Ten Fundamental Principles of Net Energy
Posted by Nate Hagens on January 26, 2007 - 12:00pm
Topic: Alternative energy
Tags: alternative energy, economics, eroei, eroi, lifecycle analysis, net energy [list all tags]
This is a guest post from Cutler Cleveland. Theoildrum.com previously highlighted Dr. Clevelands work on the Energy Return from Wind. Todays post is Professor Clevelands latest installment on net energy analysis at the Encyclopedia of Earth, which I have reformatted to theoildrum. The Encyclopedia of Earth, where Prof. Cleveland is an editor/director, has made amazing progress in its short history attempting to become an academic/content based web clearinghouse for information on earth and our environment. I encourage everyone to follow some of the hyperlinks in the below story and peruse that site.
Outside of taxes and profits, we are a society used to thinking in gross terms. But the net is what we get to use. Net energy is how much energy is left for productive purposes after the energy needed to find, concentrate and deliver its energy services are subtracted. Net energy analysis, (and its subset EROI) get alot of airtime in peak oil discussions. If the world is running on a certain total energy surplus, what are the implications for a decline in this surplus? Will the market, via dollars, anticipate or obviate a future constrained by biophysical limits? There seems to be much disagreement as to how best to use EROI and net energy principles, if at all, in tackling what we perceive on the horizon as a looming energy crisis. In this piece, Dr. Cleveland gives and overview of the central tenets of net energy analysis, in a broader perspective that we are used to on this site.
!Kung Hunter Gatherers- Figuring out net energy?
Introduction
Energy return on investment (EROI) is the ratio of the energy extracted or delivered by a process to the energy used directly and indirectly in that process. A common related term is energy surplus, which is the gross amount of energy extracted or delivered, minus the energy used directly and indirectly in that process. EROI is a dimensionless number, while energy surplus refers to an actual physical quantity of energy. Suppose an energy delivery system delivers 10 joules of energy, but in the process consumes 2 joules. The EROI for that process is 5 (10 divided by 2), while the energy surplus delivered is 8 joules (10 minus 2).
EROI is a tool of net energy analysis, a methodology that seeks to compare the amount of energy delivered to society by a technology to the total energy required to find, extract, process, deliver, and otherwise upgrade that energy to a socially useful form. Net energy analysis was developed in response to the emergence of energy as an important economic, technological and geopolitical force following the energy price increases of 1973-74 and 1980-81. Interest in net energy analysis was rekindled in recent years following another round of energy price increases, growing concern about energy's role in climate change, and the debate surrounding the remaining lifetime of conventional fossil fuels, especially crude oil.
The principles
1. Net energy and energy surplus are important driving forces in ecology and economic systems
The efficiency and effectiveness of energy capture is a central organizing principle in ecology. Living organisms must capture energy and allocate it among a number of life-sustaining tasks (growth, reproduction, energy storage, defense, competition). A larger surplus produced by a system of energy capture compared to competing strategies gives an organism a competitive advantage. Ecologists have used the principle of net energy to explain a wide range of phenomena, including habitat switching, long distance migration by birds, vertical migration by marine organisms, optimal foraging strategy, the pattern of the distribution and abundance of species, reproductive behavior in bats, and the effects of human disturbance on organisms.
Biologists such as Alred Lotka and Howard Odum elevated the concept to the driving force behind natural selection itself, where, in the struggle for existence, the advantage goes to those organisms whose energy-capturing devices are more effective in directing available energies into channels favorable to the preservation of the species.
Scholars from a number of disciplines have applied the same concept of net energy to social systems, with widely varying assumptions about the extent to which net energy influences the trajectory of the evolution of culture. The analogy to natural systems is straightforward: societies with access to energy sources with a higher EROI and a large net energy surplus have an economic and military advantage over societies that use lower quality energy sources. A low EROI means that more of a society’s productive resources must be devoted to energy delivery, and thus cannot be used to produce non-energy goods and services, support a powerful military, expand the arts, or be consumed as leisure time.
