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EROEI Calculations for Solar PV Are Misleading

Alternative Energy

The Energy Returned on Energy Invested (EROEI) concept is very frequently used in energy studies. In fact, many readers seem to think, “Of course, EROEI is what we should be looking at when comparing different types of energy. What else is important?” Unfortunately, the closer to the discussions of researchers a person gets, the more problems a person discovers. People who work with EROEI regularly say, “EROEI is a tool, but it is a blunt tool. An EROEI of 100 is good compared to an EROEI of 10. For small differences, it is not so clear.”

Because of the idiosyncrasies of how EROEI works, different researchers using EROEI analyses come to very different conclusions. This issue has recently come up in two different solar PV analyses. One author used EROEI analysis to justify scaling up of solar PV. Another author published an article in Nature Communications that claims, “A break-even between the cumulative disadvantages and benefits of photovoltaics, for both energy use and greenhouse gas emissions, occurs between 1997 and 2018, depending on photovoltaic performance and model uncertainties.”

Other EROEI researchers with whom I correspond don’t agree with these conclusions. They recognize that in complex situations, EROEI analyses cannot cover everything. Somehow, the user needs to be informed enough to realize that these omissions result in biases. Researchers need to work around these biases when coming to conclusions. They themselves do it (or try to); why can’t everyone else?

The underlying problem with EROEI calculations is that EROEI is based on a very simple model. The model works passably well in simple situations, but it was not designed to handle the complexities of intermittent renewables, such as wind and solar PV. Indirect costs, and costs that are hard to measure, tend to get left out. The result is a serious bias that tends to make the EROEIs of solar PV (as well as other intermittent energy sources, such as wind) appear far more favorable than they would be, if a level playing field were used. In fact, published EROEIs for solar PV (and wind) might be called misleading. This issue also exists for other similar calculations, such as Life Cycle Analyses and Energy Payback Periods.

Some Background on EROEI

Proposed types of energy alternatives are often analyzed using Energy Returned on Energy Invested (EROEI) calculations. For each type of energy product that is produced, a ratio of the energy output to energy input is calculated. A high ratio gives an indication that the particular approach is very efficient, and thus is likely to produce an inexpensive energy product. Coal is a typical of example of a fuel with high EROEI. Wood cut using a hand saw would also have a very high EROEI. On the other hand, a low ratio of energy output to energy input, such as occurs in the production of biofuels, is expected to be high cost, and thus is not suitable for expanding.

A derivative concept is “net energy.” This is defined as the amount of energy added, when “Energy Input” is subtracted from “Energy Output,” or variations on this amount.There are many other related concepts, including “Energy Payback Period” and “Life Cycle Analysis.” The latter can consider materials of all sorts, not just energy materials, and can consider pollution issues as well as energy issues. My discussion here indirectly also relates to these derivative concepts, as well as to the direct calculation of EROEI.

The actual calculation of EROEI amounts varies a moderate amount from researcher to researcher. On the input side, the researcher must make decisions regarding exactly what energy inputs should be included (manufacturing the solar panel, transporting the solar panel to the construction site, building the factory that makes the solar panel, disposing of toxic waste, etc.). These energy inputs are then all converted to a common base, such as British Thermal Units (Btus). On the output side, amounts are fairly clear when the production of fossil fuels is involved, and the calculation is “at the wellhead.” When output from a device such as a solar panel is involved, there are many issues to be considered, including how long the solar panel is expected to last and how many hours of solar output will actually become available given the solar panel’s siting (which may not be known to the researcher). In theory, the energy costs of ongoing maintenance should come into the calculation as well, but will not be available early in the life of the panel when the calculations are made.

Two Kinds of EROEI: Return on Fossil Fuel Energy or Return on Labor

The type of EROEI we generally hear about today is what I would call “energy return on fossil fuel energy invested.” This is a concept developed by Charles Hall in the early 1970s, shortly after the book The Limits to Growth was published in 1972. In fact, it sometimes includes other kinds of energy in the denominator as well, such as hydroelectric. Most people who follow today’s academic literature would probably assume that this is the only kind of EROEI of interest when discussing today’s energy problems.

In fact, there is a different kind of EROEI analysis that preceded fossil fuel EROEI. This is return on the labor of an animal, a theory that now goes under the name  Optimal Foraging Theory. Falling return on labor for animals represents the situation in which an animal has to walk (or fly or swim) increasingly far, or is required to swim increasingly upstream, to find the food it needs. Animal populations tend to collapse when their EROEIs fall too low. Prof. Hall taught ecology, so is well versed in the issues of energy return on animal labor.

There is also a parallel analysis of the return on human labor. Return on human labor has been studied for many years, and is documented in books such as The Upside of Down, by Thomas Homer-Dixon. In fact, Homer-Dixon talks about falling EROEI with respect to human labor being the cause of the fall of the Roman Empire.

The return on human labor can drop too low in several ways:

  1. If resources deplete or erode. For example, if topsoil becomes too thin, or energy supplies become depleted.
  2. If population rises too much, relative to resources. We are really interested in things like arable land per capita, and barrels of oil per capita.
  3. If a disproportionate share of the return the economy receives goes to some elite group, so the workers themselves don’t receive enough.

Falling return on human labor is very similar to falling wages. This falling return affects those at the bottom of the employment hierarchy most, such as young people just out of school and workers without too much education. These wages may or may not fall in monetary terms; what is important is that the goods and services that these wages buy fall on a per capita basis. Once falling return on human labor starts happening, the whole system starts unraveling:

  1. Governments cannot collect enough taxes.
  2. Businesses lose the economies of scale that they previously had.
  3. A large share of debt cannot be repaid with interest.
  4. Individual citizens find that they cannot afford to get married and start new families because their wages are too low, and they have too much debt.
  5. In earlier times, epidemics became more common because workers could not afford adequate diets.

I would argue that falling return on human labor is the primary type of falling EROEI that we should be concerned about, because it represents the summation of all of the types of returns that the economy is getting. It might be considered the Societal Return on Energy Invested.

I would also argue that Societal EROEI, defined in this way, is already too low. One way this can be seen is through the higher unemployment rate of young people in many countries. Another is a delayed rate of starting new families. Another is wages of many of the less educated workers rising less rapidly than inflation.

