“Ah! You’re a mechanical engineer,” She said. This was social first conversation, and the subject of energy had somehow come up. She, being a civil engineer, quickly recognized the dialect of a cousin tribe.
She was correct, sort of. I earned the degree…a long time ago. Like everybody else in the program I studied thermodynamics. In fact “thermo” is one of the required subjects that’s a struggle for some. Thermodynamics is about heat energy and converting it into some other useful form, like motion. How well the conversion is done, that is, how much you move compared to how much you burn, is called thermal efficiency. Engineers are always looking for and get paid to find and reduce the part that’s wasted, in other words, improve efficiency.
I never worked as an engineer. Instead, I went into the U.S. Navy and learned to fly. After that as a professional pilot, I turned heat energy (produced by large quantities of jet fuel) into motion, for me and a couple hundred people riding along behind me.
Generating your own electricity can save you money. PV panels produce a return on investment. The amount of return in dollars can be calculated pretty accurately. The investment decision challenge is to make sure the return stream is enough to pay back the investment plus a little more.
Deciding whether or not to invest involves a comparison. What do I have to invest compared to what I get back? Or if the money has to be borrowed, is there a positive cash flow left after all the expense of the loan has been covered? A second calculation is always made too, but maybe not articulated. That is, how’s this investment compare to all the others I could make? In other words, “if I have money, should I put it here?”
What’s the payoff for investing in a Volt? Let’s run the numbers.
First, some assumptions: For most people, a typical day involves 33 miles of driving, 12,000 miles of routine trips each year. An occasional longer jaunt might bring the total added to the odometer to 15,000. The Volt can go 40 miles on electricity alone, so we’ll assume local driving will be on the battery. Charging would likely be with cheap electricity from the wall outlet at home and maybe some free electricity from charging stations located in public places. Let’s assume this mix of cheap and free electricity costs 10 cents a kilowatt-hour on average.
The Volt will travel between 3 and 4 miles on a kWh. Let’s use 3. For 12,000 miles the car will consume 4,000 kWh. At 10 cents, that’s $400 for electricity.
Yield on U.S. Government debt is at record low levels, this despite the ongoing noisy debate about excessive borrowing and the threat of future inflation. A percent and half annually for 10 years? What’s with that?
Obviously there are big factors at play. Political and financial confusion in Europe are significant, no doubt. Money is fleeing from that turmoil to safer havens, including loans to Uncle Sam, despite angst over the size of our federal debt and deficit.
The rate on every other loan or deposit is linked to the price of government paper. That includes the interest you earn when you make a deposit in your bank. Have you checked the rate on a savings account lately? .00000something?
The energy business has always been wild and dangerous and often dirty. Think “wildcatter” and “roughneck”. It can be risky for investors, not a place for widows and orphans. As for dirt and danger, most of us have no desire to be coal miners. In addition to common industrial workplace hazard, extraction has often been from places of violence, an environment more akin to a battlefield, not pastoral peace and quiet.
Wars are fought over oil. This is the story today in Sudan, and the world waits nervously for resolution of a standoff with Iran over it’s nuclear development activities. There’s fear of a cut in the oil supply from the Middle East.