There’s a lot of buzz around renewable energy sources as the way forward when it comes to powering our lives, from our homes to businesses. Some of the exciting options offered through renewable energy sources include solar power, wind energy, and geothermal energy. Despite the appeal of going green, renewable energy has been met with some reluctance. According to the U.S. Energy Information Administration, the statistical agency of the Department of Energy that provides data, forecasts, and analyses on energy use, in 2022, only about 21% of the U.S.’s energy is produced through renewable sources, with wind power topping the charts at 10%, followed by hydropower, solar, biomass, and finally geothermal at a mere 0.4%. One of the primary reasons for renewable energy’s relatively low use is… you guessed it, the cost. Where exactly do the hefty price tags associated with renewable energy sources come from, and are there any tangible solutions around this?
How much does renewable energy cost?
Cultivating renewable energy sources to generate power can be expensive at its outset with large upfront costs, such as the cost to purchase and install solar panels, or the cost to build wind turbines. However, renewable energy is still relatively young. In fact, the first sale of commercial wind turbines occurred only in the past century, as compared to fossil fuels, which have been used to heat homes since the 1800s (and the use of petroleum dating back thousands of years!). This means that the technology for renewable energy is still quite new, and with the advent of newer and more advanced technology, the growth and potential of renewable energy sources is rapidly expanding. As a result, the cost to produce clean energy is becoming cheaper and cheaper every year, dropping from 9 – 16% every year.
According to some estimates, the cost of producing energy from renewable sources in 2019 was actually comparable to the cost of producing energy from fossil fuels ($0.05 – $0.18/kWh). Hydroelectric power is one of the cheaper options and offshore wind comes in at the higher end. The prediction is that energy from renewable sources will begin to phase out the use of coal, oil and gas, especially as our current dependence on fossil fuels will eventually deplete these reserves within the next century.
Is there a way to know which option is more economical in the long-run?
When it comes down to it, energy companies and policy makers must consider various factors when making a judgment call on whether to go green or whether to continue to use fossil fuels. The economic impact of such a decision is far-reaching, and is not only seen in the costs incurred to produce the materials to generate clean energy. So, to put it into perspective, consider the following factors:
The money and up-front costs that are invested into create renewable energy, such as through installing solar panel systems or wind turbines, would have otherwise been used to mine and extract fossil fuels anyway. So, in that sense, this economic investment into renewable energy resources could be viewed as a mere substitution, and not an added cost.
The costs for energy for cultivating renewable energy will come down over time as technology advances and availability increases. This means that the month-to-month energy bill for individual households and businesses is expected to come noticeably down over the next few years, which means savings in the long-run.
Another benefit is that the energy that is generated through renewable sources is self-sustaining and once established, will produce energy essentially for free for years to come.
Generating energy from renewable sources opens up a whole new industry with the potential for new jobs to support the economy. And the renewable energy industry is only expected to soar in the coming decades. Already, Texas tops the nation in wind energy, and is amongst the top 3 leadings states in solar power.
The use of clean energy will significantly impact the health of the environment and the health of its consumers. Not only does this have an obvious impact on quality of life, but also on the costs associated with damage control… Think: oil spills, environmental cleanups, global warming/climate change, and the rising cost of treating those whose health is negatively impacted by increased levels of pollution. With clean energy, we all breathe with a little more ease.
Considering all of the above, it’s high time we evaluate whether the upfront costs to produce renewable energy are a price worth paying. If you’re considering going green, or want more information on the breakdown between traditional energy vs. renewable energy, talk to Arrow Energy to see how renewable sources may impact your energy bill and your lifestyle, both today and in the long-run.