Living in Uncertain Times

Here's an interesting posting by Scott Adams, the famous Dilbert cartoonist:

Economics of Solar Power

Is it economical to install a solar power system (photovoltaic) for a new home?

Assume you will live in this home for the next 30 years, you're in California where the sunlight is plentiful, energy costs are high, and the government is offering rebates. You run the numbers, and as long as the cost of the system is wrapped into your mortgage, you are saving cash from day one. Ta-da! It's good economics, right?

Not so fast. Economists consider all alternatives, and one of the alternatives is to wait a few years and then add solar power to your home, when the systems are likely to be far more efficient and much less expensive. If you wait, you run the risk of losing any government rebates, and there's an economic penalty for not wrapping the cost into your original mortgage. But waiting still makes sense if the new system is twice as efficient.

If you add those considerations to the uncertainty of living in the same place for 30 years, the possibility of energy costs from the grid coming down (it could happen) and the weekly maintenance of the solar panels (you need to hose them down if it hasn't rained lately), it's hard to justify installing solar power.

My new home will have solar power. It was a city requirement. I plan to brag about it to people who are passionate about the environment and bad at math.

All of the above is true, but if everything was logical, then nobody would buy solar now. That means the price would not go down (in fact it would go up because demand was low and it isn't profitable to sell ones-and-twos).

The funny thing about life: the only way to get to the future is by doing irrational things like "believing in the future". If we were all rational and cautious, nobody would be the first to try something new. We would be stuck in a perpetual freeze, terrified of not getting the "best deal".