middle East is an example. Other global problems are those originating in the use of nuclear energy for electricity generation, which creates the risk of nuclear weapons’ proliferation. Conventional wisdom says that economic growth is roughly proportional to the growth in consumption of raw materials and energy, and the resulting pollution (2004). The empirical evidence for such correlation is in general based on studies over limited intervals of time. If such proportionality was to last for many decades the consequences would be disastrous, because the economies of a number of very populous developing countries are growing, as well as GDP per capita, and will soon approach the level of the developed countries. This would result in great strains in the access to raw materials and energy, as well as an increase in environmental degradation (2004).
The environmental consequences of industrial development and associated energy consumption in developing countries are beginning to reach such proportions that they not only threaten the local population but represent a sizeable contribution to global climate change, mainly due to increased fossil fuel consumption (2004).The world today has a rich North and a poor South with pockets of poverty in the former and some very affluent people in the latter. Most of the world’s population aspires to the material lifestyles and consumption patterns apparent in richer nations. Others may be less secular and look forward to non-material development in the shape of an increase in contentment, more sense of security, religious or cultural enrichment ( 2005). The former, material, outlook is dominant and with growing populations the question is, will the Earth’s environment support these hopes? The environmental manager is concerned with exploring what can be done to improve people’s lifestyles, given the structure and function of the environment, and then implementing it. Some countries have achieved what they and others see as development, thanks to one or more of the following: agriculture, science, industrial expansion, natural resource exploitation, colonial expansion, trade and intellectual skills. Development is thus widely seen as a goal and an ongoing process, but there is less certainty over its exact meaning or how it functions, or the strategy that is best adopted to pursue it (2005).
Environmental management is no longer just concerned with physical and largely quantitative data it now deals with historical data, policy formulation, social capital and institutional issues, qualitative information from focus groups and questionnaires, advice from political ecologists, the findings of cultural ecology, anthropology, and much more. On the whole, it has become more co-ordinatorial and participatory and much more integrative. Modern environmental management also tends toward less compartmentalization, more encouragement and support than enforcement, and often a bottom-up approach. There is also a shift toward continuous improvement and environmental stewardship, rather than command and control and solution of problems after they occur ( 2005). There is an imminent need to manage the environment due to global issues that have risen in the past few years. The need for managing the environment results to countries like Hong Kong to understand the best means to measure and monitor electricity consumption.
Electricity and its industry
The standard neoclassical public policy prescription for reforming vertically and horizontally integrated natural monopoly industries is fairly straightforward. It has been or is being applied, to varying extents, to telecommunications, natural gas, electric power and to railroads around the world. The historical natural monopoly industries are typically composed of both potentially competitive segments and natural monopoly segments. Vertical integration between them, it is argued, has led to an unnecessary expansion of monopoly from one horizontal level to another and has extended inefficient regulation to segments where market forces can and should govern better (1999). In order for all competitors to compete effectively and for competition to proceed efficiently in the competitive segments, prices charged to customers must be unbundled and competing suppliers of the competitive services must have access to the regulated bottleneck natural monopoly segments based on comparable price and non-price terms and conditions which do not discriminate against any competitive supplier, in particular de facto differences in access between suppliers owned by the network operator and independent suppliers (1999).
