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Energy Return and Economic Planning

Alternative Energy

A recent academic paper suggested that the Energy Return on Energy Invested (EROEI) of Solar Photovoltaic in northern latitudes was actually less than unity, in other words that the technology was a net energy consumer. In response, another paper argued that it was probably in the region of 7 to 10. Read together the papers in fact tend to strengthen the conclusion that there is so much uncertainty in such calculations that no administrative decision can be safely based upon them, and that it would be better to leave the matter to the neural network of a liberal market which will gravitate spontaneously to high energy return sources because they are cheaper.

In 2016 Ferruccio Ferroni and Robert J. Hopkirk published a striking article (“Energy Return on Energy Invested (ERoEI) for photovoltaic solar systems in regions of moderate insolation”, Energy Policy 94 (2016), 336–344) claiming that the energy return for Solar PV sites in Switzerland might be as low as 0.8, implying that the technology was not a net energy producer but a consumer. Unsurprisingly, this paper has been the subject of intense criticism, and a detailed and in many points persuasive rebuttal has recently been published by Marco Raugei et al. (“Energy Return on Energy Invested (ERoEI) for photovoltaic solar systems in regions of moderate insolation: A comprehensive response” Energy Policy 102 (2017), 377–384). Raugei and his colleagues make a number of methodological criticisms of Ferroni and Hopkirk and using alternative methods, calculate that the energy return is in the region of 7 to 10. While Raugei et al’s figure is positive it is not particularly high, as compared for example to figures in the literature for electricity from coal and gas (EROEI = 28–30), and nuclear (EROEI = 75–105) (see D. Weissbach et al. “Energy intensities, EROIs (energy returned on invested), and energy payback times of electricity generating power”, Energy Policy 52 (2013), 210–221).

Exciting though these disputes are, and it cannot be denied that the entire EROEI literature has a deep academic fascination, it is obvious that even at their best the methods are extremely sensitive to premises that may well prove to be mistaken. In other words, it is impossible to avoid the conclusion that EROEI is not a robust calculation and is barely in the realms of intersubjective science.

Interestingly, these uncertainties are almost entirely in the Energy Invested side of the equation (on Energy Return, in fact, Ferroni and Hopkirk and Raugei et al. in substantial agreement). This suggests that the analysis has some key weaknesses not entirely dissimilar to those of the Levelised Cost of Electricity (LCOE) method as it applies to renewables. As is well known, the system effects of uncontrollably variable renewables are not adequately addressed by LCOE, since adding uncontrollably variable renewables to a system increases overall costs (new grid and operating procedures, and suboptimal operation of the conventional fleet), all of which tends to reduce system productivity thus increasing costs. LCOE doesn’t capture this, so a Total System Cost analysis is required to discover what the probable effect would be on the consumer.

The situation with EROEI is rather similar. Rather than just asking whether a technology has a high or low EROEI in an isolated or laboratory sense, we should be asking what the presence of a particular solar PV or wind turbine fleet, for example, does to the EROEI of the overall system of which it is a part. No one would deny that such an analysis is even more difficult than the narrower estimates attempted by Ferroni and Hopkirk and Raugei et al. Perhaps it is impractically difficult, but that  brings us to the broader point. – It seems that however gifted and scrupulous the researchers attempting a comprehensive EROEI calculation, whether at a site or system level, neither the reasoning nor the information can be sufficiently robust to inform an administrative decision on a crucial economy-wide investment with a lifetime measured in decades and far reaching economic consequences.

Of course, it is precisely because of such epistemological limits that economic planning in general is so unwise, and that with any major complex decision there is no alternative to allowing the neural network of free contractual markets to react to the full conspectus of data available, as represented in the price. This is as true in energy policy as it is elsewhere. In fact, and for obvious reasons, price will be strongly correlated with EROEI, a high energy return yielding cheaper energy. Consequently, competitive energy markets will always gravitate towards the highest EROEI systems available because they are cheaper for the consumer. Would solar and wind survive that experiment? The need for both income support subsidies and market coercions compelling consumers to purchase the electricity suggests not, but it would only be fair to give them a chance and put them to the test in an undistorted market. This would be academically very valuable, as well as good for the consumer.

