Tuesday, April 14, 2009

The Numbers Still Don't Work

This is clearly a case of not understanding fundamental economics.

The red flag was this statement:

The couple had to come up with extra collateral to get their loan approved after an appraiser couldn't find any comparable homes.

A pretty good indication that the bank doesn't see this as a good investment. In fact, a quick calculation, using future value shows that the payback on the solar panels (30 years) exceeds the expected life (about 20 years). (Based on an $89,000 investment, saving $400 per month, all at 5% interest/inflation)

I also believe that this administration wants to increase the cost of energy to make solar and wind more competitive. But the materials needed to make solar panels and windmills are very energy intensive. Increasing the cost of energy will only increase the cost of these products, making them less competitive.

Save the Earth if you want. Don't expect it to be profitable.

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