Kingsmill Bond

New Energy Analyst
+44 20 7246 7800

Featured New Energy research

Recent New Energy research

* Energy return on investment, Kingsmill Bond, 7 Mar 2017
* The end of the ICE age, Kingsmill Bond, 2 Feb 2017
* Renewable intermittency, Kingsmill Bond, 13 Dec 2016

See all our New Energy research >>

Energy return on investment: The dawn of the age of solar

Universal, eternal and high return – the energy return on investment (EROI) of solar has overtaken that of oil, and the gap is widening. This heralds the dawn of the age of solar.

The EROI of solar is high: a new solar panel now pays for its energy costs within one year and over the course of its lifetime generates 22 times as much primary energy as it takes to make it, set it up and maintain it. Moreover, the EROI of solar keeps on rising. Improved efficiency, economies of scale and learning by doing will drive up the EROI of solar to more than 30 within five years.

By contrast, the EROI of oil is falling. As easily accessible oil runs out, so the EROI of oil keeps falling. Non-OPEC oil has an EROI of around 16, while that of the US is below 10, China 6.5 and Canadian oil sands just 3. By the time oil has been refined and converted into a useful service, its EROI drops dramatically; the EROI of oil used for electricity generation is below 3.

Over time, high EROI energy drives out low EROI energy from the supply mix. The industry believes that low EROI (i.e. high-cost) oil will set the marginal price. In reality, low EROI oil (including biofuels) will simply be driven out of the supply mix.

The triumph of solar is new: the EROI of solar overtook that of oil only in 2014, and the internet remains full of bogus analysis using old data to argue that solar is a low EROI resource. Entrepreneurs are already filling in the gaps as the supply mix adjusts. Expect a cornucopia of invention and innovation.

Leave a comment

You need to be logged in to leave comments