Net energy has been used to explain major energy transitions, including the industrial revolution and the emergence of the affluent society, the rise and fall of great civilizations, the pattern of resource depletion, and the impact of technological change on energy technologies. Net energy has been used as a methodological tool to assess and compare energy systems, as a tool to assess the climate impact of energy technologies, and it plays a central role in the longstanding debate on the viability of alternative energy technologies such as ethanol.
2. The size and rate of delivery of surplus energy is just as important as EROI
The net amount of energy delivered from the energy sector to the non-energy sectors is the energy available to generate non-energy goods and services. The size of that surplus sets broad but distinct limits on human economic aspirations. Falling water, for example, can deliver a large EROI in a specific location, but the total energy surplus available to a society from falling water is limited by the relatively sparse spatial distribution of the resource. The amount of energy surplus potentially available from diffuse energy sources such as solar and wind power is just as important as their EROI.
Contrary to popular belief, agriculture did not supplant hunting and gathering as the major food production technology because it had a higher EROI. Indeed, hunting and gathering often produced a very high EROI in specific locations and around specific resources. For example, the harvesting of energy-dense biomass in coastal whaling had an EROI in the neighborhood of 2000:1. Some hunting and gathering societies developed sophisticated social and civil institutions, and often consumed their energy surplus in the form of leisure time. But hunting and gathering ultimately is limited by the distribution of edible net primary production in the biosphere, which limits population densities to about one person per square < a href="http://www.eoearth.org/article/Meter">kilometer.
The advantage of agriculture derives from the large net energy surplus delivered per unit land area and per person compared to hunting and gathering. Agriculture thus erased the energetic limits to carrying capacity inherent in hunting and gathering, and released human labor and other productive resources from the farm. The latter was a necessary condition for the industrialization of society.
3. The unprecedented expansion of the human population, the global economy, and per capita living standards of the last 200 years was powered by high EROI, high energy surplus fossil fuels.
The penultimate position of fossil fuels in the energy hierarchy stems from the fact that they have a high EROI and a very large energy surplus. The largest oil and gas fields, which were found early in the exploration process due to their sheer physical size, delivered energy surpluses that dwarfed any previous source (and any source developed since then). That surplus, in combination with other attributes, is what makes conventional fossil fuels unique. The long run challenge society faces is to replace the current system with a combination of alternatives with similar attributes and a much lower carbon intensity.
4. The principal economic impact of a shift to a lower EROI energy system is the increased opportunity cost of energy delivery.
A shift to a lower EROI energy system means that more of society's productive resources are devoted--directly and indirectly-- to delivering the same amount of energy. That energy thus cannot be used for other purposes, notably consumption goods. Energy used to make a drilling rig or wind turbine cannot be used to manufacture iPods or provide medical care.
5. Energy quality matters
Net energy is only one attribute of an energy system that determines it usefulness to society. The usefulness of an energy system is determined by a complex combination of physical, technical, economic, and social attributes. These include gravimetric and volumetric energy density, power density, emissions, cost and efficiency of conversion, financial risk, amenability to storage, risk to human health, and ease of transport. These attributes combine to determine energy quality: differences in the ability of a unit of a fuel to perform useful services for people. No single metric of an energy system captures all such attributes, including EROI. It stands to reason, therefore, that a comprehensive and balanced comparison of energy technologies should employ a range of metrics, with their strengths and weaknesses duly noted.
Energy content per unit mass and per unit volume for various sources (click to Enlarge)
Since all forms of energy can be completely converted to heat, heat units (Btus, joules, calories, kilowatt-hours) provide an easy way to aggregate different forms of energy. For example, the world uses about 450x1015 Btu, or 450 "quads" of energy each year. That quantity is the aggregation of dozens of different energy types added together by multiplying their mass or volume used times their heat content per unit mass or volume. But this approach implicitly assumes that "all Btus are equal," i.e., that people value a heat unit of electricity the same as a heat unit of coal. Of course, this is not the case. Electricity performs important tasks that coal cannot, or it performs them more effectively. People are willing to pay 15 times more for a heat unit of electricity (in the U.S.) because of these differences. Accounting for differences in energy quality can dramatically alter the results of net energy analyses.
