[VK-pro]

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

[JumpCrisscross]

> 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]

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.

[hansvm]

There's a sort of mixing of units happening here, and I think it's causing some confusion. Here's an example (greatly simplified) scenario highlighting a flaw in your rationale:

1. Energy at your normal usage costs $1000/yr.

2. You can spend $20k now to have access to equivalent energy output for the next 40 years before it degrades to unusability.

3. Next year, somebody invents a flux capacitor bringing all energy costs for everyone down to $1/yr.

If you don't buy the thing, you spend $1039 over the next 40 years. If you buy the thing you spend $20k, and it's hit its expected lifespan, so you don't recoup any further benefits.

The real world has inflation, wars, more sane invention deltas, and all sorts of complications, but the general idea still holds. If you expect tech to improve quickly enough and are relying on long-term payoffs, it can absolutely be worth delaying your purchase.

If you predict massive improvements in solar/battery/etc tech, the only way it makes sense to invest now is if those improvements aren't massive enough, you expect sufficiently bad changes to the alternatives, etc. I.e., you're playing the odds about some particular view of how the world will progress, and your argument needs to reflect that. It's not inherently true that just because solar pays off now it will in the future.

[JumpCrisscross]

> 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]

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?

[JumpCrisscross]

> 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

See Uruguay. Bet heavily on renewables [1]. Baked in a high cost [2].

If LNG becomes crazy cheap and you're stuck with expensive solar and battery, the countries with cheaper power will eat your industry. On a household level, you wasted money. The alternate you who didn't put money into the solar and battery set-up could have earned more from other investments and had cheaper power.

Put another way: if you remove the decommissioning costs, the same argument could be used for nuclear. Once you've built it, it's sort of "free." Except of course it's not. Building it took a lot of work.

[1] https://en.wikipedia.org/wiki/Energy_in_Uruguay#Electricity

[2] https://www.globalpetrolprices.com/Uruguay/electricity_price...

[amarant]

Per your sources it looks like they are subsidising industry use of electricity with household usage:

Household electricity prices are 157% of average in SA, and 200% of industry prices. That's not a case of renewables backfiring, it's a case of strange policy resulting in weird pricing.

[scoofy]

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.

[Fr0styMatt88]

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.

[Someone]

> 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.