This week both myself and John Butler have covered the impact of the collapse in the US of Silicon Valley Bank.
I for one, don’t see it as a systemic risk to the global banking system. In fact, I suspect this may be a subversive move by the US regulators to push harder for a central bank digital currency (CBDC).
And on Wednesday, John looked at the explicit moral hazard of central banks as they continue to endlessly backstop and bail out the financial system which only encourages more perilous and treacherous risk-taking.
What we know for certain is that when massive multi-billion-dollar banks fail, they don’t go down quietly… or alone.
It’s not easy being green
Around August last year, as the cost of energy started to ratchet up to unfathomable levels, I thought to myself, maybe our household should properly go green.
The design of our house means that we’ve got a big roof that gets a lot of sun and that could fit a sizeable array of solar panels on it.
I figured that getting solar would mean we can really tap into the natural energy of the sun, store it up in a big battery in the garage and when prices are peaking, we’d be living off the land (kind of).
I decided to press on and get a few quotes for the installation of a solar array and battery storage at my house. While I was expecting some upfront cost, I wasn’t expecting the potential need to remortgage the house.
OK, I’m being a little facetious there, but the price quote was eye-watering.
I was presented with three options: solar only; solar and a 5kWh battery; or solar and a 10kWh battery.
Across all three options, the “years to payback period” was eight years. I was also told that I’d be effectively be saving 53 mature trees per year as well. Isn’t that nice?
Now, here’s the fun part. Option one, £7,215. Option two, £11,283. Option three, £13,293.
Now the cost actually wasn’t wild. But the years until payback was my sticking point. They also provided a “profit after 25-year warranty” projection too. Meaning that I’d be £25k, £43k or £47k in profit, depending on the option I took, if in 25 years’ time I still was there using the solar system.
That’s a deal sweetener for sure.
Big problem though. There’s a good chance that I’d be paying a cost for the benefit of someone else.
Maybe I’m a little different from most people, but the idea of staying in one house for eight years is somewhat depressing to me. Nomadic blood perhaps, but I can almost guarantee that I won’t be in this house in eight years’ time.
What I also can’t do is take my solar system with me when I move. So I ask you this…
Would you pay thirteen grand for a system you’ll never benefit from?
Now you might argue people improve their homes all the time, adding cost, but getting the “payback” in the increased value of the house. Good and well in theory, but we’re not adding a room here, we’re whacking big (and often ugly) panels on a roof that aren’t going to add £50k to the value of the house.
I suspect that this is one of the primary reasons that many people still don’t have solar energy systems installed on their homes.
I would love to know by the way, have you thought the same thing? Have you thought about getting clean and green at home only to find the abhorrent costs involved make you think twice?
Write in and let me know if you’ve had a horror show with green energy quotes or perhaps you’ve got it all done and it’s been the best decision you’ve ever made!
My solar dreams failed, now… who’s next?
I mention my little solar quote horror show for good reason. You see, I think that in the current economic and energy climate it’s not the banks we need to be worried about…
The energy crisis in the UK hasn’t all been about the war in Ukraine and the cost of your energy bill each month. It’s been a problem bubbling away for years.
Remember back in 2021 and 2022 when energy company after energy company was going under?
In November last year, Parliament released a report on the failures of Ofgem. It noted that since July 2021, 29 energy suppliers had failed. The impact of that was felt across around four million households.
Maybe your energy supplier went bust in 2021 or 2022, so you’d know what I’m talking about.
There was, and certainly is now as well, a real threat that well before the world goes green that we may very well be in the dark.
That might sound terrifying, the idea that your energy supplier goes under and you’re quite literally left in the dark. But there’s another side to this as well.
My take is that with regional banking in the US in a state of fracture and failure, we’ll see the knock-on effect of that as smaller companies with exposure to these banks also start to topple.
Reports in the US are some “green” companies like Sunrun and Sunnova had decent exposure to Silicon Valley Bank (SVB). And that SVB was responsible in financing 62% of community solar projects.
Furthermore, on the SVB site you can see clear as day that it has “Over 1,550 prominent clients in the climate technology & sustainability sector…”
How many of those 1,550 clients will fail next?
What will this do to green energy in the US? What does this do to energy suppliers and green tech in the UK? These are all questions we need to look at and ask.
However, it’s not all bad news. While SVB failing and the knock-on effect of that may take time to wash out in the coming weeks, the problems here aren’t new. In fact, there’s been a resurgence of sorts around the world of all the problems we’re seeing now.
This resurgence has identified that it’s far more important to keep the lights on than let your household go dark. And it’s opened up a raft of opportunities in the market. As the woke brigade think that clean and expensive is the only way to save us all, the truth is that money “in the know” is moving into energy power plays that really are going to save us all today.
But whatever does happen in the wash with SVB, we know its failure is not going to be the last. And in my view, it won’t be just other regional banks that fold up and die – I think it’s the energy sector where the pain will come from next.
Until next time…
Sam Volkering
Co-editor, Fortune & Freedom
