Lately, I have been trying to justify the feasibility of a 600 kW windpower installation using minimal data rather than the painful emergy analysis recommended in my essay “Themodynamics, Availability, and Emergy” and in Chapter 2 of On the Preservation of Species. The results are shown below. The calculations are crude, inaccurate, and very likely erroneous. Nevertheless, the exercise has been useful. I expect that any such calculation will show that we have to lower our expectancies dramatically with respect to future standards of living. Most of the hyperlinks entered below were discovered while searching for relevant data.
I don't believe that money and energy are not connected – only that the connection is vague because money is such a poor measure of value and wealth. On the contrary, I think greater prosperity and monetary wealth must eventually cause the expenditure of more natural resources. If we harvest 600 kW from a windpower installation in our present economy, it does not mean that we can reduce the rate at which we consume underground energy deposits by 600 kW, but that we will consume that 600 kW and we will increase our normal consumption (of underground energy deposits) because an additional $585,000 is pumped into the economy. (Naturally, the same observations apply to solar panels.) That said let me show you some calculations:
The Danish windpower total energy analysis that initiated this exercise
Cost of 600 kW installation: 585,000 United States dollars (USD)
The average output of 600 kW windpower installation is 60 kW, which amounts to 1.2 million watt-years. Alternatively, we may report 60 kilowatts times 8667 hours/year times 20 years equals approximately 10,000,000 kWhrs.
The M1 supply as of 1-1-01 was about 1.1 trillion USD, which I shall round off to 1 trillion USD. (In keeping with my general disrespect for this calculation, I shall carry one significant figure only – whenever possible.)
US energy consumption in 1998 was 94 quadrillion BTUs or 2.93 × 10-4 × 9.4 × 1016 = 27.542 × 1012 kWhrs = 27.542 trillion kWhrs = 27542 trillion watt-hours, which quantity divided by 8766 hours per average year gives 3.14 trillion watt-years/year in 1998, which I shall round off to 3 trillion watt-years/year.
Gross national product equals about 10 trillion USD/year.
Under the gross assumption that the rate of energy expenditure is proportional to the M1 money supply, I take the constant ratio to be 3 watts per US dollar (USD). Therefore, the 0.6 million USD that enters the economy due to the purchase of the windpower installation plus its maintenance contract generates 1.8 megawatts-years of energy expenditure during a one year period whereas the windpower installation generates only 1.2 megawatt-years during its lifetime, which is less than the energy expenditure due to its purchase. If we place a premium on electricity, and I believe that we should, the 1.2 megawatt-years of electricity is worth 3.6 megawatt-years of petroleum. However, this calculation is unduly pessimistic according to the reasoning below.
It is irrelevant that most of the energy expenditure went to supporting the lavish energy-intensive private lives of affluent first worlders. This is what I and many others are trying to get folks (especially our renewable energy colleagues) to understand; namely, that even with the replacement of all energy deficit spending with sustainable technology we will have to moderate our lifestyles drastically, which we will not be able to do except gradually; therefore, we had better start now. [Note. By “irrelevant” I mean that the fact doesn’t support deducting the excesses in the lifestyles of the benefactors from the energy expense.]
In favor of this calculation is the important fact that all economic activity comes from the sun and the current sunshine is free, therefore what we pay for is the vast but rapidly shrinking underground deposits that represent what the sun did for us before we got here. Against this calculation is the indisputable fact that I did not support my assumption about the constancy of the energy consumption to M1 ratio by any historical data even – although nothing stops one of us from trying to look up such (historical) data. Further research is needed to determine a better relationship between energy consumption and money.
The first thing I wanted to know was how much oil might be bought with the $585,000 paid for the windpower installation. It might be interesting to see if the electricity could have been generated more cheaply with fossil fuel even though my complaint always is that oil is too cheap and represents a considerable subsidy to nuclear and renewables. The premise of this calculation is that nearly all monetary transactions eventually result in the purchase of fossil fuel in our fossil-fuel driven gasoline economy.
So, at 50 USD/barrel and 1700 kWhrs/barrel, we get 585000 USD × 1700 kWhrs/barrel divided by 50 USD/barrel = 19,890,000 kWhrs or twice what the windpower installation will produce over its 20 year lifespan; however, it takes 3 kWhrs of oil to produce 1kWhr of electricity in the case where only electricity is needed. Therefore, we might argue that the electricity is worth 30,000,000 kWhrs of oil.
Finally, we might consider the effect of the multiplier in banking in which case the 585,000 USD will become nearly 3 million USD if the reserve rate established by the central bank is 20%. In this scenario, the oil that can be purchased (or eventually will be purchased) can produce one-third times 3 million USD times 1700 kWhrs/barrel divided by 50 USD/barrel = 34 million kWhrs or three times the production of the windpower installation.
