Is Renewable Energy Cheaper Than Fossil Fuels?
Inspire Clean Energy
16 min read
category: Clean Energy 101
Cheaper energy is possible with renewables! Any discussion about energy resources will eventually turn to the subject of money. Finances play a part in almost every decision we make, even ones we make for the greater good.
The cost of renewable energy reached a record low in 2018. Solar energy and wind power are now among the most affordable renewable energy sources globally, and experts anticipate these costs to remain low for years to come.
Despite recent technological developments around energy resources, most of us aren’t sure about the associated costs. Below we’ll explore the cost of renewable energy sources, from the cheapest to the most expensive. Then we’ll compare the costs of each.
- What Is the Most Expensive Renewable Energy Source?
- What Is the Cheapest Renewable Energy Source?
- Comparing the Cost of Renewable Energy
- Is Renewable Energy Getting Cheaper? Why?
- Is Renewable Energy Cheaper Than Nonrenewable Energy?
- How Is Renewable Energy Cheaper Than Nonrenewable Energy?
- Explore Cheap Renewable Energy Options
- Frequently Asked Questions
What is the most expensive renewable energy source?
This is a hotly debated topic, and there are two possibilities: solar and tidal. In the past, the cost of technology and the lack of efficiency drove up the cost of solar. As efficiency and ease of installation continue to improve, this cost will come down, but it’s still more expensive. However, it’s worth noting that the average cost per kWh of solar is now around $0.10, while fossil fuels average between $0.05 and $0.17 per kWh.
Tidal energy is certainly the most expensive in terms of installation costs, but advocates say the maintenance costs are extremely low. Although tidal energy is known for its reliability, its popularity level is relatively low due to the fact that plants must be built along coastlines. Consequently, it’s difficult to know for sure which is most expensive.
What is the cheapest renewable energy source?
Hydroelectric power is currently the cheapest energy source, costing $0.05 per kilowatt-hour on average. Hydroelectric power is the cheapest energy source because the infrastructure has been in place for a long time, and it produces electricity consistently.
It is also worth noting that wind power now comes in at $0.04 to $0.06 per kWh, making wind power the cheapest in some areas.
Comparing the cost of renewable energy
The easiest and most efficient way to measure and compare the cost of renewables is to refer to the Levelized Cost of Energy, or LCOE.
This system allows us to compare the costs of financing, building, running, and maintaining a power plant. The values of each energy source will be expressed in U.S. dollars per megawatt-hour.
- Onshore wind energy: The price of onshore wind energy has dropped by almost 10 percent to $44 per megawatt-hour compared to the second half of 2019, and has seen rapid growth since 2010.
- Offshore wind power: According to Bloomberg Green, the current estimated global LCOE for offshore wind is $78 per megawatt-hour. New offshore wind projects in the Netherlands and Denmark are expected to achieve rates of $53 to 64 per megawatt-hour, excluding transmission.
- Solar photovoltaics: The cost of solar power has dropped by 4 percent to $50 per megawatt-hour since 2019. Figures like this are commonplace and even lower in countries like America, China, and Brazil. Equipment costs have dropped, renewable technologies have improved, and governments worldwide have pushed forward net-zero goals in an attempt to combat climate change.
- Concentrated solar power (CSP): This resource is the most expensive renewable, costing an average of $182 a megawatt-hour. Despite this high cost, it competes well with fossil fuels in some cases, as it is more consistently reliable than other renewables. New storage solutions and extensive research mean CSP is likely to drop in price over the next decade or so.
- Hydropower: This renewable resource has been providing cheaper electricity than fossil fuels recently. The global weighted-average levelized cost of hydropower electricity was equal to or below the cost of the cheapest fossil fuel–fired alternative between 2010 and 2018 (with the exception of two years). Subsequently, the majority of hydropower used between 2010 and 2018 has cost less than the cheapest fossil fuel option.
