Ken Nelson

If solar can’t pay for itself with “free” land and
the sunniest spot in America, where can it work?

Obama was way to close to my home yesterday, just 1.5 hours south in Vegas. Nominally there to tout energy policy, he was really there to raise money for Democrats.

He used Nellis AFB’s solar farm to tout “green energy” proclaiming it only cost $100 million to build and saves the Air Force $1 million a year!

Here we have Obama the lifetime politician NOT knowing, and likely not caring, how to conduct a real return on investment analysis.

First off, the land the government provided wasn’t in that cost. We could have sold the land or leased it to other activities. So the actual cost is $100 million + the opportunity cost for the land.  Also, not factored in, was the cost of the Air Force personnel reviewing, managing and promoting the project.  That had to be in the millions.

Second, money isn’t free. $100 million dollars costs around $2 million a year in interest costs.

So ACTUALLY this project costs $1 million a year and will never be paid for with savings.

But wait, it gets worse. It turns out the “savings” are financed in part by “renewable energy credits”  sold to Nevada Power. This is a subsidy by government (state and Federal).

So the government is spending money with one hand, and claiming that money as a savings with the other.

Oh… and the savings are “estimated”, which means they are wrong.

In the end, even if the savings were real, a $100 million project with a 100 year payback is one of the worst investments you can make in energy technology. When will this project be obsolete? 20, 30, 40 years?  Any reasonable estimate of obsolescence makes this a negative return project.

Wouldn’t it be nice we had a President who actually had run a business?  Or lacking that, a media that had some clue as to how investment and returns work?