Renewable Energy Profits: Energy is the life's blood of the community.

Renewable Energy Profits

Tom Wayburn, PhD in chemical engineering

Ferroni and Hopkirk published an analysis of photovoltaic installations in Northern Europe in which they reported an estimated ERoEI of 0.83, which indicates that solar PV in Northern Europe is a net consumer of energy. Subsequently, another analysis seems to show that their results are extremely inaccurate and their conclusions are wrong. This has no effect on the following which I wrote earlier:

First and foremost: Ferroni and Hopkirk counted labor; but, they did not count profit.  There is nothing that will frak up an ERoEI* quicker than the purveyor of solar who worked so hard to sell the damn thing that he marked up the sale price to twice the cost to himself; and, then, bought himself a BMW with half the profits.  I have said (more than once) that when we decide what to sell something for, we have to include the money costs of everything that went into it.  Possibly, half the price of your fishing gear went into profits.  And ... those retailers of fun didn't sit on their profits; they spent them; and, there was an energy consequence for each purchase or sale.   That's why the Total Energy Budget (E) tracks the GDP so well that it can be characterized by a single number:  E/GDP,  tabulated for each year for every country (nearly) in the world.   (By the way, I don't think they (the DOE) make it quite so accessible as they once did.)

Second, you know how they always say, "And, it will create X number of new jobs," not noticing that that counts against the entrepreneur's renewable energy brainstorm.  And, if he is hiring highly-paid managers, the ERoEI plummets.

Now, the ERoEI* can be raised by a number of tactics most of which sound like degrowth, decentralization, dechrematisticalism, and dematerialism.  I noticed early on that most working people do NOT make anything we need or want or do anything that is useful to the community.  They work hard; but, if they are “successful”, the net result is more money for themselves or for their employers and not much else.  In "Energy in a Natural Economy", I computed  that we could do things for about one-third the energy we now spend if we cut out the money game.   (This is true trivially for the healthcare sector, which ought to be more amenable to make the change, as they are not supposed to need that change.) I didn't even begin to assess secondary effects; e. g., much less business activity means fewer copying machines etc. that businesses use and manufacturers use in the business end of the business.

Decentralization is key in the delivery of electricity to its ultimate use, which ought to be very close to where it is produced.  On the other hand, the capitalist mode of production involves large percentage line losses not to mention the energy costs of building and maintaining the gargantuan infrastructure of distribution.   If the production is sufficiently decentralized (say, that each user has his own production facility), each producer can be his own maintenance man and his own operator.  One more thing: not so much decentralization as abandonment of the capitalist mode of production, which, as you know, demands continuous operation as opposed to batch mode. You know how they say, "It's no good because it is not dependable."  "0. K.," says me, "when the sun don't shine, go to bed."

Another benefit of decentralization is the simplicity with which one can clean the solar collectors to maintain a high effectiveness ratio, the fraction of incident availability that is passed on to be recovered.

Let's consider a couple of experiments that would go a long way toward settling these long-standing debates.  (i) Milton Maciel was a member of Energy Resources.  He is a chemical engineer with a PhD, I believe.   He once was a deputy energy minister for Brazil in which country he operated a large plantation which was nearly self-supporting in a true isolated manner except for a few details that we might easily have fixed for the purpose of producing a close approximation to the autonomous alternative energy district -  except for mining, where - fortunately - there is pretty good data on the emergies of the sorts of thing that Milton would have been needing for this experiment - assuming he would have a machine shop and a full-time machinist and two apprentices on the premises.  Everyone who worked there lived there.  We would  certainly get a good idea whether we had an ERoEI* greater than 1.0 or less than 1.0, I think. (ii)  Something nearly as good could be done with a large manufacturing plant that is capable of a reduced number of links to the outside and a small number of similar but complementary facilities; so, the input/output matrices are quite small and few in number.  Now, if these could be run on dematerialist principles, that would be fantastic for showing what I have come to depend on after years of computations, namely, that one can devise a political economy that will function and survive on a finite Earth whereas market system economies that permit chrematistics will not.