6. Market imperfections that distort prices and cost also affect EROI
Dollar-based assessments of energy systems are distorted by market imperfections such as externalities, subsidies, and government policies. The result is that the full social cost of energy is unaccounted for. However, EROI is plagued by many of the same problems. For example, there is no established methodology to incorporate the ecological and human health impacts of energy production and use in the calculation of EROI, so it too overstates benefits to society. In fact, economic analysis has better developed tools to estimate and aggregate external costs than energy analysis.
The calculation of indirect costs in energy analysis (e.g., the energy used to manufacture a wind turbine) often is based on economic data. Subsidies and other government policies affect decisions made in the market, and thus affect the economic data often used as inputs to energy analysis, including the pattern of capital investment. A good example of this was government regulation of the natural gas industry in the U.S. in the 1970s. Deep, new, and presumably lower EROI natural gas was assigned a higher price than shallow, old, and presumably higher EROI gas in an attempt to stimulate overall exploration. Any change in the overall EROI for gas extraction caused by this policy had little to do with “resource depletion” per se.
7. The methodologies to perform net energy analysis are well established
Conventional wisdom in the blogsphere and other Internet communities is that there are no guidelines for performing net energy analysis. In fact, there is a rich, well-established body of literature on the subject, most of which was developed in the first wave of energy research in the 1970s and 1980s. This body of work includes not only methodological detail, but also discussions about how to deal with intractable problems such as joint costs and outputs, the energy cost of human labor, choosing appropriate system boundaries, among many others. The record also has a rich history of debate about the virtues of net energy analysis, particularly in regards to what it adds, if anything, to a discussion that already includes a thorough economic assessment. The current discussion surrounding net energy analysis would be significantly enhanced if participants were better informed by previous work.
8. The relation between “peak oil” and the EROI for world oil production is unknown
This statement is true for two reasons. The first and most obvious reason is that we do not know when world oil production will peak, and won’t know definitively until sometime afterwards. Second, and more importantly, there is no comprehensive and reliable assessment of the historic EROI for world oil production. There is a distinct lack of reliable public data on the direct and indirect costs associated with oil production in many regions of the world.
The lower 48 U.S. is the only region for which we can compare the trends in EROI and oil production. There we see a remarkable convergence: crude oil production peaks in 1970 and then declines, and the EROI for that production peaks at about the same time. The timing of both peaks is consistent with a change in the underlying cost structure of the resource, when the cost-increasing effects of depletion began to outweigh the cost-decreasing effects of technological change. If such as connection holds at the global level, then the timing and impact of “peak oil” takes on added significance.
9. Technological change affects EROI just as it affects price and cost
There is a widely held assumption that the EROI for a nonrenewable energy resource such as crude oil or a renewable resource such as wind inexorably decline once the physical quality of the resource base begins to decline (e.g., smaller and deeper fields, or less windy sites). This is not necessarily the case. Technological change that lowers the dollar cost of extraction can also lower the energy cost of extraction. For example, developing the ability to drill multiple and directional wells from a single platform lowered the dollar cost per well, and it may well have lowered the indirect energy embodied in the materials required to extract oil. The well-documented technical improvements that have lowered the dollar cost of emerging technologies such as wind and solar undoubtedly exert at least some downward pressure on energy costs as well.
The decline in cost for ethanol fuel produced from sugarcane in Brazil (click to Enlarge)
Technological change exogenous to the energy industry also affects the EROI. For example, the development of more efficient combustion engines would, ceteris paribus, improve the EROI for oil extraction that relies on such engines to lift oil to the surface. Similarly, a decrease in the quantity of energy required to produce a kilogram of steel will, ceteris paribus, improve the EROI by reducing the energy embodied in oil field equipment.
