Solar Now Produces a Better Energy Return on Investment Than Oil - <AUTHOR> https://robertscribbler.com/2016/12/19/solar-now-produces-a-better-energy-return-on-investment-than-oil/ <comment><USER2> Don't worry about the political issues. Wall Street will follow the ROI numbers, and money will be available for power sources with good ROI. Oil is on the way out. Coal isn't coming back, either. Peabody Coal, the biggest coal company in the world, went bust earlier this year. Nobody wants to build new coal plants. They're huge headaches to operate compared to natural gas plants.

<comment><USER3> > They're huge headaches to operate compared to natural gas plants.

Ahem: that's because of "political issues". You should remain very worried (and vigilant) about the direction of energy policy under the incoming administration.

<comment><USER4> Right, coal plants are expensive mainly because of the scrubbers required to reduce sulfur emissions (which caused acid rain through the 1970s). A government committed to eliminating "burdensome" regulations could make coal power extremely cheap again.

<comment><USER5> Even if the federal government substantially changes its position, many states have their own clean air laws and the courts are open to states suing other states they are "downwind" from.

<comment><USER6> What if Trump fills the courts with pro-coal judges?

<comment><USER5> Federal judges serve a long time, there may still be some picked by the first Bush on the bench. One president, hopefully with only one term, can't have that big an impact on the entire federal judiciary. And federal judges have their liberal and conservative tendencies but they tend to be pretty non- partisan.

</comment></comment></comment></comment></comment></comment><comment><USER7> "efforts made to slow this transition by Trump and others in his administration should be seen as a protectionist, nonsensical, and amoral top- down defense of the harmful fossil fuel industry."

As a solar panel owner, I want to know, is this a response to the tax credit going away or is there something else of which I am not aware? If solar is able to stand on its own, the tax credit would seem to have served its purpose. The discontinuity in the level of feasibility when it goes away will not be fun, but I thought that people expected that to happen when it eventually does go away.

<comment><USER8> Oil, gas, and coal enjoy their own subsidies. Both direct and indirect. Increasing these subsidies for fossil fuels will slow the transition.

<comment><USER9> I always hear these vague allusions to oil and gas subsidies, but never concrete examples. In fact, we actually tax the hell out of oil and gas at retail, so it seems a bit strange that we would actually be subsidizing it at the same time.

What kind of/magnitude of subsidies does oil and gas enjoy?

<comment><USER10> [https://en.wikipedia.org/wiki/Energy_subsidies#United_States](https://en.wikipedia.org/wiki/Energy_subsidies#United_States)

$3.2bn / year for fossil fuels, about half of what went to renewables

<comment><USER11> Looking at the gross subsidy is misleading. Federal gas tax revenues alone are about $35bn/yr.

<comment><USER10> The excise tax is intended to pay for transportation infrastructure though, not to disincentivize gasoline consumption.

<comment><USER11> Whatever the intentions of the people imposing the tax, the effect is to disincentivize gas consumption. My point is, if the government taxes certain activities by $x and subsidises the same activity by $y, quoting only $y doesn't give the full story.

<comment><USER12> As far as I know gas tax isn't paid by the producers, but sure we can combine gas producers and users for this discussion. Money taken or given to either one has the same effect on the demand for gas production.

When that $x in taxes is paying for the infrastructure used, then the gas producers/users are actually getting $y+x from the government. The $x, being a service charge, cancels out, and the only thing left is $y. $y is the difference between the world we live in vs. a world where the government paid no special attention to the industry. It's the most important number.

<comment><USER11> Even granting your argument, if the government takes $x as a service charge for infrastructure, and subsidises by $y, that would be a net subsidy of $y, not $y+$x.

But $x is not a service charge. It bares no relation to the amount of anything used. They can't opt out of the road part of the service charge and build their own roads. The tax is not hypothecated. Whatever the rhetoric of politicians, it doesn't bare any resemblance to a service charge.

<comment><USER12> > that would be a net subsidy of $y, not $y+$x.

That's exactly what I was arguing, yes. That $y is important and $x is irrelevant.

> They can't opt out of the road part of the service charge and build their > own roads.

That has no real bearing on the economics of the situation. Paying $x to the government for roads and paying $x to a private contractor for roads work the same way. That's why the net subsidy is $y.

