What are the costs of transitioning to renewable energy?

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Main topic: Science
Other topics: Climate change
Short answer:

Cost is the most major and well-known barrier to the widespread adoption of renewable energy sources. There are several different expenses connected with renewable energy, including the following

  • Direct Costs: It includes Siting, Manufacturing and Installation cost, Transmission Costs, and The cost of energy storage.
  • Indirect Costs: It includes the price for spreading awareness, R&D Expenses; the price for developing superior technologies, and Environmental cost.
20201019 Levelized Cost of Energy (LCOE, Lazard) - renewable energy

Looking at alternative forms of energy, one of the most common questions that pop up is: What is the price attached to it? Is the cost of conventional energy generated by fossil fuels higher or lower than the cost of energy generated by renewable sources?

However, only about 11% of the world's energy is generated from renewables.[1] This is despite the fact that renewable energy is significantly more environmentally friendly than traditional forms of energy that rely on fossil fuels.[2] The cost is one of the primary motivating aspects of this.

With regard to the various renewable energy sources, one of the most significant obstacles is the price tag, which in certain instances may be absolutely mind-boggling. Businesses who are concerned about their bottom line may find that the installation of expensive solar panels and wind turbines makes conventional energy sources substantially less expensive. At the present, the initial investment required to begin using many different forms of renewable energy may be rather substantial.[3]

Although the cost of renewable energy sources is one of the factors that work against it, scientists are constantly working on exploring new methods that make alternative energy a cheaper option.

What are the costs associated with renewable energy?[edit]

Direct Costs[edit]


When lifecycle costs are included, investments in renewable energy may prove to be more profitable. The growth of renewable energy faces challenge brought on by a lack of infrastructure. The existing infrastructure was mostly constructed with nuclear power plants and facilities that burn fossil fuels in mind. The process of positioning structures on lands, such as wind turbines and solar farms, is referred to as "siting." To do so requires discussions, contracts, permissions, and community engagement, all of which may add to the expense of the project, cause it to be delayed, or even cause it to be canceled.[4]

The determination of the magnitude of the solar system presents a significant amount of difficulty. Because of this, it will be difficult to construct an energy-producing facility if the system is too small. If the solar power system is going to be very large, then it is going to require an equally large energy storage system.[5] The generated energy will be lost if there is not also an energy storage system with a large capacity.

Manufacturing and Installation costs[edit]

When calculating the total cost of installing solar panels, for instance, one has to include the expenses associated with buying each piece of equipment, shipping it to the installation location, and maintaining it once it has been put in place. In point of fact, the production and installation procedures of renewable energy devices such as photovoltaic panels come at a pretty high cost.[6] Solar and wind power is the most cost-effective forms of energy generation out of the many options available. On the other hand, the initial investment required to establish a gas-fired power plant is far less than that of a solar power system. Large-scale solar power installations have an average cost of installation of around $2,000 per kilowatt. In a similar vein, the price per kilowatt-hour for a home system of a smaller size is around $3,700, but the price for a brand-new gas-fired power plant is just $1,000.[7] The significant range in the expenses of installation is important, without a doubt. Because of the high initial cost of installation, investors and lenders see renewable energy as a high-risk investment.[8] On the other hand, they view fossil fuel plants as being more acceptable because of their lower installation costs.[9][10]

What is the cost of Energy Transformation? Source: Flickr

Transmission Costs[edit]

The power lines and other facilities that are required to transmit energy from the location where it is produced to the location where it is consumed are referred to as transmission. Because wind and solar electricity have only been around for a very short period of time, the majority of the infrastructure that is in place today was developed to service huge fossil fuel and nuclear power facilities.

This presents challenges for renewable energy sources that are not situated in close proximity to current infrastructure. In point of fact, certain regions with little or nonexistent infrastructure, such as offshore wind farms, are among the most promising prospects for the development of renewable energy sources. It will need a significant investment in brand-new transmission infrastructure to enable adequate use of renewable sources.[11]

The cost of energy storage[edit]

Even if fossil fuels are bad for the environment and will run out at some point, they are still useful since they can meet the need for a reliable source of energy. In contrast to renewable energy sources, which can only store a limited amount of the extra power they create in massive batteries, fossil fuels may be used to generate electricity even after they have been stored.[12]

There are certain periods of the day when renewable energy sources provide most of their energy. The peak hours of power demand are not met by the facility's output of electricity. Because sunlight and wind are not always present, they cannot serve as a reliable supply of on-demand electricity seven days a week. Solar and wind energy both have variable characteristics. There is a degree of unpredictability in both the generation and the loads. The extra energy may be saved for later use with the assistance of a battery storage device. Blackouts may be avoided as a result of their potential to reduce grid instability. The storage system's lifetime, as well as its battery capacity, have both been boosted as a result of technological improvement. It’s very expensive nature prevents it from finding widespread use. For the storage of solar energy to become more economically viable, costs for batteries will need to fall.

Burning fossil fuels to create electricity is a more reliable method of producing energy. On the other hand, the intermittent nature of power output from renewable energy sources creates a requirement for a battery storage system that is both effective and efficient.[13]

Indirect Costs[edit]

The price for spreading awareness[edit]

People have a limited understanding of renewable energy sources, and there is a dearth of educational opportunities in this field. People aren't as familiar with renewable energy as they are with fossil fuels just because they don't know about it, which is a problem that plagues any new technical developments. If people are unaware that green energy sources even exist or that they have the ability to harness them, there is a far lower likelihood that they will employ these sources of energy in their own houses. As more people get educated on the need of preserving the natural world, the issue of widespread ignorance is beginning to improve. In light of this, there are several chances to make investments in awareness programs that educate people on the use of renewable energy and the long-term advantages of doing so.[14]

R&D Costs; the cost of obtaining advanced technological capabilities[edit]

Only around 20–25 percent of the sun's energy can be effectively converted into usable electricity by even the most technologically sophisticated solar panels. On the other hand, conventional systems that rely on coal or natural gas may achieve efficiencies of up to 40% and 60%, respectively, depending on which fuel source they use. It demonstrates how much potential there is to create better technologies in order to maximize the benefits of the full intensity of the sun.[15]

In order to generate electricity from the various forms of energy, we need to first develop the appropriate technologies. When it comes to determining which energy sources should take priority, the efficiency of the machines that converts energy is of critical significance. Sadly, the efficiency of renewable technologies is not as great as that of typical devices for the conversion of energy, and there is a significant need for expenditures in terms of the creation of improved technology.

Environmental costs (in a few cases; the Solar panel manufacturing process creates pollution, and emissions from burning biomass)[edit]

Although solar panels provide clean, renewable energy, the manufacturing process for them might have a negative impact on the environment. Burning fossil fuels and producing waste plastic may occur from the mass manufacture of solar panels. Even when we dispose of solar panels, we must first melt them down which might release some dangerous chemicals. Sadly, this is one of the solar panels' unappreciated drawbacks. It is not environmentally beneficial to mass produce and discard them. Additionally, it is often necessary to move materials across the nation or even the globe in order to build wind turbines or solar panels. This preference for long-distance travel contributes significantly to increased pollution.[16][17]

It is practically hard to produce electricity in arid nations with extensive desert regions using biomass since it needs a substantial volume of plant waste. Obviously, burning our garbage to produce electricity helps minimize landfill waste, but it also produces hazardous pollutants.[18][19]


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