26 Comments on "Energy Return and Economic Planning"

  1. Cloggie on Fri, 24th Feb 2017 3:00 pm 

    With quantities like size, force, temperature, etc., there is agreement about how to measure these.

    With EROEI there is not. Should we for instance include the average commuting distance of PV solar factory employees in the EROEI calculation or not?

    What is needed is an EROEI calculation that is as simple (and thus reproducible) as possible, like assume values for embedded energy of raw materials entering the factory and read the total energy consumption of the PV factory and set this off against the expected life energy production of these panels at a given latitude leaving the factory.

    This figure could at least be used to measure progress in bringing down energy input for a given production progress.

  2. rockman on Fri, 24th Feb 2017 3:11 pm 

    Cloggie – “What is needed is an EROEI calculation that is as simple…”. Why is it needed? Just as drilling decisions are made based of economic criteria and not EROEI so would a solar installation. Even if the solar project had an EROEI of 150 few if any would get built IMHO if it took 20 years of energy savings to recover the initial investment. And that’s not even taking into account maintenance costs. OTOH if a commercial solar design paid back 100% of the investment in 24 months hundreds would be built even if the EROEI was just 1.5.

  3. superpeasant on Fri, 24th Feb 2017 3:12 pm 

    I started reading this as though it were a serious article.

    Sorry, to have tell you that this is utterly unscientific propaganda churned out by the extremist anti-science group headed by climate-change denier Lord Nigel Lawson. The name of the organisation is even a fraud;
    “The Global Warming Policy Foundation (probably best to replace ‘Foundation’ with ‘Fraud’). It has been in trouble with charity commissioners and other official bodies for misleading the British public. Not sure how this bunch of discredited charlatans got in here.

  4. Cloggie on Fri, 24th Feb 2017 3:33 pm 

    @rockman – EROEI 150 and 20 year return on financial investment don’t go together.

    I would have bought my solar panels even if they would have an EROEI of 1. My motivation: reserve for my old age and pay the electricity bill for the coming 25 years while I still can (and postpone the

    Why is it needed.

    You would like to know in advance if EROEI=1 (in which case PV would indeed nothing but an extension of fossil fuel) or is it substantially higher, in which case it would be truly renewable, in that you can build new solar panels from the energy harvested from panels produced earlier and have electricity over for day to day consumption.

    EROEI answers the question if a renewable energy base is possible or not. Some people can’t be convinced.

    For reassurance: in the worst case it is not necessary to place large solar parks in Switzerland (where the article refers to). EROEI in Southern Italy or Sahara is much, much higher. And electricity can be transported from these regions to Northern Europe with limited losses.

  5. Antius on Fri, 24th Feb 2017 5:36 pm 

    ‘I started reading this as though it were a serious article.
    Sorry, to have tell you that this is utterly unscientific propaganda churned out by the extremist anti-science group headed by climate-change denier Lord Nigel Lawson. The name of the organisation is even a fraud;
    “The Global Warming Policy Foundation (probably best to replace ‘Foundation’ with ‘Fraud’). It has been in trouble with charity commissioners and other official bodies for misleading the British public. Not sure how this bunch of discredited charlatans got in here.’

    That’s not good enough. You need to prove what they are saying is untrue. The scientific references quoted are from peer reviewed academic journals. Frankly, the article does not jump to unsupported conclusions. It presents both sides of the argument. It could go a lot further than it does. I calculated earlier that converting intermittent power to dispatchable power consumes about 1/4 of the electric power. Including the energy cost of the storage system, EROI can be further reduced by at least a factor 1.5.

    Also, if this site were funded by the fossil fuel lobby with clear commercial motivations, why would it reference sources that calculated high EROI for nuclear power? The nuclear industry has always been a bigger threat to those people than the renewable lobby. A big drive to nuclear energy would wipe out the US coal industry.

