Friday, November 03, 2006

Energy Payback from Photovoltaics: Problems in Calculation

Does solar energy—specifically photovoltaic (PV) panels—ever produce as much energy as the energy that was initially invested in their manufacture? Industry, academia, and government all seem to be in agreement that the answer is “yes.” (1)(2)(3) The consensus seems to be that PV produces as much energy as was used in its creation in a time period of 1-5 years, allowing PV to produce between 6 and 30 times more energy over its life than was used in its creation. These two answers—that PV produces more energy than is used in manufacture, and that PV provides an Energy Return on Energy Invested (EROEI) of between 6:1 (2) and 30:1 (2)—suggest that photovoltaics can be and should be a cornerstone of our efforts to replace our reliance on non-renewable fossil fuels.

There are serious problems, however, with the methodology used at present to calculate the EROEI of solar panels. Some authors claim that life-span EROEI for photovoltaics is as high as 50, but provide no information for how that figure is calculated. (4) Others, such as Clarion University’s calculations, take a very limited view of energy invested in PV production, accounting only for energy use of the manufacturing plant itself. Under these assumptions, they understandably arrive at a very optimistic EROEI of 6:1 to 31:1. (1) So what energy inputs are not being accounted for in such a calculation? Let’s work backwards:

* Installation: PV does not good sitting in the factory. It must be installed, and this takes labor. There are various ways of accounting for the energy represented by such labor, but it certainly takes energy.

* Transportation: PV has to get to the installation site. Efficient manufacture is only possible if it is centralized, but this means that it must be shipped—usually by truck, which requires both the fuel directly consumed by shipping, plus the energy consumed in the entire chain of operation necessary to construct the truck, as well as the labor cost of the driver, which also represents an energy input.

* Manufacturing plant: EROEI calculations usually account for the energy consumption of the manufacturing plant, but not for the construction of the manufacturing plant itself, as well as the construction of all the machines used on the PV assembly line (PV advocates often point out that silicon is the most abundant element on earth and therefore requires very little energy to acquire—but this is NOT true for the highly advanced manufacturing machinery necessary to create PV cells, usually made from metals that require great energy input for extraction). If we take the total energy required to create one PV manufacturing plant as well as its expected lifetime production, we can then calculate how much of that energy should be attributed to a given quantity of PV panel.

* Labor: One of the key components in the production of PV panels is human input, and yet this energy cost is not accounted for in standard EROEI calculations. I’m not referring to the actual calories expended operating an assembly line, or answer the phones in the front office, but rather the energy consumed in the course of these people’s daily lives—energy that must be accounted for because it is part of the support structure necessary to create a PV panel. No employees, no PV.

These embodied energy costs in the creation of a PV panel (called “emergy”) are difficult to calculate. We can regress infinitely, eventually going so far as to account for the portion of energy consumed by a rice farmer in China in order to fill the belly of a Merchant Marine captain shipping machine parts across the Pacific, ad infinitum. How do we actually get a composite sense of the total embodied energy in PV production? One way—and certainly not a perfect way—is to use the market’s ability to set prices as an equivalent for embodied energy. This is what I am calling “Price-Estimated EROEI Theory.” It basically suggests that the most accurate representation of the total energy embodied in ANY product is the price of that product. In our example above, the energy required to install PV can be accounted for by the cost of that service. The energy required to transport, to build a manufacturing plant, to employ workers, etc.—all component energy contributions in the production of PV increase the market price of the resulting product.

So what is the Price-estimated EROEI of PV? If we accept that the price of an installed PV system is representative of the energy used, then we can compare that price with the quantity of energy produced over the lifetime of that system (which also has a market price) and reach an EROEI ratio. There are variables involved here, but when we use market-price to account for the full spectrum of energy “invested” in PV, we reach an EROEI of approximately 1:1 (*see full calculations below). This is dramatically different than the 6:1, 30:1, or 40:1 suggested by most sources. Which figure should we rely upon? While I recognize that price-estimated EROEI is not a perfect calculation, at least it attempts to account for the full spectrum of energy inputs, and the precautionary principle suggests that we should err on the side of this number (1:1) as opposed to the quite optimistic figures coming from the PV industry or the government.

Ultimately there is only one way to definitively answer this questions: The bootstrap challenge. I have previously stated that when I see an ethanol plant that distills their ethanol USING ethanol (not natural gas or coal), then I will seriously reconsider the merits of that alternative energy source. Likewise, when I see a PV production plant that is powered entirely by PV, containing machines manufactured at plants powered entirely by PV, machines composed of materials mined, refined, and shipped entirely under PV power, etc., then I will believe that PV has an EROEI greater than 1:1. With an EROEI like 30:1, this should be no problem . . . so the fact that this is not the case is yet another argument, at least in my mind, that reality stands closer to the 1:1 figure.

EROEI is not just a nifty academic exercise. The outcome of the debate on EROEI—whether for PV panels, ethanol production, nuclear fission—is critically important for the future of our economy and society. Regardless of the exact timeline, it is not seriously disputed that non-renewable energy sources such as oil, gas, and coal—all with high EROEI—are running out. There is a commonplace assumption that we will create alternatives to replace them, but at present these alternatives—from PV to ethanol—are all being produced with the very fossil fuels that are disappearing. When they are effectively gone, only energy sources with an EROEI of greater than 1:1 will be viable—and even then, our economy, with its demand for constant growth, cannot survive on energy with an EROEI of 2:1 or 5:1. For that reason, it is critical that we more carefully address this EROEI debate today. If alternative, truly renewable sources of energy cannot match—and eventually improve upon—the EROEI of today’s energy sources, then we must conduct a serious reappraisal of the fundamental structure of our society. My analysis suggests that we must do exactly that.

* CALCULATION: 2 KW complete PV system installed in Phoenix quoted at $16,000 (before any tax rebates or incentives, grid-intertie only,NOT including battery storage)(5). In Phoenix (optimal location), this generates 4,000 KW-hours of electricity per year (5). At prevailing Phoenix rate of electricity ($.10/KW-hour) this is $400/electricity per year. This produces a pay-back time of 40 years if we do not account for the time-value of money. For the purposes of this calculation I will be very conservative and find that actual inflation will equal TVM over this 40-year period. The quoted PV panels have a life-expectancy of 40-years (again, this is conservative as this “complete” system ignores battery storage, which would dramatically decrease the aggregate life expectancy). The resulting price-estimated EROEI of PV solar is 1:1.








Anonymous said...


At this point in time, I am in good agreement with the price based calculation presented. I would just point out that in the future, oil price increases will cause the price based EROEI to increase substantially. Might not ever reach 30:1, but I could easily foresee 10:1 in the next several years.


Anonymous said...


I tend to think of the whole ER/EI debate as something of a red herring. The real question, in my mind anyway: what is carrying capacity (CC) based on solar gain and nutrient cycles? Of course then one has to start accounting for habitat distruction and spiecies extinction. Then factor that type of information back into your CC calculations.

Anyway, all this can easily lead to some other sort of infinite regression.

I kind of think that the bottum line is too many people using to much stuff and producing too much waste. This situation will be corrected and some sort of shifting equilibrium will be reestablished.

All the PV panels in the universe aren't going to do you any good if you don't have topsoil to grow food in, if you know what i mean.


Jeff Vail said...

Dave: I agree completely that the debate between an EROEI of 10:1 or 17:1 is not particularly critical. Two things ARE critical in my opinion--that the EROEI is greater than 1:1, and that it is continually increasing (required to counter diminishing marginal returns, a la Tainter). Ensuring EROEI is above 1:1 is essentially a carrying capacity analysis . . . this analysis is not intended to validate PV solar as a means of salvation. If we want to save ourselves, I think that your suggestion to change our consumption-based (and hierarchal) lifestyle is necessary.

