Heisenberg's Theorum on Green Energy Measurement

Theorum:  A media article on a wind or solar project will give its installation costs or the value of its energy produced, but never both.

Corollary 1:  One therefore can never assess the economic reasonableness of any green energy project from a single media article

Corollary 2:  For supporters of green energy, there is a good reason for Corollary #1.


  1. Richard Harrington:

    Theorem: Public works projects are always over-budget

    Theorem: Public works projects are always over time
    Lemma: Transportation public works projects always over-estimate the quantity of riders

  2. poitsplace .:

    Even if they gave the "value" of the energy produced, it would essentially be a lie. Because renewable energy output is essentially dumped on an already full market, it generally suppresses spot prices of power when producing. As a result you run into things like "negative spot prices" for energy (look it up). Under these conditions the value of the energy is (after removing subsidies) nearly worthless. The true value in energy is in it being available when and where it's needed.

    Also interesting, since renewable energy takes 5-10X more materials, labor, and maintenance, "green jobs" are parasitic (negative jobs), not unlike regulatory jobs. They take workers away from jobs that create more value...since it takes more workers, labor, and materials to produce the same amount of product.

  3. Bram:

    Look up the gas mileage of any electric car. They will give you some ridiculous "converted" number like 125 mpg. What they won't tell you is how far the car will go on a kwh of electricity. So, you have no ability to compare the actual cost of fueling the car.

  4. Matthew Slyfield:

    Law of IT project management: On time, on budget, on scope: pick any two.

  5. gr8econ:

    If it's a government IT project you only get to pick one - see Obamacare exchanges.

  6. Matthew Slyfield:

    See the law above is for well managed IT projects. A poorly managed IT project might fail to achieve even one out of the list. Since when has the government ever managed anything well?

  7. Ward Chartier:

    From time to time I encounter people trying to sell me solar panels. I ask relevant questions that all matter to calculating a life-cycle cost. What is the mean time between failure (MTBF)? Relevant because I want to know how often I should expect to incur repair expense. What is the annual percent degradation of the efficiency of the solar panel? Relevant because degradation increases the amount of time before achieving payback of the capital investment. What is the time value of money I should use in developing my total life cycle cost? Relevant because inflation (the time value of money) will increase the cost of future repairs. The vendors can never answer these basic questions.

  8. mesocyclone:

    It's even worse than that. A grid with significant penetration of wind and/or solar has high hidden costs due to the intermittency. It needs to maintain full non-alternative generation capability in order to handle down times of alternative energy, and it needs to keep some of that powered up in order to meet sudden changes. In addition, grid connected residential solar systems do not pay the full cost for the grid required to provide power when their generation is down.

  9. Canvasback:

    Sophisticated questions, to be sure. But in my time in the industry with a Sunpower dealership all the answers were available. The government subsidies from the feds and California really jump-started the industry The price per installed watt went from $10 to around $5 as manufacturing and installation costs fell. If you put up $20 k and get back $1200 in savings (untaxable) each year, where else can you get that kind of return? And their warranty was great too. All our customers were glad they did it.
    *Disclaimer: As in every industry - some will be left disgruntled.

  10. poitsplace .:

    Indeed they do have very high costs. And in an ironic twist, those higher costs are wrongly attributed to fossil fuels. The wild swings that make wind unworkable are even causing premature failures of even rugged generating equipment like hydroelectric turbines.

    And as for rooftop solar, the assumption is currently that the power will be used immediately by the neighbors. If solar were to exceed this level they'd have to redesign the grid (or simply not allow the power to be used) because the transformers would step the power DOWN (adding to voltage drops from transmission) as it went backward through the grid.

  11. mesocyclone:

    Wild swings, I think do indeed increase wear on generation capabilities. They are happiest when they are running at a constant speed.

    The second paragraph isn't true. As long as you are dealing with the AC grid (which is to say, every place you can buy power), you can add energy to the grid at the local voltage, and the transformers will do their thing. An A/C transformer will step high voltage to low, and if you feed low into it, it will step it up to high. Transformers are symmetric.

    However, there are other issues. Pushing too much power into the grid will break it, the same way that too much load will. Also, anyone who expects to use the grid for backup when their solar isn't generating is using the same grid investment as someone without solar, but not paying for it. This is unfair. Also, when the amount of solar/wind reaches a certain level, the grid operators have to dedicate generation to backing up the solar/wind because of its intermittency, and that generation tends to be far less efficient.

  12. herdgadfly:

    Your disclaimer notwithstanding, a $20,000 investment, with an annual cash inflow of $1,200 equals a 50 year payback of the initial cash outlay using a conservative 6% discount rate. So Sunpower was bilking naive customers who had no concept of the time value of money.

    "Let the buyer beware" is a far better disclaimer.

  13. Bram:

    $1200 on $20k is great for stock - when the stock itself is still worth at least $20k. I'm going to guess that inside 20 years, those panels are worthless eyesores you'll need to pay to have removed.

  14. bigmaq1980:

    I wouldn't call it bilking, as likely customers are also looking for non-monetary benefit.

    That said, "where else can you get that kind of return?" is a false challenge, as there are many variables behind the "return".

    There's no mention of the risks, for one thing. The proposition is nothing like a simple, put money in bank and earn interest type of investment.

  15. bigmaq1980:

    That theorem and the corollaries can be applied to many things our government does.

    One example, Obamacare "success" - we never heard the numbers of signups along the way (unbundled from Medicare, or from persons with insurance the prior year), etc..

    This is one reason I advocate the idea that every law or program must have a defined objective and a described set of concrete measures written into any bill / policy. It becomes evident what the intent is/was, and what the success factors are/were.

    Most everything in our governments to date has been / is so loosey goosey that politicians can claim anything.

    Thus, we get into the quagmires like the tax credit issue for states not running their own marketplace for insurance, and have guys like Gruber telling us what we already initially thought was the intent, but current officials claiming the opposite.

  16. CT_Yankee:

    ***SMUGNESS - I just saved the planet*** actually works pretty good when showing off to their friends, presuming of course that the kind of buyers who "invest" in something like this have friends like them, with similar liberal math skills. Kill the smug? Just ask them if they had access to a calculator when they figured it all out.

  17. bigmaq1980:

    Smugness - aka social signal posturing.

    Keep in mind it also applies to luxury (e.g. Mercedes, BMW, Lexus), where the brand weighs more on the price than the incremental cost of the vehicle.

  18. jhertzli:

    The Eiffel Tower was on time and under budget. The Catholic Church might declare Eiffel a saint on the grounds that he performed two miracles.

  19. Matthew Slyfield:

    Can you document that, particularly the under budget part?

  20. TeleprompterOTUS:

    The average american wouldnt know what to do with the costs and the benefits in one article and those smart enough to be critical already make assumptions based on the intentional omission of relevant data. Many of my lefty/green friends simply want MOAR green - why - because green is good - its like donating to charity with other peoples money!

  21. frankania:

    I installed a 600 watt rooftop system here in rural Mexico on our off-grid house, and use a small refrigerator, LED lights, small fans etc. Works great full-time if we are careful and it cost about 2800 bucks and is supposed to last 25 years.
    Biggest expense is buying new batteries every 5 or 6 years (4 at about $70 each) for the storage, since we are off-grid.

  22. frankania:

    Calculates at about $13/month for power, no?