The key things that make the calculation of EROEI of human labor and EROEI of animal labor “work” as intended are

  1. Clear boundaries on what is to be included. The boundary is per animal, or per human being.
  2. Very close timing between when the energy is consumed (food or other) and when the output is available (animal energy used or goods and services consumed by humans).
  3. There is an easy way of adding up diverse inputs and outputs, namely using the financial system to count the worth of human labor, or an animal’s energy system to determine whether the food input is sufficient.

The one thing that doesn’t entirely “work” in this model is the fact that the actions of humans can have an adverse impact on other species, but this is not directly reflected in the EROEI of human labor. This is not handled by the wage system, but it can be somewhat handled in the tax system. Of course, if taxes are used to compensate for the adverse impact that humans are having on the ecosystems, the higher taxes will tend to reduce the return on human labor further, and thus bring about collapse more quickly.

Fossil Fuel EROEI as a Cost Estimate

When Prof. Hall developed the concept of EROEI, the concept was intended to be a rough cost estimate. If a particular type of alternative energy required a lot of energy to be created, it would likely be a very expensive type of energy; if very little energy was required, it likely would be inexpensive. When making one energy product using other energy products, energy is usually a major item of input. Thus, it seems reasonable to expect that EROEI calculations will work at least as a “blunt tool” for pricing.

The problem in making EROEI more than a blunt tool is the fact that none of the three characteristics that make EROEI on human labor work as expected is present for fossil fuel EROEI. (1) Fossil fuel EROEI boundaries can be made wider by making the list of energy inputs counted longer, but they always remain short of the entire system. (2) Timing is a huge issue, leading to a need for capital and a return on that capital, but there is no adjustment for this in the calculation. (3) The fact that energy quantities rather than prices are being used to add up inputs means that we can never determine something that is comparable to the overall cost of the complete supply chain. Furthermore, similar to the problem with humans adversely affecting other species, intermittent electricity adversely affects both the electric grid and the pricing of other types of electricity. EROEI calculations leave out these impacts.

The fossil fuel EROEI system ends up being similar to a system that compares tops of icebergs, when these icebergs are floating at somewhat different levels, and we can’t measure the relative levels well. Furthermore, our measuring tool is restricted to only one type of input: energy that can be counted somewhere in the cycle. Adverse impacts, such as damage to the grid or to the electricity pricing system are not counted at all.

The danger with EROEI comparisons is that a person ends up with “apples to oranges” comparisons. Generally, the more similar energy types are, the more likely EROEI comparisons are likely to be truly comparable. For example, EROEIs for the same oil field, made with data a year or two apart, are more likely to be more meaningful than a comparison of EROEIs for fossil fuels with those for intermittent electricity.

Specific Problems with the EROEI of Solar PV

(1) Prospective EROEI calculations tend to have a bias toward what is “hoped for,” rather than serving as a direct calculation of what has been achieved. If the EROEI of an oil field, or of a hydroelectric plant that has been in operation for many years, is desired, it is not terribly hard to find reasonable numbers for inputs and outputs. All a researcher needs to do is figure out pounds of concrete, steel, and other materials that went into the initial structure, as well as inputs needed on a regular basis, and actual outputs, a calculation can be made. When estimates are made for new devices, the bias is always toward what is hoped to be achieved. How much electricity will a solar panel produce, if it is properly sited, properly maintained, maintenance costs are very low, the electric grid can actually use all of the electricity that the panel produces, and all parts of the system last for the expected life of the solar panel?

(2) All energy is given the same “weight,” whether it is high quality or low quality energy. Intermittent energy, such as is produced by solar PV, is in fact extremely low quality output, but there is no adjustment for this fact in the calculation. It counts the same as much better quality electrical output, such as that provided by hydroelectric.

(3) There is no charge for the use of capital. When capital goods such as solar panels are used to produce energy products, this has several negative impacts on the economy: (a) Part of the energy produced must go to pay for the interest and/or dividends related to long-term capital use, but there is energy cost assigned to this; (b) A country’s debt to GDP ratio tends to rise, as the economy is required to use ever more debt to finance all of the new capital goods; and (c) The wealth of the economy tends to become ever-more concentrated in the owners of capital goods, leaving workers less well off. EROEI calculations don’t charge for any of these deficiencies. These deficiencies are part of what makes it virtually impossible to scale up the use of wind and solar PV as a substitute for fossil fuels.

(4) EROEI indications tend to be misleadingly favorable, because they leave out hard-to-estimate costs. EROEI analyses tend to focus on amounts that are “easy to count.” For solar PV, the amount that is easiest to count is the cost of making and transporting the solar PV. Installation costs vary greatly from site to site, especially for home installations, so these costs are likely to be left out. Indirect benefits provided by governments, such as newly built roads to accommodate a new solar PV installation, are also likely to be omitted. The electric utility that has to deal with all of the intermittent electricity has to deal with a whole host of problems being dumped on it, including offsetting the impact of intermittency and upgrading the newly added electricity so that it truly meets grid standards. There are individual studies (such as here and here) that look directly at some of these issues, but they tend to be omitted from the narrow-boundary analyses included in the meta-studies, which researchers tend to rely on.

(5) Precisely how solar PV at scale can be integrated into the grid is unclear, so costs required for grid integration are not considered in EROEI calculations. There are a number of approaches that might be used to integrate solar PV into the electric grid. One approach would be to use complete battery backup of all solar PV and wind. The catch is that there is seasonal variation as well as daily variation in output; huge overbuilding and a very large amount of batteries would be required if the grid system were to provide electricity from intermittent renewables throughout the winter months, without supplementation from other sources. Even if storage is only used to smooth out daily fluctuations, the energy cost would be very high.

Another approach would be to continue to maintain the entire fossil fuel and nuclear generation systems, even though they would run only for a small part of the time. This would require paying staff for year-around work, even though they are needed for only part of the year. Other costs, such as maintaining pipelines, would continue year around as well.

A partial approach, which might somewhat reduce the energy needs for other approaches, would be to greatly increase the amount of electricity transmission, to try to smooth out fluctuations in electricity availability. None of these costs are included in EROEI calculations, even though they are very material.

