What Is the ROI (and EROEI) on Subsidized Renewable Energy?

FractivistsK.J. Rodgers
Crownsville, Maryland  

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Renewable energies have been subsidized heavily to be attractive, but by doing so the Energy Return on Energy Invested is lowered. 

Anyone who has any business acumen will understand the law of ROI (Return on Investment). You need to know if money is well spent and if that opportunity to invest is going to yield any positive results. This is really a basic concept when the figures and facts are correct; allowing for a true evaluation of risk vs. opportunity loss. When it comes to renewables, the ROI is murky and supposedly favorable on the surface, but in reality, it is a scheme.

Baltimore Sun photo from story on grants (taxpayer funds) going into this a Maryland wind farm boondoggle. Read it by clicking photo and then consider the ROI and EROEI.

Recently, I discussed the effects of ripping off the fossil fuel Band-Aid and how it was hardly a possibility due to our nation’s power grid. It is not agile enough to adapt to fluctuations in renewable energy output without a very expensive overhaul.  This leaves many places with heavy reliance on renewable energy sources needing to either sell (or pay to get rid of) excess power or pay for backup systems.

What we are also learning is that renewable energy (e.g. wind and solar) is being overvalued from the standpoint of benefits, while costs are underestimated. The Energy Collective now has a new article that further dives into how researchers have improperly evaluated the intermittent renewable resources.

The author, Gail Tverberg, looks at how evaluations such as Levelized Cost of Energy (LCOE), Energy Return on Energy Invested (EROI), Life Cycle Analysis (LCA), and Energy Payback Period (EPP) are not typically being used when analyzing renewable benefits and costs. Renewable energy is often propped by hidden subsidies necessary to get it to market.

Energy ROI Evaluation

When we subsidize energy sources, it distorts the market, effecting pricing for all types of electricity. Tverberg states:

“A big part of our problem is that we are dealing with variables that are “not independent.” If we add subsidized wind and solar, that act, by itself, changes the needed pricing for all of the other types of electricity. The price per kWh of supporting types of electricity needs to rise, because their EROIs fall as they are used in a less efficient manner. This same problem affects all of the other pricing approaches as well, including LCOE. Thus, our current pricing approaches make intermittent wind and solar look much more beneficial than they really are.”

She goes on to say:

“As greater amounts of intermittent electricity are added, the availability of inexpensive balancing capacity (for example, from hydroelectric from Norway and Sweden) quickly gets exhausted, and neighbors become more and more unhappy with the amounts of unwanted excess generation being dumped on their grids. Denmark has found that the dollar amount of subsidies needs to rise, year after year, if it is to continue its intermittent renewables program.”

 

Renewables are rarely controlledIn order for solar and wind to be viable, then the EROI needs to be within an acceptable range: a high of 10:1 and low of 3:1. The closer an energy resource gets to 1:1 the less useful it is. As Tverberg claims in the article, the 3:1 EROI is only achievable with wind at high generation, although the benefits are marginal. Solar, though, is below this making it about as good as the Tesla batteries it’s charging.

This is interesting as Maryland is gearing up for the offshore wind farm off the coast of Ocean City. It is a ridiculous project aimed more at virtue signaling than anything else and is entirely based on subsidies. Costing nearly $2 billion, the costs are going to be charged to the consumers over 20 years, making them effectively pay extra for electricity over than time, not to mention their taxes going into the scam. This is before even getting to how it may affect tourism in the area or the potential impacts of the marine life.

The Renewable IOU

When the project is artificially propped up to produce a 750 megawatt (at capacity) for $2 billion, what direction does the EROI then turn? It’s not hard to figure out but no one wants to do so, of course. By default, we are going to have to raise overall energy prices, pay more taxes and also maintain existing power plants for backup. There is no hope for anything even marginally economically rational and very little emission savings (if not increases) to be had. So, what’s the point? The real question is who is benefiting from this project the most? It sure isn’t Marylanders.

The post What Is the ROI (and EROEI) on Subsidized Renewable Energy? appeared first on Natural Gas Now.

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