Sunday, April 30, 2006

Clarification of previous post

In the previous post I suggest that wind and solar farms sell calls to generate thousands per MW/yr.

To clarify, I mean that each megawatt of capacity can generate thousands for each year (between 2016-2036) that call options are sold. A MW of capacity can (and usually does) generate thousands of MWh of electricity in a year, depending on how many hours a day the system generates energy. I just want to be clear that each MWh would only cost/generate a few $ in call premium. Electricity today costs on the order of $50/MWh to generate so the premium is a fraction of today's cost not 20 times today's cost.

Still those few $ a MWh, times thousands of MWh/yr, times the number of MW of capacity, times a decade or two gets one to the millions I claim renewable energy farms could be reaping today. In the future they will still sell their energy either to the call owner at the arranged call price, or the then market rate if it is lower than the call price.


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