A major reason for the growth in the use of renewable energy is the fact that if a person looks at them narrowly enough–such as by using a model–wind and solar look to be useful. They don’t burn fossil fuels, so it appears that they might be helpful to the environment.
As I analyze the situation, I have reached the conclusion that energy modeling misses important points. I believe that profitability signals are much more important. In this post, I discuss some associated issues.
Overview of this Post
In Sections  through , I look at some issues that energy modelers in general, including economists, tend to miss when evaluating both fossil fuel energy and renewables, including wind and solar. The major issue in these sections is the connection between high energy prices and the need to increase government debt. To prevent the continued upward spiral of government debt, any replacement for fossil fuels must also be very inexpensive–perhaps as inexpensive as oil was prior to 1970. In fact, the real limit to fossil fuel extraction and to the building of new wind turbines and solar panels may be government debt that becomes unmanageable in an inflationary period.
In Section , I try to explain one reason why published Energy Return on Energy Investment (EROEI) indications give an overly favorable impression of the value of adding a huge amount of renewable energy to the electric grid. The basic issue is that the calculations were not set up for this purpose. These models were set up to evaluate the efficiency of generating a small amount of wind or solar energy, without consideration of broader issues. If these broader issues were included, EROEI indications would be much lower (less favorable).
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