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Numerical Fallacy of not including full risk of Green product investment

Is there a word to take account the risk factor of buying something expensive over something cheap ?
- Often it makes numerical sense to rent a house than to buy one, when you factor in certain risks. ie when you rent boiler and roof repairs are the responsibility of the landlord, whereas if you buy your number plan might get screwed up after a happy couple of years if you have a broken boiler or roof to repair.
Now it occurs to me a similar thing might happen with green buying, ie that people might forget about some costs.
- eg. Say situation #1 I live in a $200K house
situation #2 I live in a $200K house and I invest in green measures
1. $40K of solar panels on the roof
2. $50K electric car instead of $20K normal car
3. Another $30K of green stuff like battery banks etc.

Now imagine if my electricity bills are so high and the subsidies so good that I calculate that in 25 years I will get back my $40K
-1. that is not good enough cos in situation #1 I would start with he $40K in my hand, so after 25 years I will have much more. In payback calculations what I should be doing is comparing the solar panel investment against the whole investment value of that $40K after 25 years invested in something safe.

Secondly in scenario #2 there is another possibility
It might occur that my house burns down after a couple of years
In scenario #1 I just lose the $200K value of the presumably insured house.
But in scenario #2 I'd also lose the $100K altogether that I had invested in solar panels, green car, other green stuff, whereas in scenario #1 I'd have that $100K invested somewhere else safe.
Hopefully we can say that in 25 years less that 25 out of 1000 houses are burnt down, but that is still a 2.5% chance that you might lose everything.
It doesn't have to be a fire it might be a truck running into the house or a storm ripping the solar panels off the roof.

It seems to me that true cost of green investment is
1. the difference between what you would have got in a safe investment
plus 2. an amount to account for additional risk.
- Is there a word to take account the risk factor of buying something expensive over something cheap ?

Re: Numerical Fallacy of not including full risk of Green product investment

On the issue of whether a Green product investment is better than a 'safe investment', it will depend on the subsidy scheme on offer in a country at a particular time. My understanding is that in the specific case of installing solar panels from around 2010 and maybe for a few years after that in the UK, it did outperform a normal financial investment. These blog posts from a British politician called Roger Helmer in 2010 and 2011 explain the generous subsidy arrangement that was available at the time (I don't know if the subsidy is still available - it sounds as though it was too generous to still be in existence):

Helmer took advantage of the subsidy arrangement and installed a 2.4kV solar panel system at his own house in 2010, even though he was a critic of renewable energy and the subsidy scheme. Subsequently Helmer defected to UKIP (from the Conservative party) in 2012, and became UKIP's energy spokesman, which is a bit strange as UKIP is an anti-renewable energy party but is being represented on energy issues by a spokesman who is making a fair bit of income from having solar panels on his roof.

Re: Numerical Fallacy of not including full risk of Green product investment

Another comment I would make Stew is that in situation #2 item 3 "Another $30K of green stuff like battery banks etc.", I don't think the majority of people who install solar panels are interested in battery banks. You would only be interested in spending a substantial amount of money on batteries if you wanted to go off-grid, and you have to be connected to the grid and contributing power to it to get the subsidy (at least in Europe). Also $30K is a bit low to go off-grid using battery storage for most parts of the world.

The "Energy Matters" blog had a recent post where it estimated the cost of battery storage wall units supplied by Tesla to go off-grid at various latitudes.


Assuming a solar power system with battery storage to provide a household consumption of 5000kWh/year, the cost of the battery storage is given as:

At the equator $17.5K. At 20 degrees N latitude $101.5K. At 40 degrees N latitude $238K. At 60 degrees N latitude $535.5K. The total weight of batteries for the latter case is given as 15.3 tons.

Yes read Euan the other day

By coincidence days I read Ean's debunk of Audi's magic E-diesel project the other day, and then read his Tesla Battery analysis

you've seen this ? by Bloomberg Tesla's New Powerwall Battery Doesn't Work That Well With Solar Musk own company Solar City points out that rather than use a storage battery domestic customers would e better off feeding excess electricity generated back into the grid to claim the generous subsidy.
- However Musk will be angling for laws giving industrial customers big subsidies if they use batteries ..the poor Joe Public will be paying for those subsidies.

Here in Borneo an NGO guy explained to me "It don't understand it out solar battery system on the sunny island here is completely uneconomic and we have to run the diesel generators all nigh to power the fans for sleeping, but in the UK my mother's solar seems to work and she gets paid by the electricity company"
..well yes but the subsidy the UK law forces the energy company to pay her out of everyone else's bills, is so stupidly huge.