When the advocates of competition discuss utilities, they typically distinguish between natural monopoly and potentially competitive activities, and focus on the latter. The competition they have in mind is output competition, and the traditional models of competitive markets are used to elicit the conditions under which it can be promoted. Within the domain of output competition, a number of distinctions can be made. These focus on two dimensions: the definition of the output and the time period. In the utility sector, the boundaries between production and transmission and between supply and distribution are uncertain (1998). For example, in the electricity industry, generation of electricity is a fairly well-defined activity, but the boundary between generation and the related dispatch and Pool activities is not. In addition, electricity generation provides not only the commodity itself, but the stand-by capacity which ensures that, whatever times of day someone turns on a light, the power is instantly available. Downstream, at the customer interface, there are a variety of services which lie on the boundary between supply and distribution. Customers buy electricity with associated services, such as meter reading, energy advice, credit facilities, and payment options ( 1998).If competition is confined to the commodity it focuses on purchasing strategy, financial risk management, and marketing, and, as such, may be highly competitive with small margins. Financial failures of suppliers are quite possible and mechanisms have to be put in place to deal with customers stranded by a failed supplier. If, however, the other services are added in, supply competition is a much broader activity (1998)
In the electricity supply industry, two networks exist, the high voltage transmission network and the local distribution networks operated by the regional electricity companies. The latter, however, are also involved in the supply of electricity to the final households and many have also made significant investments in electricity generation. The logic of separating out the natural monopoly suggests that separation of the distribution businesses from the supply and generation businesses is likely to become an issue in the near future ( 1998). Electric power sectors around the world have many common structural features. These similarities exist largely because the basic physical attributes of modern electric power networks vary little from place to place. Any electricity supply industry structure with good technical performance characteristics must deal with the same set of physical and economic problems. Where industrial structures differ, clearly identifiable governance mechanisms have emerged to deal with the same set of vertical and horizontal coordination problems. The generation of electricity and the transmission of electricity are intimately related to one another from both an operating and investment perspective (1999).Since electricity cannot be stored or otherwise inventoried easily and customers continue to draw power as long as the circuits are closed and they are connected to the network, the generation of electricity and the consumption of electricity must be balanced continuously while maintaining the stability of the network and its physical attributes within narrow ranges that will not damage equipment connected to it or lead to sudden network failures. To do so, both transmission and generating facilities are required to support the operation of the network as well as to provide energy to serve customer loads (1999). Electricity and its industry is the primary industry that will be affected in the change of consumption of electricity and the regulation of electricity use.
Electricity Consumption
Energy use is characterized by very high dependence on coal and coal-fired electricity production, massive investments in producing oil from coal and gas, intensive use of energy in the industrial development sector, and energy scarcity among low income households. Domestic consumption of electricity varies greatly across the socioeconomic spectrum. Wealthier households are heavy consumers, whereas poorer homes use mainly paraffin, candles, and rechargeable batteries. There is also local fuel wood collection. People that live in dwellings without electricity are exposed to health risks associated with the fuels they use. Domestic health risks have the greatest direct impact on women and children, who are confined for the longest periods to indoor domestic environments ( 2001). The factors that affect electricity consumption are associated with a person’s conditions of life, whereas his or her orientation of life including values and thinking on environmental issues has only limited effect. Also, the existence of codes of eco friendly conduct within a person’s social network has no significant effect on electricity consumption (2001).
This contrasts with the relationships found between way of life and ecologically aware consumption in general. The consumption of eco friendly products is governed primarily by the codes of conduct, and the attention paid to environmental issues, within the social network. In addition, those people who do not know the size of their electricity bill have relatively larger electricity consumption, but also a relatively larger consumption of green products. This indicates a discrepancy in pattern of behavior between electricity consumption and consumption of green products. An explanation for this could be that electricity consumption is basically invisible and tends to be forgotten by the consumers (2001). Moreover, serious reductions in consumption of electricity would likely interfere with the routine of daily life. Standard rate-making practice has been to establish revenue requirements and set overall electricity prices to cover average historic accounting costs. These may bear little relationship to current marginal, or opportunity costs of electricity, which reflect forward-looking conditions (1994). Market imperfections are often cited as a major reason that customers do not adopt higher levels of energy efficiency. Non market costs of externalities resulting from production of electricity are generally not taken into account explicitly in setting electricity prices. Thus, the price seen by consumers and utilities does not reflect all societal costs of producing electricity, possibly resulting in a greater than socially optimal level of consumption of electricity. Electricity provides the means for consumers to enjoy the benefits of myriad energy services, including light, comfort, refrigeration, and motive power. The marginal, or incremental, value of electricity is reflected in its price; that is, consumers are willing to consume electricity up to the point where its incremental value just equals its price, which represents the incremental cost seen by the consumer (1996). Electricity consumption is one of the things monitored by governments and consumers. Various instruments are used to measure the consumption of electricity.