(6) Solar PV (as well as other intermittent electricity, such as wind) causes direct harm to other types of energy producers by artificially lowering wholesale electricity prices. Wholesale prices tend to fall to artificially low levels, because intermittent electricity, including solar PV, is added to the electric grid, whether or not it is really needed. In fact, solar PV adds very little, if any, true “capacity” to a system, so there is no logical reason why prices for other producers should be reduced when solar PV is added. These other producers need the full wholesale cost of electricity, without the downward adjustment caused by the addition of intermittent energy sources, if they are to obtain a sufficient return on their investment to make it possible to continue to provide their services.

These issues tend to drive needed back-up electricity generation out of business. This is a problem, especially for nuclear electricity providers. Nuclear providers find themselves being pressured to close before the ends of their lifetimes, because of the low prices. This is true both in France and the United States.

In some cases, extra “capacity payments” are being made to try to work around these issues. These capacity payments usually result in the building of more natural gas fired electricity generating units. Unfortunately, these payments do nothing to guarantee that the natural gas required to operate these plants will actually be available when it is needed. But gas-fired generating units are cheap to build. Problem (sort of) solved!

(7) Electricity generation using solar PV cannot be scaled up very well. There are multiple issues involved, including cost, debt, difficulty in handling the variable output, and the adverse impact of the intermittent electricity on the profitability of other carriers.

What Should Be Done Next? 

It seems to me that a statement needs to be made that EROEI was a preliminary pricing method for various fuel types developed back in the early 1970s. Unfortunately, it is a blunt tool, and is not really suitable for pricing intermittent electricity, including solar PV, wind energy, and wave energy. It presents a far more favorable view of adding these energy types to the electric grid than is really the case. Hydroelectric energy is sometimes considered intermittent, but is really “dispatchable” most of the time, so it does not present the same problems.

EROEI calculations are in a sense the output of a very simple model. What we are finding now is that this model is not sufficiently complex to deal with the way intermittent electricity affects the system as a whole. What needs to be substituted for all of these EROEI model results (including “net energy,” Life Cycle Analysis, and other derivative results) is real world cost levels using very much wider boundaries than are included in EROEI calculations.

Euan Mearns has shown that in Europe, countries that use large amounts of wind and solar tend to have very high residential electricity prices. This comparison strongly suggests that when costs are charged back to consumers, they are very high. (In the US, subsidies tend to be hidden in the tax system instead of raising prices, so the same pattern is not observed.)

Figure 1. Figure by Euan Mearns showing relationship between installed wind + solar capacity and European electricity rates. Source Energy Matters.

Even this comparison omits some potential costs involved, because intermittent electricity concentration levels are not yet at the point where it has been necessary to add huge banks of backup batteries. Also, the adverse impact on the profitability of other types of electricity generation is a major issue, but it is not something that can easily be reflected in a chart such as that shown in Figure 1.

It seems to me that going forward, a completely different approach is needed, if we want to evaluate which energy products should be included in our electricity mix. The low energy prices (for oil, natural gas, coal, and electricity) that we have been experiencing during the last 30 months are a sign that consumers cannot really afford very high electricity prices. Analysts need to be looking at various scenarios to see what changes can be made to try to keep costs within the amounts consumers can actually afford to pay. In fact, it probably would be helpful if building of new generation could be reduced to a minimum and existing generation could be kept operating as long as possible, to keep costs down.

The issue of low wholesale prices for electricity generated by nuclear, gas, and coal needs to be analyzed carefully, since, for example, France cannot easily get along without nuclear electricity. Nuclear energy is generally a much larger provider of electricity than wind and solar. Somehow, the financial returns of non-intermittent providers need to be made high enough that they can continue in operation, if they are not at the ends of their normal lifetimes. I am not sure how this can be done, short of banning intermittent electricity providers, including those currently in operation, from the grid.

A Long-Term Role for Solar PV 

It appears that our civilization is reaching limits. In fact, it seems likely that our current electric grid will not last many years–probably not as long as people expect solar panels will last. We also know that in past collapses, the only thing that seemed to partially mitigate the situation was radical simplification. For example, China transported goods in animal-powered carts prior to collapse, but changed to transporting goods in wheelbarrows, after it collapsed about the third century A. D.

Building on this idea, the place for intermittent renewables would seem to be off the electric grid. They would likely need to operate in very small networks, probably serving individual homes or businesses. For example, some homeowners might want to set up 12 volt direct current systems, operating a few LED lights and a few specially designed 12 volt direct current appliances. Businesses might want to do more. The problem, of course, comes in maintaining these systems, as batteries degrade and other parts need to be replaced. It would seem that this type of transition could be handled without huge subsidies from governments.

The belief that we can maintain our current electric grid system practically indefinitely, using only wind + solar + hydroelectric + biomass, is almost certainly a pipe dream. We need to be looking at the situation more realistically, and making plans based on what might actually be feasible.

Note:

[1] In defining net energy, some would say that Energy Input should be multiplied by a factor of three before the subtraction is done, because input energy is only partially counted in most calculations. Another variation is that the calculation varies by energy product, and whether EROEI has been calculated using a “wellhead” or “point of use” approach. These variations further add to confusion regarding exactly which amounts are comparable to which other amounts.

our finite world



37 Comments on "EROEI Calculations for Solar PV Are Misleading"

  1. penury on Wed, 21st Dec 2016 7:08 pm 

    As is usual with these submissions I must read and re-read what she is saying in order to comprehend the message. Usually I just figure that Gail know what she is talking about and I don’t

  2. onlooker on Wed, 21st Dec 2016 7:15 pm 

    in summary if we look at many of the studies pertaining to the Cost/Benefit analysis of Solar/Wind they tend to be overly optimistic because the method of analysis usually employed is the EROEI and so in the words of Gail ” these evaluations tend to make the addition of solar PV to the electric grid look more worthwhile than it really is. In fact, the same arguments hold regarding wind energy.” Solar Wind Not Good as compared to Fossil Fuels

  3. Boat on Wed, 21st Dec 2016 7:42 pm 

    Money will find the cheapest energy. If intermittent energy reaches a saturation point the grid is unstable and causes brown/black outs guess what, those very expensive events will cause a change. Storage or nat gas plants whatever. We’ll see soon in Iowa which by 2020 will be up to 85 percent wind. A large citiy Las Vagus is 100 percent renewable. Their clients are some of the richest in the world. I bet they have a plan for intermittent energy.