Paul: I'll go along with your assumption that oil prices will increase dramatically in the future--I think it is almost certainly correct. How will this increase the EROEI of PV solar? It may well make PV competitive to oil as the EROEI of oil continues to drop, eventually approaching 1:1, but that only makes both sources a bad choice. The actual EROEI will not change, but if the price of oil increases because of a shift in supply-demand balance (as opposed to increased oil production costs), then the price-estimated EROEI will change: the question is, which will increase more, the price-value of the electricity produced by PV solar or the price-value of the energy inputs to produce the PV panels in the first place? The latter will probably lag behind the former, but they should generally increase in parallel--and this will not change the price-estimated EROEI significantly--certainly not from 1:1 to 10:1.

Anonymous said...

Hey Jeff --

Good article, as always:-)

I do have to question the inclusion of human labor, however. On a couple of bases...

First and foremost, at some point, if you regress fully to include all possible sources of energy input, your EROEI will always be less that 1:1 -- basic physics, conservation of mass & energy + entropy...

Second, human energy is invested in absolutely eveything we do. How does human labor affect EROEI on oil and other energy sources? If you include it in any calulation, then you must include it in ALL of them.

I'm thinking a better metric might be defined as a relative value. Set X human energy investment as a baseline, then add in positive/negaitve values relative to that baseline. After all, we all have to expend energy to live, so what is that basic investment that we cannot really expect to drop below... and then with each given technology or technique, are we investing more or less raltive to the base?

Of course, all of this eventually gets too complex to actually be able to make any sort of valid calculation, but at the very least the ideas should be included in any discussion of this sort, IMO.


Jeff Vail said...

Janene: I think that your point that, by accounting for all human labor, energy sources will tend towards 1:1 is a very important point. I think that this IS the point: most people underestimate how truly exceptional it is when you can invest a small amount of human labor and have a huge return in fossil fuel gush out of the ground. EROEI of the Abqaiq field in Saudi Arabia, for example, is WAY above 1:1, even when all human labor is included. We often underestimate how amazing a resource we are working with when we squander it away in our consumer economy. I don't have unequivocal proof, but I don't think that any of the high-tech "renewable" energy sources have an EROEI much above 1:1 when ALL inputs are included. I don't think that they're really "renewable" at all--they are built on the foundaiton of high-EROEI fossil fuels. I'm sure many people will disagree with me vigorously on this point, but it is THE critical point to resolve if we are to properly address our future energy problems...

Bob Gardner said...

The value of human labor can be calculated... if a laborer outputs 100 watts for 10 hours, he has produced 1 KW-hr of energy. I can get that from the power company for about 15 cents. If I have to pay a man for 10 hours labor at $10 an hour US wages or even at $.50 an hour Chinese wages its still a lot more. So does this mean 1 KW-hr should be worth one man-day in wages?

adam fenderson said...

Pimentel has been ridiculed for considering the energy cost of the grain the farmer eats in his ethanol calculations, however we really do need to consider such things and more, as you say. I enjoyed your article but have a few comments, some a bit speculative...

1) Before he died, Howard Odum, calculated an EROEI of less than 1 for solar PV, however we can see with hindsight that he over-estimated the energy costs of administration and maintenance. New thin film methods are more efficient with materials also. Sergio Ulgiati, one of Odum's most prominent followers has recently computed a much more positive EROEI using Odum's emergy methodology. I don't know if the study has been published yet -- but I'm trying to find out, and will publicise it on if it's out. I think Odum used price-estimated energy costs, but also built databases based on more refined, but equally whole-economy methods. So probably Ulgiati's study does not suffers from the criticisms of other research you mention. Which isn't to say case closed, but definitely an important study. There's also this very good round up of current research here:

2) Your 1:1 figure would have massive uncertainties.

I think there's an inevitability with the price-estimation method that you include all sorts of current energy wasteful methods of producing things, some of which we might be able to lean-up by an order of maginitude when energy prices really go up.

However energy is underpriced in todays economy. So does overestimate of potential energy requirments, balance out with the underestimate coming from underpriced energy? I don't know! Maybe it more or less does...

3) EROEI only has meaning when researchers set system boundaries and make them clear. The price-estimated method has wide system boundaries, however it would also externalise most environmental costs (and undervalue energy inputs) just like the market does.

However, to rephrase your point, the alternative accounting methods which attempt to add up each material input and transporation cost etc, have smaller system boundaries, because you can't count everything. They reach much more optimistic sounding figures, but only within this context. The researchers set boundaries too small to be meaningful except perhaps to the manufacturer, not very meaningful to the society at large perhaps.

The boundaries issue also addresses Janene's point. We need to set some boundaries to get a figure other than 1:1. Direct sunlight falling on the PV is not considered an energy input in the equation. We're trying to calculate how much energy already in the human economy has to be invested. Another energy input we wouldn't include in this calculation would be the geological energy required to make the materials.

4) Important differences exist between an EROEI of 10:1 and an EROEI of 2:1 or 1.1:1. Imagine a hypothetical solar PV powered national economy, where the panels achieve an average EROEI of 1.1:1, within a whole-economy system boundary. In this economy 10 out of every 11 energy expenditures in the economy would by invested back into the solar PV manufacturing industy, and its supporting service industries. The rest of the economy combined - the arts, law, food, leisure, science, other manufacturing, etc would be about 1/11 of the overall economy in energy terms in total! Charlie Hall estimates that an EROEI of something in the ballpark of 6:1 would be necessary for anything like 'civilisation' to survive. (I assume he means with whole-economy systems boundaries).

5) There's a practical and philosophical issue here about whether we can improve on nature, which has been in the solar PV game for 3 and a half billion years. I might try to write an article on this one for energy bulletin, would love your thoughts, if you'd let me send it by you before pub.


Jeff Vail said...

The following was received via email from G"eert (who was having problems with the comments--a common problem lately for which I appologize):

"I’ve been calculating the payback period for an investment in PV panels I intend to make.
Of course here in Belgium circumstances are far less favorable than in Phoenix Arizona (a 2160Wp is supposed to generate 1836 kWh/year or at 0,1805 €/kWh it gives us 331,40 EUR electricity). However subsidies and
tax deductions are quite important here.
My payback period with subsidies comes at 12,18 years while the period without subsidies, tax advantages and “groenstroomcertificaten” extends to 72,50 years.
(groenstroomcertificaten (greenelectricitycertificates): we get paid for certificates which are tradable by the producers in the framework
of Kyoto)

Energy cost embodied in the creation of a PV panel I’m not sure yet whether I can follow you in your reasoning. The retention of the price of a PV panel as the representation of the
accumulation of commodities, energy and labor looks like an easy
solution, but is it?
The price embodies also components which are not or only partly
energy-related, like profits, rent of land and labor itself. Maybe even
more important is that the price will fall dramatically as mass
production enters and some fixed costs and R&D is spread across a
larger number of panels produced (mostly not energy-related costs will decrease with increased production). Prices are strongly time-related. Volumes less (still related to the
technology of the present).

I’d prefer to match expected price increases in electricity wit the
Time Value of Money (TVM). I suppose the increases in electricity
prices will exceed actual inflation or at least represent better future
inflation (in this sense letting it be equal is not so conservative).

(PS I don’t understand the cost of the battery storage. We give our
electricity excess back to the net and our meter goes in reverse, no
battery needed)

Three Dutch professors recently published in an article in Het
Financiële Dagblad, that dependent on the source we need for the
production of 1 liter biodiesel 0,2 to 1,3 liters of oil.
Professor Wim Soetaert of the University of Ghent claims they’re
comparing apples and oranges. It’s correct that for o1 liter
bio-ethanol you put in as much energy as you get out of it. For
biodiesel however the input-output lies far better with a relation of
3:1. But reality is far more complex. The energy you put in the
production is low-value warmth energy and what you get is high-value motorfuel which is a handy and expensive energy. He compares it with a electricity plant where you need three units of warmth energy to
produce on unit of electricity. With the low-value energy you won’t be
able to use computers or lit lights.

We’ll just have to accept the necessity of fossil fuels to transit to a society driven by a amalgam of energies. Today I cannot see the entire replacement of fossil fuels by alternative energy, at least not if we want to live the way we do. A reduction of the use of energy lies on the other side of the equation."

Jeff Vail said...

