Right, and we already discussed that and found that it isn't
economically sound.
If someone wants to install PV, have at it. But it isn't financially
sound, and won't be until it is $1/watt installed, imo.
We don't have enough information, Peter.
It's the Return On Investment (ROI) that's important from Tom's point of
view. In this case not only the current return on the cost of investment is
important; assumptions he has made about the future price of electricity
and maintenance costs are critical. If the assumptions are realistic and
the ROI still compares favourably with other forms of investment, Tom has
made a wise move, regardless of any other considerations.
That said, the return he makes on his investment doesn't appear out of thin
air. It MAY be economically sound for Tom, but what about everyone else?
What concerns me is the effect the subsidies he receives, has on
electricity prices for the vast majority of people who cannot afford to
invest in PV or other forms of renewables. His generous feed-in tariff is
paid for by the rest of us in the form of higher electricity prices.
If his (and other domestic and corporate investors) ROI is as high as, say
10%, does that justify and increase of 10% in electricity prices for the
rest of us? How do you feel about it Tom?
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A couple of things to say about this. The first is that electricity
prices reflect the cost of generation, which to a large extent reflects
the cost of fossil fuels. Household electricity tariffs in Germany have
increased by a factor of around 4 since 1970, and roughly doubled since
2000. There is no reason to expect the cost of fossil fuels to fall in
the future and every reason to expect them to rise, meaning that we can
expect electricity prices to rise regardless of renewables.
Another factor in the consumer price of electricity is tax. Electricity
in France is not significantly cheaper because of nuclear energy, but
rather that the French government applies a much lower tax rate than
nearly every other country in Europe, Germany and Denmark the highest.
Since the percentage of PV grid feed-in has only recently become
anywhere near significant, it is clear that none of these price rises
can be the result of subsidized grid feed-in, and hence the claim that a
10% rise in electricity prices is the result of grid feed-in subsidy is
unjustified and simply used as a scapegoat.
As far as the feed-in tariffs are concerned, the difference between the
average household tariff and the grid feed-in tariff is around 5 cents.
The feed-in tariff is declining every year, so that in a few years
together with the rising electricity prices we can expect parity. At
that point no-one can claim that the PV installations are being subsidized.
