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But each new project that gets financed changes the environment in which the existing ones operate. A market return on capital for a state of the art wind farm may look good.

But an off-market return on capital for a 5-year old farm maybe doesn't look that good any more. If interest rates are lower you'd want to refinance to take advantage of the lower costs, or new developments will price you out of the market. If interest rates are higher the present value of your production drops.

This is part of what drives the business cycle: the conditions at which a project is financed may be wholly inappropriate years later.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Migeru (migeru at eurotrib dot com) on Thu May 20th, 2010 at 09:44:37 AM EST
[ Parent ]
I don't see the problem. If interest rates go up, you're safe with your current loan. If they go down you refinance.

And you will hardly be priced out of the market by new more cheaply financed windfarms, when wind is just a few percent of the total power supply.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Thu May 20th, 2010 at 09:59:28 AM EST
[ Parent ]
If interest rates are lower you'd want to refinance to take advantage of the lower costs, or new developments will price you out of the market.

There is no problem with that which can't be solved by a 20-year take-or-pay contract with the receiving utility.

Feed-in-tariffs and preferential scheduling laws are, as far as I can tell, simply a way to force utilities into long-term take-or-pay contracts with an industry that isn't considered Serious, and/or where the utilities have more market power than the individual wind development.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu May 20th, 2010 at 04:24:43 PM EST
[ Parent ]

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