Let's take two hypothetical means to produce electricity, A and B.
A is, from EROEI point of view, almost a perpetual machine, with EROEI of 1,000,000. Unfortunately it is really expensive, investment costs are one million dollars per watt generated.
B then, has really bad EROEI, 1.0001. However, getting that electricity costs only 0.0001 USD/MWh.
I do not understand in which circumstances it would be relevant or interesting to use EROEI as a metric to compare these power sources.
Note also that in absence of subsidies, ROI contains all the information EROEI gives.
> Note also that in absence of subsidies, ROI contains all the information EROEI gives.
That's not a bug but a feature. The main advantage of using EROEI over ROI is that it's in nature's units. You cannot use any accounting tricks (such as subsidies) to fake it.
Sorry, I do not see the similarity. In your example you are limiting how much you can invest to one opportunity. And (risk adjusted) ROI is perfectly valid way to compare both of your companies, I just invest as much as I can to the higher yielding asset.
> You cannot use any accounting tricks (such as subsidies) to fake it.
It may be more difficult to fake, but it does not answer the question what use the measure has. (Note that ROI may be fakeable in the short term, but in the long term that is much more difficult. Either you get your money back or you do not.)
OK, let me try to explain better.
In your example, the only thing that prevents me to invest in the source A (with the ridiculously high EROEI) is how much other resources than energy I currently have. For example, say source A requires diamonds, which are expensive, and I can only afford a handful. But source A is much better investment than the source B, and I absolutely want to invest into A first (at the very least, I can sell the energy with much higher profit margin).
In my example, the only thing that prevents me to invest into higher-yielding asset (and we agree it's a good idea) is some additional limitation of reality (availability of resources), for example the size of the market.
So in both examples, there has to be an additional resource constraint, which prevents putting all investment into the higher-yielding enterprise. In the first example this limiting resource is money, in the 2nd example it cannot be money, but it can be something else.
So if ROI is a good way to compare investment opportunities, EROEI is a good way to compare energy sources.
> It may be more difficult to fake, but it does not answer the question what use the measure has.
An well-known example where ROI was faked is subsidies for ethanol as energy source. EROEI is less than 1, but because of the subsidies, ROI became larger than 1.
The EROEI would be an ultimate measure of where to put your effort (energy) if you were alone in the world and there were no other people. Then you wouldn't need money and could price everything in energy required to obtain it. Or equivalently, the world where people would collectively want to minimize the amount of effort they want to spend. Which is not quite the real world with money (the wealthy people for example can afford less effort than others), but it's useful as an approximation of it (and if you assume free market, then they are very close).
e.g. "A has EROEI of 1,000,000 but requires one billion megawatt/hours to build. It will then return 1,000,000,000,000,000 MWh over its design life. B returns 1.0001J for every joule invested."
With those options society would pretty much have to stick to B while accumulating the necessary construction of A.
Note that EROEI analysis doesn't consider depletion or renewability either. Or even necessarily a timescale.
Obviously solving for the former is simplifying issues like diminishing returns, external costs, available energy reserves, means of extraction, and methods of accounting for ERoI, but he does raise a point which is "as long as we're in the black, doesn't J/$ matter more than of J/J?"
When solving for "which method is most efficient" then you could argue yes. When solving for "which method provides the best long-term spirce of energy" it becomes a different question.
The EROEI argument includes the observation that "in the black" for an industrial society is well above 1:1 and believed to be somewhere above 5:1. Going below that on average is expected to result in collapse.
In the short term, fossil fuels provide a high EROEI - but only until depletion (locally or globally). The overall fossil EROEI falls over time. This implies that it's necessary to install non-depleting or less-depleting sources before we reach critical depletion. But we're not clear on when that is; peak oil may only appear in the rear view mirror.
Essentially EROEI is an ecologist's view on the subject. "$" is not a resource that exists in nature and they would prefer a view from sufficiently high that it drops out of the analysis.
( http://www.theoildrum.com/ was a fantastic resource on this subject, and still is although no longer updated. For example, http://www.theoildrum.com/node/6871 : input of fossil calories allows one person to provide the food-caloric needs of 100 people. How can this continue past peak/unburnable oil?)
Now, to answer your question, if you decide to start a big research program to increase the availability of energy, you should almost certainly focus on the high EROEI source, not the cheap one. If you decide to create an energy company to sell something right now, you'll go the other way around.
You probably did not mean it this way, but that would mean that almost certainly no-one should have researched solar power until maybe 10-20 years ago.
To me, if you are talking about research, EROEI should be part of the feasibility ROI calculations (obviously), but nothing more.
But it would mean that studying solar some 30-40 year ago was a bad idea. Fossil fuels were too good, and solar didn't look any well by that time. But solar had some other characteristics that made it unparalleled at some niches (like satellites), and guess what, that's exactly what people were interesting on researching by that time.
