Nate Hagens wrote a post at The Oil Drum called Applying Time to Energy Analysis. Under standard EROI analyses, there is no recognition of time – if you cut down a tree, but couldn’t burn it for energy until 50 years from now, it would count the same in terms of EROI as if you could burn the tree, the day after you cut it down (except perhaps for the embedded energy in the shed where you needed to keep the log for 50 years).
There are a lot of reasons why energy that is not available for a long time might be less valuable. If nothing else, if energy is not available for a long time, it will be necessary to tie up capital in developing this source of energy.* Dennis Meadows of Limits to Growth fame has said that the limiting factor as we approach “Limits to Growth” is capital. If some types of energy production tie up capital disproportionately, this, in itself, is a problem, because it will limit total energy available to society. If these sources of energy are low EROI to begin with, this is a double hit.
A second issue is that we really don’t know how long we will be able to use any type of capital energy investment.* We know how long a wind turbine might last under a Business as Usual scenario, but we don’t know whether the entire system of which it is a part will last that long. For example, will the transmission system still be in good repair? We also don’t know whether we will be able to buy replacement parts for wind turbines that fail, many years from now, or if access roads will be open repair people to fix turbines needing repair.
Nate talks more abstractly about society’s preference for energy usable now, vs energy usable in the future, and looks at discount rates from various studies. He then calculates indicated discounted and undiscounted EROIs for various energy sources.
Based on Figure 1, the EROI for wind, solar PV, and corn ethanol all decrease, when time discounting is used. The effect is greater, the greater the discount rate.
Nate shows the various EROIs as if they are comparable to each other, but I am not entirely convinced of their comparability. To me, it makes sense to compare the EROI of one wind turbine with the EROI of another wind turbine (calculated by the same person, with the same formula), but I am less certain about the comparability among energy sources. Each of the EROIs is calculated at the point of generation. It seems like what one would really want to compare is the amount of energy required to deliver a particular source of energy to the user. Such a calculation would produce considerably lower EROIs for all of the energy sources, but especially for wind, if upgrading to the grid and electrical storage are required.
Nate shows graphically what the effect of discounting is. This may be helpful to get an idea of the relative magnitude of the adjustment. For wind, he first shows inputs and outputs, without discounting:
He then shows how much impact discounting at 5% has on these flows:
He finishes by showing the much greater impact of discounting at 15% on the same flows:
*This is not an issue raised by Nate Hagens.