  4. makati1 on Wed, 21st Dec 2016 8:12 pm 

    Boat, they also need water…dream on.

  5. IPissOnTheWholeWorld on Wed, 21st Dec 2016 8:57 pm 

    Like always she is vague. Net energy is an equation made of addition and subtraction.

    Nowhere in her post she defines the net energy equation she is using and the variables name. Plus shes does not mention what are her data source she uses to arrive at her conclusion.

    Net energy has nothing to do with cost. Using a cost graphic and extrapolate a net energy value for solar panel is an amateur stretch.

    Like always with her, amateurish writing.

    She shows not value and data sources associated with the manufacturing process involved and the energy involved in the manufacturing process.

  6. Boat on Wed, 21st Dec 2016 8:59 pm 

    mak,

    They buy water. Lol google Vagus growth over the last 50 years. Desperation leads to innovation.

  7. Boat on Wed, 21st Dec 2016 9:12 pm 

    They like to use Europe who to their credit got solar to scale. Today’s solar and wind for that matter is more efficient and cheaper. It’s hard to find new EROEI numbers for the latest and most advanced products. At the end of every product cycle the replacement turbines and panels will be much cheaper and the per kW cheaper. That is the real story.

  8. makati1 on Wed, 21st Dec 2016 9:24 pm 

    Boat, desperation leads to failure. The end is fast approaching for all desert locations. And the collapse of the U$ economy will put the last nail in Vegas’ coffin. If you are so smart buy a house there. Or two. LMAO

  9. rockman on Wed, 21st Dec 2016 10:12 pm 

    Stop reading if you’re tired of the Rockman beating the same old dead horse. The Rockman is tired to but here it goes again:

    If a decision to invest with any alt is going to be based upon solely upon economic analysis does the EROEI matter? And if anyone thinks that isn’t true please list all the alt energy projects that were built out anticipating they wouldn’t be economic. IOW anticipating it would be less expensive in the long run sticking with the existing fossil fuel sourced system. Of course that’s different then comparing apples to apples: new built alt system vs a new built fossil fuel system. Such as the alt growth in Texas. But even in the example of Texas the EROEI’s of neither system was considered.

    And watch out…here it comes again: just as no drilling decision has ever or will ever be based upon the EROEI of that project.

  10. GregT on Wed, 21st Dec 2016 10:29 pm 

    “Desperation leads to innovation.”

    More Kevin complete and utter nonsense.

    Definition of desperation

    1: loss of hope and surrender to despair

    2: a state of hopelessness leading to rashness

    https://www.merriam-webster.com/dictionary/desperation

  11. GregT on Wed, 21st Dec 2016 10:33 pm 

    “If you are so smart buy a house there. Or two. LMAO”

    Kevin already has part shares in a bank owned home in Houston mak. No need for him to be any ‘smarter’.

  12. Dredd on Thu, 22nd Dec 2016 4:58 am 

    “And watch out…here it comes again: just as no drilling decision has ever or will ever be based upon the EROEI of that project.” – rockman

    Sounds like the warmongers and banksters use that “system” too (Banker Jekyll Will Hyde Your Money – 11).

  13. Davy on Thu, 22nd Dec 2016 5:09 am 

    Alternatives are a transition energy. It does not matter if they succeed as the new dominant energy or not. This is the economic intent and the popular narrative. It is clear they have issues of scale at many levels. The whole dynamics of the energy source is in flux. We are trying to integrate this new source into the grid and the transport sector. There are cost involved with technological development. There is the human element of networks and social acceptance. These multidimensional issues are physical and systematic.

    This technology is only possible with global economics and fossil fuels hence alternatives are locked in the economic and energy trap of modern man. This trap revolves around demand destruction and depletion. It revolves around the forces of decline and decay slowing growth. Modern civilization has a minimum operating level. When we approach this level negative activity results. Alternatives are part of this intimately and their proponents dismiss and disregard this condition.

    We are likely not going to make an energy transition becuase transition is not in the cards. Transition denotes growth and progress and many indicators are screaming decline. That said we are in a zone of turbulence within growth and decline. This is global with some areas growing and some declining. In this situation some places will achieve high levels of transition until globalism ends. Alternatives are a global technology that cannot go local in self-replication so alternatives are tied to globalism. Globalism could limp along for years.

    Don’t expect alternatives to be what fossil fuels were. They are a different animal. Fossil fuels are raw power and alternatives are complex power. There is a big difference when looking at transition. One drove man out of the primative into the modern. The other must maintain the modern while transitioning to a whole new paradigm. It must do this in a world in systematic decline from multiple converging issues. It must do this with low EROI compared to what is needed. It must do that with an economy clearly unhealthy and nearing rapid decline. That give you a taste of the impossible scaling alternatives face. In another world maybe but in this world no.

  14. indigo on Thu, 22nd Dec 2016 6:49 am 

    Rockman
    “….just as no drilling decision has ever or will ever be based upon the EROEI of that project.”

    Some 80+ years ago, when it was possible to access approx 100 BTU’s worth of energy, at the expense of 1 BTU, …no energy company had need to give EROEI a second thought. And the net gain of 99 BTU’s worth of energy, of course, bought us a lot of ‘civilization’ back then.

    A BTU [gain/expenditure], ratio of 13 : 1, which is roughly the situation today, buys us a lot less ‘civilization’. What I think is happening is that that various ‘prints’, of QE cash is what is keeping the [oil extraction], plates spinning, [at least for now].
    The energy companies of today,[as you suggest], don’t care about EROEI. What they care about is that their salaries are going into their bank accounts every month. If QE cash is going into the industry, the energy industry cares not if they are undertaking a thermodynamically pointless task, of burning 1 BTU to gain 2 BTU.?
    In short,.. The oil industry will happily, waste 1 BTU to get 2 BTU, just so long as we print up some more cash and pay their salaries to keep the stuff coming.?

