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Old 04-20-2015, 02:35 PM   #81
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... However, if I include cost of funds of 5.5% (which is my assumed portfolio rate of return) then the payback was 23 years (when we are 81).

So I wrote to the guy and said: ....

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The cost of solar has two parts; product and labor. Although it is true that product prices my drop, labor prices will not, in fact it is safe to say that labor costs will only go up year to year based on increasing wages.
Yep - I keep seeing so many of the solar fan sites quoting the prices of the panels to show how the cost is coming down. But there is that pesky labor for installation, electrical inspections, transfer switches, the mounts, and the inverters.

Grid-tie (the cheapest) inverters seem to be ~ $0.35/watt IIRC, so that's a big hunk of the price of solar as the panels get near $1/watt. I don't think inverters are on any steep price curve - the semiconductors will probably get a little cheaper over time, but you've got big inductors and heat sinks and the chassis and weatherproofing - all mature technology.

It would be interesting if that other link on subsidies to other energy sources included a figure for the effect on retail price. IOW, what is an un-subsidized $/kWh for a typical grid mix?

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Old 04-20-2015, 02:54 PM   #82
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It is the improving technology that makes it affordable, and that increases sales, not the other way around.
While that is partially true (you can't wish the future, and tinkering needs time), there is also a scale and experience effect working here.

The more stuff you make and the greater the scale of your production, the better one gets at making it more cheaply. It's a pretty fundamental concept.

That's one of the reasons why Germany put in so much subsidies, to get over the "scale hump".

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Yes, incentives slow the process, they don't speed it up.
If that were true, venture capital wouldn't be viable. Throwing money at a problem can solve a lot of issues, including driving costs down.
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Old 04-20-2015, 03:28 PM   #83
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Originally Posted by ERD50 --
It is the improving technology that makes it affordable, and that increases sales, not the other way around.
While that is partially true (you can't wish the future, and tinkering needs time), there is also a scale and experience effect working here.

The more stuff you make and the greater the scale of your production, the better one gets at making it more cheaply. It's a pretty fundamental concept.

That's one of the reasons why Germany put in so much subsidies, to get over the "scale hump".
That can apply sometimes, but I actually think it is pretty rare and often overstated. Yes, demand can make it worthwhile to make large capital investments to bring the cost of manufacturing down (automation for example). Sometimes there is too much risk to invest in that automation, w/o knowing there will be demand. But in reality, these things are pretty predictable. If only early adopters would buy VCRs at $1800, it doesn't take much market research to figure out the market for $1600, $1400, $1200 etc, VCRs, and figure how much capital and R&D needs to be invested to hit those price points. It's done every day. Without subsidies.


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Quote:
Originally Posted by ERD50 --
Yes, incentives slow the process, they don't speed it up.
If that were true, venture capital wouldn't be viable. Throwing money at a problem can solve a lot of issues, including driving costs down.

Sorry, you've got it wrong. Show me a (successful!) venture capitalist who approached a product backing by saying "I know, we will pay people to buy a product they don't want at the market price, that will increase our sales, and that will drive our costs down." See how silly it is?

No, a venture capitals throws money on the R&D side - that can certainly pay off, and does exactly as I said - results in lower prices (or better value), and that increases demand.

I think I said it before on the Tesla thread - real EV enthusiast should be ranting against sales subsidies - that money would go much farther if applied to R&D. What would create more benefit, an incremental 100 cars sold, or $700,000 in lab money?

Most of the cars probably would have been sold w/o the subsidy anyhow - is $7,000 really a go/no-go for a Tesla purchase, or for the celebrity who wants to arrive at the gala in a Nissan Leaf, after getting off their private jet?

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Old 04-20-2015, 04:12 PM   #84
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Sorry, you've got it wrong. Show me a (successful!) venture capitalist who approached a product backing by saying "I know, we will pay people to buy a product they don't want at the market price, that will increase our sales, and that will drive our costs down." See how silly it is?

No, a venture capitals throws money on the R&D side - that can certainly pay off, and does exactly as I said - results in lower prices (or better value), and that increases demand.
Not sure why you phrase it that way. Paying people to buy a product is equivalent to selling said product below actual cost at that time.