10. Alternatives to the dominant energy and power systems show a wide range in EROI
Most alternatives to conventional liquid fuels have very low or unknown EROIs. The EROI for ethanol derived from corn grown in the U.S. is about 1.5:1, well below that for conventional motor gasoline. Ethanol from sugarcane grown in Brazil apparently has a higher EROI, perhaps as high as 8:1, due to higher yields of sugarcane compared to corn, the use of bagasse as an energy input, and significant cost reductions in ethanol production technology. Shale oil and coal liquefaction have low EROIs and high carbon intensities, although little work has been done in this area in more than 20 years. The Alberta oil sands remain an enigma from a net energy perspective. Anecdotal evidence suggests an EROI of 3:1, but these reports lack veracity. Certainly oil sands will have a lower EROI than conventional crude oil due to the more diffuse nature of the resource base and associated increase in direct and indirect processing energy costs.
On the power generation side, coal, and hydropower have the highest EROI among conventional power systems, although the latter has very limited potential for further expansion in most regions of the world. Nuclear power appears to have a lower EROI, but there are very few credible studies that are thorough and unbiased. We do not know what the EROI will be from the new generation of nuclear reactors that would be built if demand for them returns. Wind has a very favorable EROI in the right conditions, while solar thermal and photovoltaic systems have lower EROIs compared to coal and hydropower. As outlined above, a key issue is the size of the surplus that can realistically be delivered by those renewable power technologies.
A final point for consideration:
Carbon may trump EROI. The growing concern that climate change may impose swift and large costs on society may drive the next major energy transition. It is plausible that carbon intensity, as opposed to net energy, may be the principal attribute of future energy systems that determines the timing and pace of their adoption. Society may choose to forgo the benefits of a larger energy surplus to reduce its exposure to climate-related risks.
Further reading
Original posting of the article at the Encyclopedia of Earth here
Biopact. 2006. Brazilian ethanol is sustainable and has a very positive energy balance - IEA report
Bullard, Clark W., Peter S. Penner and David A. Pilati. 1978. Net energy analysis: Handbook for combining process and input-output analysis. Resources and Energy, 1978, vol. 1, issue 3, pages 267-313.
Cleveland, Cutler J. 2005. Net energy from oil and gas extraction in the United States, 1954-1997. Energy, 30: 769-782.
Cleveland, Cutler J., and Robert Herendeen. Solar Parabolic Troughs: Succeeding Generations Are Better Net Energy Producers. Energy Systems and Policy 13: 63-77 (1989)
Cleveland, Cutler J., Robert Costanza, Charles A.S. Hall, and Robert Kaufmann. Energy and the U.S. Economy: A Biophysical Perspective. Science 225: 890-897 (1984).
Farrell,, Alexander E. Richard J. Plevin, Brian T. Turner, Andrew D. Jones, Michael O’Hare, Daniel M. Kammen. Ethanol Can Contribute to Energy and Environmental Goals. 27 JANUARY 2006 VOL 311 SCIENCE
Gever, John, Robert Kaufmann, David Skole, Charles Vorosmarty. 1986. Beyond Oil: The Threat to Food and Fuel in the Coming Decades
Hall, C.A.S., J.A. Stanford and R. Hauer. 1992. The distribution and abundance of organisms as a consequence of energy balances along multiple environmental gradients. Oikos 65: 377-390.
Hall, Charles A.S., Cutler J. Cleveland, and Robert K. Kaufmann. Energy and Resource Quality: The Ecology of the Economic Process. (Wiley Interscience: New York, 1986). (Reprinted by the University of Colorado Press, Niwot, CO 1992).
Lenzen, M. and J. Munksgaard. 2002. Energy and CO2 life-cycle analyses of wind turbines-review and applications. Renewable Energy, 26: 3, pp. 339-362.
Odum, H. T., 1971. Environment, Power and Society. Wiley-Interscience, New York. ISBN 047165275X
Smil, V. 1991. General Energetics: Energy in the Biosphere and Civilization. John Wiley, New York. ISBN 0471629057
Spreng, Daniel T. 1988. Net Energy Analysis and the Energy Requirements of Energy Systems (Praeger). ISBN 0-275-92796-2
Tainter, Joseph A. (1990). The Collapse of Complex Societies (1st paperback ed.). Cambridge: Cambridge University Press. ISBN 0-521-38673-X.
