Why is Renewable Energy So Expensive?

Any major socioeconomic transition is going to have its costs and trade off’s, and renewable energies are certainly no exception. A major argument regularly used against renewable energies is their high cost in comparison to their more traditional, fossil fuel-based counterparts. Many of these costs, however, are not so much an artifact of the cost of production in its most basic sense but instead correlated with costs related to transition. For example, “almost all the wind turbines in British seas…are produced by a single firm.” Of course, such consolidation of manufacturing, in any case, tends to result in higher prices overall. Internet service providers and their price-setting abilities are exemplary of this. The same can be said about the overall supply chain.

Both of the former examples mentioned can also be looked at through the lens of transition in that as the technologies develop and become more common, the price will allow for greater flexibility.

There are however some production and price-related issues that more so reflect the nature and needs of the technologies which, while possessing some elements of transition costs, are less avoidable over time. Renewables like solar and wind typically see installations take place in open areas such as the country-side, ocean, and other areas where there is enough space to establish a functioning high efficiency solar or wind plant. The problem is, such places and their characteristic openness are also located in areas away from large populations centers. This poses additional questions of service and storage of energy, as well as how to make use of the electrical grid which has been designed with traditional energy methods in mind.

There’s also another issue: energy intermittence. The sun doesn’t always shine and the wind doesn’t always blow. Neither of these is an end-all-be-all problem if energy storage technologies develop further to meet such needs, but for now there needs to be a contingency plan—traditional forms of energy production. Coal-fired plants will likely remain at least partially online, or at least on standby in case demand spikes. However, such stasis will likely tack on additional costs. Partially running a plant will still require staffing, monitoring, increased flexibility, and creating other demands which may result in a spike in prices.

There are other nonrenewable options that are at least cleaner than coal, like natural gas, but we also know of the major risks associated with fracking as a common methodology of natural gas extraction. Nuclear is renewable but exists in a sort of sociopolitical purgatory propped up by a culture of fear that is nearly impenetrable.

These transition costs are an unfortunate but expected reality. A renewable future is complex, chock full of pro’s and con’s, and the task of “fully assessing the environmental impact of infrastructure development and operation” (Dunlap, 2019 258) along with any economic effects, whether direct or transitive, is a tremendous undertaking which will surely have controversial consequences. 

However, it is an undertaking being pursued. The CURVE framework (Clean, Unlimited, Renewable, Versatile, and Economical) provides a systematic approach for assessing any potential alternative energy production technologies, especially in comparison with well-established fossil fuels with such strong short-term reliability. The landscape of a renewable future is shifting every day, but questions of cost most assuredly need more palatable answers.

References
Dunlap, R. A. (2019). Sustainable Energy, SI Edition (Second ed.). Cengage Learning.

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