Friday, January 30, 2009

But did anyone teach them the economics?

In the "How We Live" section of The Funny Paper today, there's a story about a group of students in Hood River High School who spearheaded the installation of a wind turbine on school property. 

These kids, according to the story, have been fully indoctrinated in everything green:

 "To these teens and many of their generation, understanding and promoting alternative, renewable energy is a given. They want more recycling bins on school grounds and energetically embrace other green projects. Not to mention, they know they can play a bigger role for the environment by teaching their elders."

They got the money for the turbine from the Oregon Energy Trust, who agreed to fully fund the $25,000 installation and maintenance for the project. Now they have a turbine that feeds the grid a small amount of electricity. 

The story says the electricity produced by the turbine is 1.8 kilowatts. That, no doubt, is what it spits off when it is actually spinning, not an average of what it produces during any given year. But let's assume it is an average.

The value of that electricity at Oregon prices is about $1,261 a year.  Would you invest $25,000 to yield $1261 a year? Barely. That is about a 5% return - a 20 year payback - far less than any profit making enterprise would need to invest. 

Plus, the $25K doesn't include various costs such as land. 

So I am wondering whether, along with what these students are taught about alternative energy and sustainability, they are ever taught anything about ROI and economics. 

Any guesses?


Anonymous said...

They take sustainability, turn it into an ethical issue, and fire it at vulnerable kids emotions. Anything economic or logical or scientific is glossed over or left out.

The good news is the kids will back up what they believe is ethical. The bad news is they have been mislead.

Anonymous said...

You touch on one of the biggest problems in our society, the combination of vision and reality. Education and politics have moved in unity to combine the forces of vision with disregard for economic reality. This is evident in project after project. Unfortunately, voters buy the vision because they are too lazy to analyze the reality. Quantitative analysis has lost favor with the decision makers of our society. The reason is that they are using money other than their own.

Anonymous said...

It's unlikely that anybody in the high school tried to teach these kids about cost/benefit analysis, return on investment, or any other economic way of looking at this project.

Why? Because it is likely that not a single teacher in the building knows about such things.

Todd said...

The article also has a quote that states, "We are just trying to expand people’s understanding of what alternative energy is…That it’s not that expensive. “

Not expensive because the Energy Trust and all ratepayers that pay the public purpose charge are paying for it.

1.8 kW system is most likely a name plate capacity meaning that average capacity is about 1/3 of that.

That means we are looking at generating approximately 600 watts. Enough to light about six 100 watt light bulbs for a cost of $25,000.

This excessive and needless waste. It is time that Oregon gets sensible about sustainability and pursues environmental goals that are achievable and cost effective.

Rob Kremer said...

And all they would have to ask the kids is "would you spend $25,000 of your own money to produce enough electricity for 6 light bulbs?"

I think even your average high schooler would know the answer.

David Appell said...

Rob: In any case, you have failed to account for the damage that fossil-fuel-derived power does to the planet. In some studies (such as Stern) this is as high as 20% of GDP.

What does your analysis indicate?

Huck said...

Seriously, Rob, I have to agree that you're blatantly ignoring real costs and benefits in your posts. The Dalles, just 20 minutes west regularly has toxic haze from the coal plant in Boardman - what are those costs? Plus you're ignoring the value of 1) the education, a public good, 2) the reduced demand for fuels, which can vary dramatically and seriously skew your estimates on return.

As I've said repeatedly, you're not attributing ANY possibility that there is ANY validity to human-caused climate change. Even if there is only a 10% chance that humans have 10% the effect most scientists predict, we should attribute a 1% value to the costs of fuels. Buy conservatives, who should be trumpeting such "conservative" estimates for the sake of balance, continue to present a skewed position.

Seriously, disagree if you want, but if you want to imply they don't know any economic principles, you'd better bring quality analysis to the table. You didn't here.

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