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by rlpb
85 days ago
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> Investors begin to refuse to build new potato farms because a return on their investment gets worse whenever anyone decides to build a new farm. If they all refuse, then they're leaving money on the table. One investor could invest in 10% production only, and that would be very lucrative. It would be exactly my low cost to produce potato scenario. In practice, they don't all refuse, or all invest. The market finds a balance. In time, producers switch to the new method, because anybody who doesn't leaves an opportunity for someone else to take their business and make more money. This takes time, though. If we want things to go quicker, then we need to guarantee return on investment for longer, which is exactly what the government does by guaranteeing prices to renewable energy producers. |
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Yes exactly. The incentives to renewables producers exist to ensure accelerated growth. This may mean we are paying more for renewables in the short term (though no more than fossil fuels) but the investment should pay dividends in future.