Quote:
Originally Posted by prashamk
We all know that upfront cost of the project is high indeed! But then it requires very little recurring costs which pays the need for high upfront cost.
Or is it my misconception?
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I don't know if it's a misconception but it's not the whole story. As well as the capital cost you also need to look at the cost of capital.
A quick example..
Here in UK, if you wanted to have a domestic wind turbine the installed costs would be around £2,500 and it might your electricity costs by about £125 p.a. Simple arithmetic would suggest a payback period of 20 years.
But it isn't that simple. If you just stuck the £2,500 in the bank it would earn about as much as the wind turbine would save. If you had to borrow the money, it would likely cost you more tha nthe turbine would save.
Sure, it's a simplification that takes no account of incentive schemes and other factors that impinge on the cost/benefit calculation.
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