Much has been written about how intermittent renewables like wind and solar negatively affect grid stability and often require government subsidies to produce positive financial returns on investment (roi). Less understood, but even more important, is the fact that these intermittent renewables reduce our global net energy surplus compared to the nuclear, coal, oil, and natural gas sources they replace. In other words, our current technologies generate higher energy output from their energy inputs compared to wind and solar.
The world’s current standard of living is a direct result of power generation technologies that produce a high surplus of energy. Research suggests that wind and solar electricity cannot break even relative to the economic threshold of existing energy surplus, suggesting that they will lower our future standard of living.
Understanding why surplus energy matters is key to understanding human progress. it is also the key to understanding how the bitcoin network’s energy-dependent proof-of-work consensus mechanism can be a tool that extends society’s energy surplus well into the 21st century.
what is surplus energy?
having a surplus of energy is essential for survival.
Take a cheetah, for example. a cheetah expends an enormous amount of energy chasing its prey. many of these chases are unsuccessful. for the few that do result in a kill, the energy provided by eating their prey must be greater than all the energy consumed in previous chases (and be enough for the next chase).
however, beyond the maintenance energy required just to live and hunt, the energy surplus must also be large enough to allow a mother cheetah to give birth, nurse her cubs, and spend time and energy to raise them. For a cheetah to live normally, her surplus energy must be well above an equilibrium level.
The same can be said for a fish, an insect, a tree, or any organism or system that requires energy, including humans and human economies. the greater the surplus energy within a system, the more diverse, robust, and resilient the system is because it can easily meet its basic needs with the surplus energy for reproduction, experimentation, innovation, and growth.
Excess energy, or net energy, is measured by energy returned over energy invested (eroei). eroei is the ratio of the energy gathered by a system (numerator or heat energy of prey) to the energy expended in the process of gathering that energy (denominator or energy expended in hunting). to be exact, the calculation must use units of energy, preferably joules, the international standard for measuring the energy content of heat and work.
as a financial roi, an eroei > 1 shows that a system gathers more energy than it spends to gather that energy, for example, the cheetah eats more calories than it needs for basic functions. the result is a surplus of energy that allows a mother cheetah to give birth and raise her cubs. when eroei = 1 the energy received is equal to the energy expended (balance point) and the cheetah barely survives and cannot reproduce. an eroei < 1 indicates that the system requires more energy than it can muster, eg the cheetah cannot survive.
in the human world, an eroei < 1 is also a recipe for death and extinction. an eroei = 1 is a tenuous balance between life and death with no surplus energy for growth and advancement of society. however, a large and growing surplus of energy produced from high energy technologies has allowed human civilization to expand and flourish creatively, technically, and culturally.
energy is real wealth
Simply put, energy is our true wealth and our growth depends on how efficiently we convert primary energy into useful energy that allows us to do useful work. As humans have evolved over the millennia, we have developed better and better technology for finding and converting ever denser primary energy sources into useful energy.
for example, crude oil contains about 44 mj/kg (megajoule per kilogram) of thermal energy, black carbon about 25 mj/kg, dry wood about 16 mj/kg, and peat and grass 6 -7mJ/kg. when they burn, their stored chemical energy produces heat. Additional technology converts some of that heat into a more useful secondary energy like electricity. human technology continued to advance in order to harness the higher energy density of oil compared to the peats and grasses our distant ancestors used for fuel. out of this denser energy came an exponential growth in society’s energy surplus that also unleashed massive gains in technological innovation and living standards.
While we often focus on the energy efficiency of a technology for converting fuel into work (for example, an internal combustion engine has an operating thermal efficiency of +/- 25%), eroei analysis takes a more holistic. represents the additional energy costs of the materials and processes required to build the engine along with its operation. this is where eroei analysis can shed light on surplus energy from different power plant technologies.
For a power plant, eroei equals the energy produced over the lifetime of the plant divided by the energy required to build, operate, and decommission the plant. after including the energy costs of its components such as steel and concrete and the energy costs of its fuel, a fossil fuel power plant needs to produce at least the same amount of energy over its lifetime to reach energy balance . the same happens with renewable and nuclear energies.
