Fascinating number

On the way the solar power FiT works:

As Lord Marland put it this week: “It is already going to cost the consumer £7 billion for £400 million of net present value.\”

This makes the consumer £ 6.6 billion poorer of course.

We really do want to remember only to do those things which have an NPV over and above the cost of doing hem.

5 comments on “Fascinating number

  1. How about setting up a power company that, directly through the bills, 1. charges for leccy at market rates and 2. makes a charge that goes directly to building a Nuke for the future use of subscribers. When on line this will for its subscribers, supply leccy at a hugely reduced rate, free or even with a dividend, as surplus energy will be sold to those relying on wind power. It may even be able to provide for its free replacement, thus becoming a PPM. No doubt this is really what you’re doing in the former GDR…

  2. “We really do want to remember only to do those things which have an NPV over and above the cost of doing hem.”

    Pedantry alert: If it doesn’t include those costs already then it’s not an NPV

  3. Agree with P-G.

    For there to be a £7bn cost and a £400m NPV, that means that the present value of the future benefits must be £7.4bn.

    If there’s a positive NPV, we’re richer. But that doesn’t seem to be what the article means.

    So who doesn’t understand NPV? The Telegraph journalist, or the government minister and the civil servants who briefed him?

  4. Hmmm. Although FiTs are not good value, if you demand that every action produce an identifiable return that exceeds the cost of doing it, you’ve basically ruled out all research and development that have no immediate application.

    No doubt you’d have been chastising the guy experimenting with a device for firing sharp sticks (‘Bow and Arrow? It’ll never work, if it worked it’d have been done already!) and told him to get back to the hand axe production line..

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