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Another long winded rant presenting one of the favorite red herring arguments here at TOD. At best net energy and EROEI might be relevant in the final stages of post peak oil decline. At the moment no business decisions are made on the basis of net energy or EROEI. If they were, we would have to shut down the electric utility industry for sure and probably most of the industrial economy. EROEI applies only to ethanol and is used by doomers to attack alternative fuel peak oil mitigation efforts. Energy is not a finite resource like fossil fuels. A fresh supply arrives each day from the sun. You can cover the earth with PV panels or you can capture solar energy with agriculture. Take your choice.
what a helpful and constructive comment. thank you for your participation.
Actually, Prof. Goose, he has a point. I found the IROWI (Information Return on Word Investment) of this article very low. It contained nothing new and very little substance. Since I expected more, I was very dissapointed. Maybe I should have expected less to spare me the feeling that I wasted twenty minutes of time reading it?
Practical also brought it to the point: unless we decide to go hardcore nuclear (breeders and ultimately fusion), our only choice to tap into an energy flow that will last for as long as human civilization will (and a lot longer) is solar energy. Alternatively you can slow the planet's rotation down, de-orbit the moon, drill geothermal to the core, capture asteroids or do a bunch of other wild stuff. Those SciFi solutions will work too... they are just a lot harder technically and more costly by orders of magnitude.
Feel free to discuss the physical details with me.
IP - I am posting Professor Clevelands response to "Practical" up here, because Practicals prominent post merits a prominent response- sorry for the gauche blog behavior
"At the moment no business decisions are made on the basis of net energy or EROEI."
Who ever said day-day business decisions are or should be made according to net energy criteria? No one I know of. EROI is a long run force that has shaped every major technological, economic, social, and environmental transformation we have gone through, and most certainly will drive the next one. It sets broad but immutable constraints on what is and is not possible. Investment undoubtedly will be driven to sources with the higher net energy gain, unless non-market forces interfere, because free market systems probaly try to mazimize power see (H.T. Odum).
"If they were, we would have to shut down the electric utility industry for sure and probably most of the industrial economy"
Did you read and understand the section on enegy quality? We trade 3 BTUs of low quality (coal) for 1 BTU of high quality energy (electricity) because that 1 BTU can do more economic work-produce more GDP-than those 3 BTUS of input fuel. An appropriately done EROI of a utlity reflects this reality.
practical - two questions:
1) if you cover the earth with PV panels or capture solar energy with agriculture, there is a cost associated with concentrating and delivering this energy. Do you know what that cost is? In dollar or energy terms?
2) did you actually read Dr. Clevelands post? he addresses many of the concerns in your short winded rant.
1) Today: 25 cents/kWh residential PV, 12-15 cents/kWh industrial PV and 8 cents/kWh thermal solar on the GW scale. Ten years from now: 30% less. 25 years from now: 60% less. I bet you can afford that.
2) No, he didn't. But he fooled you quite well with language that is fluffy and sweet, like cotton candy. And like cotton candy the article contained little that is actually nourishing.
1) You've neglected the cost for new (non-waste)silicon, additional storage, transmission lines, maintenence and labor of pv systems. The boundries for eroei analysis are greater than those for energy efficiency studies
2)Your analogy is lacking. Cotton candy is light and contains little caloric content but is full of embodied energy. She spinning machine and labor use a lot of energy
1) What I quoted was total cost of ownership divided by total energy produced. That is usually what you do for all other electrical sources, too. Transmission cost of PV is lower than that of conventional power sources because the generator can be on your roof rather than three hundred miles away. There is even an over-unity net gain because local generation causes smaller peak loads in summer and the reduction of I2R losses from the coal fired or nuclear or whatever power plant will show up as a greater than unity transmission efficiency for PV (all other things being equal). There is never a free lunch, but sometimes there is a win-win.
2) I meant to say that cotton candy has a lot of calories but you couldn't survive on it. A pure cotton candy diet leads to avitaminosis and lack of essential amino acids and fatty acids. Please don't ever try. No matter how much of that stuff you will eat, you will always get sick and ultimately die.
What we need here are essential facts, not BA kind of fluff!