If there is a tax that's applied specifically to gas companies that _isn 't_ directly paying for infrastructure they use, then that tax can be subtracted from the subsidies. But the gas tax doesn't fit that bill; if anything it undercharges.

<comment><USER11> > If there is a tax that's applied specifically to gas companies that isn't > directly paying for infrastructure they use, then that tax can be subtracted > from the subsidies. But the gas tax doesn't fit that bill; if anything it > undercharges.

The gas tax is only one of many taxes that these companies pay - you have to sum all their subsidies and subtract all their taxes. That's the point. If you're not doing that, comparisons with subsidies to other industries are going to meaningless.

<comment><USER12> You subtract the taxes specific to the industry. Not all their taxes. Are there any such taxes?

<comment><USER11> I subtract all their taxes. If Exxon pays $100bn/yr in various normal taxes, and the government pays them $1bn/yr in fossil fuel subsidies, that's a net subsidy of -$99bn/yr.

How can it be a fair representation of their situation to only say they receive $1bn/yr in subsidy?

<comment><USER12> Because something like income tax is a given. We're not comparing against a world with no government. We're comparing against a situation where they get no _special_ attention. You can use whatever word you want for it, but if a company pays half as much tax as everyone else that's a big deal.

You're right to say that it's not fair to only list the $1bn. It should be put in context of the $100bn of normal taxes. But reducing it to "$99bn" is not a fair representation either. It doesn't tell you if they otherwise would have paid 100 or 200.

<comment><USER11> I'm quite happy to accept the reporting of both gross taxes and gross subsidies. My objection is to only comparing the gross subsidies.

</comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER13> The per-watt numbers may sound great, but these are still apples and oranges energy sources. While there are some area where one can certainly replace the other (electrical grids etc) there are others (shipping) where the gap remains monumental. In terms of energy density (35ish MJ/L) and storage (a box) diesel fuels look to remain king for a while.

One downside of cheap solar might be a drop in crude prices, resulting in its more frivolous use. I'd hate to see improvements in shipping meant to conserve fuel, and thereby lower carbon emissions, be set aside once fuel becomes cheap again. We need to watch for this and, perhaps, get regs in place to ensure it is burnt as sparingly as possible.

<comment><USER14> Something like a quarter of US energy consumption is in transportation. As you mentioned, the storage density of electricity still far lags behind petroleum. It also takes an hour at a supercharger to "fill up" an electric car vs. a few minutes at a pump. Hydrogen and biofuels (in the US) are generally seen as energy sinks (they take more energy to produce than they give off), but what they lose in conversion they make up for in suitability towards a transportation fuel.

The point is transportation is a tricky application for renewables, and the amount of storage needed to make it work is mind-boggling huge, even assuming decades of compounding growth.

According to LLNL [1], the US consumption of energy in transportation is 27.7 quads. A quads is a measure of a lot of kWh. Specifically, 27.7 quads is 8,118,068,643 MWh.

Tesla's gigafactory is slated to produce 35 GWh worth of battery storage production per year at full capacity (slated for 2018) [2].

So, our annual energy consumption in transportation alone is 8,120,000 GWh, and our largest factory will, in two years, produce about 35 GWh per year worth of capacity.

Lets assume some compounding magic and imagine the gigafactory will be only the first of many self-replicating automated tesla factories. Say we grow our capacity at 5% every year... after two decades, in 2038, that puts annual capacity at 92 GWh, with a cumulative installed capacity of 1,250 GWh.

We're trying to hit 8,120,000 GWh. That's not gonna work.

Okay, lets assume instead of 5% growth, we somehow get 50% growth (we need more gigafactories, but lets say we also get better at building batteries, something closer to moore's law). Now after two decades of 50% growth, in 2038 our new annual storage production is 116,000 GWh, with something like 350,000 GWh of cumulative installed capacity.

Still short of 8,120,000 GWh.

(But this exponential growth is only starting to hockey-stick upwards at this 50% growth... we WOULD hit our goal within the third decade)

So, even assuming very optimistic conditions where the storage capacity production is exponentially growing, consumption stays flat, and capacity does not degrade once installed, electric cars still will barely make a dent in petroleum usage in transportation after two decades.

