What Is EROI?
EROI or energy return on energy invested is the amount, on average, by which the actual cost per unit of energy consumed (in kilowatt-hours) exceeds the amount or surplus of energy generated (in kilowatt-hours). In ecological and economic energy economics, this concept is most commonly referred to as energy return on effort. It basically means the extent to which you are using natural resources (energy) for your own economic gain without regard to how much of that energy you are also consuming in the process.
While natural resources (such as oil, gas, and coal) are usually thought to be ‘free’, the truth is that they are finite. As such, you need to pay for them, and the amount that you use them up will ultimately determine the amount that you have to pay for them.
This principle is very important because it is what drives economic growth. The more that you can consume an amount of natural resources in order to produce economic output, the greater your chances of making a profit. The larger the scale of production, and therefore, the larger the quantity of natural resources that you are able to sustainably consume, the more powerful a lever the economies of scale that natural resource consumption creates in the economy.
In some cases, however, there are also cases in which the costs of natural resources are not prohibitively large. For example, if the resources are readily available, then they can be utilized with relative ease. This can be especially true in cases where you do not have to invest a significant amount in order to make them accessible. You could therefore, for instance, create power by taking advantage of geothermal or nuclear power, by harnessing wind power, or by extracting gas from underground.
Unfortunately, if you do not possess natural resources at your disposal, then your only options for getting energy are to invest in an alternative method (which would then mean that you have to pay for alternative sources of energy) or to convert from one form of energy to another. One option that is particularly popular right now is to use solar panels to generate electricity. but this is not the only option available. and there is still a lot of research that needs to be done in order to explore other viable options such as wind and geothermal energy.
The key here is that, while the costs of natural resources are generally very high, there are a lot of opportunities out there. to produce energy cheaply. These opportunities include energy from the sun, geothermal and nuclear power, and water heaters.