Chapter 3
Methods and Procedures
This chapter will give a discussion of the different methods and procedures used and done in the study; this chapter will discuss the research method; this chapter will also give a description of the research method, the different techniques used in the research method will be discussed to give explanation of its purpose and application to the study.
Research methods
This study employed the qualitative research method, since this research intends to find theories that would explain the relationship of one variable with another variable through qualitative elements in research. The qualitative research method will make use of studies and literatures to determine the available means to measure electricity use. Qualitative research designs in the social sciences stem from traditions in anthropology and sociology, where the philosophy emphasizes the phenomenological basis of a study, the elaborate description of the meaning of phenomena for the people or culture under examination. Often in a qualitative design only one subject, one case, or one unit is the focus of investigation over an extended period of time. Qualitative research is multi method in focus, involving an interpretive, naturalistic approach to its subject matter. This means that qualitative researchers study things in their natural settings, attempting to make sense of, or interpret, phenomena in terms of the meanings people bring to them. Qualitative research involves the studied use and collection of a variety of empirical material such as case study, personal experience, introspective, life story, interview, observational, historical, interactions, and visual texts on the described routine and problematic moments and meanings in individuals’ lives. Observation is the most frequent data-collection method used in qualitative research. Observation has greater face validity than a second-hand account gathered either through interviewing or document study (1998).
Observation is the technique of gathering data through direct contact with usually another human being. The researcher watches the behavior and documents the properties of the object. It is a very important method of data collection used by both qualitative and quantitative researchers. Quantitative scholars usually have an a priori highly structured plan that directs them to remain aloof and observe certain behaviors. In contrast, qualitative researchers usually observe from a phenomenological perspective; they immerse themselves in natural environments and watch a situation as a diffuse, ambiguous entity and allow themselves to be struck with certain peculiarities or interesting happenings. In many examples of qualitative research, the researcher goes into the field to observe and interview people. This raises an important concern about how the researcher is to present him or herself in the community being studied. One option is that researchers could be anonymous so no one in the situation being studied would know the researcher is there to gather data. The interpretive nature of qualitative research does indeed present a real problem to scholars who attempt to explain the process. This is why most theoreticians do not explicate the process of analysis as a set of steps. Rather, they talk about the analysis process as an organic whole that begins in the data-gathering stage and does not end until the writing is completed. The process allows for multiple iterative passes back and forth from data gathering to writing and back to data gathering (1996).
Reliability refers to consistency in measurement. In common terms the reliability of a test is the extent to which subsequent administrations would give similar results. A test which is not reliable will give different results every time it is taken. Accepted practice uses such measures as test-retest reliability coefficients to indicate reliability. In qualitative research, reliability suggests that different qualitative researchers would come to the same conclusions given exposure to the same situations. The extent to which data relate to objective criteria will improve reliability. When the data are based on personal impressions they tend not to be reliable. However, when they relate to counts or physical measurements or the number of correct math problems, they are generally reliable (1998). There are two basic approaches to defining qualitative research problems, open and focused. It entails collecting a broad spectrum of data and is typically used to discover the nature of the phenomenon, often leading to hypotheses as well as conclusions. Qualitative and quantitative researchers alike define problems, select research designs, develop methodologies, collect, analyze and interpret data, and report findings. There is, however, one significant difference between the two. In qualitative research, the researcher is the principal data collection instrument; whereas in quantitative research, scientifically designed data collection tools are developed (1998). Qualitative research intends to find theories that would explain the relationship of one variable with another variable through qualitative elements or components in research. The qualitative research is described as multi-method in focus, involving an interpretative, naturalistic approach to its subject matter. This means that a qualitative researching procedure acts on studying things in their natural settings, attempting to make sense of situations, or interpret events in terms of the meanings people bring to them.