I hope I made some error on my metaphorical napkin here (like a battery can be recharged... if you have 365 Wh of annual consumption, that can technically be serviced by a 1 Wh battery being used every day, right? So we don't quite need to match the 8,120,000 number exactly, right? Maybe like 1/10 or 1/100th of that?) Because if I didn't, that means we need an Apollo-level effort sustained for a few decades to have a meaningful path off fossil fuels.

[1]: [https://flowcharts.llnl.gov/content/assets/images/energy/us/...](https://flowcharts.llnl.gov/content/assets/images/energy/us/Energy_US_2015.png) [2]: [https://www.tesla.com/gigafactory](https://www.tesla.com/gigafactory)

<comment><USER15> Your comment at the end is on the right track. Annual energy consumption isn't the ideal metric because you can charge a car battery every day. 22,200 GWh is all the storage capacity you'd need with daily charging.

<comment><USER14> Okay, so you're saying we could do it if we had 22,200 GWh / day capacity, cause if we can charge it up every day, that's *365 = 8,120,000 GWh annual consumption.

So at 5% YoY growth, we hit it at about 2031.

Ok, so that's only a decade and a half of non-stop growth. Now we're talking something plausible. 5% YoY for 15 years means someone will be making a lot of money if that comes anywhere to be.

<comment><USER16> I'd say under 10,000 GWh/day required, because:

a) The LLNL flow charts are for primary energy, not energy services; an electric vehicle can travel further on a megajoule of electricity than an internal combustion vehicle can travel on a megajoule of diesel fuel.

b) Long distance shipping, airlines, and (probably) long distance trucking are not going to replace liquid fuels with batteries. Either there's going to be residual use of fossils for those smaller applications or electricity will be used to make synthetic liquids; either way those segments aren't going to contribute to battery requirements.

</comment></comment></comment></comment></comment><comment><USER17> EROEI never made any sense to me. It seems to conflate two fundamentally different notions: fuels as energy sources and fuels as energy storage mediums. Who cares that petroleum EROEI might fall to less than one? Petroleum in that scenario would still useful for vehicles. Even if you need two joules to extract one joule of fossil fuel, this process might be economically viable if your two joules are immovable (e.g., drawn from a nuclear-powered grid) and your one joule is movable (e.g., in an airliner). There's no special significance to EROEI.

<comment><USER18> pjc50 gets the large scale answer correct.

On the individual scale a company in a >1 ratio line of business sells energy, which incidentally happens to be in the form of Jet-A or 93 octane but what really matters is they sell energy that runs the other economic sectors. Whereas a company in the <1 ratio line of business sells fascinating petrochemical feedstocks, which incidentally happen to be flammable and could be used as expensive fuels and they compete for needed energy with the rest of the economy.

The ethanol debacle shows how important that is. Certainly aged 12 year crown royal is not energetically feasible as engine fuel and that doesn't matter as long as its affordable for drinking. The distillery produces human fuel, but not energy, in fact its a net sink of energy. Likewise you can build a plant to produce ethanol, and it will produce fuel, and as long as you don't worry about energy or CO2 that's OK. Inevitably after its built someone will point out that rather than importing 30 million barrels of crude oil energy per day, if you want to run cars on ethanol we'll have to import and burn 60 million barrels of crude oil energy per day and there will be freakouts.

Part of the confusion is in the old days it was only possible to simultaneously produce both energy and fuel whereas we've burned the cheap oil such that now we're going to be deciding to make industrial plants and processes that produce energy OR fuel but often not both at the same time. In the old days it was impossible for a refinery not to produce and sell both fuel and energy at the same time...

<comment><USER17> Global EROEI decline doesn't seem a serius danger to me --- solar and nuclear power are both abundant and available at modest cost. That 60 million barrels of energy for input doesn't strike me as something that ought to lead to freakouts. (Coal is available as well; of course, using it incurs significant external costs.)

</comment></comment></comment><comment><USER19> I'm all for solar but to be fair the source study for this was looking at the economics of modules not deployments. Solar does have an inverse economies of scale problem where the cheapest, most amenable sites are the first to get solar farms. To scale it to be competitive with coal, nuclear, etc. you're going to run into higher site acquisition costs and suboptimal conditions. Worth the challenge to save our planet, obviously, but let's be honest about it.