Then you will have to incalculate that: either the panels are on the roofs, where people live, or they are in a place where there is more sunlight in a better angle, where they can be more efficient.
IP
I agree that an article should ultimately be judged by the quality of the data and argument, but when did good writing become a character flaw? Most scientific writing suffers from a terrible form of prose that follws the following sentence structure ad nauseum: preposition...preposistion...linking verb...preposition...preposition.
E.g.
The cost OF installation OF solar panels WITH the new technology invented BY our company IS less than the cost OF operating the older system WITH the inefficiencies inherit In the system.
or
The effect OF the medication ON systolic blood pressure IN the experimental group WAS greater than the effect ON the placebo group IN this study.
This latter sentence could be rendered:
The medication effectively reduced the experimental group's systolic blood pressure more than the placebo group's.
By avoiding all the prepositions and allowing an action verb to create some of the sentence's meaning, the point is made more clearly and is easier to read.
If you read a lot of scientific writing, like I do, pay attention as you read. You'll become aware of how repetitive and redundant this lazy form of writing is and how it detracts from the writing and makes the point less clear. And then you'll realise how refreshing it is to read something like Mr. Cleveland's essay.
Oh, and yes, the "repetitive and redundant" phrase was intentional.
While a lot of prepositions is possibly harder to read, it may ease the task of expressing a complex sentence/idea as exactly as possible.
A bit of nitpicking here, Your rendition of the medical phrase differs from the original (it seems to me that the "effect" in the original phrase is not quantified, it could be positive or negative, or chaotic?).
Yea, you're right. "effectively" is superfluous. I shouldn't criticize poor writing without taking the time to avoid other writing pitfalls!
I agree Nate. Various people have quoted figures like $0.25/kWH cost for PV energy, but my own real-world analysis puts it a closer to $0.40/kWH for the median insolation case. This is 'real-world' in the sense of getting an actual amortized cost of a system of a given size for residential installation. An additional point to note in this kind of amortization cost is that one is paying for this electricity whether or not one is using it. If, ideally, surplus is sold back to the utility at retail (they often pay only wholesale) even then, in my location I would be paying ~$0.32/kWH net for what I was selling back to the utility. Clearly, to me at least, unrealistic numbers are being used to make PV look better than it really is.
For large-scale centralized PV power generation, seldom have I seen a realistic assessment of the grid-penetration/storage problems. Usually you just get an arm-waving, 'we will simply use pumped water storage.' without any further analysis of the infrastructure and maintenance costs and how they would affect the EROI of an energy source that is already marginal.
In the section '5. Energy quality matters' the downside of PV energy is clearly that one gets essentially a trickle of power for the amount of capital investment.
I'm definitely in favor of intensive research on 'renewable' energy sources as well as research on how to change our lifestyles. But I'm really tired of rants like 'practical' makes or arm-waving claims of powering industrial civilization on the arm-waver's favorite pet energy source.
Many thanks to Dr. Cleveland for an excellent summary. I should read up more about the earlier work he cites on net-energy studies. So should others, especially the know-it-alls.
ET,
Could you give the details of the PV costs you found, so that I can reconcile them with the estimates I've seen?
If you could, I'd appreciate: total cost; installation cost; peak rated capacity; and projected # of kwhr's. I believe you used an interest rate of 6%.
A few thoughts: your rate of 8 cents is cheaper than average, and is much less than the actual cost of providing the peak power that solar provides: the fact that your power rates are averaged over the whole day subsidizes peak electrical consumption. Average cost in the US is about 10 cents, and peak power ranges very, very roughly from 15 to 35 cents.
Pumped storage is an old, proven and cost-effective method of storing electricity, not a vague hand waving kind of thing. It hasn't been used more because nat gas peaker plants have been so cheap. Nevertheless, there are many existing examples such as the Luddington MI installation that was paired with nuclear roughly 30 years ago, and is still in use. AlanFBE gives cost figures that amount to less than 1 penny per kwh stored, and of course only a fraction of the energy would require storage.
I have seen quoted:
~$33,000 for a grid-tied system that would deliver estimated average of 541/kWH/mo in a median case insolation zone, half way between worst and best cases. This price does not include installation, but I could possibly get a better price, so for the sake of being generous, assume it does include installation.