Bob: I think you make some excellent points about the actual energy output of human labor. However, if a human exerts 1 KW-hour of energy in a day's labor, I think that we must remember that there is much value here beyond the 1 KW-hour. This energy has far more value than 1 KW-hour passing down a power line because it is self-directed, intelligent, mobile, etc. Again, while price of labor various dramatically (and demonstrates some of the problems with price-estimated EROEI), I think that in general the difference in price between human labor and electrical power does, to some accuracy, represent the difference in value between them.

Jeff Vail said...

Adam: Thanks for the very thoughtful comments. I'm looking forward to reading Ulgiati's study when you post it. A few responses to your points:

2) I agree, the 1:1 figure is probably quite a bit off. I think that it's a start, at least, because it makes the best effort that someone with my degree of mathematical skill is capable of. However, you make some excellent points, especially that the price of energy in our economy is already heavily influenced by political, not economic factors, so its price is a less accurate measure than if true market conditions prevailed. Ultimately, I think that a "savior" energy source needs two things: an EROEI of greater than 1:1, and an EROEI that is increasing (per Tainter's critique re: diminishing marginal returns). As technology increases, there is the potential for the EROEI of solar to steadily increase (to a point). I think that price-estimated EROEI may be most applicable to observing EROEI movement over time. In fact, that was the initial aim of my article, but I haven't been able to find reliable historical prices for the past few decades at this time. Even if the price-estimated EROEI is only 1:1, if prices change and next year it is 1.2:1, then that is significant, no matter how inaccurate the method may be for calculation of a TRUE EROEI.

3) Good point on externalizing environmental costs... if only we could all adapt Lester Brown's ideas in Earth 2.0 on accounting for exertnalities. I'd like to see a good accounting for the actual carbon dioxide reduction of solar power. Especially since most of the energy invested in its creation still come from fossile fuels, and since they are invested up-front, I think that it may actually be a step backwards on that measure...

5) I agree that our quest to improve upon nature may be futile. Personally, I think that decentralized and passive solar, such as passive-solar architecture and well-managed, sustainable woodlots combined with high-efficiency wood stoves, may be a better approach, no matter how "low-tech."

adam f said...

Cheers for more of your thoughts Jeff.

Great point about an increasingly complex society's need to have a constantly increasing EROEI energy source to avoid collapse. That makes a lot of sense.

Although the EROEI of oil and coal have been dropping for decades so there must be enough fat in the system to absorb a lot of pressure too. Although you could argue that we're well into a period of decay...

Anonymous said...

As it was mentioned, there are all kinds of subsidies in the price of things.

Another way to look at EI is to see how much energy one can byu with the $16,000. At $80/bbl, this is 200 bbl.

1 bbl = 5,800,000 BTU
1 kW-h = 3,412 BTU

hence 1 bbl = 1700 kW-h, or the 4000 kW-h/yr installation will generate the energy of 2.35 bbl of oil.

If one compares purchasing either the PV installation or 200 bbl of oil, the life of the PV needs to be 85 years for a 1:1 EROEI.

There are two ways this calculation may be augmented.

On the one hand, the $16,000 price probably reflects the price of the plant that was paid 10 years ago, when oil was $10-$20. If 50% is the price of the manufacturing, and 50%, installation (which probably reflects current oil prices), then the oil that went in to these $8,000 old + $8,000 new is 400 + 100 = 500 bbl, hence 400 years for the PV to break even.

On the other hand, probably the electricity of the PV is not going to be used to generate heat, so one needs to compare to a diesel generator that has much less than 100% efficiency for conversion of the thermal energy of 1 bbl of oil into electricity. At 40% efficiency, the first calculation results in 34 yrs for break even, the second, 170 yrs.

Even if one purchases the slightly more expensive diesel distilate retail at $2.50/gallon, this makes the EI only 25% less, hence the life of the system for break-even 75% of the above estimates.

Another interesting comparison is with mother nature, which is arguably quite inefficient in converting solar to chemical energy.

The productivity of a good forest is about 15 tonnes/ha/year, and that of switchgrass, between 10 and 15. Let's take the lower end for this estimate.

At 22 MJ/kg for cellulose, a hectare 10t/yr will yield 220 GJ/yr/ha.

The $16,000 PV system will yeal 4,000 kW-hr/yr or 14.4 GJ/yr. Hence, the break-even point for the $16,000 PV installation is 0.065 ha, or 0.16 acres of switchgrass (and may be 0.10 acres of woods).

If one wants work as opposed to heat, a conversion factor needs to be applied to account for less than 100% efficiency. A highly efficient steam engine in theory can be run at 90% efficiency. Simpler gas turbine engines run at typically 60% and can be built locally, say one per village (say 450 MW engines) , so that transportation of the wood to the turbine and the electicity back to the village is not a big issue.

Alternatively, for smaller peak power (less than 750 W) the horse is an extremely efficient convertor of chemical energy to work (over 50% efficiency). Granted it has to be fed starch, not cellulose, so one has to plant rye, not switchgrass, at probably only 1/2 of the solar efficiency, so that makes a total factor of four. Still, if one can get a horse and 0.65 acres of rye fields for $16,000, one is still ahead of the PV system.

Translation: At current pricing (energy invested) PV's suck.

P.S. I have to apologise for the typos -- no spell checker in mozilla text boxes :-(

Jeff Vail said...

Anon: Thanks for the additional calculations. I need to mention that I don't claim that "Price-Estimated EROEI" is 100% accurate, just that it is a potentially valuable way of calculating EROEI. It would not surprise me if the "true" EROEI of PV was, at present, anywhere from 0.1:1 to 2:1.

Jason Godesky at Anthropik just posted his throughts on the potential for a "Solar Revolution," well worth the read:

Sermon to the Sun Worshippers"

In addition, we must consider the time-lag in the EROEI of component energy to produce PV panels. If we assume (as I think is quite accurate) that the EROEI of fossil fuels is dropping as we must exploit increasingly marginal fields, then there is a drop of the EROEI of the energy used to make PV panels. Because the full "tail" of components were manufactured over a period of time in the past (from when the ore was mined to when the machines were themselves manufactured), there is a time-lag in this EROEI being incorporated into the EROEI of PV panels. This also holds true for price-estimated EROEI. PV panels are relatively cheaper today because they used up less expensive oil in their construction (and in the component mining, manufacturing, and transportation required). When today's higher energy costs are used to make tomorrow's PV panels, the EROEI could drop by a factor of 2 or more... essentially, we're still using the easy Saudi oil (at an EROEI of 70:1 or more) when we calculate the cost of manufacturing PV, but we're using today's expensive oil (like the "Jack" find) when we calculate the value of the electricity that this PV produces. With this taken into consideration, an EROEI of 1:1 for PV may be excessively optimistic...

Alan said...

I haven't much time to respond to your post at the moment, but I thought it important to comment on a couple of issues.

First, you state that PV advocates claim that silicon "requires very little energy to acquire," which, strictly speaking, I suppose is true. However, it requires an enormous amount of energy to purify for use in electronics and is widely accepted by the PV industry as the single largest consumer of energy -- by a wide margin -- in the PV production process. I cannot think of a PV energy-payback study I've seen that fails to account for this, though it's possible there have been some. On the other hand, the energy used to refine the metal in the machinery that is used to make solar cells is distributed over hundreds of thousands, if not millions, of solar cells over its useful life. The total mass of silicon that passes through these machines dwarfs the mass of the metal they're made from, which I'd wager is proof enough that the energy invested in them is negligible compared to that invested in the silicon.

It's worth noting that the energy content of the so-called "PV grade" silicon sources that will start producing over the next couple of years will be substantially less than that of the silicon used by the PV industry now.

Second, there are numerous studies of this issue that you do not appear to be including in your review. I have roughly three dozen of them, and I'm aware of several others that I have skimmed, but not yet collected. Unfortunately, most of them are not available online -- perhaps that reason you haven't included them -- but some of them do attempt to address issues that you criticize the others for omitting, such as energy used for transportation and plant construction. I can't recall any of them concluding that PV takes more than 10-12 years to recover the energy required to produce it, with most of them coming in far below that.

Finally, for what it's worth, most of the studies I'm aware of compute EROEI using an expected PV module lifetime of 30 years. The figure is derived from the accelerated lifetime testing of PV modules that has led most manufacturers to give warranties of 20-25 years.

