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> since a battery that lasts 5x as long costs 5x less. This is only true if there is an inflation-adjusted discount rate of 0%, which is unrealistic even in th

> since a battery that lasts 5x as long costs 5x less. This is only true if there is an inflation-adjusted discount rate of 0%, which is unrealistic even in this era of low interest rates. Adjusted for inflation, paying $10 now and again at years 10, 20, 30 and 40 is better than paying $50 up front would be. (By adjusted for inflation, I mean that the $10 you pay in 10 years might actually be $11, but still $10 in 2019 dollars)

BubRoss 7y ago
That's assuming that batteries would stay the same price while currency inflates.
- DuskStar 7y ago
  It's assuming that the item you're purchasing would maintain the same real price. If it cost $10 to start, and after 10% inflation the battery now costs $11, this holds. (Well, it holds if you have some way to beat inflation with safe returns. US government bonds often but not always meet this requirement) In the case of batteries specifically, I think it's likely that prices drop even without adjusting for inflation. This makes the price advantage even clearer.
  - BubRoss 7y ago
    What you are saying doesn't even make sense. The original comment was that a battery that lasts 5x as long costs 1/5th the price over time, and your hypothetical is buying a much cheaper battery for some reason. There is no reason to play semantic games with the time value of money, it is clear what the original person was saying.
    - DuskStar 7y ago
      My point was that as lifetimes get longer, value does not scale linearly. Would you pay 1000x as much for a battery bank that would last until 12019, or would you assume that it would be made obsolete at some point over that period? Maybe we've all moved to fusion, and grid-scale storage is useless. Or perhaps prices decreased by 10x over the next 20 years, and so getting a 20 year battery + a 9980 year battery would only cost 2+998/10=101.8 times as much as the original 10 year instead of 1000 times. Time value of money is important, and IMO would be enough on its own. But opportunity cost from excluding future improvements matters too - and given the improvements in battery tech over the past decade, one that would certainly be relevant over the next five decades.
gamblor956 7y ago
Adjusted for inflation, paying $10 now and again at years 10, 20, 30 and 40 is better than paying $50 up front would be. This ignores the economic realities of how projects of this nature are funded. Once projects reach a certain scale, it's much easier to find $50x once than $10x multiple times, especially when that $10x spend does not include costs that may increase over time, such as labor and regulatory compliance.
perl4ever 7y ago
"which is unrealistic even in this era of low interest rates" What? It doesn't seem unrealistic to me. Interest rates are increasingly negative in nominal terms, but much more frequently near zero or negative in real terms. Even in the US, 5 year real rates have averaged around zero from 2010 to present.[1] [1]https://www.multpl.com/5-year-real-interest-rate https://www.multpl.com/5-year-real-interest-rate (as you can see, real rates were going up a lot until the fed backed off and we're back to zero)

BubRoss 7y ago

That's assuming that batteries would stay the same price while currency inflates.

DuskStar 7y ago
It's assuming that the item you're purchasing would maintain the same real price. If it cost $10 to start, and after 10% inflation the battery now costs $11, this holds. (Well, it holds if you have some way to beat inflation with safe returns. US government bonds often but not always meet this requirement) In the case of batteries specifically, I think it's likely that prices drop even without adjusting for inflation. This makes the price advantage even clearer.
- BubRoss 7y ago
  What you are saying doesn't even make sense. The original comment was that a battery that lasts 5x as long costs 1/5th the price over time, and your hypothetical is buying a much cheaper battery for some reason. There is no reason to play semantic games with the time value of money, it is clear what the original person was saying.
  - DuskStar 7y ago
    My point was that as lifetimes get longer, value does not scale linearly. Would you pay 1000x as much for a battery bank that would last until 12019, or would you assume that it would be made obsolete at some point over that period? Maybe we've all moved to fusion, and grid-scale storage is useless. Or perhaps prices decreased by 10x over the next 20 years, and so getting a 20 year battery + a 9980 year battery would only cost 2+998/10=101.8 times as much as the original 10 year instead of 1000 times. Time value of money is important, and IMO would be enough on its own. But opportunity cost from excluding future improvements matters too - and given the improvements in battery tech over the past decade, one that would certainly be relevant over the next five decades.

gamblor956 7y ago

Adjusted for inflation, paying $10 now and again at years 10, 20, 30 and 40 is better than paying $50 up front would be. This ignores the economic realities of how projects of this nature are funded. Once projects reach a certain scale, it's much easier to find $50x once than $10x multiple times, especially when that $10x spend does not include costs that may increase over time, such as labor and regulatory compliance.

perl4ever 7y ago

"which is unrealistic even in this era of low interest rates" What? It doesn't seem unrealistic to me. Interest rates are increasingly negative in nominal terms, but much more frequently near zero or negative in real terms. Even in the US, 5 year real rates have averaged around zero from 2010 to present.[1] [1]https://www.multpl.com/5-year-real-interest-rate https://www.multpl.com/5-year-real-interest-rate (as you can see, real rates were going up a lot until the fed backed off and we're back to zero)