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OT: BZE 21-Apr-2011 At 11:00:38 AM evanbb

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On 21/04/2011 maxdacat wrote:
>Surely you would need to consider how much cash a country has in order
>to build such generating capacity.

No, I disagree. The Government will not be making the investment, private enterprise will. They either have the cash or do not. 'Australia's' financial position makes no difference.

>In the case of Spain, who has a budget deficit of about 10% how can they finance >such new wind infrastructure sustainably?

Ignoring the continued bastardisation of sustainability to reference financial matters, yes it is possible that a country in defecit can fund infrastructure 'sustainably'. If the rate of return on the project is greater than the interest rate on the debt I would argue that isa good financial decision. So would most people in financial and economic orthodoxy. It's the same theory of a business borrowing money to invest in expansion. If their expansion rate is greater than the interest rate (and some NPV considerations) then it's a good thing to do. Problems come when the interest rate outstrips the rate of return (cash flow problems) or when the amount of debt as a percentage of assets gets too high (highly leveraged).

>Australia doesn't have the same debt issues which is great. We therefore
>MAY be able to invest in new power capacity. I am just sceptical of those
>who say look at europe and their nice wind power without considering if
>it really offers value for money.

Sad as it is, wind is the best value for money renewable tech we have right now. That equals value for money in my book. But again, stop thinking of this as Australia's problem, and start thinking about how we can encourage private enterprise to take the risk. Then it doesn't matter if we're in deficit or not, the company best set up to make money from wind will and the infrastructure will roll out. This is the essence of the market system and why a price on carbon is much, much more important than direct Government intervention.