Paul Homewood observes that the British government recently boasted of spending £160 million to retrofit some 38,000 social housing properties. “Warmer, greener and cheaper homes as government opens a triple win upgrade for social housing” the press release tootled. But the projected savings are estimated to be around £170 per household per year which means, for 38,000 homes, annual savings of around £6.4 million. Ignoring the fact that the £170 is likely a gross over-estimate, according to the annuity formula, if the benefits last for 25 years and borrowing rates average 3 percent, the whole thing is worth just over £112 million. Making the rate of return negative 30 percent. If that’s a “triple win” we’d hate to see quadruple.
While some may say such cold-hearted calculations miss the point, namely saving the planet, they do the reverse. If the calculations don’t work out you’re not saving the planet; if something loses money it means it’s destroying wealth, of which energy is one very important form. And even if you’re managing to save a bit of energy by destroying a lot more wealth in other forms, just imagine the scale of spending, again meaning wealth destruction, that would be required to make the sort of actual difference in energy consumption that activists claim is not just necessary but urgent.
British PM Boris Johnson appears to have lost whatever sanity he once possessed on this file. Grilled by a member of his own party in Question Period, and yes in Britain backbenchers actually enjoy some independence of thought and action, he insisted that there had been “vertiginous” falls in the price of batteries and of wind and solar power, including specifically that the price of offshore wind had fallen by 70% in a decade, and that all the UK needed was will, though lots of it: “promethean technological optimism”. But then came the vulture to chew his liver, because Conservative MP Craig Mackinlay calculated that subsidies for renewables have not fallen but increased, to over £10 billion a year, working out to something like £80 per megawatt/hour. (Given that British power generally costs in the vicinity of £172 per megawatt/hour retail, and £55 wholesale, it’s not win-win.)
Such results are typical when it comes to trendy forms of alternative energy, and exemplify the old huckster’s joke about losing money on every sale but making it up on volume. As one persistent critic of the economics of light rail in Phoenix first predicted then confirmed, it underperformed so badly at such runaway cost that the city could literally have bought a Prius for every single rider and saved money. You can’t fail practical math this badly very often before you run out even of other people’s cash. But Phoenix light rail only cost about $2 billion and for Net Zero-scale plans the price tag is far higher and so is the economic hole into which your F in math will propel you and everyone else.