Research Design
The research process onion of (2003) will be used in the entirety of the study in order to formulate the most suitable research approaches and doable strategies for this study. The first layer raises the question of the research philosophy to adopt, the second considers the subject of research approach that flows from the research philosophy, the third examines the research strategy most applicable, the fourth layer refers to the time horizon a researcher applies to his research, and the fifth layer is the data collection methods to be used (Saunders et al., 2003). The research process onion assists the study in gathering detailed information on the different methods used to measure the consumption of electricity. The research process onion will act as a guide and it will provide the step by step procedure that will make sure that the goals of the study will be met.
Ethical Issues that might be faced
Informed Consent
Worries about protecting clients’ rights to privacy can similarly be understood as concerns about issues of autonomy. The right to privacy follows from the assumption that autonomous individuals have the right to make decisions about their own lives and the information relevant to it, including to whom that information is confided. Thus, for example, although students and supervisees may not have the right to confidentiality in a strict sense when they confide information to professors or supervisors, they do have a right to expect that the information will be treated with respect and kept private to the extent that it is possible (2000). The use of informed consent in research, practice, and teaching is certainly no panacea for the ethical problems psychologists face. On the other hand, informing consumers or participants ahead of time about the aspects of the experience that may cause them discomfort or clarifying misconceptions could go a long way to helping psychologists avoid ethical mistakes (, 2000).
Whether in practice or in research attending, to the competence of the participant to give consent, the clear disclosure of necessary information, the participant’s understanding of the information, the voluntariness of the decision, and the right of the person to authorize consent helps fulfill the spirit of consent. It may be necessary to experiment with different methods of providing consent depending on the group involved (2000). From an ethical perspective, maintaining confidentiality is grounded in the principles of autonomy and fidelity. Respect for autonomy, or the right to self-governance, implies that individuals have the right to make decisions about those with whom they wish to share private information and those from whom they wish to withhold it (2000). Without control over who has access to information about themselves, individuals could not protect private information or guard against dangerous disclosures ( 2000).
Second, respecting the privacy of intimate human interactions and the personal secrets others share is at the core of human relationships, thus, the principle of fidelity adds further justification for keeping confidences. Third, when consumers or research participants share private information about themselves after a psychologist has extended a professional promise of confidentiality, a fiduciary relationship has been formed ( 2000).Any person/organization asked to participate in a certain research should be given enough information on why the research is important and how the information acquired for the research will be used. It will give the sources of information assurance that the information will be used in accordance with proper respect and within boundaries and limitations set by the society. It will also assure them that the information that they divulge will not be used against them. The research about the different methods to measure electricity consumption will ensure that proper information about the need, objectives and future implications for the research will be given to the sources of information.
Issues on Confidentiality
This extends to the way in which researchers treat people involved in their study. It is tempting to slip into a mode of seeing informants as sources of data rather than as interesting human beings. Violating their person through disrespect in this way may scar them for a long time, and cause them to see future research in a cynical or negative light. In some instances, researchers may be collecting data from people who cannot take complete responsibility for their own decisions, such as children or consumers with learning difficulties. They need special protection ( 2002) .Privacy and protection from harm is closely related ethical principles because, if a researcher betrays participants’ rights of privacy, then they are failing to protect them from harm. Rights of privacy are neglected if they publish research findings which present confidential information, or if they expose confidences which can be traced back to participants ( 2002). Confidentiality is an important aspect of qualitative research because it can help in making sure that sources of information will have the trust and confidence to participate in research undertakings in the future. If confidentiality is violated, sources of information may not want to share information that can be valuable to future research. The research will not disclose personal information of the sources of information. This will result in lesser ethical problems. It is necessary for the researchers to explain to the sources of information that the information collected will be used solely for assessment. The researchers will inform the sources of information that the study will allow them access to the designed results.
