Paybacks Aren't Always a Good Deal

At some point in the process of planning your renewable energy powered home you will undoubtedly come across the term payback. This concept of comparing the up front cost of a renewable energy system against the cost of purchasing the same amount of power over time from the utility company is often used as a benchmark for the affordability of renewable energy.

Here’s how it works. Let’s say you have designed a system for your home that is based on producing 3 KWhrs of power per day. Under the concept of payback you would calculate how many years, at 3 KWhrs/day, it would take you to pay back that investment in purchased utility power. There is often a time period mentioned, usually 20-25 years, beyond which the payback period is considered unreasonably long.

In my opinion the concept of payback is a flawed one. For one thing, no one, myself included, would consume electricity at the same rate when connected to the grid as we would when producing it ourselves. There is simply no incentive to do so, even with the so-called "conservation" programs currently being promoted by the utilities.

Also, comparing the cost of a renewable energy system to the cost of purchased power from a utility is, in my view, comparing apples and oranges. The concepts and techniques used in the design and implementation of a renewable energy system are entirely different from those used in the utilization of grid power.

Utility companies, however, love the payback concept. It keeps the idea of renewable energy comfortably (for them) exotic, appealing only to true believers. They don’t want consumers thinking of renewable energy systems as just another household appliance. When that happens, consumers will start to think about the purchase of a renewable energy system the way they now think about the purchase of a car or a new kitchen, "Gee, I like the idea…how can I fit it into my budget?".

If we bought cars using the payback concept we’d never care what color they were, or how they feel when we drive them. We would simply get out our trusty calculators and figure up the purchase price and what the car will cost to operate. Then we would compare that with some dollar value we would get out of the operation of that car. You all do that…right? Sure, and Chevrolet still sells Geos by the truckload.

The fact is, we do care what color they are, and how they feel when we drive them. But most of all we like the feeling of independence we get from driving one, the feeling that we control how we get from point A to point B.

It’s the same with renewable energy. Believe me, I like the way it feels to drive through a town plunged into darkness by a power outage and know that, when I get home, I can turn on the lights and read a book or listen to music or catch the game on TV.

I find it interesting that in large cities, where the use of a good mass transit system would be cheaper than owning and operating a car, the economic arguments in favor of such systems fall flat. We need a stronger motivation to get out of our cars than just saving money.

I get the same feeling of independence and self-reliance from my renewable energy home as I do from my car. A good renewable energy system will last at least 20-30 years with little or no maintenance. In that same period of time you will spend far more money to buy and operate your transportation, be it a beater or a Bentley, than you will spend on a renewable energy system. Yet, the economic argument against a relatively inexpensive energy system seems to carry more weight than it does against the more expensive automobile.

Ironically, the change in perception that will come as we begin to see more viable electric vehicles may also help make renewable energy a more widely accepted technology.

All Contents © 1998
Wagonmaker Press
Thomas W. Elliot


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