$33,000 @ 6% for 30 yrs = ~$197/mo payments
on top of this, my grid hookup basic maintenance cost is $12/mo.
I would conservatively estimate other routine maintenance at $5/mo
giving a total monthly outlay of ~ $214
($214/mo)/(541/kWH/mo) = ~$0.40/kWH
I'm just going by the insolation chart and I'm sure results will vary. As I pointed out, this $214/mo would be laid out regardless of electricity production or usage. I could use a smaller system, of course. It would be relatively easy to downsize my consumption to ~300kWH/mo but the cost per kWH would remain the same. For ~540kWH/mo my bill for grid power runs about $55/mo. and goes down if I use less.
To me, this is the 'reality check' that tells me the true story of cost as it is right now. Hopefully things will improve.
"Hopefully things will improve."
I would look pretty silly if I 'invested' in such a system today and paid $0.40/kWH for the next 30 years when PV proponents are telling me that costs are going to come down to $0.20kWH or less in the next 5 to 10 years.
Sure, it's probably a very good idea to wait for costs to go down. A lot of people are doing that - in effect they've been priced out by price supports in Germany.
And of course, if there are no subsidy programs to reimburse you for the external benefits (direct pollution, GW, security, etc) I wouldn't expect you to invest in something that doesn't pay for itself.
Funny you should mention that. I was just considering the fact that the electricity on the grid here is a larger percent hydro than anything else. A PV system would likely have come from a coal-fired electricity driven factory in Taiwan or ROC, putting plenty of crap into the biosphere.
And could you tell me how a grid-tied system helps security?
This was all basically a cheap shot.
Hydro is your cheapest source. PV will displace other things first.
Security: please note that I was discussing externalities, not direct user benefits. Increasing renewables will displace natural gas first, as it's most expensive. On the margin it's imported, and this will increasingly be from places like qatar, where the security of supply is very low. You may have noticed that we're currently spending $1.2T (and 10's of thousands of american casualties and Iraqi lives) on access for oil in that region.
I of course see cost as relevant to people deciding whether or not to buy a system, but I don't see how it relates to how good or bad PV is as a piece of the energy solution. For one thing, the PV system should be producing for 30-40 yrs or more, and to be fair one would have to compare the PV system to the alternatives available and their cost each year down the line while the PV is producing, not the cost today of suddenly burning a barrel of oil out of the ground, which is then gone forever.
The question really is whether the energy investment will pay off, not the dollar investment. I think there are added benefits - no greenhouse emissions, less stress on grid transmission, and for us, the knowledge that our PV system will supply almost all our annual electrical needs as long as we live in our home - price security in other words, and the option for us to put in battery backup in the future if we want.
Do you have the peak power rating? That's the traditional way of costing out the capital cost of PV. Of course, your capacity factor determines your cost/kwh, and the two are directly related.
I would suggest you get started with a much smaller system. How much are you willing to invest in going a little more carbon neutral this year? $3000? Why not buy two panels and an inverter? Next year you can buy another couple of panels, but hopefully cheaper (if the silicon crisis can be resolved). Ten years from now you can get the same capacity for maybe close to half the price. By hedging your investment you will have done yourself and the environment a great favor.
For a proper financial calculation of solar energy cost one has to do hedging, anyway. Since the solar industry is growing rapidly, the majority of the investment will be done late in the game, at the lowest price of the mature market. On average solar energy will cost close to the market price 25 years from now, not what it costs now.
And, like I said in another post... solar is growing as fast as it possibly can due to technical limits. Now we have to wait and see how long it will continue to grow and how much that buys us.
Alternatively, you can always buy green energy from your utility. It will cost something like $20/month and they will build a wind farm somewhere or give CFLs to people. The results are just the same, probably even better than if you try to go solar yourself. They get a price advantage of almost a factor of two which you don't. How do I know? I did inquire for quantities of concentrator solar cells a while ago. They company was happy to sell 500kW+ to me for $3.50/Watt but wouldn't budge to ask for $6 at the 1kW level. Needless to say... I had neither $1.75 million nor a place to put up the concentrators.
