Renewable Energy Costs
Until recently, the world relied on fossil fuels to provide almost all our energy. As we’ve started to understand the threat pollution and climate change poses on our way of life, the development of alternative clean, renewable energy sources has accelerated.
This acceleration has now reached such a level that the possibility that the world could phase out the use of coal, natural gas, and crude oil is not just real – it’s inevitable.
The reduction in the use of fossil fuels might be desirable for environmental reasons, but can we afford it just yet? What is the true cost of renewable energy? Let’s take a closer look.
Is renewable energy cost-effective?
As you can imagine, the question “is renewable energy cost-effective?” isn’t simple to answer. Do we mean cost for the consumer, production, development, what is spent on infrastructure, or even cost to the planet?
Pinning down figures can be difficult to do; the numbers often depend on whom you ask. There are still those who deny climate change or even that fossil fuels are finite. They will produce statistics “proving” that clean energy sources are way too expensive. Then again, there are climate activists who will massage the numbers and, perhaps, give an equally biased result.
For pragmatists, the answer is, “whatever the cost, can we afford not to?” It is a fact that fossil fuels are running out and whether the supplies last 50 years, 100 years or 150 years, it doesn’t change the fact that our way of life will change dramatically if there’s no fuel for electricity or gas.
Similarly, many people around the world have started to see significant changes in the weather, no longer getting snow in the winter and seeing record-breaking temperatures and dry-spells in the summers. If we don’t do something soon, the world’s climate will change significantly for the worse.
Is renewable energy cheaper than fossil fuels?
According to the International Renewable Energy Agency (IRENA), in 2019, the energy produced from renewable sources was comparable in price to that of fossil fuels.
An article by Dominic Dudley in Forbes explains this further. He says the cost of electricity from developing new fossil fuel plants ranges from $0.05/kWh to $0.15/kWh. By comparison, hydroelectric power comes in at an average of $0.05/kWh, onshore wind, solar voltaic, biomass and geothermal below $0.10/kWh and offshore wind at $0.13/kWh.
More to the point, the cost of clean energy sources is falling year-on-year and will continue to do so as infrastructure develops. Solar power is falling by 13% year-on-year, and wind by 9%.
How much will it cost to switch to renewable energy?
As a country, it will of course cost a significant amount to build the new infrastructure required to power the country from renewable energy sources. Many people may argue that the cost is too high, but let’s unwrap that idea a bit more:
- Many of these costs will be money that would otherwise have been spent on fossil fuel exploration, extraction and the conversion to electricity
- Costs for households will fall significantly
- We’ll see a dramatic cut in emissions would greatly reduce the numbers suffering from respiratory problems
- There will be less damage caused to our forests, grassland, and farmland from acid rain
- Thousands of jobs will be created by the infrastructure
- There would be no oil spillages threatening our coasts and wildlife, no smog, and the chance to slow and stop climate change
- Building renewable infrastructure not only benefits local economies by creating jobs, but it lasts for decades before it needs replacing – meaning it produces energy essentially for free once it’s paid off the original build money.
So, how much will it cost you, as an individual, to switch to renewable energy? Inspire Energy makes it easy to switch to electricity produced only by clean, renewable sources. It can do this seamlessly; signing up takes less than five minutes, and your supply will remain uninterrupted. You can join either online or with a single phone call, and we do the rest!
If you’re ready to make the switch to renewable energy and do a huge part in preventing and reversing climate change, click below to get started.
Why don’t we use renewable energy all the time?
If we overlook the fact that there’s a lot of money in fossil fuels many are reluctant to give up, then there are two main issues: capacity and storage. We now realize the importance of exchanging fossil fuels for renewables, and since then proper investment in these technologies have become more common.
The last few years we have seen massive increases in the world’s capacity for producing clean energy. According to the Center for Climate and Energy Solutions (C2ES), in the US, renewable energy is the fastest-growing energy resource. In the period 2000-2018, it doubled and made up more than 17% of our electricity generation. This growth rate will increase as more governments and companies realize the critical importance of moving away from fossil fuels.
At this point, we can’t use only power produced by renewable energy. There is not enough capacity world-wide. But that situation is changing daily as more clean energy projects come online.
The second aspect is storage. One problem with clean energy is that the sources are not constant. You cannot produce solar power at night nor wind power when there is no wind (though technology is fast developing here, too). At this moment, battery technology, in terms of grid-strength supply, is in its infancy, although innovations in storage have begun popping up recently.
As a personal consumer, you can join Inspire to get consistent 100% clean energy delivered to your home without ever worrying about whether the sun is out or wind is blowing. You can use clean energy most of the time – join us to do just that!
What’s the cheapest source of electricity?
