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Tag Archives: energy return on energy invested

PV solar: big isn’t always better

By Dave Elliott

PV solar is now big – with 227GW installed around the world. But large solar farms apart,  much of it is in small roof-top units. Would bigger arrays be better? Certainly economies of scale suggest large-scale projects are generally more cost-effective than small ones. That holds up well for wind, but does it also hold for PV solar?


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Are renewables enough?

By Dave Elliott

Richard Heinberg from the Post Carbon Institute raised some interesting issues in a lengthy paper at: For example, he says ‘renewable energy technologies currently require fossil fuels for their construction and deployment, so in effect they are functioning as a parasite on the back of the older energy infrastructure. The question is, can they survive the death of their host?’


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A new UK green energy transmission and storage vector

By Dave Elliott

This helpful paper from a team at Sheffield University, UK, entitled ‘Great Britain’s Energy Vectors and Transmission Level Energy Storage’, suggests that ‘power to gas’ conversion systems could supply synthetic gas (syngas), made using renewable electricity, for storage in the gas pipe network, so as to balance variable renewables, this  being a substantially larger storage option for the UK than pumped hydro.


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US green energy: store, curtail – or export?

by Dave Elliott

The US is pressing ahead with renewables, with around 60GW of wind and 10GW of PV solar already in place.  But that means some system operation issues are coming to the fore.  Since these sources vary, as does demand, when there is surplus output from wind of PV, should it be stored or just dumped?


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Energy return on energy invested

by Dave Elliott

There is inevitably some energy ‘embedded’ in energy generation systems, and it is useful to compare the energy needed to build and run plants relative to the useful energy out, but estimating ‘Energy Returns of Energy Invested’ (EROEIs) can be tricky. The ratios can range up to 200:1 or more, and down to single figures- very worryingly since then it is hardly worth running the plant.


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New article on energy quality shows the influence of ‘net energy’ on economic growth

Recently I had a new article published in Environmental Research Letters, the journal associated with environmentalresearchweb. The title of the letter is “Energy intensity ratios as net energy measures of United States energy production and expenditures”. In this letter I explore the Energy Intensity Ratio (EIR) as a proxy measure for energy return on energy invested (EROI). In calculating the EIR by dividing the energy intensity of a fuel (Btu/$) by the energy intensity (total energy consumption/GDP) of the overall US economy, I can track the relative cost of energy over time. In this way, the price of energy is scaled to the energy efficiency of the economy. Essentially, high EIR values mean that energy is cheap and is not constraining the economy. Low EIR values mean that energy is expensive, and if the value becomes low enough, can constrain economic growth because too much economic activity is spent obtaining and purchasing energy instead of other activities.

A major benefit of this EIR approach is that it uses readily available data: energy prices, energy consumption totals, and gross domestic product (although GNP would also provide additional insight). Thus, this method connects economists (who believe in an efficient market that price includes all information) and those of the energy analysis community that work to calculate EROI from core energy and materials data. The analysis shows that EIR is an effective proxy measure for EROI as they follow the same trends over time.

Often people interpret the steady decline of the economy’s energy intensity as an indicator that the economy is becoming more decoupled from energy consumption. However, as my paper shows, this is a misleading view. What matters more is whether or not obtaining energy also takes less energy inputs over time. As seen in the figure, during the 1970s the EIRs for oil, natural gas, and coal all dropped for over a decade (due to the Arab Oil Embargos raising oil prices) that economic growth was negative for 38 out of 96 months (40% of the time) from November 1973 to November 1982 (also see It took a decade for the US to effectively break from the stagnant economy by investing in energy efficiency (vehicle fuel standards, appliance efficiency, etc), new energy resources and technologies (Western subbituminous coal, enhanced oil recovery), and largely removing oil from electricity generation.

A parallel scenario exists for the last ten years in that again the EIRs of coal, natural gas, and oil all dropped significantly to the levels not seen since the early 1980s. And also, at the end of this drop in energy quality was a prolonged economic recession (18 months from December 2007 to June 2009) from which the economy has not fully recovered. US unemployment has been above 9.5% for an unprecedented amount of time since the Great Depression.


