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There's an economics caveat to interpreting solar prices, which I think may have put a lot of people on the wrong track. Suppose solar panels were priced such

There's an economics caveat to interpreting solar prices, which I think may have put a lot of people on the wrong track. Suppose solar panels were priced such that, after accounting for installation costs and subsidies and everything else, solar was much cheaper than grid power and paid off quickly. Then pretty much everyone would want one, and the manufacturer would have a huge backorder. So the manufacturers wouldn't do that; instead, they'd price the panels a little higher, sell everything they could produce but not have the backorder, and invest the extra money into expanding their production capacity. I think this is where we're currently at; solar power is in fact cheaper than grid power, it's just priced to support investment into expanding the manufacturing/installation capacity to properly take over.

losvedir 11y ago
> Suppose solar panels were priced such that, after accounting for installation costs and subsidies and everything else, solar was much cheaper than grid power and paid off quickly. Then pretty much everyone would want one, and the manufacturer would have a huge backorder. So the manufacturers wouldn't do that; instead, they'd price the panels a little higher, sell everything they could produce but not have the backorder, and invest the extra money into expanding their production capacity. That's what finance is for. I assume if this were actually the case, wouldn't the manufacturers _take_ the backorders and separately raise money for expanding their production capacity? I don't buy it.
- eru 11y ago
  Manufacturers will sell as expensive as they can get away with. Of course, there's decent competition in this market to counteract that. jimrandomh's scheme would require a significant amount of collusion between all major producers.
  - jimrandomh 11y ago
    No, it's just that building a solar-panel factory is really expensive and has a longer lead time than customers will wait.
    - eru 11y ago
      Isn't that the same with almost any kind of factory? If I was in the market for a car or computer, I wouldn't want to wait for a new factory to be build, either. Is that anything special about the solar-panel industry?
- foota 11y ago
  It could depend on a lot of things. If at a price of $100 you have 10 buyers, and at $200 you have 8 buyers, you'll clearly sell at $200.
  - bainsfather 11y ago
    Only if there was no competition. Otherwise your 8 buyers at $200 would be buying from your competitors at a cheaper price.
unabridged 11y ago
If you can create a solar panel that pays off too quickly you could be better off selling the energy than selling the panels. You only need to start selling to the public when your competitors release enough solar panels to lower the grid price or you need cash. This is somewhat analogous to the situation with the manufacturers of hardware bitcoin miners.

losvedir 11y ago

> Suppose solar panels were priced such that, after accounting for installation costs and subsidies and everything else, solar was much cheaper than grid power and paid off quickly. Then pretty much everyone would want one, and the manufacturer would have a huge backorder. So the manufacturers wouldn't do that; instead, they'd price the panels a little higher, sell everything they could produce but not have the backorder, and invest the extra money into expanding their production capacity. That's what finance is for. I assume if this were actually the case, wouldn't the manufacturers _take_ the backorders and separately raise money for expanding their production capacity? I don't buy it.

eru 11y ago
Manufacturers will sell as expensive as they can get away with. Of course, there's decent competition in this market to counteract that. jimrandomh's scheme would require a significant amount of collusion between all major producers.
- jimrandomh 11y ago
  No, it's just that building a solar-panel factory is really expensive and has a longer lead time than customers will wait.
  - eru 11y ago
    Isn't that the same with almost any kind of factory? If I was in the market for a car or computer, I wouldn't want to wait for a new factory to be build, either. Is that anything special about the solar-panel industry?
foota 11y ago
It could depend on a lot of things. If at a price of $100 you have 10 buyers, and at $200 you have 8 buyers, you'll clearly sell at $200.
- bainsfather 11y ago
  Only if there was no competition. Otherwise your 8 buyers at $200 would be buying from your competitors at a cheaper price.

unabridged 11y ago

If you can create a solar panel that pays off too quickly you could be better off selling the energy than selling the panels. You only need to start selling to the public when your competitors release enough solar panels to lower the grid price or you need cash. This is somewhat analogous to the situation with the manufacturers of hardware bitcoin miners.