Many like the idea of solar because it’s “green”. Many don’t have a clue how the contents of the panel are mined, by the way. I stumbled across the solar story because I’m massively in on silver, and saw this as one of the largest uses of silver. With the Biden regime, and many others, going crazy over green types of energy policies, it stands to reason silver is soon going to be in shortage at the prices it is currently at.
Many like the idea of saving money. They send off their electric bills and a skilled salesperson tells them about all of the discounts and programs out there, then runs a lot of fancy numbers to give you some sort of feel good story about how you will replace your dirty electric bill with clean energy from the sun.
While I can understand the concept of being green and perhaps saving money, it’s not why I’m looking at them. So why am I looking at them?
I’m going to run you through some mental gymnastics below – walk you through the WHY. But first – I hear Marin Katusa always talk about “skating to where the puck is going”. He appears to be agnostic politically when he tries to discuss this. Meaning, he doesn’t invest in things because it is his personal politics – he seems a regime going somewhere and he puts a stake in the ground anticipating the move they told you about.
So I’m skating to where the puck is going – perhaps. Let me walk you through a scenario that could play out in the next 10 years.
- Anyone reading this linked from my Twitter probably understands inflation is here. It’s coming. And it could get potentially much worse. It’s also humanly possible that inflation goes “Weimer-like” in the upcoming years. Maybe not full on Weimar, but maybe we are in double digits for years.
- This inflation also means costs of producing things are going up. We are now seeing $84 per barrel of oil, and it is likely going much higher. Liquid natural gas is higher.
- The Biden administration is not friendly to any kind of resource development, including oil, coal, and silver. Then, they killed the Keystone pipeline to kill off cheap oil to get here from Canada. So, in order to “be green”, they target fossil fuels. The problem is, Americans still need this energy to drive their cars or turn the lights on in their homes – so the Biden administration then went to OPEC and told them to increase production to cut prices of oil. OPEC said “no”. Remember, under the previous administration, we were energy independent. Now, gasoline prices have doubled because “Brandon” is running our energy policy into the ground. They aren’t being green, they are just replacing our cheaper domestic production with imported expensive energy.
- Given the three items above, there is a likely time where oil, LNG, and coal are going to go parabolic. Especially if we have a tough winter. Lebanon has lost all power in the country due to running out of fuel for their power plants. India has days of coal left.
- IF these go parabolic, the same dopes that created this problem are going to start trying to blame “greedy” energy companies making gross profits. It seems at some point the 1970s price controls will come back. If you look at any socialist country like Venezuela who has gone through a hyper inflation, a similar story plays out – to some extent. IF price controls are put in place, like a price ceiling, bad things will come.
- IF a price ceiling hits, walk yourself through how this works. If it costs a company $90 to secure foreign oil, but the government only allows you to sell it at $85, the company will no longer buy that $90 oil to sell. Our companies do not work for free. They need a profit in order to exist. Price ceilings are economics 101. What happens when price ceilings hit?
- Shortages then happen. Rationing of time. Perhaps we lose power for a few hours a day, but perhaps it gets much worse and we lose for days at a time?
The solar panel system I’m looking into will feed power into a battery pack. I will get my home power from a battery pack and then sell extra to the grid. IF the grid goes down, many solar panel systems also go off because you cannot feed power into the grid if it is down – it’s assumed power lines are down and you’d be injuring a worker.
Even IF shortages don’t occur, can you tell me with a straight face that we are not looking down the barrel of inflation really hard? Meaning, if this was a “normal time”, perhaps the payback of the system occurs over about 8-10 years. However, assume the price of power is significantly higher in the short term? I believe that if power doubles in price, you are then looking at a payback period in half the time, correct? If the solar panels are to last 25 years, then it perhaps takes 4.5 years to break even, then you have about 2 decades of “free” power?
I am becoming more and more a prepper as the days go on. I now have a lot of frozen food here, and the fire pit I recently added with the wood is another cooking alternative. Think about if LNG goes parabolic? Do I heat my home with that, or perhaps have space heaters strategically placed in rooms which run from solar/battery? I know what you are going to say – production is lower during winter. I get it. My point is, however, that having alternatives out there seem to be a logical way this is going these days.