- Geothermal energy: Two years ago, a little over 500 MW of new geothermal energy generation capacity was added. Where there are reliable, high-temperature resources, geothermal energy can be a productive, economically friendly source of round-the-clock power. In 2018, the global LCOE of new geothermal plants cost around $72 per megawatt-hour, an impressive 1 percent lower than the previous year. This cost is significantly higher than that of wind energy, but this resource may prove a worthwhile investment in the long run. Lifetime capacity factors will depend on the performance of geothermal wells and ongoing investment into production wells’ maintenance.
- Bioenergy: As of 2018, the global-weighted average cost of electricity was $62 a megawatt-hour. This figure was 14 percent lower than the previous year and resulted from a shift in energy deployment toward less capital-intensive options. Bioenergy capacity in each country depends on the feedstocks’ availability and can be affected significantly by whether these feedstocks are seasonal or available year-round.
Is renewable energy getting cheaper? Why?
The price of renewable energy is dropping because the demand is increasing. This increased demand triggers a spiral in which demand continues to rise. Companies can afford to sell it for less, which further drives up demand, and so on.
There’s also a lot to be said for research. When results, statistics, and facts about a relatively new energy source become available, governments, corporations, and industries are more likely to invest in them. This idea makes sense and is why fossil fuels have been so heavily relied upon thus far; nobody wants to invest in a new technology that hasn’t proven itself yet.
There’s also the financial element of energy resources to consider. While environmental sustainability is the primary factor that makes renewables attractive to the average consumer, it’s the money that draws in corporations and governments. If a governmental body believes its country will prosper financially over the next few decades, it will see renewables as a worthwhile investment.
Is renewable energy cheaper than nonrenewable energy?
By dividing the costs of renewable energy among capital, fuel, operations, and maintenance, we notice some stark differences among these resources. Renewables like solar power, wind energy, and geothermal energy may not initially be cheap. Still, they do not incur fuel costs once installed, and they typically come with lower operation and maintenance costs, too.
When we assess the overall cost of various energy sources, we must also consider when, where, and how often we can use each resource. Wind and solar power can now compete with fossil fuels while offering countless vital health and environmental benefits, but they’re still technically intermittent and inconsistent resources.
Because of this, it’s unlikely that wind and solar power will replace nonrenewables in the near future. While this may sound disheartening, utility companies and power operators are discovering new ways of offering more value to the power grid through the use of renewables.
How is renewable energy cheaper than nonrenewable energy?
While the initial costs of installing renewable energy technologies may seem expensive, these costs are dropping, and wind farms, geothermal sites, and solar PV sites can pay for themselves in less time every year.
One significant reason behind the affordability of solar power and wind energy is government energy subsidies. Many governments offer individuals and businesses subsidies for using sustainably sourced power to curb environmental damage. These financial incentives help bring down the end cost of opting for renewable energy sources.
A transition to alternative energy is vital if we want to slow down the damage done to the planet every day. Renewable energy sources like wind power are optimal from an environmental point of view; wind turbines can be installed onshore or offshore, providing a sustainable resource that essentially bothers no one.
Wind power also causes the least amount of environmental damage out of the already-environmentally preferable options. Wind energy provides employment, boosts local economies, and offsets the release of harmful chemicals into the air. Wind energy alone avoided over 40 million cars' worth of emissions in 2019, and in some towns wind farms help keep local taxes low. There are many other benefits to using sustainable options like wind power, and now, there are ways for you at home to help drive up the demand for such technologies.
Explore cheap renewable energy options
Inspire Clean Energy, is a renewable energy company on a mission to transform the energy grid. We believe clean and reliable energy should be accessible to everyone, and our goal is to accelerate the global transition to a net-zero carbon future.
Inspire Clean Energy gives you the power to choose clean energy for your home, minimizing your carbon footprint and increasing demand for clean and cost-effective energy sources like wind power. Find out more about how you can make the switch to an affordable clean energy plan.
Frequently Asked Questions
What are the costs involved with using renewable energy?
