System Energy Assessment (SEA), Defining a Standard Measure of EROI for Energy Businesses as Whole Systems

Abstract

A more objective method for measuring the energy needs of businesses, System Energy Assessment (SEA), measures the combined impacts of material supply chains and service supply chains, to assess businesses as whole self-managing net-energy systems. The method is demonstrated using a model Wind Farm, and defines a physical measure of their energy productivity for society (EROI-S), a ratio of total energy delivered to total energy expended. Energy use records for technology and proxy measures for clearly understood but not individually recorded energy uses for services are combined for a whole system estimate of consumption required for production. Current methods count only energy needs for technology. Business services outsource their own energy needs to operate, leaving no traceable record. That uncounted business energy demand is often 80% of the total, an amount of "dark energy" hidden from view, discovered by finding the average energy estimated needs for businesses far below the world average energy consumed per dollar of GDP. Presently for lack of information the energy needs of business services are counted to be "0". Our default assumption is to treat them as "average". The result is a hard measure of total business demand for energy services, a "Scope 4" energy use or GHG impact assessment. Counting recorded energy uses and discounting unrecorded ones misrepresents labor intensive work as highly energy efficient. The result confirms a similar finding by Hall et al. in 1981 [1]. We use exhaustive search for what a business needs to operate as a whole, tracing internal business relationships rather than energy data, to locate its natural physical boundary as a working unit, and so define a business as a physical rather than statistical subject of scientific study. See also online resource materials and notes [2].

Comparing World Economic and Net Energy Metrics, Part 2: Total Economy Expenditure Perspective

“…It neglects any embodied energy (e.g., in units of energy) for operating costs, such as the salaries and services necessary to operate businesses that produce energy, which are theoretically included in NPR economic in units of money [37]. NEPR direct also neglects energy embodied in capital.…”

“…A single project monetary return on investment must also consider the estimated cash flows over the entire project lifetime. Thus, comparing full life cycle cash and energy flows is one useful method for translating between individual ERRs and costs (see Part 1 [1,37]), but more difficult to extract from broader energy and economic time series.…”

Energy Return on Investment for Norwegian Oil and Gas from 1991 to 2008

“…While we believe that these other categories (3)(4)(5) are very important we leave their discussion and consideration to other papers in this special issue [30] and elsewhere [7,31].…”

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