What's the Renewable Energy Cost?
What's the renewable energy cost? The answer will vary by technology, but on average, onshore wind and solar PV cost about $0.06 per kilowatt-hour.
The most competitive solutions will involve a mix of these technologies, including demand-side management and energy storage. Regardless of the exact costs, intermittent RE is still too expensive to compete with fossil fuels in price. Let's look at some of the factors that affect the cost of renewable energy.
What is Renewable Energy?
Renewable energy encompasses the utilization of energy harnessed from naturally occurring sources that have the unique capacity to naturally replenish themselves over the course of time. This intrinsic ability for renewal not only distinguishes them but also underpins their status as sustainable and ecologically sound alternatives for energy generation.
Among the array of resources falling under the umbrella of renewable energy, prominent options include solar energy, drawn from the potent radiance of the sun, wind energy harvested through the kinetic force of moving air masses, hydropower generated by the controlled movement of water bodies, geothermal energy extracted from the Earth's internal heat, and biomass energy derived from organic materials.
The Importance of Evaluating Costs
The significance of evaluating costs cannot be overstated, as it serves as a cornerstone in numerous decision-making processes across various domains. Comprehensive cost evaluation enables individuals, businesses, and governments to make informed choices that impact financial stability, resource allocation, and overall strategic planning.
In the realm of personal finance, evaluating costs empowers individuals to manage budgets effectively, distinguish between essential and discretionary expenditures, and ensure long-term financial security. This practice aids in preventing overspending, debt accumulation, and financial hardships, while fostering a sense of control and preparedness for future uncertainties.
For businesses, cost evaluation is pivotal in optimizing operational efficiency. By meticulously assessing both direct and indirect expenses, organizations can identify areas for potential savings, streamline processes, and enhance profitability. This approach aids in determining the viability of projects, the allocation of resources, and the pricing of products or services to remain competitive in dynamic markets.
Factors Influencing Renewable Energy Costs
Various intricate factors intricately interplay to shape the costs associated with renewable energy generation. These multifaceted influencers provide a nuanced understanding of the dynamics behind the pricing of sustainable energy sources.
Technology Type and Maturity
The realm of renewable energy is a tapestry woven with diverse technologies, each at different stages of development. The maturity of a technology wields a profound impact on its cost. Seasoned technologies like hydropower, having traversed through decades of refinement, tend to manifest comparatively lower costs owing to their well-established nature. Conversely, emerging innovations such as advanced solar panels, though brimming with potential, might entail higher upfront investments as they harness cutting-edge scientific advancements.
The geographic tapestry of our planet significantly influences the cost dynamics of renewable energy. The abundance of pivotal resources like sunlight, wind, water currents, and geothermal heat fundamentally shapes the financial landscape of energy production. Regions blessed with copious natural resources can capitalize on their availability, driving down costs by virtue of harnessing potent energy streams with relatively fewer infrastructural investments.
Scale of Installation
The magnitude of a renewable energy project holds the power to tip the scales of cost. Mega-scale installations often bask in the benefits of economies of scale, a phenomenon where costs per energy unit generated dwindle as the project's size amplifies. This scale-driven cost reduction arises from optimized resource utilization, streamlined operations, and heightened efficiency in larger projects.
The regulatory milieu orchestrated by governments casts its formidable shadow upon renewable energy costs. Policies, regulations, and permitting frameworks set the tone for cost dynamics. Progressive and nurturing policies, exemplified by mechanisms like feed-in tariffs and ambitious renewable energy targets, bear the potential to catalyze a downward spiral in costs. By stimulating investments, fostering technological innovation, and encouraging market competition, these policies underpin a conducive environment that counteracts cost escalation.
Comparing Renewable Energy Costs with Conventional Sources
Solar PV costs $68
In 2010, utility-scale solar power cost $378 per megawatt-hour (MWh). Today, solar PV costs as little as $68 per MWh. This makes solar PV cheaper than coal, onshore wind, and nuclear power. Solar PV has also decreased in cost due to increasing competition and reduced capital costs.
In the past decade, PV costs have decreased by a factor of ten or more, depending on the technology.
To understand how much a solar panel costs, consider that the energy must be converted from DC to alternating current (AC) before it can be used. Converting from DC to AC loses 10 percent of the energy.
