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I agree on the clickbaityness of the title but disagree on your assertion that one can not predict what this price a project is willing to sell its energy gener
by clomond 8y ago
I agree on the clickbaityness of the title but disagree on your assertion that one can not predict what this price a project is willing to sell its energy generated at given the expected costs of developing the project. (This is different from them making a prediction in energy costs far into the future, which you assert).
This is because the majority of “material” factors within the project can be known with a reasonable degree of certainty today. Expectations of costs over the course of the project can in theory be protected via contract (I.e. land rights over decades, service agreements from manufacturers of the turbines) or are “fixed” and are “costs incurred today” and can be amortized over a given a period of time. Additionally, insurance and warranties on the equipment move the risks off to others to further help generating certainty which can be extrapolated to a reasonable “expected rate of returns/expected cash flows” - I.e. What, given all of what they’d know - the price of selling electricity over a given period of time is needed to pay back on the project. Apparently this developer determined that they can sell their electricity for 7.5Cents(USD)/kWh over a period for 20 years and still make a reasonable profit.
(Note: I also don’t agree that there isn’t an agenda/narrative with such an article & title. Just that if developers couldn’t predict such costs, they wouldn’t guarantee the low price in the first place).