    The problem of course, is that although this arrangement makes the oilmen happy bunnies, with their wages coming through monthly,.. society cannot thrive on the 2:1 results of their ‘QE subsidized’ labour.

    The net result is that an artificially [QE], subsidized oil industry, keeps the oil flowing, but society frays slowly at at the edges,… one unfilled pot hole,… one unfixed street light,… one lost social worker job a time until we as a society face the Great Unraveling.?

  15. Cloggie on Thu, 22nd Dec 2016 7:07 am 

    A BTU [gain/expenditure], ratio of 13 : 1, which is roughly the situation today, buys us a lot less ‘civilization’.

    Wrong kind of thinking. In 100 years a lot has happened and a lot of the BTUs have been converted in knowledge and methods. It takes far less energy to maintain a road than to actually build one from scratch.

    30 years ago I had to fire up my very old Volvo-240 of 1400 kg (essentially a tank disguised as a passenger car) in order to drive to the bank and post paper payments. Today you do that online and as such reduced the energy cost of the very same transaction to almost zero. There are a lot of those examples.

  16. Cloggie on Thu, 22nd Dec 2016 7:08 am 

    Today you get a lot more bang for your BTU.

  17. Davy on Thu, 22nd Dec 2016 7:19 am 

    Clog, how much power and complexity does it take to run that online payment system might give your techno happiness less impact. Much advances have been made but along with advances has come new problems. The yet to be realized question is will advances power us through the problems. Many have unrealistic hope. Every day that goes by I have less hope.

  18. Cloggie on Thu, 22nd Dec 2016 7:23 am 

    Clog, how much power and complexity does it take to run that online payment system might give your techno happiness less impact.

    Far less than than it takes to keep a car economy afloat.

  19. Simon on Thu, 22nd Dec 2016 9:07 am 

    Hi Cloggie

    I guess, this implies that you only did one errand (Bank). Whereas probably you trundled off to get groceries etc etc.
    Now, yep the bank is electronic, however you will still need to do all the other stuff, so the only real saving will be in the efficiency of the transport.

    thanks

    Simon

  20. shortonoil on Thu, 22nd Dec 2016 9:28 am 

    “The underlying problem with EROEI calculations is that EROEI is based on a very simple model.”

    At least the author got one thing right? EROI is simple because it is a dimensionless ratio. Multiply by 100, and it produces a percentage. Unfortunately, they miss the not so simple part. EROI is a time and positional function. The EROI of petroleum is different at the well head, than it is at the refinery gate, than it is at the end users tank. It is also different today than it was yesterday.

    The ERoEI is a little different because it refers specifically to petroleum: it is the energy returned on energy invested at the well head, at some specific point in time. So it is very useful for comparing a well in Rumania with one in Nigeria. It is not particularly useful for comparing an oil well with a PV installation because they don’t build well heads into PV systems (some people don’t seem to notice these kinds of things)!

    The gist of the matter is that EROI (and ERoEI) are very useful if they are used correctly. That of course depends on whether the one using it knows what they are using. When they start comparing well heads to PV systems they obviously don’t! We will continue to use ERoEI because it is a very handy way of comparing petroleum production over time. It products one simple number that can be used afterward in many simple ways. That does not imply that it is useful for the simple minded. Pickup sticks are probably a better alternative for them?

    http://www.thehillsgroup.org/

  21. Cloggie on Thu, 22nd Dec 2016 9:34 am 

    Simon, for the average groceries I hardly ever use the car, but instead the bicycle or my two feet.

    And since I almost always buy exactly the same stuff, predictable like a clock, by the time that I’ll be wheelchair material, I can go online and get the stuff delivered in my kitchen for 3.95 euro’s…

    https://www.ah.nl/over-ah/online-bestellen/bezorgservice

    …by a van that hopefully navigates on the basis of a solved travelling salesman problem.

    These kind of online-services, not to mention the future self-driving car, will enable large chunks of the population to abandon expensive private car ownership.

    In my professional IT-branch it is very common for people to regularly work from home, as it doesn’t make a difference where the worker is located, as long as he is online. Meetings are done with groupware, including peer-to-peer video. And since in a so-called knowledge economy this situation is normal, commuting will gradually be pushed back as well, hand in hand with abandoning private car ownership.

    As I said, in a modern society you get more bang for your BTU.

  22. mx on Thu, 22nd Dec 2016 9:49 am 

    We’ve got some Goof-Ball Bias going on here:
    Just this one sentence:

    “Intermittent energy, such as is produced by solar PV, is in fact extremely low quality output, but there is no adjustment for this fact in the calculation”

    -Someone got solar mixed up with wind.
    -Secondly, that solar output is high quality right into the PEAK DEMAND curve, Yielding the Biggest Savings by suppressing Peak Prices. Solar actually moves Peak Carbon energy demand off Till around sunset. That’s effective savings for rate payers, and utilities that can take the savings and pocket it.

  23. shortonoil on Thu, 22nd Dec 2016 9:50 am 

    “If a decision to invest with any alt is going to be based upon solely upon economic analysis does the EROEI matter?”

    EOG Resources Inc. December 31, 2015

    Gross profit margin……… 75.13%
    Operating profit margin..(-76.35%)
    Net Profit Margin…………(-51.66%)
    ROE (return on equity)…(-34.96%)
    ROA (return on assets)…(-16.77%)

    Anadarko Petroleum December 31, 2015

    Operating Profit Margin Anadarko Petroleum…( -92.86%)
    Net Profit Margin………..Anadarko Petroleum…(-70.55%)
    ROA…………………………Andadarko Petroleum..(-14.42%)

    Maybe they should have done a little more ERoEI-ing, and a little less drilling?

  24. Jef on Thu, 22nd Dec 2016 9:59 am 

    Capitalism is based on the concept of surplus. Without a surplus there will be no operation.

    Plenty of operations have been built up by promising future surplus then eventually fail to deliver the surplus and tank.

    Amazon has to be the world record in longevity of promised future surplus without delivery. Maybe fracking should take a page from them.

  25. Kenz300 on Thu, 22nd Dec 2016 10:19 am 

    Clean energy production with solar panels / tiles and battery storage.

    Clean energy consumption with electric vehicles. No emissions.

