Solar: Cheaper than Tar Sands

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Last piece was pretty bleak. So here’s some positive news, it’s a piece out of my upcoming book: Ten Technologies to Save our World: Powering the Clean Energy Revolution.

Copyright©2009 Tom Rand, Eco Ten Publishing. All rights reserved. No part of this excerpt may be used or reproduced in any manner whatsoever without written permission.

It is often claimed that the only energy solution big enough to satisfy North America’s growing energy appetite is the Tar Sands, in Alberta Canada. The Tar Sands are massive deposits of a tar-like substance that is mined, melted and refined. They are notoriously dirty, and notoriously expensive. 


It turns out that large-scale solar-based electrical generation is highly competitive with the tar sands, and dollar-for-dollar we could get more energy from solar than we can from melting all that tar. 

Here’s the proof:

The Fort Hills project, a tar-sands development run by Petro-Canada, has estimated capital costs of $130,000 per barrel per day of capacity (Source:http://www.moneyweek.com/investments/commodities/are-canadian-tar-sands-the-answer-to-our-oil-needs.aspx).  This is equivalent to 3 billion barrels of oil annually per trillion dollars of capital investment. This is from the horse’s mouth, so if anything, it will cost much more.

A trillion dollars invested in large-scale solar thermal can generate the equivalent of  somewhere around 1200 G kwh annually (see Concentrated Solar Energy Output below). This equates to around 750 million barrels of oil (1582 kwh of thermal energy in a barrel of oil). But using the oil only gets you a third of the energy out as useful work, whether it’s in an engine or a turbine. The solar electricity is already in useful form, so we can up this number by a factor of three: so a trillion-dollar investment gets you the equivalent of over 2.25 billion barrels of oil a year. 

Tar Sands still looks comparable, even favourable to solar. It’s at least a horse-race, which should be enough to settle the case, given the horrid consequences of melting and using the tar.

But that is only the capital cost for the infrastructure. You then have to pay for all the energy to melt the tar, upgrade it, refine it, etc., which amounts to over $25 a barrel. So the 3 billion barrels will have an additional cost of $75 billion annually. For the accountants in the room: take the present value of that annual cost, and add it to the tar sands investment. Present value of $75 billion a year, at 5% interest, over 20 years is another trillion. So the tar sands investment cost essentially doubles.

Lo and Behold, suddenly solar is the winner!

Solar: 1 trillion gets you 2.25 billion boe (barrels of oil equivalent) every year.
Tar Sands: 1 trillion gets you 1.5 billion boe a year.

While comparing electrical production to oil may be unfair, in that we need oil to run some parts of our infrastructure (like transportation) and not electricity, the overall point remains: large-scale solar is a better spot to aim. Hydrogen for transport, electric vehicles, are each parts of the new economy we will build. Inefficiencies of getting hydrogen through electrolysis and burning it, charging batteries, etc. will admittedly level the playing field somewhat. The point I am making is a general one, however, it a sanity check on possibility not a pro-forma financial analysis.

Footnote, References and Calculations:

Concentrated solar energy output:, the Nevada One project, rated at 64 MW, produces an estimated  134 M kwh  annually (Source: http://www.nevadasolarone.net/press-releases/ACCIONA-Connects-to-the-Nevada-Grid) and cost $260 million. A trillion dollars translates to 134 M kwh * (1 trillion / 260 million) = 515 G kwh annually.  The proposed 553 MW Mojave Solar Park is estimated to cost $2 billion. At a 25% capacity factor this translates to 605 G kwh for a trillion dollars. Similar figures come out of plans for the European super-grid in which solar farms cover North African deserts, and feed power back to Europe through high-efficiency DC lines.

However, that’s only one solar farm. If we put some serious capital toward these projects -which require no high-tech materials (it’s just mirrors, some heated oil, and a turbine) – then the costs would come way down. Ford showed us how to do it, didn’t he? So let’s figure the costs can come down by a modest factor of 2.

Solar thermal is slightly cheaper. A actual project in Toronto, Canada that costs $134,000 is a 60 plate installation covering 178 sq m. These panels generate 134,000 kwh per year, which equals 79 barrels of oil. This translates to the equivalent of around 600 million barrels of oil every year for a trillion dollar investment (Source: private correspondence on actual solar thermal installation. Calculation: 134,000 kwh / 1582 kwh per boe = 79 boe. 1 trillion / 134,000 = 7,462,687 times 79 boe annually). With some economies of scale, and assuming slightly warmer climates (this is Toronto!), this would easily double to 1.2 million boe annually. 

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