Answer: 36 to 38

Question:  How many years does it take for a typical government / green investment to pay off?

Example 1:

Mesa got $1 million in federal stimulus money to replace 2500 traffic lights with LED's. That's $400 a light which probably includes the cost of installation. Once they are operational, Mesa expects to save $0.028 million per year in electricity costs. At that rate, it will only take 35.7 years of savings to get the $1 million back.

Example 2:

Nine turbines from seven manufacturers, including Reno's Windspire, are being installed to test their performances in different environments. The first turbine was installed at the sewer plant in Stead and the second at Mira Loma Park.The nine turbines and several solar projects together are a $3.5 million investment, before $1.7 million in energy rebates are applied to reduce that cost. The projects are expected to save 788,932 kilowatt hours a year for an annual savings of $91,000 a year [a 38-year payback].

The latter example actually over-estimates the payback, because it ignores the substantial maintenance costs of wind turbines (what percentage have you actually seen running?) as well as the systematic over-estimation of their power output.  Incredibly, the SF Chronicle's green writer/blogger actually brags up the Reno boondoggle.

Postscript: In the comments of the wind turbine article I added, in response to the projects green credentials:

But, you say, its not about return on investment but CO2 reduction. OK, lets look at that, forgetting for a minute whether Reno taxpayers should be paying extra for electricity to reduce global temperatures by 0.00000000001C.

Let's consider an alternate investment in gas turbine electric generation, and assume it and the wind turbines are displacing coal-fired power. Per Kw-H, gas turbines are going to, even including the fuel, produce power for a fourth or less the cost of wind with these relatively small turbines. And gas is plentiful and most of it comes from the gold old USofA (or at least North America).

But it's not zero emission you say. OK, but if it is 1/4 the cost that means that it can displace four times as much coal power for the same investment. And it is as low of CO2 emissions per btu as you can get in a fossil fuel. In fact, 4X of gas generation would reduce CO2 emissions more than 1X of wind. So even in terms of CO2 emissions, wind here is a bad investment.


  1. random walker:

    Although I agree with your general thesis, in the traffic light case, you are neglecting the reduced maintenance cost of LED fixtures due to their longer life span. That saving is probably significantly higher then the electrical power savings.

  2. NormD:

    Recently some cities in colder climes found they had to install heaters in their LED lights to melt away accumulated snow and ice that the incandescent bulbs melted through normal operation.

  3. Val:

    That Stead turbine (actually incorporated into Reno) is not far from my house... I drive by it three or four days a week to take my son to baseball games. It is pretty windy up here, and when it blows it blows quite a bit, but it is usually only during sun up or sun down - day time winds aren't rare, but they are definitely not regular. I sure wouldn't want to depend on that thing for any regular power, even with a ton of battery storage available.

    Of course, none of that really matters, since during the entire time it has been here, I have only seen it running once. And that counts many windy days.

  4. Stan:

    I've been wondering if government's use of energy is analogous to its use of debt. With debt, the government is tying up capital that would otherwise be used in the more efficient private sector. Wouldn't the government's use of energy amount to the same? By saving energy it is both reducing demand, and increasing supply to the more efficient private sector. Even with the ridiculous initial investments, I wonder if it has a net-positive effect on industry.

  5. anon:

    "So even in terms of CO2 emissions, wind here is a bad investment."

    Good analysis. But in the end, it is a matter of faith -- as are all religious matters.

    Use wind power, don't eat shellfish, fish on fridays, say 15 hail marys, recycle newspaper and glass, and be cleansed of your sins.

  6. Don Lloyd:

    The kind of cost/benefit analysis you are doing isn't relevant. The Congress is going to spend as much as it can on whatever projects seem to have the most political benefit for individual Congressmen. So overall, total cost is relatively constant, and the logical choice of projects funded depends on their relative expected returns, presumably some combination of political and monetary returns. But the only reason to not fund a particulat project has nothing to do with its payback time, but rather whether it crowds out another project with better (mostly political) expected returns.

    Regards, Don

  7. Gil:

    Don't you mean the return on spending is infinite, or to put it another way, never? The LEDs will need replacing around 10 years after installation. Solar and wind power are dead-end streets.

  8. Matt:

    One more thing in favor of LEDs is that they don't go out all at once. If a few go bad you still have a functioning traffic light.

  9. ParatrooperJJ:

    One thing to keep in mind with LED lights is that they don't produce alot of heat. They will work fine in warmer climates, but they don't melt the snow that falls on them in colder climates. We found this out last winter in Ohio. The cost savings is quickly lost when you have to send crews around to each traffic light several times a day to brush off the snow.

  10. Rick C:

    Gil: While that's true, incandescents don't last anywhere near 10 years. Also, LEDs are brighter and easier to see in poor conditions (for example near dusk or dawn when the sun might be facing the bulb; the sun tends to drown out the bulb more than it would LEDs.)

    LEDs have both drawbacks and advantages. Snow notwithstanding (not an issue _for me_ since I live in Dallas) I'd far rather have them than incandescents, and wouldn't need to rationalize them with spurious cost-saving measures. (Having said that, I'm not sure I'd go for wholesale replacing of incandescents everywhere...maybe replace 'em via attrition.)

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