Is renewable energy cheap for households? It’s cheaper in many ways. However, there are still several costs involved with using renewable energy. We’re running out of fossil fuels, and electricity costs are all about supply and demand. The less coal, natural gas, and oil we have, the more expensive it will become for households. The initial upfront cost of renewables may be expensive because we have to build a renewable power infrastructure.
Additionally, as new renewable energy infrastructure is built, the cost is likely to fall significantly for consumers. According to the Center for American Progress, investments in renewable energy, electrification, and efficiency have the potential to save the average household around $500 annually.
Is renewable energy better than fossil fuels?
Many people know fossil fuels are bad, but they don’t understand why. Fossil fuels can take thousands of years to naturally replenish, so we can use only a limited supply. Conversely, renewable energy comes from natural sources that replenish more quickly, potentially making renewable energy cheaper in the long run because they can generate power at reduced costs, especially with government subsidies.
The most significant difference between fossil fuels and renewable energy is that fossil fuels harm the planet and its people. Fossil fuels heat the earth and produce unhealthy byproducts like air pollution, which can cause respiratory issues. Conversely, renewable energy emits less CO2, if any at all.
How do I switch to renewable energy?
Switching to renewable energy sources is easy with Inspire. We offer two plans to help you access sustainable energy. To switch from fossil fuels to clean energy, all you have to do is sign up for one of our clean energy plans, allowing you to access green energy in just a few simple steps.
Once you’re enrolled in your plan, we’ll work directly with your utility company to switch you to our electric supply. You’ll still receive bills from your utility company, but you’ll see our name as your clean energy supplier. Inspire supplies clean energy for you without interruptions to your service.
Is it worth it to switch to renewable energy?
If you care about sustainable living and want to make a measurable impact on the planet, switching to renewable energy is worth it. In the long run, renewables could result in cheaper energy, lowering your cost of utilities while helping you reduce your carbon footprint. Clean energy produces little to no greenhouse gas
emissions and can help reduce air pollution. In addition, the use of appropriate technologies and government subsidies can help reduce costs significantly.
Renewables are growing much faster than fossil fuels. They can improve public health by eliminating the air and water pollution emitted from coal and natural gas that contributes to respiratory and other serious health problems. Additionally, renewable energy can stimulate our economy by creating more jobs than the fossil fuel industry and offering more stable energy prices for consumers.
Comparing the cost of renewable energy
The easiest and most efficient way to measure and compare renewables’ costs is to refer to the Levelized Cost of Energy, or LCOE.
This system allows us to compare the costs of financing, building, running, and maintaining a power plant. The values of each energy source will be expressed in US dollars per megawatt-hour.
- Onshore wind energy: The price of onshore wind energy has dropped by almost 10% to $44 per megawatt-hour, compared to the second half of 2019, and has seen rapid growth since 2010.
- Offshore wind power: According to Bloomberg Green, the current estimated global LCOE for offshore wind is $78 per megawatt-hour. New offshore wind projects in the Netherlands and Denmark are expected to achieve rates of $53-64 per megawatt/hour, excluding transmission.
- Solar photovoltaics: The cost of solar power has dropped by 4% to $50 per megawatt-hour since 2019. Figures like this are commonplace and even lower in countries like America, China, and Brazil. Equipment costs have dropped, renewable technologies have improved, and governments worldwide have pushed forward net-zero goals in an attempt to combat climate change.
- Concentrated solar power (CSP): This resource is the most expensive renewable, costing an average of $182 a megawatt/hour. Despite this high cost, it competes well with fossil fuels in some cases as it is more consistently reliable than other renewables. New storage solutions and extensive research mean that CSP is likely to drop in price over the next decade or so.
- Hydropower: This renewable resource has been providing cheaper electricity than fossil fuels recently. The global weighted-average levelized cost of hydropower electricity was equal to or below the cost of the cheapest fossil fuel-fired alternative in all but two years between 2010 and 2018. Subsequently, the majority of the hydropower used between 2010 and 2018 has cost less than the cheapest fossil fuel option.