Chapter 4 Data Presentation and Analysis
After data collection the next thing to be done is data presentation, interpretation and analysis. It is important that the research output be presented in an organized, coherent and understandable manner so that those who will read the research can propose important decisions about the results of the study. This chapter intends to discuss the information acquired from the research done for the study. The main objective of the study is directed towards studying the different means to measure electricity consumption in Hong Kong. After this part summary then analysis of the results will be done as well as a concluding part of the study and recommendations for the country. This part takes a look at the results and what it implies within the study.
Consumption and its forecast
High consumption translates into huge impacts. In industrial countries, the fuels burned release perhaps three fourths of the sulfur and nitrogen oxides that cause acid rain. Industrial countries’ factories generate most of the world’s hazardous chemical wastes. Their military facilities have built more than 99 percent of the world’s nuclear warheads. Their atomic power plants have generated more than 96 percent of the world’s radioactive waste. And their air conditioners, aerosol sprays, and factories release almost 90 percent of the chlorofluorocarbons that destroy the earth’s protective ozone layer ( 1992). As people climb from the middle-income to the consumer class, their impact on the environment makes a quantum leap not so much because they consume more of the same things but because they consume different things. The furnishings of man’s consumer life-style things like automobiles, throwaway goods and packaging, a high-fat diet, and air conditioning can only be provided at great environmental cost. A consumer’s way of life depends on enormous and continuous inputs of the very commodities that are most damaging to the earth to produce: energy, chemicals, metals, and paper (1992).The fossil fuels that power the consumer society are its most ruinous input. Wresting coal, oil, and natural gas from the earth permanently disrupts countless habitats; burning them causes an overwhelming share of the world’s air pollution; and refining them generates huge quantities of toxic wastes. Estimating from the rough measure of national averages, the consumer class depends on energy supplies equal to at least 2,000 kilograms per capita of average-grade coal a year. The influence of the consumer class is felt strongly in regions populated mostly by the middle-income and poor classes ( 1992).
By drawing on resources far and near, consumers cast an ecological shadow over wide regions of the earth. Every piece of merchandise in the retail districts of the consumer society creates its own ecological wake (1992). Rapid human population growth in the world today is a major challenge to environmental management. The current world population is nearly 6 billion and populations in a few countries are doubling every seventeen years. As a result, pollutants are being produced practically everywhere in the world by human activities faster than they can be managed and/or degraded by natural biota and the environment. In addition to the increasing pollution of the natural environment, land, water, energy, and biological resources are being rapidly degraded (1998). Despite these sobering statistics, humans have the intellect to reduce their numbers and to develop and implement effective environmental strategies so that people can live free from poverty and starvation in a sustainable and productive environment. A healthy and prudently managed environment is a major benefit to humans and other species. The natural environment is the sustainer of all life on earth. Indeed, humans and all living organisms rely for their very survival on the basic resources which earth’s natural environment provides. More than 50 per cent of the Introduction of environmental management systems at the national level in many countries, and the requirement that such systems should go beyond merely restoring environmental damage to actually reducing or eliminating pollution, clearly shows the importance of environmental planning in forestalling further damage to the natural environment (1998). Given the complexity of the environment, the complex and hitherto unknown interactions that occur among its numerous subsystems, and the increasing environmental problems being created by human activities, it is clear that a holistic approach must be taken to study and understand it. To that end, knowledge of the environmental subsystems and their respective elements should be structured in a way that facilitates easy communication and understanding by all the actors and stakeholders involved (1994). Due to changing needs by man, their use of resources increases. The increase in the use of resources resulted for the need to forecast the consumption and whether it surpasses allowable limits.
