What Is Energy Return On Investment - EROI
Energy Return on Investment (EROI) is the amount of energy that has to be expended in order to produce a certain amount of energy. The energy return on investment (EROI) is a key determinant of the price of energy as sources of energy that can be tapped relatively cheaply will allow the price to remain low. The ratio decreases when energy becomes scarcer and more difficult to extract or produce.
BREAKING DOWN Energy Return On Investment - EROI
In its simplest form, EROI is calculated as:
EROI = Energy Output / Energy Input
However, there are dramatic differences in how certain steps of the input process are measured. This measurement is complex as the inputs are diverse and there is uncertainty how far back they should be taken in the analysis.
Generally, we can expect that the highest available EROI energy sources will be utilized first, as these offer the most energy for the least effort. A net energy gain is achieved by expending less energy when attempting to acquire and use a source of energy.
EROI analysis is considered part of a life-cycle analysis.
Types of Energy Sources Where EROI Is Measured
There are a number of consumable energy sources where EROI is determined for efficiency and cost analysis. This includes types such as oil, biofuels, geothermal energy, nuclear fuels, coal, solar, wind and hydroelectric.
The EROI for oil has decreased dramatically over the past hundred years. The amount of energy required to produce one barrel of oil has decreased as more efficient methods such as fracking have been introduced.