  6. Antius on Fri, 24th Feb 2017 5:52 pm 

    ‘I would have bought my solar panels even if they would have an EROEI of 1. My motivation: reserve for my old age and pay the electricity bill for the coming 25 years while I still can (and postpone the’

    Cloggie, that may work on a purely personal level, if you have the cash and want to spend it that way, who are any of us to argue?. But a low EROI is clearly problematic if these things are planned to be a primary source of energy 30 years from now. In an age of expensive energy, poor EROI is very problematic. It suggests that present relatively low costs are the result of over-manufacturing, poor demand and low interest rates.

    In the long run, a lot of lives will be improved or ruined based upon where society chooses to invest its money. So obscuring facts and pretending this is a valid solution is not kind or sensible.

  7. Cloggie on Fri, 24th Feb 2017 6:05 pm 

    Antius, never said that low EROEI is unproblematic. With a very low EROEI, a renewable energy base can’t exist.

    But there is no reason to assume that this is the case. Offshore wind energy has long entered satisfactory EROEI terrain and developments in solar, especially thin film solar, leave a lot of room for innovation and substantial improvement of EROEI (via improvement of production process, that is the input factor).

  8. makati1 on Fri, 24th Feb 2017 6:30 pm 

    Another bullshit article to distract the sheeple. Wind and Solar are net LOSS of energy over time. When they can build, AND maintain the systems and roads and installation cranes and support staff and parts manufacturing/shipping/etc., and THEN have a significant energy gain, I’ll believe it.

    Until then, a stand alone roof-top system can extend electric availability for a home … until the first component fails. Then it is “lights out!”

  9. onlooker on Fri, 24th Feb 2017 6:39 pm 

    Yep, Mak and apart from that even if somehow you could employ, set up and construct your mass renewable energy systems which is highly unlikely, you still would be facing considerable energy deficits compared to FF, considering the inherent qualities of renewable energy, being intermittent and not nearly as energy dense as FF. So keep on dreaming techies.

  10. Anonymous on Fri, 24th Feb 2017 7:59 pm 

    Don’t sweat it guys, clogged arteries is here to convince all of us(again) that high-tech solar panels and windmills can be built out of dreams and fairy dust. It is reassuring to know, that in dutchland anyhow, they have billions of EVs, windmills as far as the eye can see, solar powered ‘roads’, and flying, driverless cars too I bet. And best of all, clog tells us they practically manufacture and maintain themselves. Practically zero material, energy, or human input required.

    Clogged Drains has it all worked it, really, just ask him, hell tell ya. Like 1000x or more.

  11. Cloggie on Fri, 24th Feb 2017 11:00 pm 

    Sneer on bro. The solution aint coming from your direction, no matter how many fake movies the masters of the universe make about you to keep the One World dream alive:

  12. superpeasant on Sat, 25th Feb 2017 1:16 am 

    Antius – Yes, I agree these science deniers were quoting from differing views in a peer-reviewed journal. They are extremely clever and their sole intention is to cause dissension amongst their oponents. I have no idea which of these reports on the EROEI of solar power is correct and the answer is probably somewhere in the middle. However, Lawson and Co just want to give renewables a bad name and for the public to turn against the whle thing. Very clever, but also very evil.

  13. Antius on Sat, 25th Feb 2017 5:20 am 

    An EROI of 6-10 is poor either way. And that was EROI at insolation levels of 1700kWh/m2/year. In northern Europe, it is closer to 1000, so the effective EROI is 4-7. With energy storage included, EROI is divided by ~1.5. So, whole system EROI is 2.7-4.7. This is before the energy cost of distribution is considered and any energy losses.

    If EROI is at the upper end of the range, it might just about be feasible. But if solar power is the way to go, it might be better to build solar thermal plants in the Sahara and transmit the power back to Northern Europe using long distance cables. The energy security problem can be mitigated using thermal storage. In the event of supply being cut, heat can be injected into the thermal store using low cost fossil fuel burners. The carbon emissions from these are zero is they are never used.

  14. Cloggie on Sat, 25th Feb 2017 5:47 am 

    An EROI of 6-10 is poor either way.

    That’s true but anything above 10 would be workable.

    But… as discussed above the EROI is a very dubious ill-defined metric:

    But what is even more important: most research effort to date has been spent on optimizing the conversion of solar light into electricity. Nobody cared that much about EROI, but instead about making the photo-voltaic conversion work as optimal as possible.