ARIMA method
In the 1960s and 1970s, combined auto regression with a number of other statistical techniques and developed a much more flexible procedure. In the manner of conscientious physicians, the good doctors offered careful diagnoses and a variety of treatments for a wide range of possible time series conditions. They distinguished stationary series, non stationary series, and series with seasonal variations and provided distinct prescriptions for each (2000). Respectively, these are called the Autoregressive moving average (ARMA); Autoregressive integrated moving average; (ARIMA) and Seasonal autoregressive integrated moving average (SARIMA) methods. Without getting into the mathematical details of these approaches, each uniquely combines moving averages, a smoothing technique, with auto regression and other analyses. By designating various categories of time series, and outlining means of dealing with each one, helped render the field more systematic. Applicable to a variety of forecasting problems ranging from rainfall prediction to financial analysis, the procedure has since become the standard statistical approach. With the advent of enhanced methods stemming from complex systems theory, time series forecasting has taken a quantum leap forward ( 2000).
Supplementing contemporary statistical approaches, two new strategies in particular have launched the field into revolutionary new ground (2000). The criteria which determine the selection of an ARIMA representation are roughly as follows: maximize the likelihood of the model transformed to be stationary and invertible, basing the initial specification on autocorrelation analysis of the data such that the chosen form is the most parsimonious without violating diagnostic checks on the residuals being ‘white noise’. For a multiple input process, considerable judgment is required. These criteria are basically sensible but minimal. Slight problems are that some economic variables are not well represented by ARIMA models and that there are ways to achieve stationary other than blanket differencing (2000). More importantly, emphasizing single-output models distracts attention from the joint dependence of economic variables and, by allowing almost no weight to theory or prior information accrued from other studies, including relevant variables, signs and magnitudes of parameters, orders of lags etc., exacerbates the difficulty of using short data series. Indeed, by placing all the initial emphasis on the dynamics-autocorrelation interaction it may underplay the multivariate aspect which remains of primary concern to the person using the method. The autoregressive integrated moving-average (ARIMA) model form used by time-series advocates could be viewed as a special case of an econometric model form in which the information from related variables was ignored. ARIMA models should never outperform econometric models and their doing so in any instance must be due to the latter mis-specifying the dynamics. Consequently, any successes of ARIMA models simply reveal the importance of dynamics in econometrics ( 2000). ARIMA method is a generalization of the ARMA model. It is fitted to time series data either to better understand the data or to predict future points in the series.
Changing consumption
Most energy analysts today agree that energy at the aggregate level is primarily driven by economic activity, income, and prices both energy prices and prices of substitutes. These key parameters are generally considered to be important factors that influence the decisions and behavior that affect energy demand. Prices and income also have an impact on the efficiency with which energy is used and on changes in industry structure (1998). For example, the decline of energy-intensive industries in favor of light industry, or the less energy consuming service sector, will reduce energy demand. There are also structural changes in other sectors, such as in transport. The importance of rail transport has continuously declined and been more than compensated for by increased air and road transport. These modal shifts contributed to a strong growth in overall energy demand. Aggregate energy demand is also influenced by the fuel mix. The efficiency with which energy is converted into useful energy or service depends on the technology and fuel used. The replacement of coal in industry by gas or oil, or oil in the residential sector by gas or electricity has an impact on energy demand (1998).
Fuel substitution may increase or decrease overall demand. The use of gas in industrial processes normally leads to higher conversion efficiency. But in the residential sector, the replacement of coal- or oil-fired installations by gas or electricity may lead to higher energy consumption through an increase in the service level, as single furnace systems that normally heat only a selected number of rooms are replaced by central heating, providing warmth for the entire home. Energy demand is also influenced by policy (1998). Policy mainly affects energy demand through price regulations and taxation, and through the direct regulation of the fuel mix in, for example, the electricity sector. Still most governments have in place programs to encourage energy efficiency. The policy objectives of these programs have shifted over time, but a persistent motive for policy interventions has been the perception that market imperfections and barriers inhibit cost efficient use of energy. Such barriers include lack of information and technical skills, restrictions on access to capital, and budgetary constraints (1995). Electric utilities are capital-intensive operations. The sunken investments in land and facilities are enormous, and the rates a utility charges its customers must reflect this investment. The net investment of a utility determines its rate base. The amount of profits it is allowed to make, called the rate of return, is calculated as a percentage of its rate base. Profits allow a utility to pay dividends to investors in the case of private, investor-owned utilities. The electric power industry is also energy intensive, and this characteristic made the regulation of the industry of great concern to various lawmakers (1995). The consumption changes due to various factors like climate, time of the year or industry change, it is important to note how a certain factor can alter consumption. It is vital that one knows how to predict the change that will be brought about by electricity consumption factors.
