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I’m sleep deprived so maybe not the right words, but isn’t there an implicit IRR that a household would maintain and usually a 20 year payoff would be maybe not

by VK-pro 6mo ago

I’m sleep deprived so maybe not the right words, but isn’t there an implicit IRR that a household would maintain and usually a 20 year payoff would be maybe not the first use of investment dollars? I feel maybe that’s more the problem here with renewables. It’s cheaper but not cheap enough to put the dollars there instead of somewhere else

scoofy 6mo ago
I mean, the payback period is like 5 years if you count all the subsides. My point is only that, you can effectively take most of your house of the grid, even in an urban area, with a relatively short payback period, and an almost guaranteed return. Is it the most profitable place for investment dollars? Probably not, but it's effectively risk-free, and there are plenty of knock-on benefits, like having power in a blackout, and having the option of getting an EV in the future. I think most sensible people who are even moderately risk-averse would think that's a fairly winning deal when we're only talking about a small amount of up front capital.
- Someone 6mo ago
  > Is it the most profitable place for investment dollars? Probably not, but it's effectively risk-free One could even say it is risk-negative. It decreases the risk one runs of future oil price hikes. If you buy solar cells, you buy futures on energy delivery at a guaranteed price.
- Fr0styMatt88 6mo ago
  I agree with this, but I don’t trust that it will stay this way. It always seems like there’s no real way to ‘get ahead’. They’ll always find a way to make the system cost such that it barely pays itself off, by introducing fees or cutting rebates. For example, there was a proposal in Australia to raise our fixed grid access fee from something like $1 a day to $5 a day. Or consider even just the feed-in-tariff for solar — that’s gone down as solar power has gotten cheaper, which is expected, but it’s another thing that increases that mythical payback period for the system. Now to be clear I think the tech is wonderful and would 100% have a big battery and solar system if I could, but not for financial reasons. For all intents and purposes you’re just pre-paying for the next X years of your electricity. I would at least want my battery warranty to be four times X, which it currently is not. Now in 5 years there might be battery tech that gets to that multiplier that I want and THEN I could start thinking of it as investing in ‘free electricity’. But I’m sure the government and electricity suppliers will close any loopholes they can to prevent that.
  - deleted 6mo ago
    [deleted]
JumpCrisscross 6mo ago
> isn’t there an implicit IRR that a household would maintain and usually a 20 year payoff would be maybe not the first use of investment dollars? Yes. Also, the risk for industry is going all in right before a new technology comes out. At that point, you either write off your original investment and deploy the new kit. Or you accept a structural energy-cost disadvantage. I am massively pro renewables. But you have to ignore a lot to pretend it's without risk.
- scoofy 6mo ago
  The system already pays for itself. The only thing you lose if a new technology comes out is opportunity cost. You also likely don’t want to be an early adopter of the newest tech anyway if this is a concern for you. This doesn’t really make sense to me as an objection, so maybe I misunderstood.
  - JumpCrisscross 6mo ago
    > system already pays for itself No, it yields savings. This is a massive difference. > You also likely don’t want to be an early adopter of the newest tech anyway if this is a concern for you This is a real concern for any long-term investment, particularly when we're talking at utility/industrial scales. Dismissing it like this is basically arguing that solar is too new to be properly talked about, which is nonsense.
    - scoofy 6mo ago
      I guess, though, the actual “solar” part of the solar set up is by far the cheapest part. The vast majority of the set up costs are just getting electrification done right. Like, even if LNG becomes crazy cheap, a battery set up will still save you money in the long run just by allowing off-peak demand. This is why I’m confused: for this to me remotely a bad investment, basically everything possible has to go wrong for you, whereas the risks associated with carbon energy production are very obvious and very likely. Do you have some more likely counter scenario?

by VK-pro 6mo ago

scoofy 6mo ago

I mean, the payback period is like 5 years if you count all the subsides. My point is only that, you can effectively take most of your house of the grid, even in an urban area, with a relatively short payback period, and an almost guaranteed return. Is it the most profitable place for investment dollars? Probably not, but it's effectively risk-free, and there are plenty of knock-on benefits, like having power in a blackout, and having the option of getting an EV in the future. I think most sensible people who are even moderately risk-averse would think that's a fairly winning deal when we're only talking about a small amount of up front capital.

Someone 6mo ago
> Is it the most profitable place for investment dollars? Probably not, but it's effectively risk-free One could even say it is risk-negative. It decreases the risk one runs of future oil price hikes. If you buy solar cells, you buy futures on energy delivery at a guaranteed price.
Fr0styMatt88 6mo ago
I agree with this, but I don’t trust that it will stay this way. It always seems like there’s no real way to ‘get ahead’. They’ll always find a way to make the system cost such that it barely pays itself off, by introducing fees or cutting rebates. For example, there was a proposal in Australia to raise our fixed grid access fee from something like $1 a day to $5 a day. Or consider even just the feed-in-tariff for solar — that’s gone down as solar power has gotten cheaper, which is expected, but it’s another thing that increases that mythical payback period for the system. Now to be clear I think the tech is wonderful and would 100% have a big battery and solar system if I could, but not for financial reasons. For all intents and purposes you’re just pre-paying for the next X years of your electricity. I would at least want my battery warranty to be four times X, which it currently is not. Now in 5 years there might be battery tech that gets to that multiplier that I want and THEN I could start thinking of it as investing in ‘free electricity’. But I’m sure the government and electricity suppliers will close any loopholes they can to prevent that.
- deleted 6mo ago
  [deleted]

JumpCrisscross 6mo ago

> isn’t there an implicit IRR that a household would maintain and usually a 20 year payoff would be maybe not the first use of investment dollars? Yes. Also, the risk for industry is going all in right before a new technology comes out. At that point, you either write off your original investment and deploy the new kit. Or you accept a structural energy-cost disadvantage. I am massively pro renewables. But you have to ignore a lot to pretend it's without risk.

scoofy 6mo ago
The system already pays for itself. The only thing you lose if a new technology comes out is opportunity cost. You also likely don’t want to be an early adopter of the newest tech anyway if this is a concern for you. This doesn’t really make sense to me as an objection, so maybe I misunderstood.
- JumpCrisscross 6mo ago
  > system already pays for itself No, it yields savings. This is a massive difference. > You also likely don’t want to be an early adopter of the newest tech anyway if this is a concern for you This is a real concern for any long-term investment, particularly when we're talking at utility/industrial scales. Dismissing it like this is basically arguing that solar is too new to be properly talked about, which is nonsense.
  - scoofy 6mo ago
    I guess, though, the actual “solar” part of the solar set up is by far the cheapest part. The vast majority of the set up costs are just getting electrification done right. Like, even if LNG becomes crazy cheap, a battery set up will still save you money in the long run just by allowing off-peak demand. This is why I’m confused: for this to me remotely a bad investment, basically everything possible has to go wrong for you, whereas the risks associated with carbon energy production are very obvious and very likely. Do you have some more likely counter scenario?