The conclusion from this analysis is that three decades after the oil crises of the 1970s, today we are essentially at the same point we were with respect to EROI and EIR as in 1980. In other words, for all of our technological advances in the last three decades – including computers, information technology, horizontal drilling and unconventional oil and gas development, and energy efficient appliances – we are just treading water with respect to energy quality. The US economy broke free from the energy chains of the 1970s by using energy more efficiently, and that will be the key to new economic growth. Unfortunately, these efficiency investments can take another decade to pay off. Although not widely cited as the reason by most economists and “experts” on news shows, low EIR and EROI energy supplies are the major reason why economists do not see near term economic growth being as large as in the past.

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The US government needs to understand marginal returns on complexity and the role of energy

A few weeks ago on This Week (ABC, of the said the United States is now too complex for there to be very large sweeping bills to pass that will be good for the country. The reasoning is that the bills are now so long that there are too many unintended consequences and surprises embedded in them. He thus pushed for more incremental bills to make continuous progress. On the other hand, President Obama says the health care system is so complex that you can’t overhaul it in a piecemeal fashion. So which is it?

What does these conflicting statements from the US elected officials say about the state of governing the United States, or perhaps generally the industrialized world, regarding the reaching a point of diminished marginal returns on the complexity of how we are organized? And in the reasoning of Joseph Tainter ( are energy resources, or the lack of the abundance per capita of the past, have something to do with our inability to solve new problems?
I’ll quote from an article in Slate’s website (

“Over the last several decades, the number of bills passed by Congress has declined: In 1948, Congress passed 906 bills. In 2006, it passed only 482. At the same time, the total number of pages of legislation has gone up from slightly more than 2,000 pages in 1948 to more than 7,000 pages in 2006. (The average bill length increased over the same period from 2.5 pages to 15.2 pages.)

Bills are getting longer because they’re getting harder to pass. Increased partisanship over the years has meant that the minority party is willing to do anything it can to block legislation–adding amendments, filibustering, or otherwise stalling the lawmaking process. As a result, the majority party feels the need to pack as much meat into a bill as it can–otherwise, the provisions might never get through. … And as new legislation is introduced, past laws need to be updated. The result: more pages.”

So governing the country is becoming more and more difficult to increasing size and complexity. Theoretically, this requires more and more money and energy to operate the government and distribute services among the citizens. Given that US energy consumption has been effectively flat at between 99 and 101 quadrillion (1 quad = 1 x 10^15) BTUs since 2004, perhaps this has finally caught up to us in the form of the mortgage and financial crisis causing the current recession. The economists are stating that they don’t see jobs recovering much at all this year even if the overall economy does grow by any percentage.

It is disappointing to hear, or rather not hear, more of a discussion among politicians of how energy resource quality (measured by energy return on energy invested (EROI), net energy, etc.) is not brought more into the general discussion as an indicator of the future path of our society. I hosted a panel session at the American Association for the Advancement of Science Annual Meeting on “The Consequences of Changes on Energy Return on Energy Invested” (see: that the fossil fuels we have used in the past and are still consuming today. Thus, energy systems must inherently get simpler not more complex. It is not clear whether the “smart grid” is more simple or more complex. In some instances, it allows decisions to be made more locally and that sounds simpler. On the other hand, there are more decision-making nodes or locations, and that sounds more complex. I’m inclined at the moment to think that the smart grid is an increase in complexity, but this is a ripe area for future research.

I send out a call to the energy community to call for a more integrated approach to thinking about how critical energy quality is to economic production and societal organization. Instead of blaming the current politician in office for running up the budget or spending too many tax dollars, we need to show that our future options for private and public services are fundamentally limited by the quantity and quality of the energy resources we consume. Thus, we should not be surprised when our politicians are having extreme difficulty in solving the current challenges. The lesser amount of excess energy floating in the economy simply demands that actions be performed much more precisely with less and less room for error. When there is excess energy available, you can simply more easily afford to mess up, and for that matter, clean up your mess.

