Guest Post by Graham Palmer. Graham recently published the book “Energy in Australia: Peak Oil, Solar Power, and Asia’s Economic Growth” (“Springer Briefs in Energy” series).

The Tesla Powerwall is promised as the critical third key to unlocking the Tesla Triumvirate – solar, batteries and electric vehicles. The Powerwall provides an opportunity to look at the opportunities and weaknesses of distributed power, and examine the long-run sustainability of such a system. To do this, we can turn to life-cycle assessments and the field of Energy Return on Investment (EROI).

EROI is the ratio of how much energy is gained from an energy production process compared to how much of that energy is required to extract, grow, or get a new unit of energy. Advocates of EROI believe that it offers insights about energy transitions in ways that markets can not. The availability of surplus energy has been one of the main drivers of economic and social development since the industrial revolution.

At the start of the 1990’s, Pimentel launched a debate that was to be long running, on the effectiveness of corn ethanol production in the United States. Pimentel drew attention to the energy intensity of the ethanol life cycle, including nitrogen fertilizer, irrigation, embodied energy of machinery, drying, on-farm diesel, processing, etc. Although not settled decisively, there is a consensus that the EROI of US corn ethanol is below the minimum useful threshold. Brazilian ethanol seems to be better, and there is hope that second generation biofuels will be better again.

The relative fraction of residential energy end-use in Australia helps to give a sense of the scale between our direct household energy use, and the total energy consumption in Australia – according to the Bureau of Resources and Energy Economics (table 3.4), residential energy consumption made up 11% of total energy consumption, with electricity a little under half of that. As a community, the vast majority of our energy footprint is embedded in the goods, food, products, and services that we consume.

We can also apply EROI principles to electricity production. However electricity is only valuable within the context of a system and isolating the EROI of individual components is more challenging. We can, however apply life-cycle inventories to individual components, including solar, batteries, and electric vehicles, and see how they perform. Life-cycle assessments measure the lifetime environmental impacts of greenhouse emissions, embodied energy, ozone depletion, particulates, water and marine toxicity and eutrophication, and other effects.

The UK-based Low Carbon Vehicle Partnership compared a range of low emission vehicle options in the UK. This considered the full life-cycle of the vehicle including production of the vehicle with a driving range of 150,000km. The conventional vehicle was based on the VW Golf, and the electric vehicle was based on the Nissan Leaf.

Based on the current European grid, it concluded that EVs generally have lower life-cycle emissions than an equivalent petrol vehicle, but the outcome is dependent on the electricity grid and other factors. The report also projected the analysis out to 2030, assuming improvements in energy and vehicle technologies. For the ‘typical 2030’ scenario, the emission intensity of the UK and European grid was assumed to drop to between 0.287 and 0.352 kg CO2-e/kWh (around a third of Australia’s current emission intensity).

The most important outcome of these life cycle assessments is that the embodied energy of the battery and the emission intensity of the grid are the crucial determinants of the emission intensity of EVs. The report assumed a battery capacity of 24 kWh for the EV, or less than a third of the Tesla Model S battery.

Vehicles are produced and used within a complex industrial enterprise, and it makes no sense to isolate the emission performance within the context of a household. Most projects that have examined the charging regime of EVs, such as the recent electric vehicle trial in Victoria, have shown that managing the additional load of EVs will be critical.

Fortunately, the preferred charging regime for most regular users of EVs will be overnight, when there is also spare system capacity. This will mean that achieving emission reductions will need to focus on baseload, or renewables (such as wind) that operate overnight. The UK report also considered sustainably produced biofuels, the future of which remains unclear at this time.

Turning to solar, Musk correctly identifies the key strength of distributed solar and batteries. Around half or more, of residential and commercial electricity costs are the costs of distributing electricity. If electricity can be generated locally, and supported with storage, there is the opportunity to support the network during the day and early evening. But if we adopt Musk’s strategy of deploying solar and batteries to function as a universal baseload power source, the need for oversized solar capacity to manage through the winter and batteries is self-defeating and will blunt decarbonisation efforts.

If we take recent LCA data for lithium-ion traction batteries of 586 MJ/kWh, and apply this to a nearly-off-grid system that will power the average Victorian household for 95% of annual hours, the EROI calculates to less than 2:1 after 30 years – the system takes around 15 years to pay back its embodied energy debt. The use of such a system to power a regularly driven EV during winter would be even more demanding. Such as system can work in isolated cases when supported with external energy, but adopted universally, couldn’t support an advanced society. Morgan describes this as the Catch-22 of energy storage.

Rather, the judicious use of solar and batteries, driven by tariff reform that better represents the value of distributed energy, will improve the productive use of the grid rather than undermine it. However aligning tariffs with costs is notoriously difficult because economic efficiency often runs counter to fairness and any change inevitably brings winners and losers.

The main weakness of Musk’s presentation is that he is promoting the “technology as energy” fallacy, which is the notion that technology emerges out of ideas without a material and energy trail. When any new energy is introduced, it necessarily draws on the capital and resources of the incumbent industrial and economic enterprise. In time, new energy sources introduce advantages that supplement and replace incumbent sources. But the “infiniteness” of the primary energy source does not necessarily reflect the energy available to society. Indeed, for most of human history, societies lived within a bound system of indefinitely renewable solar energy, and most people struggled to live beyond a basic subsistence level. The EROI of the energy converters is the critical determinant of its usefulness, rather than the quantity of energy “out there”.

The business and regulatory model for electricity utilities impairs innovation, so it doesn’t hurt to have entrepreneurs occasionally throw a spanner into the conventional distribution model. The genius, or irony, of Musk is that he may ending up making a bundle of money selling the idea of grid independence with distributed energy, while improving the productivity of the grid and baseload power.