geothermal power plant, Iceland
Many people are on board with renewable energy – if it wasn’t for the perceived high sticker price of transitioning. It’s the classic response of “I’m all for renewable energy, I just think it needs to be cheaper“.
The reality, though, is that renewable energy has never been cheaper. As more companies devote time and money to improving existing technology, it becomes a simple equation of supply and demand, and the supply has never been greater. Additionally – like any new technology – renewable energy becomes more efficient as time goes on. Think of the prices of digital cameras when they were first released – what was once inaccessible to many is now affordable to most. And this is what we are currently experiencing in the renewable energy sector, thanks to a free market that encourages competition, ingenuity, and rapid expansion. In fact, solar energy has become cheaper than most experts had ever predicted. And it is expected that solar and wind technology will be the cheapest forms of energy by as early as 2025. This is due to the increase in availability and subsequent decrease in price, while non-renewable energies (natural gas, oil, and coal) will be experiencing the exact opposite: a decrease in availability and a subsequent increase in price. Furthermore, the petroleum that is still available is much more difficult and expensive to extract than what was being burned 20 years ago, so prices for petroleum-based energy sources will continue to rise.
The price also comes down to the required inputs. For example, in order for a coal-fired power plant to be successful, one must build the plant itself, and also purchase coal (the input) indefinitely. However, the inputs that generate renewably energy – whether that be hydro, geothermal, solar or wind – are free. So once the actual system is built, electricity can be generated immediately, without the need of any costly inputs.
Another thing to consider is the additional costs now associated with carbon-intensive electricity generation. As various countries implement a carbon tax or cap and trade system, it becomes more expensive to use anything other than renewable energy technology. Taxes on coal, in particular, coupled with subsidies for the renewable energy sector, are making renewable technologies more economically appealing than ever before.
The dramatic fall in renewable energy prices is already being realized around the globe. For example, the average global cost of solar-powered electricity generation fell 61 per cent between 2009 and 2015. And in areas that receive large amounts of direct sunlight – like India and Dubai – solar plants are already offering electricity at a price that is less than half the global average. And in Australia – a country known for its vast coal reserves – onshore wind energy is now cheaper than both coal and natural gas.
In case the economic benefit experienced by various countries wasn’t enough to convince you of the potential of renewable energy, take a look at the private sector: Apple, IKEA, Google, and Wal-Mart are all opting for renewable energies to meet their electricity needs and save money. The commitment made by General Motors to opt for renewable energy has already saved the company over $80 million (USD).
Renewable energy is now entering an entirely new territory; what was once a mere alternative with the support of environmentalists is now being supported by economists from around the globe as well. This is referred to as the “tipping point”, where renewable energy becomes an economically feasible alternative to petroleum-based electricity generation.
Yes, renewable energy was too expensive to be feasible… twenty years ago. But today, thanks to a rapid expansion of existing technologies, countries and corporations are realizing that they can save money, generate electricity, and practice environmental responsibility. Renewable energy is not too expensive, as it is now the cheapest option in many cases. Additionally, this cheap option addresses both current and future electricity demands without causing any further environmental harm – and the potential of that, alone, is truly priceless.
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