Jeff Vail said...

Alan: I agree that the quantity of photovoltaic cells that pass through the manufacturing machines is huge, but the embodied energy in those machines is also huge. That's the strength of the price-estimated EROEI approach, is that it most accurately accounts for the portion of energy embodied in each machine that should be attributed to each portion of PV. Trying to break this down manually is nearly impossible, due to problems with calculating actual depreciation values of the machinery (NOT tax-books depreciation values), as well as the component machinery, transportation, and labor required to make those machines. But market pricing does this admirably well, and the fact that overhead (machines, labor, factories) is such a substantial portion of PV prices shows how far off the mark any EROEI study is if it shows the PV silicone as the major embodied energy component--such studies will provide eroneously high EROEI ratios...

As for life span, I think 30 years is reasonable, but just to be extra conservative my calculations of 1:1 used what I consider an optimisitic figure of 40 years. At the 30-year level the EROEI would have come out to 0.66:1

Alan said...

I agree that the quantity of photovoltaic cells that pass through the manufacturing machines is huge, but the embodied energy in those machines is also huge.

I don't think you fully appreciate just how much energy it takes to refine silicon for electronics use. Metallurgical grade silicon and aluminum, the metal used in much PV production equipment, both require about 15 kWh/kg to refine from ore. The aluminum is then used to build equipment, while the silicon receives an additional energy input of 120 kWh/kg before it is used for solar cells, for a total of 135 kWh/kg -- nine times more than is used to refine aluminum. It takes another 60 kWh/kg to convert the refined silicon to silicon wafers.

Now, a diffusion furnace of modest size might weigh about 4000 kg and have a throughput of 1000 wafer/hour. Assuming that entire 4000 kg required 15 kWh/kg to construct, it represents about 60,000 kWh of energy. Such a furnace would likely process at least 35 million solar cells over a five-year period, with each cell responsible for about 10 grams of silicon consumption, for a total energy consumption of 47.25 million kWh. Factor in the additional 21 million kWh that required to convert that silicon from feedstock to wafers and the energy used to make the wafers that go through the furnace is more than 1100 times that used to make the furnace itself.

I realize this is not a comprehensive evaluation and there are certainly plenty of factors I haven't accounted for, but it is an effective order-of-magnitude illustration. You will be hard pressed to make up a difference of three orders of magnitude through building construction (despite the energy content of concrete) and the equipment used in the approximately 20 other production steps. The is particularly true when you account for the fact that production equipment can last more than five years, spreading the energy cost of the equipment over tens of millions of more solar cells. And even when a production line is scrapped the building is generally re-used for the next production line.

Now, I don't trot out these enormous figures because I think they're a good thing -- clearly all of this energy consumption is bad for product pricing and bad for EROEI. And in large part because of all of this, the PV industry is developing sources of silicon feedstock that use nearly an order of magnitude less energy. But I hope it helps you appreciate just how large the energy figures are, even compared to the energy contained in a finished piece of equipment.

the fact that overhead (machines, labor, factories) is such a substantial portion of PV prices

That is most definitely not the case for the crystalline silicon PV modules. Your statement not only disagrees with the few existing public disclosures of this sort of information, but also with the proprietary disclosures I have been privy to and the advice of a cost engineer colleague (we have been working in the PV industry for quite some time). Raw material costs make up 70-80% of the cost of a finished crystalline silicon PV module, and the largest single raw material cost is silicon feedstock (and that was true even when silicon cost only $20/kg). Even a price-based energy accounting must conclude that silicon feedstock is the single largest line item.

As for equipment costs, the construction cost for a crystalline silicon PV plant is roughly $1.00 per watt of plant capacity (e.g., a 25 MW plant costs about $25 million to build). This $1/W is spread out over all of the solar cells made over a period of years. Compare that to the total manufacturing cost of a PV module, which is currently in the range of $2.50-3.00/W, and it's clear that plant construction and capital equipment costs are small fraction of the total.

Labor costs are also a small portion of the total, and that portion is shrinking as plants scale up and automation increases. In fact, 83% of worldwide PV production is located in Japan, Europe, and the United States where labor costs are high, and that figure was rising before Chinese companies entered the market (and I am talking about Chinese companies, not foreign companies building in China). Clearly, PV companies are not overly concerned about labor costs.

The construction of larger plants is also reducing the cost share of capital equipment and overhead, as when plant capacity doubles these costs do not nearly double themselves.

Finally, since you favor a price-estimated approach I would encourage you to consider the following two significant sources of error. First, the supply of PV modules lags demand by a wide margin. Most PV manufacturers have already committed all of their production well into the future, some as far as 18 months, and by some estimates PV manufacturing capacity would have to instantly double in order to meet current demand. The upshot of all of this is that retail PV prices are currently inflated by the supply-demand situation and therefore are a poor proxy for PV module manufacturing cost.

Second, silicon feedstock itself is traded as a commidity and its price is an extremely poor indicator of its energy content. Over the past decade it has traded at prices ranging from $8/kg to over $200/kg despite no significant changes in the manufacturing process. Thanks to the current shortage, contract prices were around $60-80/kg last I heard, with spot market prices around $200/kg. (I have written extensively about this in my own blog if you're interested in knowing more.) Feedstock manufacturers themselves require prices around $30/kg for profitability and energy is by far the largest expense item in the process, so perhaps $30/kg would be a good proxy in your price-estimated approach.

I would say that your statement is more true for thin-film technologies like amorphous silicon, which have lower raw material costs and higher capital costs, than it is for crystalline silicon technologies. However, these thin-film technologies generally do better than crystalline silicon PV in EROEI studies.

Alan said...

Such a furnace would likely process at least 35 million solar cells over a five-year period, with each cell responsible for about 10 grams of silicon consumption, for a total energy consumption of 47.25 million kWh. Factor in the additional 21 million kWh that required to convert that silicon from feedstock to wafers and the energy used to make the wafers that go through the furnace is more than 1100 times that used to make the furnace itself.

My apologies -- the actual amount of silicon consumed by a solar cell is about 10 grams per watt, not simply 10 grams. Since the typical crystalline silicon solar cell will produce something around 2.25 W, a solar cell requires about 22.5 grams of silicon. Thus, the silicon in those 35 million solar cells will require about 106 million kWh for refining and 47 million kWh to be converted into wafers -- about 2500 times more energy than that required to make 4000 kg of aluminum.

You'll note that this works out to about 4.4 kWh per solar cell. If the cell is properly installed at an average location in the United States it will recover that energy in less than 18 months, even after accounting for electrical losses in the PV system. Sure, that only covers the energy used to convert quartz to silicon wafers, but as I've said that is the single largest energy sink in the process.

I had also intended to point out that bare silicon wafers make up about 50-60% of the total manufacturing cost of a crystalline silicon PV module, but apparently I accidentally deleted that from my previous comment.

Anonymous said...

I am missing something here.

alan: You'll note that this works out to about 4.4 kWh per solar cell. [...] Since the typical crystalline silicon solar cell will produce something around 2.25 W,

... this would make the energy embedded in the feedsctock (arguably, most of the energy in the PV system) be 1955 kWh / 1W PV capacity.

At $0.10/kWh, this is 19.6 cents/W. Now, I've heard the price of the system quoted as "$3/W" and the price of the instalation, and $8/W ($16,000 for 2000W installation).

So, if the 20 cents above are "most of the energy/cost in the installation, where does the other 280 cents come from (or the other 780 for installed systems)?

Anonymous said...

I think you are trying so hard to find fault that you are missing some basics. PV systems are not energy sources or fuel. That would be sunlight. The hardware is the collection and utilization infrastructure. Every thing that humans do includes a lot of that kind of overhead. So what?

Secondly human energy is something we have to expend to stay healthy and alive. Is it better spent at the PV plant or at the gym on a stationary bike? Whats the EROI on growing carrots in the garden? It takes the expenditure of human energy to survive. If it takes an hour to prepare a meal that we eat in 15 minutes we don't roll over and die instead of eating because it is too ineficient.

