Gold versus Solar (or other RE)

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rhare's picture
rhare
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Gold versus Solar (or other RE)

This is a discussion on the relative trade-offs between buying a monetary asset (gold, silver) versus buying energy production capacity.  I've been trying to determine if it is more prudent to purchase gold in order to hopefully be able to buy needs in the future while hedging against inflation and dollar collapse, or better to buy a large solar array (10-20kw), which produces more energy than I currently use for potential sale.

I think it is important to point out that this trade-off discussion becomes valid only after you have taken care of critical needs (food, food production, water, shelter, self defense, etc).  It is basically a trade off on how to invest and protect resources for future use.

As I see it, you can buy gold, in hopes that in the future, that gold will allow you to buy additional resources (food, energy) or you can buy energy generating capacity that you can then sale or use later.  Here are the pros and cons I've thought of:

  • Gold - Pro
    • Valued/understood as money.
    • Easily transported (for fleeing if necessary).
    • Easily hidden.
  • Gold - Con
    • Little direct use (can't eat gold).
    • May not be able to buy energy generating capacity in the future (no PVs available)
  • Solar PV - Pro
    • Directly usable up to capacity needed.
    • Multiple direct future uses - water pumping (farming), electric car, small manufacturing (power tools)
  • Solar PV - Con
    • Requires grid/external infrastructure to convert to money.
    • Very visible.
    • Difficult to move.
    • Generally reliable, but can break down
    • Excess capacity useless/lost if not immediately salable.

Both should be good inflation/dollar collapse hedges. Both should gain value and maintain relative value versus other assets.  However, if you look at energy as Chris Martenson points out is incredibly cheap for the benefit we get.  If a energy crisis does occur in the near future, that excess capacity may be much more valuable.

Here in NM, in order to sale excess capacity to the local utility (for cash versus future use credit), you must have an A/C capacity of greater than 10kw which is a farily large system ($100K).

So have others thought about this trade off?  Has anyone put together a large solar installation (greater than 10KW AC)?

-- Rob

Damnthematrix's picture
Damnthematrix
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Re: Gold versus Solar (or other RE)

Hi Rob, and welcome to the fray....

For me at least, it's a no brainer, we have already gone solar.  In fact, did it four years ago next month.  I can't get excited about gold.  I understand the intrinsic value, the tradeability and the fact it lasts forever, but you can't eat it, and it just sits there doing nothing.

You also have to bear in mind that some time in the future, you won't be able to buy any PVs, no matter how much gold you have...  I can tell you now that if in ten years time the grid's failing and someone turns up on my doorstep offering me 100 ounces of gold for my solar system, I'd tell them to get lost....

Also, it's fast becoming obvious to me that in the US regulations about grid tied PVs vary enormously, and are not very favourable to the man in the street.  We're in Australia, and we have a 1.3kW array on our roof, grid tied with battery backup (we have regular blackouts in this particular neck of the woods).  We get the same rate for what goes out as for what we consume, and we currently consume slightly more than we generate, something we need to fix this year.

No way would I consider the sorts of array sizes you mention in your post.  BEFORE considering buying solar power, you should look at every possible way to reduce your consumption.  Energy Efficiency is waaay cheaper than solar panels!

As far as I'm concerned, being able to keep our home made cheeses refrigerated, having the capacity to use power tools to make and/or fix things is worth far more than any gold, and if I had a spare 100 grand lying around, I'd be setting myself up to survive the crash before buying any gold.  Pay off your debts, buy quality power tools (in fact I have a policy here of only buying quality anything... it needs to be able to outlast me so our kiids can use it!) and good fencing and animal shelters.  You will never regret that.

Mike

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jpitre
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Posts: 366
Re: Gold versus Solar (or other RE)

Rob -- gold vs solar

I like the idea of having a little gold around, but in my opinion a renewable power generating system such as a solar array is a much better investment and will benefit our society as well as ourselves for years to come.

I just received final approval today from the County inspector for our 7.5 KW solar grid tied system today, and should be online making money next week. As it turned out, the system was relatively easy to install requiring only basic construction/electrical skills. I took a 3 day course from Sharp Electronics to gain an understanding of the basics and worked with a local electrician friend who did the electrical hookup. I think it would be simple to expand the system to several times as large by adding more equipment.

As far as cost, if you do most of the work yourself, I think it is possible to get your cash out cost down to about $6 per KW installed

If you signup on the Dropbox database site setup by JAG on the “Definitive Martenson Community Database”  at  http://www.peakprosperity.com/forum/community-database-established/18169 , you will find the details and design of the our solar site posted.

If you need more information, let me know and I’ll do my best to answer.