<comment><USER16> In _some_ countries there's a high enough population density and/or little enough sunlight that land availability could prevent 100% solar electricity even if storage were magically solved; Germany, the UK, Belgium, the Netherlands, and Taiwan come to mind.

Land isn't going to be a constraint in most countries. Solar resources, while distributed unevenly, are _significantly_ more evenly distributed than fossil or nuclear fuels, or even wind resources. See for example this map of insolation in the US: [http://www.nrel.gov/gis/images/solar/national_photovoltaic_2...](http://www.nrel.gov/gis/images/solar/national_photovoltaic_2009-01.jpg)

In the continental US the very best solar resources are maybe ~7 kWh/m^2/day and there's hardly anything below 3.5. Or to put it in terms of cities, Seattle gets 58% as much annual insolation as sun-drenched Phoenix: [http://www.i4at.org/lib2/solarrad.htm](http://www.i4at.org/lib2/solarrad.htm)

So it took _many_ historical performance:price doublings before unsubsidized solar electricity got within shouting distance of fossil electricity in even the sunniest places in the US, and then just one more to reach that threshold across most of the country.

The technical and economic performance of wind/PV has already improved enough, and has enough assured near-future improvements already in the pipeline, that I'd say it would be destined to "eat the world" for electricity if storage were a solved problem. But storage isn't a solved problem.

Most discoveries that get hyped as "battery breakthrough" by university press offices aren't really breakthroughs, but there's so much research that there's an abundance of riches even after you throw away the ~95% that looks bad on slightly closer examination. Common problems with battery "breakthroughs" that justify quick rejection: dependence on rare elements (lithium is reasonably abundant; I mean things like tellurium, germanium, rhenium...), low cycle life, effects demonstrated only at interfaces or in nanostructures without any obvious path to bulk scaling. Among the remaining ~5% that looks interesting, assuming the publications aren't fraudulent, I have little idea which ones will end up industrially significant. Chemistry is a lot easier to model than market success. There are also partial substitutions for electricity storage that could displace and/or complement it: supergrids, demand response, thermal buffering...

<comment><USER20> What I am trying to understand is how is underground compressed air storage not the solution to the energy storage problem. LightSail is doing this, I don't see why others aren't too.

The tech is simple. Dig a hole in your backyard, put a large steel tank in it with an air compressor and a small turbine generator.

Putting the tank underground vastly improves the safety of the system and hides it. You can also derive heat from this process.

<comment><USER21> Right now Lightsail is attempting to cross the startup death valley by first selling its pressure vessel technology before tackling the more demanding energy market. They recently announced a tractor trailer sized compressed natural gas module. The idea is to get their costs down to where they can be competitive in energy storage, its an open question on whether that is possible.

Btw, their vessels are carbon fiber, not steel. And deriving heat is a problem not a benefit. Every bit of heat that leaves the system is lost efficiency.

[http://www.marketwired.com/press-release/lightsail-energy- la...](http://www.marketwired.com/press-release/lightsail-energy-launches- lightstorer-gas-transport-module-targeting-breakthrough-economics-2165657.htm)

[http://www.wsj.com/articles/energy-storage-startup- lightsail...](http://www.wsj.com/articles/energy-storage-startup-lightsail- plots-long-term-game-plan-1456110323)

<comment><USER22> > Every bit of heat that leaves the system is lost efficiency.

Storing air underground absorbs heat, or at least results in less heat loss than storing it above ground.

</comment></comment></comment></comment></comment><comment><USER23> In an attempt to clarify my previous point, everyone please feel free to examine Exxon's 2040 outlook, which puts Nuclear, solar, wind and other renewable energy sources at only 25% of all energy production by that time: [http://corporate.exxonmobil.com/en/energy/energy- outlook/hig...](http://corporate.exxonmobil.com/en/energy/energy- outlook/highlights/)

<comment><USER24>
        By 2040 natural gas will meet 25 percent of energy demand.
        By 2040 nuclear and renewables will grow 50 percent
        approaching 25 percent of energy demand.
        Oil will remain the world's primary energy source,
        fulfilling 1/3 of all demand.

</comment></comment><comment><USER25> Do any HN readers actually "invest" in oil? I think plenty of us _trade_ oil, but who actually goes long in something that is so volatile in response to things you have no control over(war, accidents, the list goes on)?