Third the price of items has almost nothing to do with value. The price of crude oil went up 3 dollars per barrel within a couple of days of the US election. Oil and natural gas prices have doubled, tripled and quadrupled at times. How can that kind of volatility reflect anything rationally linked to value. The whole notion of supply and demand pricing makes any argument for using price as an energy index look like nonsense. It also totally ignores the other important qualities of any energy option. Burning coal, gas and oil at the rates we have (made possible by low cost which reflects high EROI) is destroying the very planet we need to survive. An alternative that is much cleaner is worth a great deal more. And then there is the higher cost of extremely high efficiency in buildings, vehicles etc. It is worth a great deal if it drastically lowers environmental impact.

Using high EROI numbers for oil and gas as the gold standard by which to compare other options implies that we will find something as good to replace fossil fuels. That is likely an impossible dream. It's that logic, and the lethargy it has enabled, that has allowed us to continue chatting about these obscure things for the last 3 decades instead of using the remaining time we have access to this high energy fossil fuel windfall to rebuild our infrastructure into something more sustainable. We won the lottery when we stumbled onto these fossil energy stores. It will always look too hard to have to go back to work earning a living until we use up the last lottery check and find ourselves on the street.


Anonymous said...

One thing I would like to point out about your calculations.

When considering transporation costs, a good "general" rule to use is 40% of the cost is fuel cost. That is of course at today's prices. If oil were to double then the % would increase.

This would of course call for a revison of your ratio in a direction that is favorable for PV.

Tony J.

gazzer180 said...

as i agree the EROEI is not very good on most renewables i must suggest that it is far better to use some of the non renewables on producing solar panels regardless of the EROEI because if we use up all the non renewable resources and create nothing in its place then future generations will have nothing at all. ps i think ethanol is definetly a waste of time.

Jeff Vail said...

I keep hearing the argument that, even if the EROEI is terrible, it is better to use those non-renewable energy sources to build PV. I don't agree, for several reasons. First, it is better to begin the transition through conservation to a less energy-intensive lifestyle and economy. Second, using fossil fuels to build PV is tantamount to an admission that we will burn up all the fossil fuels, which is anything but carbon-neutral...and we will reap the consequences. Third, a solution that doesn't address EROEI and the resulting societal dependencies is nothing more than an admission that we'll be fine, but our grandchildren will be screwed. I know that it's a much tougher course of action to make the hard choices and sacrifices ourselves, but the sooner we realize that this is the necessary course, the better...

Richard Kulisz said...

I do wonder why nobody has mentioned nuclear energy which has an EROEI of 70, what's been called 'easy Saudi oil'.

PV isn't my preferred solution not just because the EROEI is worse than nuclear. Or because the quality of the produced electricity is so poor.

Rather because it requires a massive personal investment backed by a very high interest personal loan or mortgage, as compared to sovereign debt such as built EdF's network of 58 nuclear plants.

Nevertheless, I certainly prefer PV to civilizational collapse and mass deaths. Frankly, the people who keep hoping for dieback and powerdown are annoying little shits.

Alan said...

At $0.10/kWh, this is 19.6 cents/W. Now, I've heard the price of the system quoted as "$3/W" and the price of the instalation, and $8/W ($16,000 for 2000W installation).

So, if the 20 cents above are "most of the energy/cost in the installation, where does the other 280 cents come from (or the other 780 for installed systems)?

Some of it goes to pay for the other materials and equipment used in the manufacturing process. Some of it goes to labor. Then there are taxes, depreciation, debt service, and the cost of capital. When talking about the installed system, there are shipping costs (some of which are obviously energy-related), installation labor, permits, inverters, etc.

Energy costs are certainly a part of many of these, but silicon is widely regarded as the single most energy-intensive part of the whole thing. Not only that, but the actual prices of many of these items are demonstrably not proportional to the energy content of the items they're attached to. The price of silicon, as I've mentioned, has ranged from $8/kg to more than $200/kg over the past decade despite no significant changes to the manufacturing proces. Something similar can be said about the gasoline used during shipping.

This is my biggest problem with using money as a proxy for energy -- the implicit assumption that prices reflect energy content is extremely difficult to validate. This is in large part due to the fact that prices are determined by the market, period. They don't necessarily have anything to do with actual manufacturing costs, especially in an undersupplied, rapidly changing market like the PV market.

Second, using fossil fuels to build PV is tantamount to an admission that we will burn up all the fossil fuels

How so? Each kWh of electricity generated using PV reduces the amount of electricity generated by fossil fuels by a kWh, right? So what difference does it make whether the energy is fed into the grid or fed into a plant making more PV panels?

Well, for one thing it makes PV -- or any other technology you make the same demand of, including fossil technologies -- incredibly expensive to build. For the sake of argument, let's say the energy payback time on a PV module is 2 years. So you spend a year building a PV plant, then spend 2 years building PV modules to power the plant. As a result, you need all the capital you would normally require for a PV plant plus a full two years of operating capital. As a result, you need something like seven times the initial capital and you shave 2 years off the time the plant has to recover the investment. Thus, all you've accomplished is to significantly increase the price of PV modules without changing the amount of electricity generated in the world -- and not only that, by increasing the price of PV you've likely shifted some that generation from PV to fossil fuels.

Now remember, I assumed a 2-year energy payback time, so this conclusion is not a result of long energy payback times for PV. Fossil fuels will fare better in a similar analysis, but only because their costs are primarily fuel costs that don't all need to be paid up-front (i.e., a coal-fired plant with a 2-year payback needs only 2 years of fuel up front, as opposed to paying for a full 30 years worth of electricity up front with PV).

It seems to me that in the end the goal is to shift as much of our energy generation portfolio as possible over to renewables. Insisting that renewables be built only from renewable energy not only fails to accelerate the process, but quite possibly decelerates it. Either way, it doesn't affect the total amount of energy generated and consumed. Isn't it better to make renewables from fossil-derived energy in the short term if it increases the amount of energy we generate from renewables in the long term? Handicapping renewables in the short term strikes me as penny wise and pound foolish.

Andreas said...

An interesting and topical article - if somewhat flawed.

1. In your exampe you quote a 2kW PV panel producing 4000kWh per year in Phoenix. I didn't realise that Phoenix was now in the Artic circle. Surely there are more than 2000 hours of light even in Phoenix? Or is the smog too much already.

2. Some responses to your article have mentioned entropy and basic laws of physics & thermodynamics. You seem to conveniently ignore these. Nobody has yet made a completely reversible process - one where the amount of energy released in doing 'stuff' can be recaptured undoing 'stuff'. QED you will never achieve the mythical 1:1 return however you calculate it.

3. You appear to have missed the most fundamental point. It is not the cost of producing energy that is important, but the impact on the environment. We can obsorb the cost. What we can't do is deplete the planet of precious resources and choke it in the process. PV's and fuel cells can generate power (W or Q) without causing greenhouse emmissions. One day we may even be able to aspire to your bootstrap vision.

4. Heard of Moore's law? Density of transistors will double every year .... Well a similar principle will surely apply to PV's and fuel cells. They will become more efficient, more powerfull and much much cheaper as economies of scale kick in. But it will need some investment and a little legislative help to prime the pump so to speak.

5. Fat chance then while George(W) Bunter and his corrupt and oily cronies run the world. They don't see the opportunity yet. And why should they - all that oil money keeping them accustomed to their comfortable ways.

Jeff Vail said...


Re 1: There are more than 2000 hours of sunlight in Phoenix, but every hour of light is not created equal. There is angle of declination, time of day, and overcast to take into account (yes, it rains in Arizona). The estimate of 4000KWH from a 2000KW array is from a local, Phoenix, AZ based solar company after taking these factors into account.

Re 2: I have no argument with you about entropy. I think it bolsters my argument--our only hope as a society to leverage energy at an EROEI of greater than 1:1 is either to use the input from the sun or gravity (tidal) that makes Earth a non-closed system, or to use accumulated energy from the past (fossil). I think that the second law of thermodynamics suggests that anyone claiming an EROEI of greater than 1 is not accounting for all costs (though we can discuss to what degree this is actually essential given the solar/gravitational inputs mentioned above).

