Pumped hydro more expensive than batteries: a tongue-in-cheek analogy

Having written the last five posts on the comparison between hydro and batteries based on the calculations in the SolarQuotes article Snowy Hydro 2.0: More Expensive Than Battery Storage, I think it is time to conclude this series. In previous posts, I focused primarily on the errors and had split up the series into several posts. This allowed me to discover the different aspects in more depth, but re-reading those posts, I had the impression that the technique that was used to favor the batteries over hydro now might not really that clear anymore. It might also not be very clear how absurd the comparison between average output versus maximum capacity actually is.

I try to remedy this by illustrating those techniques in a tongue-in-cheek example in which I will make the same flawed calculations as done in SolarQuotes article and making equally nonsensical arguments. If you want to appreciate this post and you didn’t read previous posts yet detailing the (flawed) arguments that were made in that article, then it might be advised to do that first or read the SolarQuotes article. Otherwise you might not understand the gist of this post.

To illustrate this technique, I will tell a story of a transport company and its CEO who wants to buy a new delivery van for long-haul transport. He is in favor of a big van that he thinks is suitable for handling the bigger loads that the van is expected to handle.

Now assume that I am an employee of that company and that I am assigned to prepare the dossier. However, I don’t like the bigger van and I am in favor of a much smaller van that unfortunately is less suitable for larger loads. The task before me is to convince my boss that the smaller delivery van is nevertheless the better choice…

That seems pretty impossible to do, but after having written already five posts on the argumentation of batteries versus hydro, I think that I now have sufficient insights to successfully finish this difficult job. Trust me, this is going to be a breeze…

To visualize the problem, my boss wants a van similar to the one on the right and I am preferring a van similar to the left:

Large vs small van

My task now is to make the argument that the van on the left is a better choice over the one on the right using the calculations provided in the SolarQuotes article. In my example, I will use the dimensions and (Australian) prices of the standard VW Caddy (left) and the (high-roof) VW Crafter (right) to present my case.

Before I start making the calculations, I will make some comparisons similar to the ones in the SolarQuotes article. Some of which will influence the calculations ahead.

Let’s start off with comparing prices of both vans. The official dealer tells me that he can deliver the big van for AU$75,000. I however disagree. There will be some taxes, some extra features that are deemed necessary to be able to handle large loads and whatever. Purchases of vans of that size always end up above price, so, ahem, “my guess is, at the moment, a reasonable cost estimate is around” AU$85,000 and I will use this number in my calculations for the big van.
The smaller van would cost roughly AU$40,000. I am obviously not going to use that price in my calculations. Instead I will cherry pick some price example from a dealer who desperately wanted to enter a certain market and sold such a small van very cheaply, maybe even at a loss. Let say this specific dealer once sold a small van for $30,000 and therefor managed to enter that market successfully. That is the price of the small van that I will use in my calculations.

Now I have the price comparison settled, let’s look at the capacity of the two vans. The official specification for the big van 4.3 m load length and 14.4 m3 load volume. Again, I disagree and I think that the maximum capacity is much lower in reality. There will surely be some materials needed to handle bigger loads that take some place too and therefor the maximum capacity can not be used under “normal operation” of the van. I think 12 m3 is a reasonable capacity for such a van. If necessary, the big van could however provide more than this 12 m3 and that is “a useful capability to have”.

There are other things that I can look at. Let us for example look at fuel consumption. For the same load, the small van consumes less fuel (38 MPG) than a big van (53 MPG). That is already nice, but I can step it up a notch though. If I make use a scenario in which the small van makes a one-way trip and compare the fuel consumption with that of a big van doing the same trip both ways, then miraculously the small van consumes waaaaaaaaaaaay less fuel than the big van.

Another plus for the small van: it is particularly good at inner city traffic and this short haul transport is very lucrative. If I now just assume that the same lucrativeness will apply for long haul transportation too, then the small van will be able to “bring in additional revenue that the big van can not”…

Wow, it is going great for the small van until now…

Summarizing, this is the data that we are finally working with after the adjustments:

  Big van Small van
Payload length (m) 4.3 1.8
Payload volume (m3) 12 3.2
Price (AU$) 85,000 30,000

Now I am itching to start calculating with those numbers. First the cost per payload for the big van:

  • Per payload length: AU$85,000 / 4.3 m = AU$19,767/m payload
  • Per payload volume: AU$85,000 / 12 m3 = AU$7,083/m3 payload

The same for the small van:

  • Per payload length: AU$30,000 / 1.8 m = AU$16,667/m payload
  • Per payload volume: AU$30,000 / 3.2 m3 = AU$9,375/m3 payload

This shows that the small van is cheaper per meter payload length than the big van, but that is not the case for the payload volume. The small van is more expensive per m3 than the big van.

“But this is not as large a drawback as it appears”. That big van will not operate constantly under its maximal capacity. Measuring all loads to be transported, I calculate an average volume of 1.5 m3 per day. That is on average, “its loads will be variable, and on some days, the big van will not transport anything at all, while on others it would transport much more than average”.

[Attention: this is the point where the pea is switching from one shell to another.]

As seen in the previous calculation, AU$19,767 would give 1 meter load length for the big van. The same budget spend on the small van could however deliver an average daily transport of:

  • a payload length of AU$19,767 / AU$16,667/m x 1 = 1.2 m
  • a payload volume of AU$19,767 / AU$9,375/m3 x 1 = 2.1 m3

Meaning that the same budget spend on the small vans could buy on average 0.6 m3 more volume and therefor I can conclude that “while its total length is much less, the small van can deliver more than the average load AU$19,767 worth of the big van is expected to deliver”…

Mission accomplished! I now established that the small van is seemingly the better choice per meter length and is more than big enough to deliver the average load that the big van is expected to transport. My boss will be happy with my excellent analysis… 🙂

… that is, until he realizes that he now has to purchase four small vans if he wants to haul the same volume and employ as many drivers, costing way more than what he would have to pay for the bigger van plus one driver … and in the end he still has to hire a bigger van every time the load is larger than 1.8 m (and/or higher than 1.2 m and/or wider than 1.6 m) … 😳

via Trust, yet verify

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November 2, 2021 at 03:12PM

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