Remember, that the result of all these retractions (decentralization, degrowth, dematerialism, and dechrematisticalism) is that, for the most part, the purveyors of the technologies will be those who are the principal benefactors.

I still think ERoEI is a great tool and the detractors are people who can't get their heads around it. Again - for the most part.

I just re-read Euan Mearns' excellent piece, “ERoEI for Beginners”, in his Energy Matters blog. Toward the end of the article, he takes a stab at dividing human activities into some that we can charge to the effort of producing energy and others that we must list as consumers of the energy produced. Here is a sample of the things people say that reveal a limited understanding of how ERoEI should be implemented: “Net energy is the surplus energy left over from our energy gathering activities that is used to power society – build hospitals, schools, aircraft carriers and to grow food.” Please note that, depending upon circumstances, all four – hospitals, schools, aircraft carriers, and food – belong in EI. If there is anyone who is not a part of the energy mission, pro-rata charges would be introduced.

You see, Euan thinks like an economist. He thinks of energy as a commodity – like house paint or pork bellies – that we wish to utilize for our comfort and convenience. Energy is not just something we use as part of our lifestyle. We should not think of it as just one thing – but, rather, as everything, like breath and blood combined. It is life. Any member of the community for whom it can be said that this person does nothing for the flow of energy, is wasting energy. He should be furloughed; and, he should be happy to do whatever his intrinsic interests dictate, which has been the object of acquiring an education. If the Matching Problem of Chapter 2 of On the Preservation of Species has been solved, we will be able to determine feasibility or quasi-sustainability or sustainability immediately. I must finish updating Chapter 2 of On the Preservation of Species or write a stand-alone description of the Matching Problem. Earlier today, I read the following:

Note.  Permit me to define two, perhaps new, meanings of the words "profane" and "transcendent".  Let us consider an act of man profane if its purpose is to provide for life the energy that supports life all of which comes ultimately from Nature, e. g., agriculture.  Let us consider an act of man transcendent if its purpose can be said to be to build a monument to God whether God exists or not, e. g., art.  Let us consider all other acts of man to be "frivolous".  Then, one can choose to place the energy costs, E_P, of all profane acts in the Energy Invested (EI).  One can include the energy costs, E_T, of transcendent activity in EI if the transcendent be considered necessary to the profane.  One can include the energy costs, E_F, of frivolous activity provided we associate an efficiency to EI equal to [E_P + E_T]/[ E_P + E_T + E_F] at which point we have arrived at the balance equation approach to feasibility because the ER/EI will be exactly 1.0 for a real society running on the energy technology under investigation.

This was written by me a sufficiently long time ago that I did not recognize the writing nor the mood of the author at the time of the writing, even though he was myself. It seems I had already begun to think of all efforts to support life as directly or indirectly producing energy. It is as though energy is life. It reminds me of the way in which we state that we are still alive by means of such figures as “I'm still breathing” and “My heart still beats.” Whether I thought that then and still think it or not, I intend to cease to try to separate my profane activities into energy and non-energy parts. Moreover, I think the transcendent is necessary to the profane. Although, it hurts me to admit it, there are many people who do not consider Elvis Presley's music frivolous. In fact, a few people consider it transcendent. Indeed, I don't think this sort of economic triage is likely to succeed; therefore, let me propose the following rule: Charge all activity to energy invested. I shall want to test this proposal in a number of ways before I send this page to anyone. Here is what another one of our colleagues said:

1) We found by "following the money" and assigning (a probably conservative) energy intensity factor to each Euro spent to generate and run a one GW plant in Spain that only about one third of the energy required to deliver  electricity to the bussbar is used for the panels.  Our estimated EROI was only about 2.8 :1, or 7:1 if you want to include a quality factor for output.  (Prieto and Hall 2012  Spain's photovoltaic revolution Springer). 

2) You don't need a bare energy net profit (and a  large base), but a fairly robust one, which we estimate (imperfectly) as 3:1 to drive a vehicle to something from 5:1 to 12:1 for our modern society ;  See the first two attached papers .  Otherwise your whole economy is just (barely) getting energy but not doing anything with it.

3) including some way of compensation for intermittency greatly lowers the EROI. See papers by Graham Palmer on this.