In 2019, Lazard, an investment bank based in New York, published figures which show that solar power, closely followed by onshore wind facilities, produces the cheapest electricity. Their average costs are $37/MWh and $40/MWh, respectively. By comparison, combined cycle gas turbine (CCGT) plants come in at $56/MWh and coal at $92.5/MWh. Large-scale hydroelectric programs produce electricity at about $40/MWh.
The cost of electricity from the other renewables is coming down year-on-year.
What is the most expensive energy source?
Currently, again, according to Lazard, residential solar power tops the list at an average of $242/MWh with nuclear not far behind at $174/MWh (confirmed by the World Nuclear Association).
Prices of power are always subject to change. The general trend is for clean, renewable energy sources to drop in price as the industry increases capacity.
Average renewable energy costs:
- Wind power: $20/MWh
- Solar power: $37/MWh
- Hydro power: $85/MWh
For comparison, coal is $102/MWh.
How does energy affect the economy?
Simply, lower energy prices reduce expenses for industry and the consumer, spreading more disposable income throughout the economy. Similarly, lower energy costs make for cheaper goods and services.
Raising energy prices does the opposite, slowing economic growth.
Does clean energy help or hurt the economy?
Increased use of clean energy can only help the economy to grow and prosper. It creates jobs, reduces the cost of energy, improves human welfare (thus reducing societal costs) and drastically reduces pollution. Renewable energy will also be cheaper for households over time, so there will be more money to spend on things we enjoy.
How long would it take for the world to switch to renewable energy?
There are too many factors to consider to make an accurate assessment. Some, however, believe the world is on track to reach 100% renewable energy by 2032.
Fossil fuels will be part of the scene for some time to come, but no one knows quite how long. The move to renewable energy is gaining momentum, and once the US and China make more significant changes, we’ll see a better, cleaner world.
Can the world go 100% renewable?
According to a new study by LUT University in Finland and the Energy Watch Group, we could become 100% dependent on renewable energy sources, in theory. After a five-year study based on a simulation of the year 2050, renewable energy is applicable for all areas of life, including transportation, water sanitation, desalinization, heat, and power. In addition, they found the system sustainable, efficient, and cost-effective compared to current energy systems that are reliant on nonrenewable sources like fossil fuels.
As the population grows, so will energy demand, and with the projected growth to 9.7 billion people worldwide by 2050, energy production will need to increase by almost 2% annually. To cope with the population growth over the coming decades, we will need to transition to more renewable energy. The energy sources will include a mix of both local and existing renewable sources while reducing the necessity for energy production from nonrenewable sources.
In the future, expect to see a mix of energy sources powering communities, including wind and solar, to make up an impressive 88% of total energy supply. This increase in renewable energy will help generate around 35 million jobs over the timeline, especially in solar. We will see the cost become affordable over time with these benefits, although the initial costs can be substantial.
Can the U.S. switch to renewable energy?
Not only can the United States switch to renewable energy, but we can do so in less than 15 years, as the cost of solar and battery storage drops. By 2035, Popular Science believes we can shift to renewable energy sources for 100% clean power at a lower cost and with an easier transition than expected thanks to new innovations in energy production and storage.
Over the next several years, it's possible to switch to 80% or even 90% clean energy. However, some disagree on the percentage due to the speed of setup at no additional cost to consumers. However, with prices for wind turbines, solar panels, and batteries falling, they hope costs continue to fall to accommodate the 2035 timeline.
As previous gas or coal-fired power plants are paid off by consumers' spending, companies could switch to carbon-free power plants without increasing the costs. By cutting carbon power, we could reduce health problems during the process, too. Over time, we could reduce fossil fuels to only around 10% while increasing nuclear and hydropower along with wind and solar to compensate.
Are renewable energy sources expensive?
As with all things, the cost for replacement, be energy production plants in this case, typically cost more than maintaining what is already established. While renewable energy sources were once expensive, the costs are decreasing as they become more prevalent. Solar power costs have fallen by 16%, with wind dropping between 9% to 13%. Even large-scale solar power has fallen by around 85%.
We are seeing the most affordable prices ever, making the thought of switching to renewable energy sources a viable option. By phasing out older methods and phasing in newer sources of power, the transition to renewable energy by 2050 becomes more feasible.
Within a reasonable amount of time, we could see cost savings in the billion dollars range, with less effort put into removing CO2 from the environment via fossil fuels. These changes would occur across the globe and not just in America, moving the entire world to better cleaner air and more affordable energy. As a matter of fact, the cost of new coal plants costs more than wind or solar farms in Europe.
How much do renewable energy sources cost to build?
Prices of renewable energy sources have dropped to competitive ranges compared to oil, coal, and gas-fired power plants. Hydroelectric power has become one of the more affordable sources of renewable energy at a rate of five cents per kilowatt-hour. Even wind and solar have dropped to about ten to thirteen cents per kWh.