Re 3: I disagree with you comletely. We cannot absorb the cost in a economy predicated on continually accelerating growth. And if the EROEI of PV is less than 1:1 (which I argue it is, even though, as stated above, it is possible to have a solar EROEI greater than 1 within the Earth-system due to external energy inputs) then it is not free of environmental costs. Until you can bootstrap, this is not a carbon-neutral process.

Re 4: I have heard of Moore's Law. There is an active debate at the moment about whether it will continue once the quantum barrier is breached, but that's like saying that gravity prooves PV will work. Neither law is applicable to PV--as history readily demonstrates, photovoltaics do not follow a Moore's Law-type progression. Not in price, efficiency, etc. Rather, PV appears to follow the standard logistics curve of diminishing marginal returns, meaning that future improvements in PV will explicitly not do what you are suggesting (and keep getting increasinlgly better), but will rather level off, and, if pressed, eventually begin to provide negative returns on investment in complexity. See Joseph A. Tainter's "Collapse of Complex Societies."

Re 5: I agree wholeheartedly.

Michael Crumpton said...

There are some interesting points here, but really these cost estimates only have meaning in comparison to other estimates (similarly figured) of other energy sources.
Estimates about EROEI should include the liabilities of using a particular energy source.

For example if we included all the environmental costs of burning coal, including medical costs from dirty air as well as dealing with the effects of biodiversity reduction, rising sea levels and drought from climate change, the cost is prohibitive.
Solar looks pretty bad eroei, but not in comparison to almost everything else.

Jeff Vail said...

I agree that a comparative EROEI figure is valuable--as suggested above--but it's my argument that an absolute EROEI figure (as my cost-based theory suggests) is more valuable because it gives us insight into the ability to delay or prevent collapse due to diminishing marginal returns.

It doesn't matter how much better photovoltaics may be than coal when all externalities are accounted for--if they only provide an absolute EROEI of 1:1, then their use will accellerate our society's move towards collapse. Not that this is necessarily a bad thing, but that's a debate for another time...

Cesium said...

Gosh, based on your argument, all sources of energy have an EROEI of 1:1. If PV produced electricity for significantly less than the cost of electricity, the cost of electricity would fall. What's the EROEI of coal? Hmm... must be 1:1 -- the amount that we pay for coal-fired electricity is as representative of the total energy costs of coal as it is of PV.

Jeff Vail said...

Cesium: your point is valid. Human society doesn't have some giant battery where our energy surplus is stored--we use it all. What portion of that energy use is superfluous? Some of it certainly seems wasted, I'll concede, but that's how the market system operates. So if we use all the energy that we produce to sustain our global civilizaiton, then there really isn't a surplus at all. Our societal EROEI is 1:1. The real litmus test is to determine if a discrete energy source has an isolated EROEI of greater than or less than 1:1. Very hard to tell--the only reliable means of determining this is the "desert island thought experiement," where we see if a bubble society powered 100% by power source X can reproduce itself. This, of course, is totally impractiable to test in the 'real world.' Which leaves us with a real methodological problem when trying to address EROEI: it's the most important question of our time, we can't ignore the totality of the chain of inputs necessary to support an energy source's exploitation, but if we account for them in the only possible way (price) then we get a semi-nonsensical output. I'm working on an "EROEI Manifesto" which will, hopefully, address these problems (though the result may not be a concrete "answer")...

Anonymous said...

You start off with EROEI, but the prove only ROI.

Lucas said...

I think this analysis neglects one major factor: the natural laws of supply and demand. What is essentially being said here is that everything is worth what it is worth. A photovoltaic installation cost is equal to the cost of electricity the system will displace over its lifetime because that is what it's worth. For a system that will last 40 years, people will pay up to the amount they would pay for utility power in that same time period. Those are natural market forces.

Embodied energy does not necessarily correlate with market price. Two distinct facts support this: 1. Companies must make a profit. There is no embodied energy in profit. Profit is simply the margin between cost and price. 2. Price is based on perception of value, and is usually calibrated to some utilitarian, economic, or social metric. In the case of PV panels, that metric is the cost of power. For a car, it is the time-value relationship between driving and biking or walking. For a Plasma TV, it is social status.

Most products use energy rather than produce it. What is the EROEI for those products? How can one say that a solar panel is any different than any other product? Are they exempt from the natural laws of supply and demand? Like all products, they simply are worth what they are worth.

Anonymous said...

One often comes across $/watt figure when comparing solar cells made by alternative processes. $1/watt is a number frequently quoted as being the tipping point for bringing solar cell cost in parity with grid electricity. Is there a standard way of calculating this $/watt number? Should it refer to cost of goods sold devided by wattage ratings of cells produced?

K. Austin, AIA said...

This has been a very interesting string. Forgive me, I'm an architect and work at reducing the amount of energy needed by residences to as low as possible. I do not fully understand the physics and math in this debate. So if my question seems stupid, please for give me. I have heard the number 91% as being the percentage of energy lost in transmission from power plants to end users. It would seem that the efficiency of any energy source located at the point of use would be more efficient simply because of the elimination of transmission loss.

My belief is that we need to use as much of the energy the earth gives provides with the minimum of pollution and environmental degradation as possible. So the use of tides, wind and solar energy are our best bet. Damning of rivers has been detrimental so even though it's electricity is renewable, I don't consider it the best choice, though it is better than building more coal plants.

Jeff, can you address the issue of transmission loss? I agree that there probably is a limit to how efficient solar chips can be, however, locally, there is a company that has invented a two step converter that is cutting in half the previous energy model. So I do think that there will be innovation in delivery and storage of energy. Battery storage has yet to be really developed, that I am aware of. If you know differently, I'd like to know about it.

K. Austin, AIA

Cause and Effect said...

Listing the energy inputs of say the production of a candle, would be as arbitrary as listing the causes that led to the production of the candle because each cause expended some amount of energy. Worse, listing the effects of the candle's production would be equaly as difficult as listing the energy output of a PV factory. If the pv panel shorts and causes a fire that ends up burning a large area is this a pv factory energy output?
Down the Rabbit Hole

robin said...

as I am since more than 10 years thinking about this problem in Germany , I am very sure, that the idea of the "Price Estimated EROI" is totally correct,
but following this idea earnestly you must reach the result, that f.e. PV has an EROI of near by zero.

I am sure, that anything, that is somehow produced and sold with a certain price (that means: every ware) got this price only by input of energy - energy in the meaning of every raw material, that can produce warmth (oil, coal, gas, uran ff).
Sun (windcraft ff) may be involved, but as I explain later in fact has no price, is costing nothing.

Energy based on sunenergy has a price only because someone has produced a machine to convert it - you don`t pay for the sun, but for the machine, and this is made from dirty energy.

Because mancraft is produced with energy, too, (growing up children, education, supporting the elders)you must count every cost of mancraft as an important part of spending energy into the product (ware). (that is around 60% of any price).

My theory is:
there are only two types of raw material:
A. Raw material that is not been usefull as energy (nearly everything you can find or grow like iron, plants).
This raw material is without any price - everyone can take or use it.
Sunenergy (and those caused by sun. wind, waves) are non raw material, but even they have in the beginning no price.

If you want to sell any ware with a certain price, you must refine it somehow,
that only means: You have to put any energy (oil, coal, gas uran ff) in it. And of course your manpower, but that is itself made from input of energy,
so you must come to the result:

Every price of any ware ist 100% energy - "dirty" energy!

So, coming back to PV:

Here in Germany we have a long experience in PV.
At this time (2008) the price of electricity out of PV is around 12 times the price of "dirty" electricity (60 Eurocent for PV to 5 Eurocent out of coal ff by the KWh),
but in fact the allinall-price is rather 20:1.
(I can easily give You some facts, if You want!).

So the "Price Estimated EROI" here in Germany is in fact much below 1, it is 0,1 or even less!!

That means:
If You think, energy of any kind of renewable sort like PV is only costing more, than "dirty" energy, You are wrong!

If it is costing more money, it is automatically costing more "dirty" energy,
and it a horrible waste of ressources.

excuse my mistakes, please answer to if you like

robin said...