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Energy for complexity: big government vs big business – it doesn’t really matter which you hate

The economic struggles since mid-2008 are bringing out factions that highlight both the uncertainty of the future together with ignorance of how the past has led us to where we are today. In the US, we have the conservative “Tea Party” movement of the right that is complaining about excessive government spending and the liberal “anti-banking” faction on the left that is fed up with the fat cats on Wall Street skimming too much off the top. Both sides are correct in coming to grips with the fact that large organizations and bureaucracies (e.g. government and banks) are having a harder time coping with the current economic and social problems of today.

What has unfortunately been quite absent from most of the political discussions about how to get the economy “back on track” is the true role of energy resources and technologies. With all of the talk in the United States about the need to “connect the dots” for the “War on Terrorism”, what we really need to do is accept the way the energy and economic dots are connected in our modern industrial society.

By taking the following factors into account and enhancing our knowledge of how we can and cannot affect these indicators, we will “connect the dots” on our future as well as possible:

  • (1) Jevon’s Paradox states that increased efficiency in the use of resources (in this case energy resources) through the use of technology and structural change increases total resource consumption.
  • (a) Policy point: if we target increasing efficiency, we can expect to only delay environmental problems.
  • (2) The energy return on energy invested (EROI) for the combination of energy resources, renewable and fossil, together with technology that converts those resources into services dictates the level of complexity attainable by society.
  • (a) Policy point: society seems to have reached a level of complexity in the last 1–3 decades such that:
  • (3) The EROI of energy services has been extremely high with the use of fossil fuels, and EROI will eventually come to a value such that it is equal for fossil and renewable resources. That time of EROI equality will mark a turning point in human civilization.
  • (4) The human species has now grown in size that it is capable of affecting the environment on a global scale as opposed to only very localized impacts before the industrial revolution.

The connecting of the dots goes as follows:

  • (1) Humans organized into agrarian societies, and this was beneficial because it raised the EROI from farming, where the energy produced in this case was that energy embodied in food, not primary energy for operating machinery. The invention of tools and use of beasts of burden (horses, oxen, etc.) also enhanced human EROI (i.e. the amount of human energy required to grow food for human consumption).
  • (2) The discovery of fossil fuels and subsequent technological change to enable further exploitation of fossil fuels led to the industrial revolution and the capabilities of production and economy in our present industrialized society.
  • (3) Resource constraints via any combination of technical, physical, economic, and political factors act as a driver to increase efficiency in the use of energy resources, but there are thermodynamic limits.
  • (a) For example, the Arab oil embargoes of the 1970s drove up the price of oil which in turn drove the US and Europe to increase fuel efficiency of vehicles to get the same service (move passenger and cargo from point A to point B) with less fuel, or energy. Subsequently, energy efficiency increased since the 1970s but the rate of consumption of energy changed from exponential growth to linear growth, and economic growth also slowed compared to the previous post World War II rates for the US.
  • (4) Today the rate of technological change in terms of increased energy efficiency and high EROI has not increased at the same rate as needed to enable economic growth equal to the pre-2000 years and subsequently the top of the economic food chain has decided to hoard recent profits at the expense of distributing those profits to the middle and lower classes. This is evidenced by the increased income gap between the top and the bottom.
  • (5) The inherently lower EROI of renewable resources will not enable the same level of economic production and societal complexity as provided by higher EROI fossil fuels. This is because renewable technologies are based upon current flows of energy (e.g. sunlight, wind, waves), as compared to fossil fuels which are based upon stocks of energy stored over hundreds of millions of years.

To contemplate the final point above, consider that Earth stored the renewable energy of the Sun (in the form of biomass) on the order of 100 million years, and now we are consuming this energy on the order of hundreds of years. What humans learn and choose to practice during this century will dictate the type of societies that are even possible after peak fossil-fuel production.