    Sign me up. A new solar roof, battery storage, an electric car charger and a TESLA vehicle.

    Solar panels are now being projected to have a much longer life and lower cost than just a year ago.

  26. Kenz300 on Thu, 22nd Dec 2016 10:22 am 

    World Energy Hits a Turning Point: Solar That’s Cheaper Than Wind – Bloomberg

    https://www.bloomberg.com/news/articles/2016-12-15/world-energy-hits-a-turning-point-solar-that-s-cheaper-than-wind

    Solar cheaper than natural gas and coal. Climate Change will be the defining issue of our lives.
    Wind And Solar Now Cheapest Unsubsidized Electricity Sources In The U.S. – First Solar, Inc. (NASDAQ:FSLR) | Seeking Alpha

    http://seekingalpha.com/article/4031497-wind-solar-now-cheapest-unsubsidized-electricity-sources-u-s

  27. rockman on Thu, 22nd Dec 2016 10:57 am 

    Indigo – You’re correct in several aspects but very wrong in others.

    “The oil industry will happily, waste 1 BTU to get 2 BTU”. No, not happy at all: at that low an EROEI the company loses money and those salaries go away. Which is exactly what you’ve seen the lasdt two years, right? I suspect that like many you way overestimate how much energy is used in drilling and production. I’ve detailed the calculations many times so I’ll skip. But as I posted when oil was around $90/bbl if that EROEI got below 5 or 6 the economic analysis would kill the project.

    Now this is tricky and sounds counterintuitive: with oil now at $45/bbl a well has to have an EROEI of around 10 or more for the economic analysis to justify drilling it. As you said it’s about $’s and not Btu’s: a well has to return $X to justify drilling. So the lower the oil prices the fewer $’s returned which thus requires more bbls produced for the same $’s invested. Which means the lower oil prices go the higher the EROEI goes.

    And the converse is equally true: the very high oil prices a few years ago allowed lower EROEI wells to be drilled. And yes: companies borrowed mucho $BILLIONS at low rates thanks to QE. But consider the benefit to consumers: the economic benefit to all those companies was questionable even at high oil prices and now with the level of insolvency due to low prices the lenders’ benefits are also questionable. But the consumers saw an unprecedented increase in US oil production and a huge cash infusion into heavy US industries along with a lot of good paying jobs. The monies spent weren’t pushed into a big pile and set on fire: it all went into the US economy. Add a huge benefit in our trade balance by NOT SENDING hundreds of billions of US $’s overseas for oil imports. And now thanks to all that new production and lower oil prices we’re sending hundreds of billions FEWER US $’s overseas for our current imports.

    The oil patch took a huge hit by borrowing too much to drill a lot of questionable projects. But the US consumer isn’t paying anything close to what it cost to increase US production: they are getting a big discount today. So while the oil patch took a financial and employment hit the opposite is true for the rest of the economy.

    But to be blunt: the oil patch never cared about EROEI or the economy or any of you f*cking consumers. And never will. LOL. Just like every other commercial enterprise in the country…probably including the one that wrote your paychecks. That wasn’t the obligation of any business: mine, yours or that of anyone else on this website.

    Nothing personal, Indigo. Just business. LOL.

  28. Aspera on Thu, 22nd Dec 2016 11:42 am 

    And watch out…here it comes again: just as no drilling decision has ever or will ever be based upon the EROEI of that project.

    Rock: Perhaps you’ve just explained the problem in our thinking; what led us to the mess we are in today. Namely, we should craft a system that DOES use EROEI to make decisions that, over a somewhat longer term than just next quarter’s cash flow report, affects the commonwealth.

    We need some different thinking here…

  29. rockman on Thu, 22nd Dec 2016 12:29 pm 

    Aspera – First, define “mess”. But in the meantime let’s try this approach. Do you have investments such as stocks, bonds, a savings account? If so did you make any investment decision based upon EROEI? Have you ever drawn salary from a company you chose to work for based upon the company’s EROEI of its output? Do you own a house or car and did you base that decision on the EROEI of the construction of that house or car? Basicly have you ever made a single purchase of anything based upon the EROEI of the process that created it?

    If you’ve answered no to all those questions then why the f*ck should anyone else be concerned about the EROEI of anything? LOL. Just teasing you…a bit. But I’ll put it back on you: when you decide which gas station to fill up what do you base your choice on: the EROEI of the oil used to make that gasoline? Is that company a shale driller? Or the price per gallon?

    If you’re not concerned about the EROEI of the oil used to make your motor fuel why should it be important to the company that produced the oil in the first place?

    Folks don’t like it when I point it out…but get over yourself: the oil patch ain’t your mommy. LOL. Nor are we the mommy of the country’s economy…just like no other company. And if you aren’t making your consumption decisions based upon the EROEI of the process then you don’t take any responsibility for the EROEI of our energy dynamic either, do you?

    Or try this: would you want the govt to subsidize (with your tax $’s) an oil company that drilled only high EROEI wells that lost money? I know of a few hundred thousand laid off oil patch hands that would vote yes today. LOL.

    And while I’m being nasty to you I might as well ask how guilty you feel about being part of the collective (the fossil fuel consumers) DIRECTLY producing the vast majority of the GHG causing climage change?

    Otherwise the Rockman sincerely hopes you and all here have a Happy Holiday!

  30. rockman on Thu, 22nd Dec 2016 1:00 pm 

    Indigo – BTW the average EROEI of oil development has never been as high as 100 or even anything close to that level. You’re just repeating the same bullshit so many others have. Next time someone makes that claim ask them to show the details of the math. But be forewarned: they won’t be able to INDEPENDENTLY DOCUMENT the data.

    The confusion may come from estimating the EROEI of a discovery well vs the total amount of energy in the ENTIRE reservoir. A reservoir that may take a few hundreds of times as much energy to develop as used in the discovery well. IOW a great EROEI of a discovery well using 50,000 bbls that discovers a 5 million bbl field. But now add the energy used to drill the 100+ wells needed to produce that 5 million bbl. That EROEI of the FIELD would just be a very small fraction of that of the one discover well.