I want to explain, why I declare, that the "Price Estimated EROI" is giving the result, that PV is a huge waste of energy with an EROI near ZERO,
it is a theorem, that is a little difficult (and my be more caused by my bad english), but it may be interesting in the results.

I call my idea a “theorem”, that is a theory, that is so easy to find out, that it is a wonder, no one has realised it before. Although it is hard to get.
My theorem has 3 Parts with 3 thesis.

Thesis # 1:
All raw materials differ into two categories, a priceless sort A and a sort B with a price:

Karl Marx has installed such a theorem, when he said, that every product is made from only two factors:
1. raw material , that everyone can get for free whereever it is found, and
2. manpower (and of course: womenpower J)

If a product is to be sold, this product changes into a ware and has a price,
And this price is therefore by 100% the price for the manpower.

Further on he names the profit (“Mehrwert”), and he declares this profit to be the property of the workers – but this “profit” is of course also reproduction of the “Kapital” (machines, building, stock).

I take this theorem of K.Marx and change it into the situation nowadays – nothing more!

In the 19th century energy was no problem – first wood, then coal, then oil and others.
Nowadays we have a lack of the part of raw material, that we call “Energy” and now you can reduce every product from the beginning of production to be made out of two kind of raw material:

A. raw material, that is neded for products, but has no energy
B. raw material, that is energy (oil, gas, uran ff).

Every “energy” can fit into both categories (see wood as a table or burnt, oil for plastics, too), but that is no contradiction – once they are either used as raw material in the product it is cleared (oil can be burned as energy or used to be plastics – once it is used, it is cleared, wether A or B.

Further on we may declare another category:

Sun and power out of sun (wind, waves) definitly is energy only, but even sun is in the beginning for free (without any price). If you produce power out of sunpower, you need a technique made of raw material A or B.
The same is to be said about renewable ressources like water or air – they are priceless in the beginning and only can be turned into a ware with a price, if you deliver it – than you pay not water (ff) , but the service (pumps, pipes), and this is made with raw materials A or B.

So we can start again with only two category of eaw materials – A and B.

Thesis # 2:
Every price (every sort of “costs”) is 100% reduceable to (waste of) energy:

If you think about EVERY ware in the world and include, how human beings are growing up, been fed, educated, are workers of all kind and than live as pensioners until their death,

You come to the conclusion, that human beings and all there consum (and work for products to be consumed) all of their life, is made of raw materials category A and B,
And if you than remember, that raw material A has no price (because it laying around for free for everyone), and if any product is changed from this raw material into a product only by using energy, you can reduce every product to be 100% energy. WITH a price and others without a price.

To remember: Karl Marx reduced products100% to human work and the price of products (wares then) is a price to 100% only for the manpower,
Now you can reduce every product AND the manpower as a result of spending raw material B (energy).

But: Why has energy a price?

Karl Marx only could explain the price of any ware to be the price of work, because work is not for free, but must be paid. If workers are not paid, they starve and die, so work must have a price, and money than is only to help trading wares in a cycle.

Energy is something different, but the reason, why energy (and than ONLY energy!) has a price, is, that all human beings since a long time depend on energy.
If there were concurrence between the producers of energy (like it was in times of much energy) , the price is reducable to the minimum of work (and therefore the energy to reproduct work). Until around 1973 this was the price of energy: the lowest price to promote oil, handle it, lay back for investions in the future and have a little profit..

Only because energy nowadays is rare, it has a price, that is independend from the manpower (made with and using energy), only that is, why you can declare every price to be a result from the price of energy.

And because energy is needed all over the world and can easily been transported there, it has a worldwide base-price. This price is a base-price than for ALL kind of energy.

There is profit of course - Is profit independend of consumption of energy?

The big and confusing exception in the cycle of money nowadays is, that you can make unbelievable high profit in selling energy (mainly oil). Stocks and paperinvestions all over the world base mainly on this imaginary money.

But if you want to use any profit, you can only buy products – and these products are made from energy like all products. These products may be highly luxury, they may be highly overpriced (like art ff), but they are still products.
So every profit (above the profit you need to reproduce yourself and your capital now and in future) is sooner or later a consumtion of energy.
(This is not a speech against making profit!)

But – mainly because of iregular high prices for energy) there is a huge amount of imaginary money, that is waving around the world. This amouunt of imaginary money is supposed to be as big as the amount of “real” money.

But this amount of imaginary money is purely worthless, if you really want to change it into products to consume if every owner of imaginary money is trying to do it at the same time.
Than this owners of imaginary money will realise, that “you cannot eat money”, this money will be worth nothing any more.
The way to destroy imaginary money is an inflation.
And that happens already (see the dollar) and will continue to happen.

In the end the amount of imaginary money will be reduced to the amount of “real” money.
And than you will see: every money is nothing else but a right to spend energyb and is worth nothing, if there is a real lack of energy..


Thesis # 3:
It is possible to count out of the price of wares dirctly the investions of energy into wares

Remember: this is for real wares and imaginary wares, too, like education, healthcare and many other products we need above eating and housing.

As said in thesis # 2 , under certain conditions the price of wares is 1oo% reducable to the amount of energy into this wares.
These certain conditions are the normal capitalstic conditions:
Every ware, that is produced and offered together with other producers, offering the same or similar product the same time, you has a typical concurrence.
This means: You have to lower your price to the point, you really need to proce the product and reproduce yourself and your capital.

Under these conditions (mainly all wares) you can figure out the amount of energy directly from the endprice (WITH taxes!!), if you know the baseprice for energy.
(If you can not hold the price of other producers, you go bankrupt, of course)

Because the baseprice is worldwide the same and is aligned, if the price of other energy is raising or falling, you know the price (not exactly, but nearly exactly), and you can offer a simple formula:

The endprice (with taxes) of any ware divided by the price of energy of the time, when the ware was produced is the amount of investion of energy into this product.(ware).

A PV costs ready around 7000 $ , produced with price for energy of 5 ct/KWh
(remember: your home-delivered price for electricity is much more than only electricity!)
Energyinput: 7000$/ 0,05$pKWh = 140.000 KWh.
Because 7000$ is around 1KWp and this is producing around 1000 KWh a year within 20 years you have produced: 20.000 KWh
For maintainance ff you have to calculate around 1000 $ in 20 years equals 20.000 KWh.
EROI = Zero
Facit: You get nothing but waste 140.000 KWh “dirty” energy just by running a PV.

You can easily confirm it – ask those, who did run a PV for a longer time!
You can get a PV cheaper by mounting yourself and maintaining yourself, but you must count your own work of course, too! With all costs to make a living.

Windcraft is similar, but much more worthwile (though still an EROI heavily under 1).

Why take the actuell price? Parts of the production (houses, children) are produced maybe much earlier to a different price for energy!
That`s right, but you must see production and reproduction!

For manpower it is not important, WHEN you did raise your children, but you have to feed them NOW, educate them now, take care for elders now and so on,
For capital (fabrics, machines, knowledge) you may use a stock, that is produced much earlier, but if you want to produce in the future, too, you have to rebuilt it, repait it, lay bach money to buy other stock, qualify your workers and so om.
All this happening NOW, not earlier!

To have a stock already of manpower, capital ff may save you a while from going bankrupty in times, when other producers are better (make lower prices), but if you don`t reproduce and better your productionline right NOW, you will go bankrupty later, anyway.
That’s why the trhesis is right:
You can use the actually price of energy (right to the time, when you produced it) , to figure out the amount of energy spent into the product.

But remember: Only under certain (main) conditions you can do that!!

As I have discussed this item a lot before, I already know several contradictions:

There are exceptions a lot (patents, art, luxury), but these exceptions are rare compared with the general flow of wares, and they are mainly caused by the existence of imaginary money.