4)  The transition to renewables (desirable for me too) would require enormous investments up front, almost inevitably of fossil fuels, possibly lowering EROIs to critical values.  The paper by Capellan-Perez is crucial.  

I will comment on the above four items here:

1. Since the delivery plays such an important role in determining the operational costs, we can expect a large increase in ERoEI* if we live and operate our solar energy facility so close to the point of use that the delivery costs are nil.
2. Great pains are taken to compute EROI after which all the accuracy is discarded by pulling an integer out of the air. “Otherwise your whole economy is just (barely) getting energy but not doing anything with it.” This reveals once again that the speaker is thinking of an economy made up of an energy sector serving the rest of the economy; but, in a crisis, every member of the community should be a part of the energy sector and, therefore, his entire energy budget goes into EI*. Actually, even in normal times, the principal business of the economy is to keep the energy flowing, after which food can be provided fairly easily. We make sure we have blood circulating; but, we don't ask it to do something for us outside of our bodies.
3. If the capitalist mode of production is to be abandoned, there is nothing preventing owner-operators restricting themselves to small batch jobs, with only enough stored electricity on hand to finish a small batch. In the next paragraph, we estimate the new ERoEI very roughly; and, the conclusion should be taken with a grain of salt. As for storage, we have 3D printing, CnC, and other robotics, that can store electricity as emergy.
4. I will read Capellan-Perez next; but, for a lark, multiply 0.8 by three to account for the savings in delivery costs. Then, multiply 2.4 by three to account for furloughing workers engaged in chrematistics. This gives us ERoEI* = 7.2 or Net Energy = 6.2 with which to support dead heads. Inasmuch as the chief benefactor is the purveyor, he doesn't need to make a profit nor hire expensive help. In fact, we can manufacture half of the installation “down on the farm”. Maintenance is straight DIY. We are subsistence roughnecks not commodity twits. No bankers need apply. It may be easier to go along with those of us who wish to Power Down to Earth as a Garden than to preserve The Empire. Population shrinkage and economic shrinkage are necessary.

Finally, we need to show, with a simple thought experiment, that profits should be added to EI*; that is, profits are interior to the AAED, Suppose we have the economically (and energetically) isolated Autonomous Alternative Energy District in place except that the sole stockholder wishes to take his large profit outside of the District and spend it as part of the general public. Convert the profit into energy product equivalents. Should the energy accountant add these energy equivalents to the Energy Invested or the Net Energy? Normally, the energy represented by the energy equivalents doesn't exist yet. If it were part of the net product (assuming that the process generates net product, that is, ERoEI* > 1.0), it could remain outside the district, but the stockholder would have to be reimbersed. Suppose the stockholder uses energy equivalents to buy an expensive car. The merchant will turn up at the AAED to redeem his certificates or whatever token he has been given. We still do not know that there will be any net product, But, are the profits investment or are they product?  When the AAED has Net Product available for export, it ships it to the purchaser who compensates the AAED in a currency completely independent of the AAED accounting system.  But, product equivalents paid to a stockholder do not fit this pattern.

(I have neglected the sunlight falling on the district and the infrared junk heat radiating to deep space; but, the first is free and the second is worthless.)

This idea that “the entire community must think of its mission as keeping the energy flowing” can be taken to the limit. The only members of the community who should not be considered part of the energy sector are the unemployed. This is a new idea for me and I would like to devise a compelling thought experiment if not a proof. I'm afraid I shall be relatively lonely with my new insight that may assist me in reinforcing my conception if it is not leading me down the primrose path. I remain, however, a fallibilist.

To begin, I should like to show the connection to energy production for any employed person in any community in which an alternative energy is able to supply the entire energy budget regardless of whether or not it becomes necessary from time to time to “borrow” energy from the outside. We say “borrow” because we expect to pay back in our alternative energy, where all kilowatt-hours of single-phase, 60 Hz, 120 Volt AC are equivalent. Every employed person in a community that has not furloughed chrematists  will have to be considered useful to the people who do useful work, since they tolerate him.  So step right up. Take a card. Any card ...