Even at 40cents/kWh you have a viable energy source. Once the oil wells are dry, you can't say that for oil. The argument "But it's too expensive!" does not hold much water on that background. Neither does it do much for you in comparison with nuclear, unless your county puts up a sign "Please build the next nuclear power plant HERE!".
"An additional point to note in this kind of amortization cost is that one is paying for this electricity whether or not one is using it."
Since your solar panels are connected to the grid, any energy you aren't using is being used by someone else. They happen to be paying for it.
"For large-scale centralized PV power generation, seldom have I seen a realistic assessment of the grid-penetration/storage problems."
There is no storage problem as long as you don't have to shut down ALL your other power plants, which won't happen for at least another 30-40 years in case of solar energy. You simply have net savings in coal/natural gas. I bet with you that ten years down the road you would love to have more cheap NG in winter to heat your living room! You will ask yourself... why, oh, why did we have to waste 60% of the BTUs in NG in our electrical plants? Couldn't we have put some more wind turbines and solar panels up back in the days when there still was NG?
And as for the power grid... I am already paying for the grid on my current electricity bill. It is a fraction of generation cost. With stronger grids that cost will go up. Is that a problem? The grid argument falls into the category... "But it is too expensive!".
"Clearly, to me at least, unrealistic numbers are being used to make PV look better than it really is."
You can discuss that with the 10+ billion dollar industry that is growing at 30% per year. I am sure all these people are just wasting their time. They will thank you for your advice not to invest in the world's next great growth industry.
For what it is worth, in Southern Connecticut where I live, given the state and federal rebates and the renewable energy certificates, solar power is cheaper than buying from CL&P, the local utility. Return on investment is between 5 and 10%. Current power costs are now $.18/kwh.
You apparently did not read item 5. (Energy quality matters), which includes:
Solar energy is free but dispersed and to compare it to concentrated and self-pumping petroleum is ridiculous.
Collecting solar is a lot like rounding up and collecting spilled packing peanuts on a windy day. It takes a lot of effort for little gain. To replace petroleum with solar would mean a lot more people would be employed making energy and not available doing other important stuff.
You said "At best net energy and EROEI might be relevant in the final stages of post peak oil." When is the 'final stage of post peak oil?' When do we start considering the declining energy content of our efforts. Why is not now the time to begin?
"Solar energy is free but dispersed and to compare it to concentrated and self-pumping petroleum is ridiculous."
I completely agree. To compare a resource that is, for all practical purposes, infinite (are you going to be here six billion years from now?) with a one time win in the geological lottery is ridiculous.
"When is the 'final stage of post peak oil?'"
It depends. For many of us it might be the day we buy our first EV that comes with a coupon for solar panels. I would say, some time around 2020-2025. Might be a bit earlier, might be a bit later. Certainly within my natural life time.
But you are right. The right time to act is NOW.
Is oil really self-pumping these days?
On solar E-ROI (which is what you're talking about), see my later posts in this article.
This is an excellent summary by Dr. Cleveland of his valuable research on concepts that are often bandied about on TOD. I'd like to say thank you for your hard work, and thank you for being open enough to share the work on a site often haunted by trolls like "practical".
I hope we can add this to some of the summaries of articles like the ones by Stuart. I don't think every article has to contain completely new facts or theories to be worthwhile to educate people, which is one of the main functions of TOD.
We have a huge number of indirect subsidies on many businesses in our society. The Bush Energy Plan and the democratic energy plan are both being currently debated in the United States, and they both are looking at subsidies for ideas of doubtful utility. I'm really glad TOD publishes this kind of article.
"and they both are looking at subsidies for ideas of doubtful utility"
To a certain degree this assertion is true, however, it is also misleading. Many ideas considered do indeed contain great promise.
"Many ideas considered do indeed contain great promise."
For investors in porking plans like Syntec, you mean? I am sure you are right about that. I just don't believe there are any promises in them for honest people who have to pay for the scam with their tax dollars.
More NOOB gems of wisdom.