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.

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:

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.

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.

As compared to a stock pusher advice? Too bad there is no spam filter on TOD.

If they were, we would have to shut down the electric utility industry for sure and probably most of the industrial economy.

You are making a very common error, equating "conversion efficiency" of electricity generation (always less than one--I'm sure you understand the second law of thermodynamics) with "energy return on investment". When conversion of energy forms are involved in an EROI analysis, you need to chain the results. Start with the primary energy form such as coal, with an EROI of 20-30, and multiply that by the conversion efficiency, say 33%. The resultant EROI is still quite positive.

The "industrial economy" has no EROI in and of itself. You appear to be mistaking energy intensity of production with EROI. EROI only applies to energy.

You're missing the point he is making. We are transforming an energy source from an unusable form, to one that is usable.

You started going down the thermal efficiency path, then took a right turn into EROEI.

EROEI is a f*ckin numbers nightmare that people can spin as they please by including or not including specific numbers, confusing people who don't have a good grasp on the subject even further.

For example, take your EROEI analysis of coal to electricity. You conveniently didn't include the coal burned to spin the turbines in your EROEI calculation, only the energy burned mining the coal. An ethanol lobbiest would love to apply this methodology to all of the natural gas they burn making their finished product, but unfortunately we can not do this because the feedstock can be used for many different purposes, therefore it isn't 'free'.

Again, as I've stated before, EROEI while useful if someone is comparing apples to apples, is repeatedly misused.

For example, take your EROEI analysis of coal to electricity. You conveniently didn't include the coal burned to spin the turbines in your EROEI calculation, only the energy burned mining the coal.

Excuse me? Exactly what is the 67% wasted heat in the example I just gave? The loss of burning coal for electricity generation. That's "conversion efficiency". It's included explicitly.

EROI certainly has problems, but tell me that the market doesnt! Id rather make long term decisions based on energy than based on dollars. The dollars will follow (or something of value will)

One of the things Im devoting my time and resources is to standardize and EROI methodology that can actually be used by policy makers to use our few bullets to their best advantage of turning fossil fuels into renewable infrastructure. The national scaling of corn ethanol MIGHT turn out if we have a cellulosic breakthrough but the ONLY reason its being scaled is due to subsidies and the money that people can make (from our taxes essentially). EROI aint perfect, but its looking a step down the road.

That's not what he said. EROEI is a numbers nightmare that rapidly boils down to nonsense. Net energy does NOT have the same problem. It can be easily understood, and the books aren't automatically cooked in the same way they are for EROEI. Net energy analysis is a fine thing to do, X barrels of oil becomes Y gallons of Gasoline, all things considered, that's fine. EROEI, I give you 8 apples and you give me back 10 vs. I give you 1 apple and you give me back 3, is there a difference here, the EROEIs are wildly different, but tell me that this matters in ANY way? It doesn't.

Nobody's claiming that things should be measured in dollars and cents, they're just wondering why you bring in the mathematically quesionable black magic of EROEI when there is no reason to do so. There are many reasonable ways to measure system efficiency, why rely on one that is by construction not reasonable?

Here's how it matters. You have an apple tree with 9 apples on it. In your first scenario, you can trade 8 for ten. You net 2 apples from your tree. You have 11 apples to use. And you're done trading up from your tree. In the second, you give away 1 for 3, 9 times. You net 18 apples from your tree. You have 27 apples to use. HUGE difference. EROEI matters because you've got to have energy in the first place to net whatever. If one barrel of oil can be used to find, pump, and process ten, you net nine to use for all we use it for, including finding, pumping and processing more. If one barrel of oil can only be used to find, pump and process 2 barrels, good luck running a civilization.

"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). Hows that for a "business decision?"

"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) becasue 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.

Cutler: First, just want to say thank you for a provocative and interesting article. I do have a query on the following statement:

We trade 3 BTUs of low quality (coal) for 1 BTU of high quality energy (electricity) becasue 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.



The EROI calculation does not take into account the negative externality associated with the CO2 emissions of the 3 BTUs of input coal. Since those emissions are in excess of the natural clearing capacity of the environment (with a renewable fuel source the assumption is made that the next growth cycle would remove an amount of CO2 equivalent to that just emitted). Someone, at some point in time, must bear the associated costs. You are describing obtaining a present quality but in doing so you are transferring a disutility to someone in the future. Your comment?


The EU appears to be in the process of introducing some form of NEA and will be requiring that products sold in the EU list their carbon content. This would premit the consumer to discern between broccoli from Chile and broccoli from next door. Do you have any information on this use of NEA?


Cheers!

At the moment no business decisions are made on the basis of net energy or EROEI.

So....

At best net energy and EROEI might be relevant in the final stages of post peak oil decline.

If true, then that shows the economic system built to date will have to be re-thought.

Exactly how shall that be done in a nice way VS a not nice way?

You can cover the earth with PV panels or you can capture solar energy with agriculture.

Solar photons are also expressed as water evaporation subjected to daming and wind machines.

If the only choices are PV/hydro/wind/Ag then how shall the present economic model be maintained or even the present population?