Jim

Queen Valley, Arizona

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jpitre
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Re: Gold versus Solar (or other RE)

Mike

The solar “deals” here in the States vary greatly from State to State, and from power utility to power utility

Here in Arizona, (don’t know much about the rest of the country) one of our larger utilities here (SRP) pays an “incentive” of $3 per installed watt in cash up front - in the case of the system I just installed, that means about $22K, additionally the Federal Government allows a 30% credit against income tax and the State of Arizona contributes another $1,500 or so. The power company allows a full credit at the same price we are paying for power for any power we pump back into the system, and at the end of the year, if we produce more that we use we get a cash payment of about $.035 per KWH - not much money, but I suspect that they me=ay end up paying more as time goes on.

Commercial installations operate under a separate set of guidelines, and while there is no cash incentive from the company, the power company does pay a much higher price for power generated in the order of 9 cents per KWH - and I suspect will pay much more in the future, so while a slight gamble, I think it is an excellent longer term investment that will produce cash flow. Even if the SHTF, people will need some power, and as long as one is not in a highly leveraged position and able to weather the initial storm, the longer term is about as good as one can hope for - especially given that there is a fair likelihood as you suggest that PV panels may be difficult to obtain in the future.  If the deal with the power company tanks in the future, we still have a marketable product in solar power to use and/or sell.

As I see it, the ROI and other complicated investment calculations are not valid when looking for survivability insurance, so it is more a matter of judgement as to how to get in the best position possible -- and that certainly varies by individual. For me, I think the solar concept is a good bet as a part of a total plan. Make sure to have a good garden and chickens first ☺

Jim

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jpitre
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Posts: 366
Re: Gold versus Solar (or other RE)

Mike

By the way. slightly off topic, but what are the quality tools you recommend? -- I got quite a few, but am still building

 

Jim

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JAG
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Re: Gold versus Solar (or other RE)

 Rob,

I would have to wholeheartedly agree with Mike and Jim. Even if there was abundant oil and no risk of financial collapse, an alternative energy system is still a very valuable investment and definitely a step towards the future.

Jim,

I noticed the material that you added to the database that details your system. Thanks for contributing that. I hope as time goes by we can get more content like that.

Mike and Jim,

Are your systems PV only, or do you incorporate wind power as well?

Thanks.

Damnthematrix's picture
Damnthematrix
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Posts: 3998
Re: Gold versus Solar (or other RE)

Jeff, our system is all PV, our wind resource is simply not good enough to invest money in a turbine.  Besides, just to prove not everything is milk and honey even in Australia, hooking wind into the grid is a nightmare here!

A word of advice to anyone contemplating wind: INVESTIGATE the wind resource thoroughly FIRST!  It takes far more wind to generate energy than you might believe.  Wind energy is proportional to the CUBE of the wind speed, so if you generate (to use simple numbers) TWO units of energy at 6 m/sec, then you will generate EIGHT at 12 m/sec!

Wind turbines being mechanical devices with bearings etc, require maintenance at regular interval, and they will wear out eventually...  PVs can theoretically last 'forever', though they do degrade gradually until I suppose they produce nothing worthwhile.  I know someone who has had an array for 35 years.....  and today's technology is far better and more durable to boot.

Mike

jpitre's picture
jpitre
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Posts: 366
Re: Gold versus Solar (or other RE)

Jeff

If we had adequate wind here in Arizona, I would consider a wind turbine in addition to solar, however here in Queen Valley the sun is good and the wind is generally lacking.

 

Jim

 

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SPM
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Re: Gold versus Solar (or other RE)

Jim - I used to live in Mesa. Some family still does. We used to go camping and quail hunting in Queen Valley. Its beautiful there.

I have to agree with everything people said on solar vs. gold. The ability to have power independant from any grid, is a much more precious commodity to me.

On tools, you don't want to see my garage. I'm a bit of a packrat in that area.

 

PlicketyCat's picture
PlicketyCat
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Posts: 680
Re: Gold versus Solar (or other RE)

WRT turning your solar array into "cash". Well, even if it was completely off-grid, I'm sure you could monetize it locally by allowing your neighbors to do the following for a fee:

  1. Charge their batteries
  2. Use their eletrical equipment -- sewing machines, food processors, meat grinders, power tools
  3. Rent space in freezer or refrigerator
  4. Recreation -- watch movies, listen to music, play video games, use the computer

I think electricity will be a highly barterable commodity.

rhare's picture
rhare
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Posts: 1325
Re: Gold versus Solar (or other RE)

Sorry for not responding quicker.  I took a drive across the country and had difficulty with Internet connectivity. Thanks for all the great info.  I will definitely look at the dropbox database.

Right now I'm looking at a 15kw (DC) array.  It turns out that PNM (the power company) treats large arrays > 10kw A/C differently.  The main difference being the ability to sell excess power to the company as opposed to getting future electric credit.  If energy goes up (as I suspect it will) that could become important.  There are really great rates on panels and entire systems from Affordable Solar (here in ABQ).  I've even had a couple of contractors say they were surprised by the quotes I received from them.

If I go forward with the array I'll post lost of info/pictures on the system.  I'm also looking at solar heating since we have radiant floor heating and that looks to be the best payback for solar installations.  I'll also add to the database.

Thanks again everyone....

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