    And now go to the other extreme. Let’s use an Eagle Ford Shale well. It takes X Btu’s to drill and delivers Y Btu’s. The exact ratio isn’t important to this example. In this case those X Btu’s didn’t discover 100 times Y Btu’s. Despite the constant misuse o the term the EFS is NOT A FIELD…it is a trend. From a practical standpoint each EFS well could be considered an individual field. IOW the ER of the EROEI of each well is all there is. Any offset well has its own unique EROEI. Might be the same, much better or much lower then a well immediately offsetting it

    A real example: The first big oil field discovered in Texas: Corsacana Field. Discovered while drilling for water in 1894 at a depth of 1,000′ and produced 44 million bbls of oil. Obviously it took a lot less energy to drill such a well then an Eagle Ford well today. OTOH while an EFS well might produce several hundred thousand bbl the average of the SEVERAL THOUSAND Corsicans Field wells produced around 10,000 bbls each. Also consider that over the life of each of those wells more energy was used to produce it then to drill it: average production rate was just a few bbls per day.

    And not just pumping the wells: in the 60’s Shell Oil conducted a very energy intensive enhanced oil recovery effort by injecting air into a portion of the field that yielded several million bbls of oil.

    So the EROEI of the discovery well vs the 44 million bbl produced would be way more the 100. So do you think the collective EROEI of thousands of wells taking decades to produce only 10,000 bbls each might be anything close to 100? Like I said above: when you see someone throw out the 100 EROEI bullshit ask them for some DOCUMENTATION like I just offered. BTW if interested just search “Cosicana Oil Field”…a lot more detail then I just offered. Texans are very proud of it and have studied it heavily.

    The EROEI’s of Ghawar Field and the other giants are not representative of the MILLIONS of wells that have produced oil since the beginning of the petroleum age.

  31. indigo on Thu, 22nd Dec 2016 1:10 pm 

    Rockman

    One of the difficulties with these kinds of conversations, is that when we ask the question,… ‘is an endeavor worth it.?’ Some mean in $ terms, and some mean in BTU terms. Worse than that, is when there is a a crossover between the two within the same argument, it confuses the issue even further.
    Another layer of complexity arises as we determine ‘if it is worth it’,… at the individual level,…or the society level,..[or hopefully, both].?

    The best analogy I can think of right now is :

    Suppose I print lots of QE cash, and pump it into an industry that pays its employees [handsomely], to pick sea shells off a beach and put them into 1 kilo bags.? At the societal level, this is an utterly pointless task,.. but the individual shell picker doesn’t care, as long as the salary goes into their account each month.

    The point I’m making is that QE is being used as a ‘mask’, to make [thermodynamically], pointless industries look worthwhile. An otherwise functioning society, would start to show serious failings as the energy extraction ratio (BTU in,.. to BTU out), hits [say] 8 : 1,.. and as it approaches 3:1, would likely collapse to the very basics.?

    But here’s the thing,… As society disintegrates because a 3:1 energy ratio cannot sustain it, the oil workers are looking at their individual situation [not the societal situation!], and as long as the QE money finds its way into their bank accounts,.. they,..[like the sea shell pickers], don’t give a damn, if the endeavor is worth it at a societal level or not. They are getting paid,.. with pretend QE money,.. and that is all that matters to them.

    …..
    Another slight gripe about the concept of energy extraction being ‘worth it’, is that commenter’s, inevitably speak from a perspective of their own ‘backyard’ and don’t always get that ‘worth it’, is relative to where you are on the planet.?

    An installation of solar panels might get you 8,000 miles worth from a Nissan Leaf in Arizona, but only 3,000 miles worth in Norway, or the UK. Where you are,… matters.?
    To make the point more dramatically,.. geothermal is very ‘worth it’, in Iceland, but maybe not so worth it in Ukraine or France.?

    FWIW,.. I was using 100 : 1 ratio as merely an example. The greater point, is that whatever the actual BTU-in to BTU-out ratio was in 1929, it is a lot less in 2016, and decreasing quite rapidly,.. and consequently, [ even with greater efficiencies and technical advances], we’re still in deep shit over the next couple of decades.?

  32. Aspera on Thu, 22nd Dec 2016 1:16 pm 

    Well Rock, you imagine your questions hit home. But they don’t. You see, as applied to food, we do use the EROEI notion to decide how we provision the household. Granted it’s a learning process partly because no one has been doing it for long. We’d like to also use it for decisions beyond food. And we’ve been chatting up the idea with folks involved with what might be called behavioral entrepreneurship around our parts.

    People seem to be asking for new ways of thinking about how to organize things and make everyday decisions. Maybe EROEI could help. Maybe other ways of working through things will be of more help. But without knowing the answer ahead of time my advice is to always try lots of small experiments (not the hard science type, but the everyday ones).

    As far as defining “mess” I have to think that you are just kidding us. So I won’t bite. But I will repeat the simple logic that NOT having used EROEI in the past is not a reason that we shouldn’t have been, or shouldn’t start to now, as groups, individuals and society makes policy and behavioral decisions about energy.

    But here’s the rub Rock. I don’t care that you and the oil business doesn’t (or hasn’t) use EROEI since I don’t look to you or your industry to help lead us out of the mess we’ve gotten ourselves into. I’m looking for new ideas.

    Sometimes progress is made one funeral at a time. LOL

  33. Cloggie on Thu, 22nd Dec 2016 2:55 pm 

    There will be always people around tempted to explain the entire world departing from a single principle. Western philosophy started with Thales, who opined that “everything is water”. OK, that was admittedly not a very impressive start of western philosophy. Next there was another attempt with Anaximenes, who gave it a try with “everything is air” after the motto “if you don’t shoot, you’ll always miss”. Anaximenes has not that many followers anymore, apart from perhaps in the Western media. After Thales and Anaximenes we now have Charly Hall, who insisted that the entire history of Western civilization can be explained from EROEI. Like you can’t have modern civilization unless you have a source of energy with an EROEI of 14. Or you can’t have opera houses below EROEI 8, etc.

    About metrics like length or weight or even temperature there is no discussion. My point is after (beginning to) reading this article: what is the use of a metric if there is no consensus about how to apply it? Why even use it?