VC money goes to R&D of course, but also allows one to sell below marginal cost at that time to accelerate market adoption and get to scale. In fact, I don't see why selling at a loss initially wouldn't count as R&D - it's investing in scale to get costs down.

Some examples of the top of my head include:
  • Facebook & Google: was sold at zero cost (In google's case there wasn't even a viable business model thought up in the beginning). Give away your product, get to scale, then figure it out.
  • Amazon web services: was sold below cost
  • Dropbox: was sold below cost initially
  • Zalando (European Zappos clone): sold below cost for several years
  • Kiva systems: sold below cost to first customers (robotics firm bought by amazon)
  • Groupon: sold below cost for several years
  • Linkedin: no revenue first few years
  • 23andme (genetic testing): sold at a loss initially
  • Basically any business backed by the Samwer brothers (Rocket Internet)
These are just dotcom(-ish) startups.

Even Boeing and Airbus sell their first models at a loss to get market adoption going, and with it get the required scale to run at a profit.

Any business that is scale sensitive and unwilling to sell at a loss initially may make a grave error and lose out to those that will. All of the above firms buried their competition in part because they captured market share faster. A big reason was getting to scale faster, and with it the willingness to sell at a loss, sometimes for many years.
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Old 04-20-2015, 05:40 PM   #85
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Not sure why you phrase it that way. Paying people to buy a product is equivalent to selling said product below actual cost at that time. ...
I think you are shifting the context of those quotes. I was responding to comments about subsidies being responsible for speeding up the technology itself. But as was said - if a company can sell the current technology because a government subsidy artificially makes the current product a decent value for the customer (after the subsidy), it reduces the motivation to improve the product. They can sell it as is!

Sure, companies amortize costs over a production run. The first vehicle off an assembly line, whether the first Tesla, or the first new model year Ford is sold below cost, depending how you look at the amortization. But that's different.

And some products require a 'critical mass' to reach a scale where they can make a profit. Amazon might have sold books below their cost of doing business, just to build up a brand name, and develop cash flow to justify infrastructure (with the business plan that costs will come down in the future, with a path to profitability). But I don't think they sold the books below what they paid for them, did they? It was the delivery and infrastructure that they were 'giving away', not the books. At any rate, it is the business making those decisions internally. Let them sink or swim with their decision.


Selling below cost can get a company in trouble for 'dumping', though I don't know how they calculate that cost and amortization of tooling, etc.

And I think we can understand those investments. I don't see how having someone else pay for 1/2 ~ 2/3rd of someone's solar panel installation is reducing costs significantly. I think we know a lot about making silicon wafers, and inverters.

I'll repeat me earlier message:

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For the most part, technology can only move so fast. Engineers need to learn along the way. We could not have made the leap from an 8080 to a quad-core i7 just because someone threw money at it. Each step, the tech gets better, making it valuable to a larger base. And that keeps going, step by step.
Solar initially was $$$, so had a very small niche (space), and as the technology advanced, the market grew. Let the market grow as the technology improves, rather than trying to create artificial demand to push the technology (which it most likely can't do).

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Old 04-20-2015, 05:57 PM   #86
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There is a big difference between government subsidies and private industry selling a loss leader. Eventually the private company will improve, or go out of business.
I remember the first solar water heaters going on roofs more than 40 years ago. Ugly, and they failed in a few years. But even back then the subsidies encouraged the purchase.
So, in 40 years this is the best we can do?
There are solar owner plants being built right now that make no economic sense without the subsidy.
Not PV, but heated salt solutions. Conceptually viable, but not economical.


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Old 04-20-2015, 06:54 PM   #87
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But as was said - if a company can sell the current technology because a government subsidy artificially makes the current product a decent value for the customer (after the subsidy), it reduces the motivation to improve the product. They can sell it as is!
Nonetheless the price of solar installations (panels plus labor) has come down by a factor of two over the past ten years during the subsidy era.