Oil's greatest investment potential is how _volatile_ it actually is. Look at the charts for brent crude day-to-day, or jump back a step and look at the crude ETFs(sco/uco/and-friends). There is a _lot of money_ to be made with that much volatility.

Back to the original question, does anyone here actually invest(as in hold long positions) in oil OR solar? If so, I am curious why you chose those particular investment vehicles, since they are technically(as in looking at the company's technical breakdown) bad long investments.

<comment><USER26> Could you explain why you think solar is bad long investment?

<comment><USER25> > Could you explain why you think solar is bad long investment?

Other emerging energy sources all ding the price of solar stocks. Eg...if tomorrow a press release for "huge natural gas power plant opens in California!" breaks, you get a (sometimes large) dip in all your solar positions, despite no value being lost at all. I would sum it up as "solar equity prices are affected by too many things other than their performance".

</comment></comment></comment><comment><USER27> Not without Lithium-ion [https://en.wikipedia.org/wiki/Energy_density#Energy_densitie...](https://en.wikipedia.org/wiki/Energy_density#Energy_densities_of_common_energy_storage_materials)

<comment><USER28> Well, hydrogen comes to mind. And power-to-gas. And running hydropower and biomass plants only at high demand.

<comment><USER29> If you think hydrogen fuel cells are a good way to go then please bid up PLUG or FCEL, I'd love to see them higher so I can short one of them.

Power to gas is just more of the same "hydrogen" economy. correct?

I read a book about the hydrogen economy back in 2000. Thought it was a great idea.

Then lithium ion batteries kicked hydrogen's butt.

</comment></comment></comment><comment><USER30> Nothing will force companies to use Solar than high ROI. Google and Apple now use Solar in a major way, with Tesla's cars and SolarCity's roofs, we are living in exciting times.

The drop in Oil demand would mean the end of the OPEC bloc.

<comment><USER31> _end of the OPEC bloc_

You might not have noticed, but OPEC is dead.

A combination of shale oil in the US, Saudi and US desire to the disrupt the Russian oil-economy and Iran/Saudi rivalries mean OPEC can't set prices anymore. The best they can do is try to restrict supply enough to stop them going bust[1].

Even that isn't a sure thing anymore - no one can be sure that even that small agreement will stick[2].

An Exxon/Russia agreement under the Trump presidency will bury OPEC. (Not sure Exxon/Russia will be _better_ than OPEC, but OPEC won't be able to do anything about it.)

[1] [http://www.abc.net.au/news/2016-12-01/opec-get-its-cartel- mo...](http://www.abc.net.au/news/2016-12-01/opec-get-its-cartel-mojo-back-to- stop-its-members-going-broke/8082892)

[2] [http://oilprice.com/Energy/Oil-Prices/Goldman-Flip-Flops- Aga...](http://oilprice.com/Energy/Oil-Prices/Goldman-Flip-Flops-Again-Now- Sees-High-OPEC-Compliance.html)

<comment><USER25> > You might not have noticed, but OPEC is dead.

Are you sure? OPEC's November 30th deal moved _world_ oil prices drastically in every direction. For a dead entity, they sure seem to exert change upon the living.

PS: I'd love for OPEC to die also, but I think they are very much alive, albeit less relevant than 20 years ago.

<comment><USER25> To add...look at yesterdays oil price movement within 10m of this article's release: [http://www.valuewalk.com/2016/12/opec-oil-cuts-not- structura...](http://www.valuewalk.com/2016/12/opec-oil-cuts-not-structural- shift-gs/)

OPEC is still alive and well, and even speculating about their deal's success is pushing prices wildly.

<comment><USER31> That's exactly the same Goldman analysis I linked to. They revised prices by $2.

This is not the OPEC who could move prices by 50% or credibly threaten to cut off supply.

</comment></comment></comment></comment></comment><comment><USER23> Not one mention of petrochemicals in this thread.

The main thing environmentalists (among others) seem to forget is that you can't make plastic out of sunlight. Or air. Or by pedaling a bicycle.

Oil (and natural gas, especially in the US where petrochemical refineries use it for ethane) will continue to be in demand if for no other reason than to be used as a feedstock for plastics and a litany of other chems that make modern life possible.

