The Cost of Going Green: Renewable Energy vs. Fossil Fuels

There’s a lot of buzz around renewable energy sources as the way forward when it comes to powering our lives, but going green is often 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 – only about 10% of the entire world’s energy is produced through renewable sources. And one of the primary reasons for its low use is… yes, you guessed it, the cost. So, where do we see the hefty price tags associated with renewable energy sources, and is there a way around this?

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, with the first sale of commercial wind turbines occurring 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 is rapidly expanding. As a result, the cost to produce clean energy is becoming cheaper and cheaper every year, dropping from 9 – 13% every year. In fact, according to some estimates, the cost of producing energy from renewable sources in 2019 ($0.05 – $0.13/kWh) was actually comparable to the cost of producing energy from fossil fuels ($0.05 – $0.15/kWh), with hydroelectric power as one of the cheaper options and offshore wind coming in at the higher end. The prediction is that renewable energy 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. 

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 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:

  • The money that is used to create renewable energy would have otherwise been used to mine and extract fossil fuels. So, it is a substitution.
  • The costs for energy for individual households and businesses will come down
  • Generating energy from renewable sources opens up a whole new industry with the potential for new jobs to support the economy
  • The use of clean energy will significantly impact the health of the environment and the health of people, thereby impacting the costs associated with environmental cleanup (think oil spills!) and healthcare (breathe with ease!)
  • The energy that is generated through renewable energy is self-sustaining and once established, will produce energy essentially for free for years to come

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, talk to Arrow Energy to see how this will impact your energy bill, today and in the long-run.