I've had PV on my rooftop since 2006, and they have just now reached break-even on my subsidized cost. The return (above break-even) will come over the next ten to twenty years. So far the maintenance cost of the system has been zero. I have to wash the panels twice a year, and that is it.
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Old 04-20-2015, 07:52 PM   #88
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Nonetheless the price of solar installations (panels plus labor) has come down by a factor of two over the past ten years during the subsidy era.

I've had PV on my rooftop since 2006, and they have just now reached break-even on my subsidized cost. The return (above break-even) will come over the next ten to twenty years. So far the maintenance cost of the system has been zero. I have to wash the panels twice a year, and that is it.

If the cost of computers, TV's, and other electronics took ten years to be cut in half, we would still have Compaq 386's, CRT TV's, and mobile phones the size of a small briefcase. In the free market early adopters pay a premium, and the business finds ways to improve production costs and innovate.
Those darn supply and demand curves just don't seem to want to go away.


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Old 04-20-2015, 08:44 PM   #89
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If computers and TVs required building permits and were installed on rooftops by Americans swinging hammers, home theaters wouldn't cost a few hundred dollars as they do now. But you make a good point, when they sell billions of PV panels, maybe we can expect their price to come down like TVs and PCs. Maybe subsidies can get that volume kick-started.
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Old 04-20-2015, 08:48 PM   #90
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I am looking forward to the day when we can more cost effectively for us go off grid for energy with solar panels, grow food inside like this (on a smaller scale) -

Q&A: Inside the World's Largest Indoor Farm | Nat Geo Food

and have a 3D printer to make a lot of the household stuff we need.
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Old 04-20-2015, 08:59 PM   #91
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If computers and TVs required building permits and were installed on rooftops by Americans swinging hammers, home theaters wouldn't cost a few hundred dollars as they do now. But you make a good point, when they sell billions of PV panels, maybe we can expect their price to come down like TVs and PCs. Maybe subsidies can get that volume kick-started.

I think we have the proverbial "failure to communicate". I am saying just the opposite. Subsidies do not kick start innovation, they stifle it. Subsidies encourage the seller to sell the current design, at a profit, because the consumer does not pay the full price.
And installation costs can be reduced by innovation, as well. Size matters.


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Old 04-20-2015, 09:09 PM   #92
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If computers and TVs required building permits and were installed on rooftops by Americans swinging hammers, home theaters wouldn't cost a few hundred dollars as they do now.


That's the nature of the beast, wishing won't change it.

But it points out something we've talked about here before - putting solar panels on individual residential rooftops is an extremely inefficient way to go about it, and should not be promoted.

If you want to install solar panels, put the panels on big, flat top buildings (big box stores, warehouses, etc). One site to review, easy to find a spot with no trees, and where the panels can be placed at an optimal angle. One of the reasons so much consumer electrocics is so cheap is due to mass production and economy of scale. So for solar, that means big installs of a few hundred panels in one shot, not a few panels on hundreds off different roofs, each requiring the crew to move, each with its own issues (different slopes on roofs, different angles, access issues, etc), its own electrical connection and transfer switch, permitting, evaluation etc. That's no way to approach a problem.

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But you make a good point, when they sell billions of PV panels, maybe we can expect their price to come down like TVs and PCs. Maybe subsidies can get that volume kick-started.
The panels are mass produced in large quantities already - after a point, the increased volume doesn't cut costs much, the curve flattens. But as pointed out, the labor for installation just isn't something that is going to respond in that way.

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Old 04-20-2015, 09:17 PM   #93
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While that is partially true (you can't wish the future, and tinkering needs time), there is also a scale and experience effect working here.

The more stuff you make and the greater the scale of your production, the better one gets at making it more cheaply. It's a pretty fundamental concept.

That's one of the reasons why Germany put in so much subsidies, to get over the "scale hump".
I thought that Germany's "green" initiatives have been a colossal failure?
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Old 04-20-2015, 10:30 PM   #94
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Our highest payback in energy savings has come from very simple changes, like turning off lights, switching to LED bulbs, getting rid of the air filters and using plants to clean the air instead. Having the soil in the house might be healthier, too. For white noise I use a docked iPod playing a white noise "song". For making pasta I found a pasta thermal cooker at a thrift shop that works great. No more waiting for a big pot of water on the stove to make pasta any more. I just use an instant electric pot. It saves time, too.

