Disclaimer

Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

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Wednesday, May 24, 2017

Energy Payback

One of the classic techniques of soft denialists is to assert that the construction and installation of solar panels or wind turbines uses more energy than they produce over their useful lifetimes.  I call them soft denialists because they don't come right out and say that there is no such thing as global warming and so we can continue to use fossil fuels.  What they say instead is that renewables won't work, and so we have to use fossil fuels.  They don't then add that this will inevitably mean that CO2 emissions will go on rising, the level of CO2 in the atmosphere will go on rising. and so global temperatures will go on rising.  Even if they were right about the energy payback ratios of renewables, the fact is that we have no choice.  We have to cut CO2 emissions to near zero to prevent catastrophic global warming.  Fortunately, the soft denialists are completely wrong.

So what are the facts?

Solar: According to NREL, current PV systems take 3.5 years before the energy they generate exceeds the energy used up in their creation and installation.  Now, solar panels lose about 2% of their capacity in their first year of use, but thereafter capacity declines by 0.5% per year.   This means that over 40 years, PV panels will lose a cumulative  mere 20% of nominal capacity.  Clearly, that's a positive energy balance.  As a corollary, note that costings of solar power assume that project life is 25 years Even with low interest rates, the increase in the present value of the investment after 25 years is small, so that makes sense.  But what that means is that after 25 years, the electricity generated is (virtually) free.

Source


Wind:   On-shore wind turbines produce 34 times the energy it "costs" to make them.  As my source points out, though, this doesn't include the energy cost of batteries or backup.  What is truly fascinating is that the energy payback ratio for coal is much less: between 2.5 and 5.1; and for CCGT (combined cycle gas turbine) is about the same (between 2.5 and 5).  CCS (Carbon capture and storage) is even less efficient.: it reduces the coal payback ratio to between 1.6 and 3.1.  These data mean that even if you include backup for wind for half the time, it still (obviously!) has a far better energy payback ratio than coal or gas on their own.

Source  (Click to enlarge)


Conclusion:  Renewables pay back the energy used to create them many times over.  The soft denialist claim is just wrong.


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