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Banking energy vs. banking money: you can’t finance energy

I’ve been working on some analysis lately tying energy return on energy investment (EROI) to financial parameters such as project internal rate of return and levelized cost of energy. An interesting question arrives when you think of the energy costs of financing a project. This is a particularly relevant question today given the level of scrutiny and discussion that is ongoing regarding financial and banking regulation.

The conventional economic wisdom is that financial speculation, mostly in real estate combined with a decade of overspending and a lack of savings in general, led to a bubble in economic growth (e.g. GDP) that then popped resulting in a recession. We are now told that the recovery from the recession caused from this overspending is close to ending due to massive government spending. This logic certainly sounds backwards: that is to say, the way the government claims we will get out of a financial downturn, caused by spending over the rate of economic growth, is in fact to spend more money than we are making. Of course this reverse logic has not convinced many people. I now look at this logic by contrasting energy and money from the view of debt financing.

I’ll define debt financing as simply spending less money/energy at the beginning of a ‘project’ than is actually the total required cost of the project. Thus, if my solar panel is $2M and I use debt financing, I might give a bank $400,000 at the beginning of the project and pay the other $1.6M over 20 years. However, when manufacturing and installing the wind turbine, I can’t consume only 20% of the energy inputs at the beginning of the project, and consume the other 80% of the required energy inputs over the next 20 years. This is because approximately three quarters of the energy inputs for a wind turbine are consumed before turbine actually starts to operate. The other 25% of the energy inputs are nearly uniformly consumed for operations and maintenance while the turbine is generating electricity.

We know that the energy for manufacturing and construction has to occur at the beginning of the project, and we know it takes 2-4 years to payback this energy (when considering the consumption of the energy by employees of the wind farm) in the form of electricity generated by the turbine. Note that most life cycle analyses analyzing energy payback time for wind turbines counting only the fuel inputs to the wind turbine life cycle such that the energy payback is calculated at less than one year for modern turbines. Either way, 75% of the energy inputs (analogous to monetary capital costs) are required at the beginning to even make the wind turbine function in the first place. Twenty percent of a wind turbine produces no energy. With this point of initial energy consumption in mind, then how do we build turbines in the first place without “energy financing”? The answer is that nature inherently provided the “energy financing” for us over the last 100 million years, and we call the energy savings over that time “fossil fuels”.

Thus, the concept of financing is one lens by which to view the difference between energy and money. Because energy is a physical quantity that must obey physical laws, we cannot make up concepts, such as financing, and have them apply to energy. It is arguable that the level of debt financing allowed in a society has a strong correlation with EROI. That is to say, it takes energy consumption ‘now’ to make goods ‘now’, so all of the extra energy to make those goods is based upon the extra energy (EROI > 1) that is currently flowing from the energy sector to all others.

Because society’s high EROI for the last 200 years has been based upon a stock, or ‘storage’, of energy in the form of fossil fuels, it is likely that a similar EROI from a flow of renewable energy (mostly solar derived resources) will not yield as society with as much energetic/economic productivity or societal complexity. This lower potential for a complex society based upon renewables is because to create a stock of energy from renewable energy flows, we must build energy storage systems to work with the renewable technologies. With fossil fuels, nature built the storage systems in the ground for us. And those stored energy resources needed 10s of millions of years of sunlight – the reverse of financing and the definition of saving.

Thus, we are currently spending the energy savings that nature provided us a million times faster than that it took to build that fossil fuel ‘nest egg.’ What we do and learn while spending this nest egg will determine how complex of a society we can have without it. Time has an arrow, and if we consume the same amount of energy 200 years from now as we did 200 years ago, we will not necessarily have the same level of lifestyle. We can only speculate about how different 2200 will be from 1800, but our actions today will certainly dictate the outcome. I’m betting that by learning how to live without fossil fuels while we have them today, will give those in 2200 a better chance of living better than those in 1800.

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