<comment><USER32> Petrochemicals are only 4% of the oil market: [http://www.bpf.co.uk/Press/Oil_Consumption.aspx](http://www.bpf.co.uk/Press/Oil_Consumption.aspx)

If switching to solar from oil would eliminate 96% of our use of fossil fuels, I'm pretty sure those "environmentalists" you refer to would still be happy.

But honestly whenever somebody brings up plastics in a discussion about sustainable energy or climate change I always assume they just like being contrarian.

<comment><USER23> I'm not doing it to be contrarian, apologies for the tone. I'm just trying to point out that people tend to see political cartoons like the following: [https://postimg.org/image/5zi56imjd/](https://postimg.org/image/5zi56imjd/) As gospel. Without considering the fact that pipelines are both statistically safer than road or rail transport. AND without considering that the oil and gas is going to be used for more than just gasoline.

<comment><USER33> You seem to be preemptively trying to head off an attitude that has not yet been shown in this thread.

Petrochemicals that are not burned are not contributing to co2 emissions. Also, there are other sources of those long carbon chains besides pumping them out of the ground. And at such a tiny percentage of oil use, they are not a big concern.

</comment></comment></comment></comment><comment><USER34> What I would like to see is the comparison pre-subsidies for the RoI. I am not convinced the author of the article reversed those.

</comment><comment><USER35> Except at night..

</comment><comment><USER36> Hahahaha, oh Kenaka. GET WITH THE TIMES, Kaneka!

Oh, I'd almost forgotten about that. Thanks for the laugh!

(Honestly, I have no idea what I'm talking about, I just thought it was funny the one green diamond was lower than the other thingies.)

</comment><comment><USER29> Guys. It's embarrassing that this is a top article on Hacker News.

There is really no association between the price of oil & the price of solar.

Oil is an expensive form of energy because it is portable & used for transportation. It competes with the price of lithium ion batteries.

Solar is for generating electricity. It competes with coal, gas, geo, hydro, wind.

And don't come back at this with some pathetic reasoning that on some islands or remote places idiots use generators. I say idiots because generators are loud, smell, need maintenance and these days are probably quite a bit more expensive than a solar + battery system.

<comment><USER37> This is about EROEI, not $

<comment><USER29> that's all great & fine, but think of it like this:

Where is oil used? Cars. Trucks. Planes.

Will a solar panel on the top of a car ever power a car? No. You need batteries.

It's the price of batteries vs. price of oil that we should be discussing.

<comment><USER38> The EROI for moving a car via PV solar is greater than moving a car via oil. Oil loses that comparison even worse, since 80%+ of the energy is thrown away as waste heat.

<comment><USER29> Yes, the totally awesome end game is to have solar panels that charge your car. But it isn't the price of solar that is standing in the way of electric cars everywhere... it's the price of batteries.

I hear this thing about return of energy, etc. But this is nothing new, right? Check out the oil sands project in Canada. Do you think the market cares about how much energy is used to create something? No.. just the $.

In any case solar & oil are not related.

<comment><USER39> > I hear this thing about return of energy, etc. But this is nothing new, > right? Check out the oil sands project in Canada. Do you think the market > cares about how much energy is used to create something? No.. just the $.

Ok, please stop and listen.

Economics, Government, the Public... they are all wrong. They got used to not care about EROEI because at the begining of the Industrial Revolution it literally didn't matter. I don't know the numbers for coal, but back when the first oil wells were being digged, the EROEI of oil was ~100:1. It did not matter how much it did cost to extract the stuff, just that you had access to it and how fast you could come up with ways to turn that energy surplus into value added (ergo, $$$).

Now, according to the article we are approaching the 10:1 barrier. That's still pretty good, and you can still run an industrial civilization on top of it, but it has become far from irrelevant. The problem is that all the economic models in use today got created back when the stuff as much more abundant and easier to produce.

If is as if there was a perverse Law of Moore that would cut transistor density in half every 18 months. Everybody started with virtualization and scripting languages and garbage collection, then C and C++ just sneaked under everybody's radar. And now, you are here, bashing assembly hackers because everybody knows that what's more important is programmer's time, not code efficiency.</comment></comment></comment></comment></comment></comment>