    Take solar panels. Give me a panel and put it on my roof. I know from 1 year experience that this panel will produce 1500/6 = 250 kWh/year. The interesting question is: how many new panel(s) can I produce with these 250 kWh? The output is accurately known, the real question is what does count as input? The panels were installed by 3 men in half a day. They came with a van. Should that energy count as input? The panels came from far away China. Should the shipping transport be included? The panels were constructed in a factory, probably using electricity only. You can count the factory panel output of a single day and read the electricity meter of the factory. This obviously need to be included in the input. The commuting energy consumed by factory workers… should that be included as input? The embedded energy of the factory itself?
    Let’s take the example of potatoes, or was it potato’s (where is Dan Quayle when you need him?). I have one potato. I put it in the ground and after 100 days I can dig the plant up and see how many potatoes I got in return. If it is only one, I never should have bothered to put it in the ground in the first place and better had eat it immediately. What you hope is: the more, the better. If I get 10 (all of the same size), I have a potato-EROEI of 10.

    What’s behind the EROEI concept? The intention is to use it to judge if a particular energy source can be used to replicate itself and that additionally there is enough energy left to consume, similar to the potato example. The closer the value is to one, the less useful it becomes.

    It is obvious that in 2016 we are still in the dark in reliably answering the question if solar and wind will deliver what oil and coal already have proven to deliver. The unsatisfactory answer is: “the proof of the pudding is in the eating”. One thing is certain: the more we work with renewables, the better they become. It is a little bit of a gamble, but we have little choice. With IT we have seen what innovation as a global effort could achieve; my iPhone6+ has more processing power than the Burroughs mainframe I worked with as a student around 1980. Let’s hope the same will apply to renewable energy.

  34. Apneaman on Thu, 22nd Dec 2016 3:37 pm 

    rockman define the mess? I have been documenting the big fucking mess you have been profiting from your entire adult life, everyday here for 3 years now. Fuck you retard. What an asshole you are.

    Historic Deluge Hits Texas. Houston, You Have a Problem.

    http://www.slate.com/blogs/the_slatest/2016/06/03/historic_floods_in_houston_texas.html

    Here’s the one where y’all corrupted/owned Cancer industry regulatory body tries to cover the mess up.

    http://www.slate.com/blogs/the_slatest/2016/06/03/historic_floods_in_houston_texas.html

    “Scores of photographs taken by state emergency-management officials show that when floodwaters rise in Texas, they inundate oil wells and fracking sites, sweeping crude and noxious chemicals into rivers throughout the Lone Star State.

    Most recently, rainbow sheens and caramel plumes can be seen radiating from tipped tanks and flooded production pads during the March flood of the Sabine River, which forms much of the state’s boundary with Louisiana. Similar scenes are visible in photos from last year’s floods of the Trinity, Red, and Colorado rivers.

    But despite apparent evidence that spills have been routine in recent floods, Texas’ regulator, the Railroad Commission of Texas, contends that it has responded effectively.”

    http://www.elpasotimes.com/story/news/2016/04/30/flooding-sweeps-oil-chemicals-into-rivers/83671348/

    And it ain’t just the wanton destruction of the life depending biosphere either. You fucking cancer industry cunts are completly out of control and act like the world was created for you. Y’all lead the world in corruption and selfishness. The worst of the humans. If only you could see your self important self rockman. Big man on campus. Where would peakoil.com be without your technical schooling and constant reminders of how important you are? Fuck you old man. I have wondered if your assholeness, or part of it, is because you are suffering cognitive impairment from your Multiple Sclerosis or the meds, but I don’t care anymore and in fact I hope you suffer and rot from it and I don’t give a fuck what anyone thinks. You deserve it and more. I hope you live long too, so you can see how all your precious cancer industry continues to tear your country and the world apart.

  35. indigo on Thu, 22nd Dec 2016 3:54 pm 

    Cloggie

    I get the overall point you are making.
    Time and technological advances, improve things [in energy use terms]. A Model T Ford, was far more of a gas guzzler, in engineering technology terms, than a Honda Prius is today. A cathode tube TV, is/was, far more energy intensive to make and run than an LED flatscreen is today.

    That said, there are other dynamics at play.

    ~ Resources which were abundant [per capita], for 3 billion people are spread far too thinly in an era of 7.4 billion people, with resource extraction far more problematic, here and now in 2016.

    ~ Maslow tells us that some things are far more important than others for our quality of life. Housing,.. food, ..clean water and sanitation, are not just more important, but very energy intensive to provide for 7.4 billion people, even for 3 billion using older less efficient tech.

    ~ if you accidentally dropped and flushed your [much improved hi-tech], iphone 6 down the toilet, your personal survival would not be impaired. It might even be improved, as you are forced to focus on the important stuff, instead of… angry birds?

  36. Cloggie on Fri, 23rd Dec 2016 2:29 am 

    rockman define the mess? I have been documenting the big fucking mess you have been profiting from your entire adult life, everyday here for 3 years now. Fuck you retard. What an asshole you are… You fucking cancer industry cunts are completly out of control and act like the world was created for you… Fuck you old man. I have wondered if your assholeness… you are suffering cognitive impairment from your Multiple Sclerosis or the meds, but I don’t care anymore and in fact I hope you suffer and rot from it and I don’t give a fuck what anyone thinks. You deserve it and more.

    The Mongol from Hangover himself worked for years in the Alberta oil patch, no doubt on a much lower level than the Rockman. So he is in his own words a “cancer monkey” himself. Also he was a car parts sales type, employed by a Hollander, walking up and down the isles all day long looking for car parts, so happy motoring could continue. If there is anybody on this board who should stop pretending he is on the moral high ground and shut up, it would be our jailbird, viciously lowering standards as he goes. F* your sofa already for a third time today, Friday? Mind the zipper, will ya.

    https://www.youtube.com/watch?v=R0wqM_tAmFs

  37. Rockman on Fri, 23rd Dec 2016 7:43 am 

    Poor Cloggie. We should have sympathy for our cohort. Appears to be suffering from the same guilt complex as some others here. Being an active member of the group (fossil fuel consumers) that is DIRECTLY RESPONSIBLE for producing the vast majority of the GHG that’s causing climate change has to be tough on anyone’s sense of morality. Easy to be understanding since without Cloggie et al financing his efforts the Rockman would not have had much of a career.

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