We can finance renewable energy with traditional loans or we can finance renewable energy by envesting.
Using envesting finance, a payback time of 20 years, a long term return on envestment of 7% renewable energy can be profitable up to 65 cents capital cost per kwh. If we extend the payback period to 30 years the renewable energy can cost up to 142 cents and still be profitable.
We know we can build large scale solar thermal energy plants for capital cost of 46 cents per kwh and we know they will have a working life of greater than 20 years. This is equivalent to a long term return of 20% where the pay back time is 20 years and where the envestment pays 20% beyond the 20 years.
Today using envesting finance we can profitably build as much renewable energy as we want without increasing the price of energy.
Why is there a difference between the two funding methods? The difference comes because with envesting we assume that the repayments are used to build more renewable energy plants while with traditional loans we assume that the repayments go to pay off the loan. With envesting compounding works to build more profits while with traditional calculations compounding works to increase the cost of finance. This happens because envesting we use zero cost money while with traditional loans we pay an unnecessary fee for the right to use money as a measure of value.
The following graph shows the long term rent on money for envesting versus the payback time for a capital cost per kwh of 68 cents. Note the linear nature of the graph and the effect length of time has on the final rate of return. This means pension funds could envest heavily in renewable energy plants so they can meet their future financial obligations to their members. Money envested 30 years ago will give an ongoing 15% per annum adjusted for inflation with renewable energy built for a capital cost of 68 cents per kwh.