However, operating an energy balance power plant would not make sense, since all the energy produced during the lifetime of the plant would be offset by an equal amount of energy consumed to build and operate the plant. there would be no surplus energy for all the other things we need (food production, schools and hospitals, etc.) and want (museums, travel, sports, scientific research, etc.).
remember that a cheetah requires a surplus of energy just to live a normal life. so do humans in the 21st century, but to a much greater degree.
what does eroei have to do with this?
One of the most comprehensive and rigorous analyzes of the eroeis of different power plants is a couple of articles by Weißbach et al1. The authors applied a uniform bottom-up methodology to calculate the energy costs (in terajoules) adjusted for the exergy (the energy used/useful) embodied in the materials, labor, and fuel supplies required to build, operate, and decommission several electricity generation technologies. this investment in energy used was divided by the energy used returned (the electricity generated during the useful life of each type of power plant) to calculate the individual eroeis.
The authors also compared the eroei of the representative plant with an economic eroei, termed “economic threshold”. This is approximated by the ratio of an economy’s GDP to its unweighted final energy consumption. In practice, it is GDP divided by the total final energy consumption for the same period of time divided by the average cost of that final energy consumption. the resulting ratio captures the economic value of the “energy dividend” that the part of an economy that produces energy pays to the parts of the economy that do not produce it.
A high and rising economic threshold describes a world with highly efficient energy harvesting processes that produce a large energy dividend that allows an economy to diversify, grow and flourish. a declining economic threshold indicates a shrinking system with less efficient energy harvesting processes displacing other non-energy sectors and leading to declining levels of economic prosperity.
The results of the article analysis are shown in the graph below.
It is clear that wind and solar power have eroeis that are orders of magnitude below established electricity production technologies. they consistently underperform hydroelectric, nuclear, and fossil fuel power plants, and when energy storage is included, their eroeis deteriorate further.
Except for hydropower, most renewables cannot reach the breakeven economic threshold. in other words, they cannot stand on their own, energetically speaking. they would fail if they had to deliver the energy for their construction, operation and decommissioning and rely on existing surplus energy from fossil fuels and nuclear. furthermore, inserting them into our current energy mix as a replacement for existing nuclear and fossil fuel technologies will dilute our current economic wealth.
There are four main reasons why intermittent renewables are not up to the task:
- Wind and solar technologies require large amounts of expensive high-energy materials (steel, concrete, copper, and photovoltaic panels) relative to their life cycle energy output.
- wind and solar power have shorter life cycles (20-30 years) than fossil fuel, hydro or nuclear power plants (50-70), recoup their initial energy costs quickly and have longer run times to generate surplus.
- wind and solar intermittency result in lower capacity factors (actual energy production over time vs. potential energy production) than hydro, nuclear, and thermal. this typically results in 2-4 times overbuilding, requiring more materials and higher energy investment costs.
- intermittent wind and solar power require the addition of buffer storage via batteries so that its electricity is useful for the network. energy storage is not new energy, just a change in the timing of electricity usage. batteries consume a lot of energy to manufacture and always have an eroei < 1. As a result, any electricity production technology that requires batteries will have a lower combined Eroei than the generation component itself, as Weißbach’s results show.
When we remove high-eroei technologies and replace them with low-eroei technologies, we decrease the total energy surplus that supports daily life as we know it. more than one economy ends up engaging in energy harvesting activities at the expense of other economic sectors. it is not the direction humanity wants to take after decades of benefiting from high energy surpluses directly attributable to fossil fuels.
it’s time to go nuclear
so what can meet our growing need for electricity with the greatest eroei? nuclear.
Nuclear power produces a huge surplus of energy as seen in its eroei of 75. It produces more than twice as much surplus energy as natural gas and coal.
Nuclear power benefits from three important factors: it uses an energy-dense fuel (3.5% enriched uranium is 3,900 gj/kg) relative to the energy costs of producing the fuel; operates with the highest capacity factors of all available electricity production technologies; and has the longest life cycles. nuclear plants built nearly sixty years ago are still operating today with capacity factors that advocates of wind and solar energy can only dream of.
