Solar investment twice as effective as oil in EVs

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An analyst for a French investment bank has endorsed the view electric vehicles (EVs) will surpass traditional combustion engines, predicting money invested in solar will yield twice as much useful energy to power transport than that invested in oil, by 2035.

By taking into account the much lower proportion of energy wasted in EVs than in traditional engines, Mark Lewis, of investment bank Kepler Chevreux has calculated a $100 billion investment in renewables would yield far more usable energy than a similar investment in oil at today’s prices – in the case of onshore wind investment, six times as much by 2035.

Details of Lewis’ predictions were outlined in an article on future trends website Impact Lab yesterday and centre on the fact 75-80% of the energy value of oil is lost in traditional combustion engines whereas the storage of renewable-generated energy in a battery, and its reconversion to power in an EV engine, entails a loss of only 25-30% of the original energy.

Transmission losses

Factoring in transmission losses of 2.5% for solar, 5% for onshore wind and 7.5% for offshore wind and by focusing on net energy yield rather than the gross energy figure produced at the point of generation, Lewis says all three forms of renewable energy examined in his study will supply more useful energy than their equivalent oil by 2020.

Lewis based his calculations on oil investment break-even costs of $75/bbl (barrel) and $100/bbl, figures in the top 25% of current industry estimates but which, according to Impact Lab, will account for ‘a significant proportion’ of future oil infrastructure investment.

When calculating return on investment figures, Lewis used project life spans of 10 years for deepwater oil projects and 20 years for traditional onshore oil exploration and oil sands schemes, versus the standard 20-year lifetime of renewables projects.

Lewis also built into his figures a capital cost reduction of 10% for onshore wind projects started between 2020 and 2035 and – for PV and offshore wind – a fall in costs of 15% up to 2020 followed by a similar reduction from 2020-35.

The analyst does not appear to have incorporated any similar capital cost reductions for more mature oil project investments and his figures do not take into account the difficulty of gaining permits for unsightly onshore wind turbines but his calculations echo the findings of UBS Bank, which recently predicted EV take-up would be the factor which swings the energy debate to renewables from fossil fuels.