- J.R. Brownson, Solar Energy Conversion Systems (SECS), Chapter 9: Solar Energy Economics (Focus on The Value, Reserve, and Elasticity of Light.)
- USGS Mineral Commodity Summaries (See Appendix C: Reserves and Resources.)
- D. Meadows, Thinking in Systems: A Primer, pp 1-9, Bathtubs 101
We want to focus on how the resource units like electricity, heat, daylight, and money derived from SECS have an elasticity of demand. How do we value the products of light, or how do we even value the solar resource itself as an energy reserve? In our reading, we find that sunlight can be analyzed similarly to a mineral reserve like copper ore.
Our decision to choose solar technologies often depends on the value that we place on light and the value of the resource units derived from shortwave light. You are going to need to think about light as a commodity, or a good that is interchangeable with other goods/services. This is a bit abstract, so take some time to reflect at the end of the page.
Flow vs. Stock Energy Reserves
Stocks and flows exist in nature and in society. We see stocks in business. In nature, a lake is a stock of water, with a river flowing into it. And the Sun is a stock of nuclear fusion yielding a flow of radiant energy.
- Potential: a driving force for flow.
- Flow: a dynamic entity connected to a stock that either supplies or depletes the stock; can be a change in mass, energy, or information with respect to time.
- Stock: an entity that has accumulated over time due to flows; can be stored potential, or a resource system that replenishes itself (like the fusion in the Sun).
- Resource system: often an environmental stock (and could be a human institution).
- Resource units: the flow of a useful resource that a client may appropriate from a resource system.
A resource system is considered renewable if the rate of withdrawal from the stock does not exceed the rate of resource replenishment. In the case of shortwave light, the solar resource system has physical conditions that define an upper limit of flow without disturbing or harming the constitution of the stock. We can't really withdraw sunlight at a faster rate than it comes to us. Hence, sunlight is flow-limited.
A resource system is considered non-renewable if the rate of withdrawal from the stock exceeds the rate of resource replenishment. In the case of geofuels, the process to make them takes 10s-100s of millions of years (and heat/pressure underground), yet the rate of withdrawal can be almost as fast as we want. Hence, geofuels are stock-limited.
The "Quantity" of Light
Compared to what is available on Mars, the quantity of light is abundant on Earth! Even between the Arctic Circles (), there is a great abundance of light available to society to do work. As a society, we are not as skilled at transforming light into useful work as we are at transforming fuel into useful work. We are still struggling to frame light as a valued good, especially as it is all around us every day. So, let's take a look at that value structure.
The value of light from the Sun is variable. There is "less" of an energetic resource from the Sun in the annual irradiation budget for Germany than in the US state of Georgia, yet the value of solar power (as electricity) is much higher in Germany than in Georgia. So is the value of the light to the clients relative to the "quantity" of light, or relative to other parameters.
In the mineral economics of commodity goods, the value of the resource units will vary with respect to two general driving forces:
- demand for the good or service, and
- cost of alternatives.
If the demand for a good goes up, the value of the resource units will go up. If the cost of an alternative good goes up (like the price of geofuels), then the value of the resource units (like solar) will go up.
Light as a Mineral Resource (Commodity)
An increased demand for a mineral commodity will increase the value, and a high cost of alternative goods will increase the value.
Value and quantity are joint properties here. As such, the "quantity" of a mineral reserve can expand or shrink in response to three main pressures. Solar resources follow the same commodity trend. In the case of the solar resource framed as a type of mineral reserve, the solar reserve is available when it is economically feasible, expanding and contracting in response to the following three pressures. That is to say, there are three levels that open up, or expand, the solar reserve in a given locale.
The value of an unconverted photon is a variable quantity, much like the value of a mineral resource in a geologic formation. Once again, the value of any commodity varies with the demand for the good and the costs of alternatives. The three main drivers that affect the valuation of light as quantified mineral reserve are:
- increased demand by clients seeking to avoid fuel costs (choosing an alternative to fuel);
- technological advances that reduce materials costs and/or installation costs;
- presence of incentives (often government incentives).
Let us compare the way in which light is valued with the way that a metal ore (in this case, zinc) is valued. An ore is an unrefined rock composed of minerals, which contains a raw metal that is valued, but which must be processed to access that metal. In our reading from the USGS Commodity Statistics, Appendix C, we see that an entire lexicon has been developed for classifying mineral resources. (This site as a whole is also an excellent public resource for evaluating mineral reserves from the US perspective.) We have since classified geofuels as "minerals" in the commodity perspective. So, why not extend the concept outward to the commodity of light, and the derived goods and services?
The following terms are within the textbook reading, and were developed from the U.S. Geological Survey Circular 831, Principles of a Resource/Reserve Classification for Minerals (1980). Note the difference among a resource, a reserve base, and a reserve.
- Resource: material or energy source occurring natively in or on the Earth, with a form, concentration, and quantity such that economic collection and/or conversion of that commodity is currently or potentially feasible. (We could apply this to light, right?)
- Identified Resources: specific resources where the location, grade, quality, and quantity are known from specific meteorological evidence, or where the resource has been estimated. Identified solar resources encompass regions that are economic, marginally economic, and sub-economic. As a reflection of the degrees of meteorological confidence, the economic divisions can be subdivided into components of measured, indicated, and inferred.
- Reserve Base: an identified resource meeting minimum criteria related to a specified solar energy conversion technology practice currently employed to convert to useful work.
- Reserve: the portion of the reserve base that can be economically converted at the time of determination (the locale).