Most nuclear plants still use the same (pressurized water) reactor design from the 1950s, but this suggests that current R&D in new nuclear technologies could lead to plants with even higher eroei. As the largest surplus energy technology for converting primary (atomic) energy into useful energy (electricity), nuclear power should be the technology of choice for most of our new electricity production.
bitcoin mining: a tool for better energy
Politics aside, by linking bitcoin mining, the world’s most portable and flexible large-scale electricity demand source, to nuclear, humanity can push its surplus energy to even higher levels. Instead of overbuilding intermittent, low-eroei renewables like wind and solar, we should aim to encourage the development of high-eroei nuclear generation using the unique attributes of bitcoin mining as an incentive.
Nuclear power plants require large and stable demand loads due to their high capacity factors needed. bitcoin mining offers exactly this type of load profile. Using its scale and stability, bitcoin miners can be co-located with new nuclear projects to absorb their electricity production before the plant’s shipment is completely needed on the grid. then, given its inherent flexibility and portability, supporting miners can unplug from one plant and move on to the next new project. As society’s energy needs continue to grow, we can ensure that this pre-built, high-eroei electricity supply is ready and waiting.
energy is the real currency
“energy is the only universal currency: one of its many forms must be transformed to do anything.”2 – vaclav smil, author of “energy and civilization: a history.”
Money is just a claim on energy. The problem with fiat money is that it is disconnected from energy due to the null backing of a scarce, energy-based asset, and constant manipulation by the government.
Bitcoin, on the other hand, is the purest monetary embodiment of energy to date. it is a clear, direct and unmanipulated claim about the economic value of energy. bitcoin’s proof-of-work consensus mechanism makes this possible. being the most decentralized network in the world will ensure that it remains so in the future. we are only now beginning to understand how powerful proof-of-work will be in redirecting human effort toward highly net-positive energy-producing technologies.
Intermittent power, as currently pursued by its advocates, will only decrease the world’s current energy surplus, causing a painful decline in living standards. it is clear that some electricity production technologies are superior to others on a net energy basis and without understanding this our choices will lead to serious unintended consequences. The 2022 energy crisis in Europe revealed a system more fragile than previously understood and could indicate future conditions: rising costs and intermittent supply.
hopefully, bitcoin can fix this. bitcoin mining along with the development of new nuclear projects can help reverse this course and expand the global energy surplus to power the 21st century.
1 Weißbach et al., Energy 52 (2013) https://festkoerper-kernphysik.de/weissbach_eroi_preprint.pdf
weißbach et al., epj conference web 189 (2018) https://www.epj-conferences.org/articles/epjconf/pdf/2018/24/epjconf_eps-sif2018_00016.pdf
2 “energy and civilization: a history”, vaclav smil (2017).
3 care is recommended when considering eroei calculations:
First, the methodology is important. Is the approach top-down (energy costs derived from fiat costs) or bottom-up (energy costs derived from quantities of materials and manufacturing processes)? the former can easily confuse fiat with energy units giving useless results. the latter, while requiring more effort, is more accurate.
Second, while eroei is a simple proportion to calculate, there is not yet a standard definition of system limits to use when determining the numerator and denominator. some analysts consider only fuel costs. others include plant costs. while others include the costs of the plant and the additional upstream costs incurred in order to build the plant. Weissbach et al. applied a uniform definition of boundaries throughout a full life cycle assessment for each type of power plant. the total energy was also adjusted to the energy used (exergy) invested and returned for each type of plant. this results in one of the cleanest scans available.
third, eroei is location dependent. the windiest places have a greater return of energy on the same energy invested. the same goes for the sunniest places for solar power. Fossil fuel plants will also have different eroeis depending on their proximity to fuel supplies and the quality of the fuel available.
Even emissions from fossil fuels like coal and oil generally decline over time. While the energy embedded in the chemical composition of similar grades of coal and oil is the same between different stocks, the energy required to harvest those stocks has historically increased. newer discoveries are generally further from final consumption and require more energy to extract. Deepwater drilling today is much more expensive in terms of energy than drilling in the East Texas oil field during the 1940s when the field was young.
Finally, like many data analyses, eroei can be subject to manipulation to justify personal bias and political goals. however, eroei has value for relative surplus energy analysis. With consistent system boundaries and a defined calculation methodology, it offers a standardized way to compare the net energy produced by various power plant technologies without taking into account their often distorted fiat rois.
this is a guest post by john thompson. The opinions expressed are entirely my own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.