However, calculating an exact or accurate cost is exceedingly difficult as there are many variables to consider, including location, seasons, storage, transmission, and much more. Adding in taxes to help levy the costs also change, making a number difficult to determine. Also, the location could change the mix of solar and wind, further complicating the cost. It's safe to say the construction costs range in the millions to trillions to implement depending on the amount of implementation.
How much do renewable energy sources cost to operate?
As we work toward the 2050 projection for 100% renewable energy, the prices will drop as infrastructure increases. Solar alone has dropped to around fifty cents per watt, and renewable energy sources are some of the most affordable available. Moreover, newly installed renewable power capacity is increasingly less expensive than the cheapest fossil-fuel-based power generation options. The cost data offered in a detailed analysis by International Renewable Energy Agency (IRENA) reveals how forcefully the tide has shifted.
Keeping that in mind, replacing coal with wind and solar could cut costs by around $23 billion per year. However, it's hard to predict the costs to operate without wide-scale use. Nevertheless, numbers are starting to surface, indicating the cost will save money compared to traditional energy methods. Although the cost we need to consider most is the cost to humans, animals, and ecosystems. According to research conducted by Yale University, the cost to switch to renewables would be around $4.5 trillion dollars.
What is the most promising renewable energy source?
Several options are very promising, but wind offers the most potential. Wind power is the most used source of renewable energy in the United States, accounting for 8.4% of all energy generated in the country. Wind is capable of generating vast amounts of energy, and it is particularly well-known among renewable energy proponents for the wide range of benefits it provides.
The atmospheric pollutants and particulates that contribute to the build-up of greenhouse gases and exacerbate climate change are not produced by wind turbines. Moreover, wind-generated power can reduce the uncertainty that fuel prices contribute to conventional energy sources because it carries no intrinsic fuel costs and is offered as a fixed-price commodity.
Hydropower is another promising method of renewable energy. Construction of dams on rivers and the release of water from the reservoir to drive turbines is the most frequent method of hydropower generating. Pumped-storage plants are a different type of hydroelectric power generation. However, scientists cannot agree, and multiple parties disagree on which offers the most promise between water and wind. Still, wind offers less environmental costs than wind, making it a smart transition.
Is renewable energy becoming cheaper?
Prices for renewable energy are falling across the board, with prices at all-time lows and continuing to decrease. Concentrated solar power (CSP) dropped by 16%, onshore wind by 13%, and offshore wind by 9%. Renewables are gradually becoming less expensive than coal's operational expenses, thanks to cheaper costs. New renewable energy projects added in 2020 alone will save emerging economies up to $156 billion throughout their lifetime.
Within the last decade, electricity costs of large-scale solar power have fallen by 85%, with onshore wind falling by nearly 56% and offshore wind by 48%. However, renewables across the board are gaining momentum and becoming viable options in contrast to traditional forms of energy. In addition, as prices become more affordable, we can see the shift to better sources for our health and competitive pricing.
According to IRENA, these trends are expected to continue in the coming decade, notably for solar and wind power technologies. According to the organization's database, over 75% of onshore wind and 80% of solar capacity planned to be installed next year would supply electricity at lower costs than the cheapest new coal, oil, or natural gas options. With these outstanding forecasts, we can anticipate saving more money without harming our health or environment in the near future.
Does clean energy cost more to use in your home compared to nonrenewable energy?
Costs are one of the driving factors in switching from nonrenewable to renewable energy sources. All existing forms of electricity are geared toward current methods, including in homes. New methods will need to be set up to harness renewable energy, which increase upfront costs for consumers. Market entrance and political/government support are further obstacles to renewable energy.
While renewable sources are more cost-effective, implementation is the main complication in switching to clean energy in the home. Direct cost comparisons will not be readily available until easier implementation methods are available. However, keep in mind that new infrastructure provides a rise in affordability.
All studies point to renewable energy costing less overall as infrastructure improves; however, the initial startup could be more expensive. Many states and utility companies provide various incentives, rebates, and discounts in addition to lowering your power rates.
The future costs of alternative energy – what can we expect?
In the future, the cost of alternative energy will continue to fall. On the one hand, capacity is increasing exponentially. On the other hand, technology is evolving, so appliances and devices are becoming ever-more energy efficient.
Renewable energy is revolutionizing our world. Having energy sources that are clean and infinite, as opposed to dirty and finite, as fossil fuels are, is a complete game-changer. It is one that may save the world from the disastrous effects of climate change. The more changes we all make on a small scale, and the bigger demand there is for clean energy, the faster we’ll see change. The best way to do this is to join us in our fight for a better planet.
If you're ready to take steps towards building a greener future with less reliance on fossil fuels, consider switching your electricity supply to Inspire. When you become an Inspire member, not only will you access 100% clean energy for your home and help reduce carbon emissions, you will receive a predictable monthly price for electricity supply to reduce bill volatility throughout the year.
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