I like collecting little ideas like this. Added up we now use half the electricity of average homes and we have many more ideas to implement. It is not cost effective for us to go completely off grid yet with solar panels for some of the reasons posters mentioned above, but we have viewed it as kind of an interesting logic / engineering project to figure out how to get our energy bills down to the nubbins without spending a huge amount of money.

I installed a metal roof a year ago last winter and was really surprised by the savings. My peak summer electrical bill the prior year was $170 or so. Last summer my peak bill was under $90. I live in midwest so we get the summer heat. The light colored roof reflected so much heat it usually was late afternoon before AC kicked in. And the best thing was no "payback period" as installing the metal roof over existing shingles was cheaper than replacing the shingles.


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Old 04-21-2015, 05:20 AM   #95
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I thought that Germany's "green" initiatives have been a colossal failure?
In many ways, yes.

But it did accelerate the scale and buildup of the solar industry.
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Old 04-21-2015, 05:22 AM   #96
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Interesting article (well to me at least) from Bloomberg:

China Adds Solar Power the Size of France in First Quarter - Bloomberg Business

Apart from the screamy headline.

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China is seeking to approve and install as much as 17.8 gigawatts of solar power this year, or nearly 2 1/2 times the capacity added by the U.S. in 2014
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Old 04-21-2015, 08:32 AM   #97
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In many ways, yes.

But it did accelerate the scale and buildup of the solar industry.
And how much effect did this actually have on advancing the technology?

Like EVs and batteries - there is plenty of push to get better batteries from all the other devices that need them. I think solar cells advance regardless of an artificial bump in demand. These things are semi-conductors after all.

And how much money was thrown at price subsidies? How much good could that have done if put directly into R&D?

I really don't understand why environmentalists defend these programs. There are far more effective ways to advance technology than with price subsidies.

Take a look at LEDs - they have advanced by leaps and bounds over the years. No real subsidies that I am aware of. The better the tech gets, the more applicable they are to more uses, and the better the value gets, the more people buy them. Each advance opens up more markets, places like CREE have lots of incentive to make them better, and they do.

Another thing with subsidies - it is a government selecting technology. How many engineers in Congress? How many with crystal balls? Had they added heavy subsidies to CFLs for example, that would actually reduce R&D in LEDS, because it is just too hard to compete against artificial demand - it would be hard to attract investment $. The consumer (and the environment) suffers.

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Old 04-21-2015, 09:06 AM   #98
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I think LEDs are getting some subsidies from power company instant rebates. They are also getting a synthetic subsidy by the recent $0.25 surcharge per bulb on CFL.
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Old 04-21-2015, 09:08 AM   #99
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Interesting paper here, though LOTS to wade through:

http://www.lazard.com/PDF/Levelized%...sion%208.0.pdf

But what stood out to me is - they consistently show that a utility scale installation of solar PV costs less than half (without subsidies included) compared to residential rooftop (with subsidies included).

And of course, those subsidies come out of our pockets, so it's a shell game anyhow. So more like 3x cheaper to install at utility scale.

So if we stopped this silly notion of paying people to put the panels on their residences, the same $ could have installed about 3x the amount of solar panels, and everyone would share in any cost savings, rather than an elite few who can afford them (with help from everyone else).

If you are an environmentalist, wouldn't you want 3x the panels installed? Or the same number with 1/3 the money, and spend the rest as the price comes down, and/or on R&D? The price reductions seem to be just about inline with the payback period, it pretty much pays to wait.

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Old 04-21-2015, 09:11 AM   #100
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I installed a metal roof a year ago last winter and was really surprised by the savings. My peak summer electrical bill the prior year was $170 or so. Last summer my peak bill was under $90. I live in midwest so we get the summer heat. The light colored roof reflected so much heat it usually was late afternoon before AC kicked in. And the best thing was no "payback period" as installing the metal roof over existing shingles was cheaper than replacing the shingles.
That is a great savings. I don't really know anything about metal roofs but I just Google the pictures and they look attractive.
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