Perhaps, the windpower installation does not do so poorly, however I am willing to bet a nickel that the Danish scientists who calculated a three-month energy payoff period for the 600 kW installation with a twenty-year lifespan did not count the lavish lifestyles of all those whose livings were enhanced by the expenditure of $585,000.
Let us now try a much more sensible calculation than those above using the same data. In keeping with Howard Odum’s analysis of the US economy, let us assume that the three trillion watt-years/year of energy expenditure is proportional to the gross national product (GNP) of ten trillion US dollars/year. This gives just 0.3 watt-years/USD.
Energy cost, then, by this cheap and dirty calculation is 0.3 watt-years/USD x 8766 hrs/year x 600000 USD x 0.001 kilowatts/watt = 1.578 million kWhrs; whereas, at 60 kW average power output for 20 x 8766 hours, the energy harvested equals 10.519 million kWhrs, which gives a payout period of 0.15 x 20 yrs x 12 months/year = 36 months. The ratio of energy returned over energy invested is six and two-thirds. [This is good news, but not great news. We need to moderate our lavish lifestyles of consumption and waste considerably.]
I believe the fourth calculation makes the most sense, since (i) Samuelson tells us that GNP is the true rate at which money travels through the economy, (ii) GNP equals the sum of all transactions at price, pi, times quantity, qi, (the purchase of a windpower installation is just such a transaction), and (iii) Odum tells us that money flows through our economy counter to emergy flow as shown in Figure 2-5 (reproduced below) from Chapter 2 of On the Preservation of Species and the essay "Thermodynamics, Availability, and Emergy". Presumably, the flows are roughly proportional over a short span of time such as one year. The remaining question is whether the infusion of cash into the economy perpetuates itself into the distant future as in the expression “jump-starting the economy” used by economists? Clearly, some of the money paid for the windpower installation will be used to make purchases, which adds to the GNP, or will be paid to others who will make purchases, or will be deposited in banks where it will be used to create more M1, etc. On the other hand, some of the $585,000 might have entered the M1 supply in other ways had it not been used to purchase windpower. Please, send ideas or even disparaging remarks to email@example.com.
In conclusion, let me repeat some remarks I made earlier when these calculation were barely underway: Remember, nothing is done except by the Sun (except that which is done by the Moon's gravitational attraction). Almost all wealth comes from the Sun. If we consume wealth stored by the Sun faster than it is replaced, we are deficit spending, which is not sustainable. This everyone knows. Now, when we spend money, we hope to receive wealth. Probably that wealth comes from the Sun's storehouse bequeathed to all of the Earth's inhabitants in common. No one would dare to claim a disproportionate share of the Earth's atmosphere. Why should anyone imagine he can claim a disproportionate share of the Earth's storehouses of energy? But, these are essentially the same as wealth, itself. The communist's high moral ground is unassailable no matter how much we love capitalism with all its gimcracks and doo-dads.
Energy economics is simple. Cash economics is tricky. The question remains: What happens to money spent for technology? All of our food comes from photosynthesis (which is free, isn't it?) – I mean almost all. But, the energy in our food is only about 0.1 kilowatts and our true energy budget amounts to what – maybe 10 kilowatts. (It's probably in my old-fashioned book to be promoted by giving the URL http://web.wt.net/~twayburn/POS.html.) So, we eat about 1% of what we spend. The rest we spend foolishly including living in homes that will be uninhabitable in 30 years, say – OK at most 100 years. We stop wearing clothes before they are worn out. Our health care costs go where? To enrich health professionals and highly-paid executives? The rest is ridiculous. But, the question remains: What is the effect of money? Clearly, the point of this exercise is to indicate why alternative energy is not the answer unless accompanied by political, economic, social, and personal change that will reduce drastically the consumption and waste inherent in an American-style political-economic system. In short – dematerialism.
http://www.floodlight.org/theory/flaherty9.htm On ownership of The Fed.
http://www.infoshop.org/faq/intro.html On rational anarchy.
http://www.primitivism.com/future-primitive.htm On primitivism.
Energy consumption in US in 1998 was 94 quadrillion BTUs or 3.142 TWyrs.
Gross National Product (GNP) was about 10 trillion USD.
The M1 money supply is about 1.1 trillion USD
Annual output of a 600kW wind turbine is 500,000 kWhrs/year.
Cost (total) of 600kW wind turbine installation is 585,000 USD.
August 15, 2004
Revised November 28, 2004