Considering that solar power's peak hours last just 3.63 hours a day, 365 days a year, and 20 years, solar panels should have a lifespan of 30 years or more. Solar PV will cost homeowners $68 per megawatt-hour or less.
According to the International Renewable Energy Agency (IRENA), solar photovoltaics cost as little as $68 per megawatt-hour in 2019. This is a significant improvement over previous years, but it is still far from cheap.
For most homeowners, the cost of installing a rooftop solar PV system would still be more than $800 per megawatt-hour. Solar PV costs $68 per MWh in India, but that cost would be far higher in China.
With the SunShot initiative, the Department of Energy has announced a commitment to make solar electricity affordable in the U.S. by 2030. In its first phase, the initiative helped industry achieve 90% of the target in five years.
The Energy Department has also announced up to $65 million for three new funding opportunities, subject to congressional appropriations. And with the help of these funds, solar electricity prices could drop to as low as $0.02 per kWh within the next five years.
Onshore wind costs $0.06
Germany has agreed to cap the maximum price of onshore wind turbines at 6.20 euro cents per kilowatt-hour (kWh) starting in 2019. The Bundesnetzagentur's decision aims to reverse a recent drop in applications.
The price cap reflects a difficult challenge: balancing the need to support new turbine construction and keep prices as low as possible for consumers. Because consumers are sharing the cost of feeding green power into grids, it wasn't possible to rely on the traditional approach of setting prices through auctions. Developers cite an uncertain political framework as one of the reasons for the change.
LCOE for offshore wind projects decreased by 28% in Europe between 2010 and 2018, according to EIA data. This decline was greatest in Belgium, where the LCOE dropped by 28%. Germany and the UK both experienced a 24% reduction.
These reductions were due to economies of scale. As a result, the costs of offshore wind projects in these countries are expected to reach $0.06 to $10/kWh by 2020.
Increasingly efficient turbines have cut installation and project development costs. However, this reduction was offset by the lack of U.S.-based supply chains and Jones Act-compliant vessels.
The cost of offshore wind in the U.S. was estimated at $160 per MWh in 2017, compared to $0.06/kWh in the UK. This price decrease is not a result of improved technology or better wind regimes; it is a result of the cost-efficiency of offshore wind projects.
In Asia and North America, onshore wind and solar PV are now cheaper than coal and other fossil fuels. Currently, onshore wind costs $0.06/kWh. Solar PV and concentrated solar power are not competitive, but future price reductions will bring them close to this level.
With the help of government programs, solar PV and onshore wind will compete directly for the market. If more countries adopt this approach, the cost of energy will decrease substantially.
Geothermal costs $68
Geothermal renewable energy costs $68 per kilowatt-hour to produce, but its high initial investment and low operating costs make it a viable source of baseload power. In the U.S., the total cost for a geothermal field and power plant is about $2500 per installed kilowatt-hour.
Operating and maintenance costs are typically between $0.01 and $0.03 per kWh, depending on the system's availability. However, higher availability may increase maintenance costs.
In the US, geothermal power can cost more than $140 per megawatt-hour, which is double the cost of onshore wind and five times higher than solar power.
Even Warren Buffet's Berkshire Hathaway, which holds the rights to much of the Salton Sea's geothermal field, has been struggling to find buyers for its electricity. In the meantime, other sources of renewable energy cost less than $68 per MWh.
The US DOE budget for geothermal research and development this year reached $1 billion. The US government has earmarked $200 million through 2024 to help commercialize this technology. Private investment in geothermal power has ramped up, too.
In the first half of 2020, global geothermal investments topped $675 million. Meanwhile, renewable energy investments grew by nearly five percent. And by 2024, geothermal production capacity is expected to reach twenty-four gigawatts.
One of the leading geothermal companies, Ormat Technologies, Inc., has signed a Power Purchase Agreement with the Southern California Public Power Authority.
The PPA provides 16MW of energy to the authority, which will resell the remaining 14MW to off-takers or sell it at the spot market. This is the first geothermal power plant in the CAISO balancing authority in thirty years.
Hydropower costs $68
A hydropower plant produces about 6% of the nation's energy. While it is more expensive than solar, wind, and natural gas, its total cost of electricity generation is about $68 per megawatt-hour. Hydropower is a renewable energy source because the fuel is water.
