Investments in solar thermal, geothermal, solar voltaics, energy savings technologies are all viable ways of reducing ghg emissions.

Some like energy savings technologies have payback periods within two or three years. They all have operating lives longer than the payback period.

They all have positive energy paybacks - that is they produce or save more energy over their lifetime than they consume.

The reasons they are not implemented are
1. Inertia - it takes effort to change
2. Uncertainty
3. Finance costs of interest paid which is high because of 2

If we removed interest costs and we allowed capital costs to be paid back from profits on the sale of renewable energy then renewable energy projects would flourish.

Nobody is arguing that renewable energy can reduce GHG emissions, but otherwise Fickle Pickle is quite wrong. It is amusing to see such naivety, but also a bit concerning that renewable energy advocates have such an immature understanding of finance. Anyway, for FPs sake, I will explain:

Whilst there is an energy payback after a few years, that is very different from financial payback. There are no magical financial tricks that can make renewable energy affordable, it is typically between 2 (large-scale wind) and 10 (solar PV with storage) times more expensive than the conventional grid electricity depending on the manner of deployment.

1) It is not “uncertainty” that causes high “financial costs of interest paid”. There is always a cost on debt, and though it varies considerably due to inflation and other factors, it is never zero.
2) If the “interest costs” are removed, who would lend money for no return on investment? If the government offered interest-free loans, then that just shifts the cost of debt onto taxpayers. We end up paying anyway.
3) The profits on the sale of renewables cannot pay for the capital costs, unless the profit margin per unit is greater than 100%. Who is paying for this massive markup? Again, we (the consumer) are paying.

But as Tom Quirk points out, the big problem with renewable energy is not just financial. Renewables cannot provide much of our energy due to intermittency. With current technology, we still need to source 85-90% of our energy from non-intermittent sources. And gas and nuclear are the only answers at present.

Fickle Pickle’s post illustrates that the supporters of renewable energy apparently do not have the intellectual capacity nor practical understanding of the technical and financial implications to realize that their dream enviro-friendly energy solution won’t work.

Greig,

You like many others think that to invest you have to borrow money. In the real world we entrepreneurs find investors to give us money for a share in the investment. Investors do not charge interest.

The way we create money through fractional reserve banking means that to create money we have to create debt. In other words money = debt. Money does not have to be the same as debt as money is a representation of an asset and there are other assets we can create other than debt. Debt is a convenient way to do it but it has proved to have unfortunate side effects of creating unstable money and debt markets.

The difficulty is that we have become so used to money = debt that we accept it as the way it has to be. It doesn't and we can decouple the debt market from the money market.

We can create money by creating a productive asset first and then letting the asset we have created be represented by money. Investors do this all the time. When you invest in a new venture you give the venture some capital and get shares. Your shares are not debt and are not turned into money until the capital has produced a productive asset that pays dividends. We create more money because the initial investment has turned into more money than we put in. That is how we can create money without creating debt.

The country can do the same. It can decide to invest in asset producing projects - such as renewable energy and other ways to save ghg - without incurring debt.

Our current system is one where to get capital we borrow. We can turn this around as investors do and give people money that they must turn into productive assets.

The country may not get the best return on their investment if it invests in renewable energy compared to real estate etc. What I do argue is that we will get a positive return and that is enough.

I continue to be amazed at the way renewable energy advocates will desperately cling to their ideal. It doesn't matter that it can only produce a fraction of our energy needs. It doesn't matter that it is far more expensive than other low carbon emission solutions. They insist: "Renewable energy IS THE ANSWER. And don't argue because we KNOW IT'S TRUE.".

And Fickle Pickle, I showed your post to a friend who is an accountant, and she thinks you are joking. "Nobody is that silly" were her words, or something to that effect.

Grieg, You are wrong when you state renewable energy investments do not give positive financial returns.

Geothermal Energy from Geodynamics, Solar Thermal from Ausra have a running cost of 1 cent per kilowatt hour. The price of wholesale energy at the energy plant door is about 6 cents. Once you have the plants built the gross profit is 5 cents per kilowatt hour. The capital cost is about $5000 per continuous kw. Assuming an operating life of 30 years the capital cost is about 2 cents per kwh. Thus the net profit per kwh is 3 cents per kwh. We know that the cost of engineering systems drops by between 15% and 25% each time the capacity doubles. By the time we reach significant capacities of geothermal or solar thermal the capital costs of both will be well below the cost of fossil fuel plants.

Renewable energy plants built today will return their money within 15 years. Renewable energy plants built after we have built 8 times the current capacity will halve in cost and return the money invested within 7.5 years.

Let me now do a calculation for an investment in housing. A rule of thumb is that a $300K house returns $300 rent per week. Running costs of land tax, repairs, agent fees are at least $100 a week. Thus a house returns $200 a week or $10,000 a year. It will take 30 years to pay back the $300K investment.

Australians borrow about $22 billion per MONTH to spend on housing. If we diverted $2 billion per month from housing investment to renewable energy investment we would have zero net emissions in less than 10 years.

Our financial system is built to benefit the financiers not to advance the whole community. In Western anglo economies 25% of the GDP of the country is absorbed by the finance sector or by the book keepers whose job it is to account for the money. They have done a poor job of increasing our total wealth but a good job of getting a bigger portion of the whole pie

Fickle Pickle,

Obviously you have no practical knowledge of accounting or you would not be dissing the finance industry. And it also shows in your laughably naive analysis. You clearly have no understanding of either how to do a levelised cost analysis of a capital intensive engineering project. Nor are your numbers even remotely accurate.

I could go through it in detail, but I couldn't be bothered. But I will make some brief observations:

1) How do you imagine geothermal and solar energy sell on the open market at 6c/kWh which is double the market average for conventional electricity (solar/nuclear etc)? Where have you factored in the fact that the difference in price must be borne by public subsidies.

2) How do you arrive at a capital cost of "continuous kw" at "about 2 cents per kwh", when even the NREL and Ausra say that supplementary supply is at least 3 times this number, and with storage is about 7 times.

3) How does solar provide "continuous kw", when even with advanced molten salt storage, it only takes one cloudy day to shut down the plant.

What really worries me is your motivation to get on a website like this, and post your nonsense. You seem to have some kind of religious devotion to renewable energy.