    The low value of EROI (if reliable in the first place) is mainly due to non-optimized production processes. The thin film technology, that would replace the energy intensive wafer production process, has great promise.

    Here is a pointer to the work of a gentleman named Bhandari, who reviewed 232 EROI studies between 2010-2013:

    Average EROI: 11.6

    That’s still not great but workable.

    We are now in 2017 and significant progress is still being made:

    Thin film solar is expected to have a energy payback time of ca. 1 year. Over a lifespan of 25 years or more, that would be an EROI of 25 or more and that’s sufficient for a renewable energy base (that can reproduce itself without fossil).

    The energy security problem can be mitigated using thermal storage.

    That’s a no-brainer. In NW-Europe for private households electricity has a share of 25%, space heating 75% of the total annual energy budget.

  15. twocats on Sat, 25th Feb 2017 5:56 am 

    thanks superpeasant… moving on.

  16. Davy on Sat, 25th Feb 2017 7:06 am 

    “An EROI of 6-10 is poor either way. That’s true but anything above 10 would be workable.”
    As a “shortish” extender of the status quo is about as good as 10 will get you. 10 is not going to power an energy transition and allow our flawed civilization to solved its many and varied problems. 10 is not going to do squat for a destroyed planetary system. The most immediate issue of abrupt climate change is beyond 10 and likely any EROI. The scale and the time frame of what is going to hit our civilization is not going to be solved by a factor of 10.

    If you want to talk a factor of 10 then talk about reducing population by a factor of 10. We need to reduce our species footprint by a factor of 10 to allow nature some room to redevelop natural means for our species to survive. We need a factor of 10 in increase in sapience to use the wisdom that will be needed to make profoundly difficult decisions to navigate the gauntlet of a die off. A factor of 10 is not growth related it is decline related. When you see this you can then apply your 10 factor to tools for the ride down our energy gradient and the coming die off

  17. BobInget on Sat, 25th Feb 2017 11:35 am 

    In 1977 my family went solar in Seattle. Our benefits were unexpected and welcome. Our electric bills were so low we secretly thought there must be something wrong with our meter. Besides all of our double glazed south facing windows we doubled our attic and wall insulation. We were hooked.

    In 1989 we moved into an unfinished cabin with great solar access in Southern Oregon. By 1990 I installed
    our first solar water heater copied from a design on my first house in Miami built just prior to WW 2. With dad off fighting for democracy, my job, age seven, eight and nine was to clean glass on that water heater.

    In 2002 we made enough money in oil and gas investments to build a five then, two years later, ten KW solar array.

    As some may gather, energy is my preoccupation.

    Our experience with ‘grid tie’ PV’s has been economic and totally satisfactory. Today of course we could generate three times the energy for that same $41,600
    investment made in 2002 and 04. We pay our power company average $12. per month in taxes, dam removal, poor folks utilities, Eastern Oregon wind power projects etc.

    When oil and gas prices turned down 2015/16
    we were grateful for our “free” electric PV generated power. The energy we generated also displaced tons of ‘feel good’ GH Gases.

    If anyone read this far, here’s a business Idea;

    PV’s degrade one, two, three percent a year (depending on locations)
    After six years, most rich people have deprecated existing PV panels. Remember, panels over six years have lots of useful life remaining. Those folks who itemize taxes, are also entitled to another round of state and federal ‘solar tax incentive’.

    A person can offer incentives to current owners.
    Turn in those ‘old’ PV’s for new without (great) additional cost.

    Unless each individual panel has its own micro inverter, an entire collective ‘string’ must match.

    If you offer to install a new (far cheaper, more efficient), system those same Tesla and Bolt owners can write off old panels as junk and get a new solar write off for the next three years.

    Offer to sell the folks “new and improved’ inverters.
    Hire licensed contractors who will handle electrical, removal and re installations.

    Now, take those old panels and inverters to ‘gray’ markets; indoor growers, guerrilla installers, off grid country or simply people of moderate to no income who NEED to save money.

    One sideline already being done.
    Buy up slightly used Nissan Leaf or Prius batteries from junk yards and resell al la “Power Walls”. Store that solar power for nighttime or emergency use.

