Sunday, December 27, 2009

RE < C

When all the external costs (climate change and other environmental and health effects) of fossil fuel generation are accounted for many renewable technologies are cheaper than fossil fuel alternatives.

As markets don't price these externalities, governments provide subsidies for renewable electricity. However, government's generally only set subsidies at the level where renewable electricity is marginally profitable (government's generally do not want to spend excessive amounts of money on subsidies and be seen to fund private profits).

Making money from investing in renewable electricity is therefore very difficult. The real breakthrough (and profit!) will be when renewable electricity is cheaper than fossil fuels - or as Google puts it when:

RE < C

Until then investing in renewable electricity is about finding the location with the best subsidies.

No comments: