Will Renewable Energy be Affordable?
Globally, governments are debating about restoring economies with ‘green growth’ policies and diverting investments into renewable energy. Do you think there is room for such debates anymore? From my perspective, it might be beneficial to hasten the transition to renewable energy. And there is one major reason behind this thought – hear me out!
Energy from Fossil Fuels – A Double-Edged Sword
The majority of electricity in our homes comes from fossil fuels. It is one of the cheapest sources of energy. But why is it so cheap? Fossil fuels consist of dense energy. It means that when we burn fossil fuels, a little goes a long way. Combine this with its wide availability and convenience of transport – fossil fuels came to dominate energy sources.
However, one of the major reason to transition to renewables is that fossil fuel is not widely accessible. 940 million people, or 13% of the world population, do not have access to electricity. This is not just due to energy availability issues. It is also related to household incomes. Low-income households increasingly lack access to electricity and clean fuels for their daily needs. In addition to this, rural households are also lagging because electricity is not equally distributed between rural and urban demographics. It often favours the latter.
If fossil fuels cannot meet the entire world’s energy demand, we need to look for alternatives that are accessible to everyone. This is imperative because, in an energy dominant society, lack of access to energy is one of the biggest disadvantages for sustaining livelihoods.
So, on top of the very real threat of climate change, another reason we need to transition to renewables is the fact that fossil fuels are finite. This means that eventually, they will run out. Thus, we might have to turn to renewables to provide continuous and equal access to energy across the globe. But how do we do that? The answer lies in developing renewables on a larger scale.
TIAA – There is an Alternative with a Twist!
In the last decade, there have been sharp declines in renewable energy costs. Since 2010, utility-scale solar PV power has shown the sharpest cost decline at 82%, followed by concentrating solar power (CSP) at 47%, onshore wind at 39%, and offshore wind at 29%. Essentially, this means that installing these technologies have become a lot cheaper. Hence, making it more affordable for a larger population.
A valid question to ask at this point is... what led to such a sharp decline in costs? For this, let’s look at Solar technology. It was initially developed for powering satellites in outer space. For such projects, people were willing to pay a high price for the technology.
(Source: Our World in Data)
When more of these technologies were produced, the price of the solar modules declined. This is because increased production of solar panels gave way to improving its processes that reduced costs. This process is known as the ‘learning curve’. It helped to create a continuous cycle of increasing demand and falling prices.
How does this impact electricity costs for the consumers?
But what does this falling cost of buying renewable technology mean for the consumers buying electricity? Data shows that electricity costs from utility-scale solar PV fell 13% in 2019. Onshore and offshore wind both declined by about 9%. This data means that with the declining technology costs, prices of electricity from them is also declining. Can you imagine the kind of impact renewables can create by simply being economically feasible to all?
On top of this, the costs of additional battery storage required for renewable energy is also declining. This is because electrical storage battery technologies also follow the same ‘learning curve’ that makes it efficient and reduces costs.
But this is not true for fossil fuels. It does not follow the learning curve. Today, mining companies have to dig deeper to find fuels leading to increased costs. And this high cost will impact the consumers as well - who will end up paying a lot more out of their pockets.
Declining costs - Affordability and Accessibility
We have already seen a considerable decline in renewable costs. This is enabling several households and buildings to adopt technologies such as Solar power. Moreover, renewable energy has started reaching the most remote and rural parts of the world. Thanks to the availability of renewable sources such as the sun or the wind. Additionally, this is also due to innovation in renewable technology that makes off the grid access to electricity a reality.
Thus, from my perspective, it is beneficial to hasten the transition to renewables. And the major advantage is that renewables have the potential to bridge the electricity gap by making them more accessible and affordable.
In the case of renewable energy, the data shows that the costs of renewables are not just going to decline. But the technology itself is going to improve leading to a more efficient, reliable and affordable source of energy.
If such perspectives intrigued you, do look out for our upcoming animated course on renewable energy. Click here to know more.
- Can Renewable Energy Create Jobs?
- Sustainability Today: How Did We Get Here?
- World Environment Day 2020 – It’s Time For Change
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