    Good luck, Bob Inget

  18. rockman on Sun, 26th Feb 2017 9:35 am 

    Cloggie – My EROEI examples were valid and correct because they were THEORETICAL. And none of your examples changes the fact that going solar is not going to deployed to a significant level if the economics don’t work regardless of the EROEI. This is especially true for COMMERCIAL projects of scale. Unless you know of an investor base that’s willing to put down tens to hundreds of $MILLIONS in capex with little or no profit.

    An individual that puts up his own solar panels with crappy economics is no different then someone who buys a big V8 4wd pickup that only gets 8 mpg: you can do lots of sh*t if the money don’t matter. LOL.

  19. peakyeast on Sun, 26th Feb 2017 10:21 am 

    In another 3-4 years my solar panels will have paid themselves back 100%. So far 1 panel has failed due to me dropping something heavy onto it.

    I expect them to give me a return of 2x the investment before having to repair inverters. The repair is expected to be about 150$ – which is insignificant.

    The realistic lifetime of the panels make me dream about an investment return of 4-5x.

    Definitely not a bad investment. And then I havent even put any value on the “feel-good and bragging rights”…

  20. Antius on Sun, 26th Feb 2017 10:28 am 

    Here is an interesting clangger to throw into the discussion. In Northern Europe, the EROI of a polycrystalline solar panel is about 6 and about 4 after energy storage losses. Sublight intensity is 110 watts/m2 on a time averaged basis.

    In space in geosynchronous orbit above the Earth, solar intensity is 1350watts/m2, and the panel would be in sunlight 90% of the time. That’s 11 times greater on a time averaged basis. So EROI for the panel would be 66. Power can be transmitted to a receiver station on Earth with an efficiency of 50%. Even after the embedded energy of the receiver station and energy losses are accounted for, EROI is still over 20. If the power is used in space EROI is 66.

    Just an interesting aside to throw into the discussion.

  21. Davy on Sun, 26th Feb 2017 10:54 am 

    Antius what is the “I” values for putting panels in space and keeping them up there. That is the difficulty with your great example. Those will be some pricy MF panels and with complicated eroi.

  22. Cloggie on Sun, 26th Feb 2017 10:58 am 

    Antius, although I sympathize with your yearning for all things related to space, that solar-in-space thingy won’t work:

    For starters it costs $20,000 to lift a kilo into orbit or 30 x 20,000 = $600,000 for your average 100 cm x 160 cm panel.

    You get the point.

  23. Antius on Sun, 26th Feb 2017 11:12 am 

    Only really works if you make the panels in space. That way you use materials that already at the top of Earth’s gravity well using abundant space solar power. Hence the mining of the asteroids and space manufacturing. It’s the only way Cloggie’s renewable dreams would work in high population density Europe.

  24. Antius on Sun, 26th Feb 2017 11:23 am 

    Costs are about $2000/kg now thanks to Musk. We would be paying to move robotic mining equipment to the asteroids and factories into Earth orbit. The leverage is many hundreds of times. It would cost tens of billions to set up, but then again a 10,000MWe satellite is worth about $20billion.

  25. Cloggie on Sun, 26th Feb 2017 11:54 am 

    Costs are about $2000/kg now thanks to Musk.


    For SpaceX — the cheapest of NASA’s new carriers — dividing the cost of each launch ($133 million) by the cargo weight of its most recent resupply mission (5,000 lbs.) gives you about $27,000 per pound.

    I was too optimistic with my $20,000/kilo.

    60 km/s asteroids? Solar panel factories in space? Are you serious?

    There is more than enough space in the Sahara for solar panel arrays. It requires an area the size of Spain covered with panels to replace the entire energy consumption of humanity, ignoring, storage and transportation for a moment. The otherwise useless Sahara is many times the size of Spain. 740 million Europeans can be expected to be able to at least recolonize a small empty part of the Sahara.

  26. Antius on Sun, 26th Feb 2017 2:36 pm 

    Falcon Heavy: cost = $90million, lift capability = 54,400kg.

    Cost/kg = $1650.

    Should come down a fair bit more with economy of scale.

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