Short term load forecasting
Electric power systems are characterized by increasingly more complex and more sophisticated daily operations and resource planning activities, necessitating the use of non-conventional approaches to address issues and concerns that have yet to be effectively resolved by conventional methods. Power systems are systems of great complexity. In approaching any specific task with a given objective, the operator is confronted with a very large number of options in his choice of actions. The past two decades has brought about progress in the number and power of computer programs available for simulation and analysis of the behavior of power systems (1993). In principle, therefore, an operator can predict analytically the consequences of any action that he might want to exercise. Or alternatively all possible scenarios and their outcomes can be calculated off-line ahead of time for search and retrieval when required. In practice, these strategies require astronomically long computational times, or astronomically long computational times and astronomically large computer memory capacities to store all the calculated results. Neither of these two approaches is practicable ( 1993).
Humans do not operate in either of these two modes, but rely instead on a combination of experience, understanding, judgment and “common sense”, aided by judicious use of a certain amount of algorithmic computation. The contemplated and ongoing Expert Systems efforts cover a wide range of tasks, including alarm processing, real-time guidance of operators, transmission network design, system restoration, load forecasting, equipment status monitoring, and so on. Typically, the Expert Systems rely on a judicious combined use of heuristics and algorithms for fast and reliable scanning of all appropriate data and options, use of heuristic rules to limit choices, or to guide search, execution of algorithms to predict or to infer results, and use of heuristic rules to interpret results and to plan next action. Load forecasting has become one of the most important aspects of electric utility planning (2003). The economic consequences of improved load forecasting approaches have kept development of alternate, more accurate algorithms at the forefront of electric power research. From short-term load forecasts used in the daily unit allocations to midterm load forecasts used for fuel budgeting, to the long-term load forecasts used for resource planning and utility expansion, a number of different techniques have been proposed and are currently in use. These methods can be classified into two major categories: time series approaches, treating the load pattern as a dynamic time series signal and predicting the future load using some time series analysis tool, and regression approaches, which recognize the strong effect of weather on electric load use, for example, and attempts to find a functional relationship between the two (2003).
The major shortcoming of these approaches is their limited accuracy partially resulting from use of linear model structures for the former and the use of static nonlinear functional relationships for the latter. The improvement of system operational security and economy are the motivations for forecasting the load of an electric power system. Forecasting of electrical load is an important aspect of planning and control of the electric utility industry. Proper prediction provides the much needed information to ensure anticipated load is met while minimizing the cost of electric power production resulting in savings to the customers. In this paper, we examine the use of hierarchical neural networks as a means for load forecasting. While the use of neural networks for prediction has been attempted by many researchers in diverse fields, the present effort differs from previous attempts in that the modeling and prediction by the neural net is controlled and influenced by what is known about the load characteristics. Accurate load forecasting is crucial in short term utility operation and long term energy management. Hourly, daily, and weekly forecast is necessary for short term utility operation to ensure that the anticipated load can be met with the least cost. Short term forecasting is exceptionally difficult because the instantaneous power is dependent on many variables ( 2000). Accurate forecasting depends very much on adequate modeling of all intervening parameters. These include the hour of the day, the day of the week, and meteorological data such as temperature, humidity, wind speed, wind chill factor, etc (2000). The short term load forecasting method is used for energy transfer scheduling and security assessment. Like other electric load forecasting method, short term load forecasting method is affected by various things that include the weather, climate, day of the week and social events. The short term load forecasting method depends on a central system control unit that gathers all needed data for analysis and study.
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