- Geothermal energy: Two years ago, a little over 500 MW of new geothermal energy generation capacity was added. Where there are reliable, high-temperature resources, geothermal energy can be a productive, economically friendly source of round-the-clock power. In 2018, the global LCOE of new geothermal plants cost around $72 per megawatt/hour, an impressive 1% lower than the previous year. This cost is significantly higher than that of wind energy, but this resource may prove a worthwhile investment in the long run. Lifetime capacity factors will depend on the performance of geothermal wells and ongoing investment into production wells’ maintenance.
- Bioenergy: As of 2018, the global-weighted average cost of electricity was $62 a megawatt/hour. This figure was 14% lower than the previous year and resulted from a shift in energy deployment toward less capital-intensive options. Bioenergy capacity in each country depends on the feedstocks’ availability and can be affected significantly by whether these feedstocks are seasonal or available all year round.
Is renewable energy getting cheaper? Why?
The price of renewable energy is dropping because the demand is increasing. This increased demand triggers a spiral in which demand continues to rise; companies can afford to sell it for less, which further drives up demand, and so on.
There’s also a lot to be said for research. When results, statistics, and facts about a relatively new energy source become available, governments, corporations, and industries are more likely to invest in them. This idea makes sense and is why fossil fuels have been so heavily relied upon thus far; nobody wants to invest in a new technology that hasn’t proven itself yet.
There’s also the financial element of energy resources to consider. While environmental sustainability is the primary factor that makes renewables attractive to the average consumer, it’s the money that draws in corporations and governments. If a governmental body believes that its country will prosper financially over the next few decades, it will see renewables as a worthwhile investment.
Is renewable energy cheaper than nonrenewable energy?
By dividing the costs of renewable energy among capital, fuel, and operations and maintenance, we notice some stark differences among these resources. Renewables like solar power, wind energy, and geothermal energy may not initially be cheap. Still, they do not incur fuel costs once installed, and they typically come with lower operation and maintenance costs, too.
When we assess the overall cost of various energy sources, we must also consider when, where, and how often we can use each resource. Wind and solar power can now compete with fossil fuels while offering countless vital health and environmental benefits, but they’re still technically intermittent and inconsistent resources.
Because of this, it’s unlikely that wind and solar power will replace nonrenewables entirely. While this may sound disheartening, utility companies and power operators are discovering new ways of offering more value to the power grid through the use of renewables.
How is renewable energy cheaper than nonrenewable energy?
While the initial costs of installing renewable energy technologies may seem expensive, these costs are dropping, and wind farms, geothermal sites, and solar PV sites can pay for themselves in less time every year.
One significant reason behind the affordability of solar power and wind energy is government energy subsidies. Many governments offer individuals and businesses subsidies for using sustainably sourced power to curb environmental damage. These financial incentives help bring down the end cost of opting for renewable energy sources.
A transition to renewable energy is vital if we want to slow down the damage done to the planet every day. Renewable energy sources like wind power are optimal from an environmental point of view; wind turbines can be installed onshore or offshore, providing a sustainable resource that essentially bothers no-one.
Wind power also causes the least amount of environmental damage out of the already-environmentally preferable options. Wind energy provides employment, boosts local economies, and offsets the release of harmful chemicals into the air. Wind energy alone avoided over 40 million cars' worth of emissions in 2019, and in some towns, wind farms help keep local taxes low. There are many other benefits to using sustainable options like wind power, and now, there are ways for you at home to help drive up the demand for such technologies.
At Inspire Clean Energy, we are a renewable energy company on a mission to transform the energy grid. We believe that clean and reliable energy should be accessible to everyone, and our goal is to accelerate the global transition to a net-zero carbon future. And you have the power to choose clean energy for your home, minimizing your carbon footprint and increasing demand for clean and cost-effective energy sources like wind power. Find out more about how you can make the switch to an affordable clean energy plan, click here.
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