12/25/2022 0 Comments Cost of a big mac in oil towns![]() Right now in fact, we're in a worst case scenario:ġ) a world of low power demand and a glut of gasoline / nat gas = low revenues, cheap competitionĢ) zero attention politically paid to climate change right nowģ) capital markets getting crushed by the prospect of depression means that project return hurdle rates go way up (because dollars are scarce and there are so many competing opportunities to buy assets cheap) The investor thesis behind renewables is twofold:ġ) in a world with peak oil (the prevailing ethos ten years ago), renewables offer a source of power dispatch with zero marginal costĢ) in a world with a carbon tax, renewables offer a source of clean dispatch where other sources are taxed (and electricity is thus priced higher) ![]() When electricity demand is lower (which it is right now), electricity prices plumment, and there's much less revenue for solar panels and wind turbines, utilities generally. If there's a world awash in gasoline, there's much less incentive to buy an electric car. You have a much greater incentive to finance construction and installation of new capacity when the promise of revenues is higher. ![]() Renewable power benefits when oil and electricity are scare and expensive. ![]()
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