It is also less expensive than energy efficiency measures such as insulating your home with windows. Hydropower represents 52% of the renewable electricity generated in the US.
While there are several types of renewable energy, hydropower remains the lowest cost source of electricity in many countries.
Hydropower has historically been the least expensive way to generate electricity and is also an important contributor to the stability of electric systems. Hydropower also provides an array of ancillary services that support grid reliability.
Hydroelectricity can generate electricity at a cost of up to $68 per kilowatt-hour, and its LCOE can be as low as $0.020 per kWh for large-scale hydro projects. The cost of new hydro capacity installed globally last year averaged USD 0.06/kWh.
In 2010, solar photovoltaic electricity cost $378 per megawatt-hour, compared to $0.68 per kWh in 2019. While coal, nuclear, and onshore wind continue to be the cheapest sources of energy, the costs for solar energy have dropped dramatically.
The cost of onshore wind energy is approaching $0.13 per kWh. Hydropower costs $68 per megawatt hour, which is still very cheap compared to fossil fuels.
There is still a long way to go before the world produces all of its electricity from renewable sources. However, a new study published in PLOS One finds that carbon dioxide is a larger contributor to greenhouse gas emissions than methane.
Researchers examined data from 1,400 dams in the world. They found that the rate at which soil erosion into the reservoir determines carbon dioxide emissions. The study was led by Laura Schererer, a research associate at ETH Zurich.
Bioenergy costs $68
According to the World Bank, generating bioenergy is associated with a cost of $68 per kilowatt-hour. The majority of bioenergy is produced in Sichuan, Yunnan, and Qinghai provinces.
In rural areas, the costs are greater, accounting for more than 5% of GDP. In the scenario “B90-2015-PC” to offset one gigatonne of CO2-equivalent per year, the total cost of bioenergy production and economic costs overlap by 50%.
The cost of producing bioenergy is based on the present value of revenues from the crop in the period t. The cost of producing a bioenergy crop per hectare is Ct, and Yt is its yield, net of storage and harvesting losses.
The opportunity cost of land, measured in $ha-1, is also included in this equation. However, the cost of producing bioenergy is not equal to the cost of reforestation.
If miscanthus and switchgrass can be grown and produced at the same cost, the cost of bioenergy production would be lower. The breakeven prices of bioenergy crops in Southern Missouri are lower than those in other Midwestern counties.
If both biofuels are grown on marginal land, the opportunity cost of land would be lower, resulting in lower breakeven prices. In the long run, bioenergy production will save farmers money on agrochemicals and land.
Where to Access Renewable Energy
Residential Solar Panel Providers
Embarking on the journey toward self-sustained energy generation, homeowners have the opportunity to collaborate with an array of dedicated solar panel providers. These companies offer an encompassing suite of services that span from initial consultation to seamless installation and ongoing maintenance. With a focus on ensuring a hassle-free transition to residential solar, these providers become pivotal allies for those seeking to harness renewable power within the confines of their homes.
Commercial Renewable Energy Companies
For enterprises aiming to pivot their operations towards eco-conscious energy sources, the landscape is adorned with commercial renewable energy companies. These specialized entities stand ready to offer bespoke solutions tailored to the unique energy requirements of businesses. Whether through the installation of expansive solar arrays or the integration of efficient wind turbines, these companies are architects of sustainable energy transitions, collaborating closely with businesses to manifest their renewable energy aspirations.
Government Initiatives and Programs
In an effort to invigorate the renewable energy revolution, many governments have unfurled a tapestry of initiatives and programs. These initiatives encompass a spectrum of offerings, including grants, incentives, and comprehensive informational resources. Their overarching goal is to bolster the adoption of renewable energy across diverse sectors. By alleviating financial barriers through grants and fostering a culture of eco-consciousness via incentives, these government-backed endeavors play a pivotal role in propelling individuals and businesses toward cleaner energy options.
The landscape of renewable energy costs is ever-evolving, driven by technological advancements, resource availability, and supportive policies. As the world continues its journey towards a more sustainable future, understanding these costs is essential for making informed decisions about energy sources. By embracing renewable energy, we not only contribute to mitigating climate change but also stand to benefit from increasingly competitive and economically viable alternatives to conventional