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When looking at investing in a renewable energy system, such as solar or wind power, one of the first things that might enter your mind is, "why is renewable energy so expensive? It's good for the environment. Shouldn't that be enough to encourage subsidies and incentives?"

In a lot of cases, of course, it has encouraged these things. But the initial, up-front cost of renewable energy is still enough at times to make some people dismiss it completely. The most important thing, of course, is that a person makes an “apples-to-apples” comparison in regard to all of the costs; when comparing wind power to coal, one must look at the total cost, over the same time period.

Let's look at why renewable energy costs are so high. Each of these things contributes to the differences between the cost of renewable energy, and the price associated with more traditional power generation methods.


First of all, the technology in some forms of renewable energy, such as solar panels, is newer in comparison to fossil fuel technologies. Because this technology is not yet as commonplace, the cost of producing it has not yet had the same chance to fall.

This is not to say that there have not been advances in the techniques used to generate energy via fossil fuels; there certainly have been! But these techniques have had a chance to evolve in a way that some renewable energy techniques and technologies haven't.

As the methods to produce and improve renewable energy systems see more adoption, the costs associated with those methods will fall appropriately.

Secondly, the materials used in the manufacturing of renewable energy systems are often rare and costly. Solar panels again provide our example; they contain scarce materials such as silicon, which are not as abundant as fossil fuels. Also, we have been extracting coal and gas from the Earth much longer than we have been extracting silicon from it.

In addition, supply and demand is also contributing to the cost of renewable energy, solar energy in particular. The demand for solar panels at this point in time is much higher than the number of panels that are available. Everyone wants what's new! It is widely anticipated, however, that this situation will reverse itself.

In conclusion, the cost of renewable energy, for several reasons, will decrease over time. And that's good news for our environment, as well as our wallets.



Jason Grace
on behalf of the
BascoTec Internet Limited
Technologie Park 13
33100 Paderborn
Germany

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