The same sustainable solution, sold at the same price to the same customer delivering the same performance for the same purpose in the same place, produces energy at costs somewhere between 50 and 200% the price of natural gas.
At half the price of natural gas, the solution is super competitive. Companies with super competitive solutions easily attract investors. This enables them to hire the right people and roll out fast, thereby building references making it possible to move even faster while lowering costs further by buying larger quantities from their suppliers, standardizing products and procedures, and building valuable experience in their organization. A good circle.
At double the price of natural gas, solutions live at the mercy of financial incentives which in turn live at the mercy of political winds. The result is less money, slower roll-out, and ultimately a longer, more risky road towards potential success. A bad circle.
Credibility is the difference between good circles and bad circles: What risks do investors providing funding for a solution see lying ahead? The more risks they see, the higher the price for their funding and the faster they want their money back. In the end, their perception of these risks is expressed in two terms: Interest rates and depreciation time.
The longer the depreciation time and the lower the interest rate, the lower the cost of the energy. New, untested solutions may be depreciated over 10 years and new technologies from new companies may carry interest rates north of 10%. For tested solutions from seasoned suppliers interest rates may go below 1% (as for district heating investments in Denmark) and depreciation towards 25-35 years (as for solar thermal in Dubai). Combined, the effect of the two parameters easily leads to more than a 4x difference in the cost of energy.
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