An interesting exception are patents (and maybe art ff):
Some holders of patents or artists are spendung all their life just to get a patent or create art.
Here the price of patents or art is representing the whole energy for the the whole life of this human being.
Another interesting exception I`ll try to explain with an example:
A baker may produce more bread, than he can sell, because he don`t know, how much buyers will come and he will ensure to give a bread to everyone, even if there are coming much buyers. The old breads will be thrown away.
Here he must take a higher price, than each bread costs (takes energy), because he must calculate the energy of all breads into the price for each single bread.
Another bakery may produce less breads and sell them all for sure, therefore can calculate a lower price, but he risks to send buyers away.
It is up to the buyers, if they like to pay a (little) higher price at the first bakery, but have the comfort, to be sure to get one, or pay a smaller price, but risk to get no bread at this very bakery.
This example can be generalized - a lot of industrial production (spareparts ff) is based on this calculation – you must see the average price, if you see different prices.
Another example: Advertisement prices in supermarkets – you pay here less, there of course more. All in all the supermarket calculate still the minimum limit in costs and they are energy.

again:Excuse mistakes,
if you want to contradict, my adress is


Anonymous said...

2002 oil prices were $20 a barrel
2008 oil prices were $135 a barrel
Does that mean embedded energy reduces 6.8x in 6 years?

You make the point that EROEI has a problem with infinite regress. When do we draw the line of invested energy – Down to the rice eaten by a worker seems ridiculous (as you point out). But this problem cuts both ways, for PV and for Oil. This is actually a fundamental problem which you believe you can fix with “Price-estimated EROEI”, but you cannot.

You say it is the “the most accurate representation of the total energy embodied in ANY product” but you give no real reasons for accepting this claim. It sounds like a neat idea, but so does my own “Attractiveness EROEI theory”, which claims that the most accurate representation of the total energy embodied in ANY product is how attractive the majority of people find that product. Where you say market price accounts for the full-spectrum of energy invested, I say a large number of people’s hormonal reaction to a product (which we can measure scientifically) more accurately accounts for embodied energy than a market which can jump $110 in 6 years for a product that has been around for over a century. On what grounds could you ever pick one of our theories over the other? The fact that your theory “attempts” to account for embodied energy is irrelevant. My Mother makes attempts at understanding the internet, but that doesn’t make her Al Gore…

You also claim you will believe PV has an EROEI of more than 1:1 when PV powers all the steps involved in its production. My response: give it some time. PV is just now approaching true marketability. Oil has been around for a LONG time. Oil is an established industry – no one disputes that – but it’s a dying one. According to your price-estimated EROEI theory (which I find flawed) PV has increased its EROEI 5x (100cents/kWh to around 20) in the last 20 years, while oil has decreased its EROEI 6x in 6 years. So even if you’re price-estimated EROEI theory is correct and PV is 1:1, it isn’t going to be for long. And I encourage you to look up Evergreen Solar as their panels are manufactured in a plant powered by PV.

While I disagree with your assessment of embodied energy, I find your discussion helpful and I have learned quite a bit just reading it.

Jeff Vail said...

I agree with a lot of your criticisms of the price-estimated EROEI methodology--it's not very "good," but I think it's value is that it forces people to think about why it isn't highly accurate, and in the process think about the same inaccuracies in other EROEI methodology (assuming they're thinking about EROEI at all, which is a great start). I think your example of oil's price increase as not reflective of oil's true EROEI is a great example--especially in a world with sunk cost in existing capital infrastructure, inelasticity of demand can dramatically skew price-estimated EROEI calculations.

That said, I'm not yet convinced that PV will ever get substantially better than a very rough 1:1 figure for EROEI. I'm holding out hope for thin-film as well as concentrated solar power, and I think that new products entering into the solar design process with a better understanding of EROEI problems give engineers a much better chance of designing for optimal-EROEI PV. That said, I think examples like Evergreen actually demonstrate where we're still looking at the problem in the wrong way, and therefore not setting the right goals for our design process. While I think it's great that Evergreen uses only PV to power their plant, that's actually a very small portion of the energy that goes in to a fully installed solar system. It doesn't include the energy required to 1) built the plant, 2) mine/transport/refine the raw materials used in the plant, the machinery and capital goods in the plant, the materials that go into the solar panels themselves, 3) the energy required for distribution of finished solar cells, including not only the fuel, but the embodied energy in the roads, the trucks, etc., and 4) the energy required to support the people who work in the plant, who manage the operation, who perform marketing, etc., including the cost to transport, feed, educate, house, heat/cool, entertain, and care for those people and their families. None of the calculations of energy input to solar panel manufacture that I've seen account for *any* of these energy inputs, and all are "but for" inputs--but for that energy use, the ultimate PV installation would not happen. I've heard some people say that these are relatively insignificant energy inputs--first, I find this hard to believe (energy used in mining alone is massive, and the energy to support the people involved is like dark matter, hidden but also massive), but more importantly I don't think anyone can say this with authority until the calculations are performed.

I'm not convinced (yet) that we can't engineer PV to have a decent EROEI, but I strongly doubt we'll get there until we start looking at the problem through this kind of lens. Not an expressly "price-estimated EROEI" lens, but just an honest effort to consider all of the energy inputs, not just those that are easiest to account for. Hope I'm wrong.

detlef said...

Hi Jeff,

I still wonder, how You figure out an EROI of 1:1 with PV.
In my opinion it is much less, if You take Your theory of estimating the EROI by the price. "Normal dirty" (nuklear, coal, gas ff) energy by these days is around 6 ct/KWh, while PV is producing it around 50 ct/KWh.
That means: The EROI of PV is around 0,1.

That means, every PV-panel needs ten times more "dirty" energy to be produced, installes and maintained, than it produces back co called "clean" energy.

Which price of the energy do You take to calculate with?
More expensive "dirty" energy or less expensive PV-energy?
Or: Don`t You dare to say it?

If You estimate an 1:1 with PV, You declare Windpower to be much better: Because Windenergy is five times cheaper than PV, this has an EROI of 5:1?
Than why is Windpower still double as expensive as "normal" energy?
My calculation is: Windpower has an EROI of 0,5!

Up to me, the only open question in the Price-Estimated EROI-theory is, how much % of the price of every factory-produced ware (and PV) is invested into "imaginary" money.
Everything else of the endprice is directly spent and lost energy, but a part of the profit and wages is invested in stocks, art, ff.

I figured out the share of "imaginary" money, that is earned by producing PV to be between 5 to 10% in Europe. In the USA it is different, because more money is invested in private hold stocks, but it will be possible, to get a valuation.
Only this share MIGHT be NOT energy directly invested into this factory-made product, but just "imaginary" money. (To tell the way to estimate this share is a little too extensive for this answer)

You express the hope, that better PV is coming (thin f.e.). Well, this "new" PV is already been produced in decent good and expensive built factories for a long while now, , and this "new" PV is not cheaper, Than the thicklayered PV.
Up to now and since 30 years PV is NOT been produced cheaper - only the PV produced in fareeast is cheapened,
but this is absolutely no contradiction to Your theory - chinese labour is much cheaper (because they consume much less energy over there , quite simple, no luxury, no vacations ff).

It will be very exciting, to see the prices of PV (and of course other renewable energymachines) in the near future!
If Your theory is accurate, than the price of PV must increase, because the price of "normal" energy is already increased. This MUST have an effect on all prices, including PV of course.

If this does not happens soon, it MIGHT be, that the producers of PV (factory owners AND workers) did get too much money (to be consumed or invested in stocks ff) and can lower the profit or wages up to a certain limit.
But sooner or later the price of PV MUST increase (IF we are right).

Or otherwise:
If the price of PV is cheaper in the near future, You (and me) are wrong.
An easy, clear and trustfull validation of the Price Estimated EROI-theory.


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Steveo said...

PV costs are much much lower, a sea change has occurred.

A 4.6 kW system can be installed for around $21,000 in Hawaii, with tax credits around $7000.

Sea change. 3 cents per kWH after tax credits

9 without any tax credits. That is what you really need to know.

Anonymous said...

Well according to BSW-solar:

the installation cost of PV in Germany is 1702 EURO/KWp, which translates into 2300-2400 DOLLARS/KWp.

The author assumes 8000 DOLLARS/KWp installation cost in his calculations.

US has access to same hardware as Germany, labor cost is pretty much the same. So why the author assumes that installation cost in USA is 3-4 times larger than in Germany?

And if it is true how that changes all the calculations above?