Having a solar system with a battery is not cheap. I’m not looking for this out of pocket, either. I’ll be looking at what incentives are out there and combine it with some sort of cheap financing. Remember how dirt cheap currency is today? Imagine if my energy bills average $220 per month (I built my house in 2014 and has a lot of great insulation/efficiency) over the course of the whole year. Imagine then my solar bill is $220 per month, but I still have another $20-$40 of gas/electric. OK. Sounds like it’s not a great deal then. However, I plan on making more energy than I use to sell back. IF I’m right and IF energy bills are going up, a lot, in the next few years, then it’s possible my energy bill WOULD be $450 without the solar. With the solar, perhaps I’m still at the $250 level.
Now, the “breakeven” point could be 8-10 years down the road to pay it off. I get that. But what if we are 3 years in, and my energy bills would have been $500 per month had I not had solar? I’m then saving $3000 or so per year the last 7 years of that, for a savings of $21,000. Then, we are looking at potentially 15 years of “free” power at perhaps $500-$600 per month energy costs without solar – perhaps another $90,000-$105,000 in my pocket?
Look – a BIG reason for my decision is to prevent “blackouts” with a solar panel system that runs if there are rolling blackouts. Look in California how they have rolling blackouts now? However, in California, there’s a law that all new houses need to have solar. So these houses probably have power. Meaning, those people who do NOT have solar are getting cooked in the LA heat and could potentially lose all of their food in the freezers. Meaning – we have government policy which is punishing people without solar.
If you do these mental gymnastics even more – you may find that 6-12 months from now, many others like me will start to come to this epiphany. I believe there may be a mad scramble for home-based solar panels when people start seeing energy bills go parabolic. We even saw that in Texas last year when they had power issues and costs of electricity to get from the provider went ape shit.
So I want you to fast forward a year. Assume for a minute, I’m correct. Think about how our supply chains have all broken down. Problems finding chips. All kinds of commodities shortages. Is this a result of supply chains, or are people buying things as quickly as possible WHILE THEY CAN at these prices? Meaning – these markets seem to suppress prices until they cannot, no more, then they launch into orbit. Imagine silver – not only an industrial metal of significant importance only second to oil in its uses, but also silver as a money during a time of extreme inflation? Many are calling for $100 silver, and that is most certainly not crazy.
Now, I want you to imagine a mad scramble for solar panels, and not enough silver at $25. Imagine double the solar panel demand – and I believe solar panels make up about 200m oz already. We produce far less than we actually use, and “recycling” is about 150m oz per year. Price would have to significantly increase to unlock home stores of silver – like silverware and candlesticks.
I don’t want to go into a silver diatribe, but my point is that I see the next few years where there is a mad rush for “x”. Last year it was toilet paper and freezers. Right now, it could be energy and raw commodities. But where is the puck going? I believe three main items will happen:
- Much higher energy prices lead to soaring energy bills and costs at the pump go crazy (this may lead to more teleworking than now if gasoline is $6 per gallon or so)
- Catastrophically higher prices can lead to price ceilings, and therefore rationing and blackouts. We see this in California already.
- A rush to solar in the next 6-24 months could double or triple the costs of solar and put significant upward pressure on the underlying commodities solar panels and batteries are made from – silver in this case. You may see 6-24 month delays in getting your systems.
Meanwhile, interest rates will HAVE to increase to combat inflation, at some point. Right now, people continue to refi their homes and buy anything they can on cheap credit to pay for it with a diluted dollar down the road. Perhaps financing solar panels doubles in interest rates over the next 12-24 months?
I figure the WORST case scenario I have, is my bills overall for energy go up 10-20% in the short term with solar that may not replace all of my energy needs. At some point 8-10 years in, the system is paid off and I get free energy bills for 15 years. The money I’m saving on that can potentially help pay for a new roof for free in 13-15 years.
So – with all of my scare mongering, I think the worst case is I get a free roof out of it in about a decade in a half.
Next in this series, I meet with a guy on Friday to go over the numbers. I will lay out as much as I can. Also, I may consider doing a cash out refi on my house to pay for the solar panels. If the interest rates are low enough, I may have the exact same monthly payment on my house, but lower interest. I then have no energy bills, essentially, for the next 25 years. That method could save me $220 per month or so for 25 years, or put $66,000 back in my pocket and avoid all finance costs to pay the solar panels back.