In two-thirds of the world, renewable sources of power are more affordable than carbon-based electricity. This shift represents a substantial victory for green energy, as it may offer the push the industry needs to become the new norm. Here's how this monumental shift happened.
Readers Choice 2020: How Solar and Wind Energy Are Now Cheaper than Fossil Fuels
Emily Folk | Conservation Folks
Cost efficiency has been one of the primary focuses of the sustainable energy industry for years. For renewables to be a viable replacement for fossil fuels, companies need to price them similarly. In the past few years, the industry surpassed this goal, as solar and wind energy are now cheaper than fossil fuels in many areas.
In two-thirds of the world, renewable sources of power are more affordable than carbon-based electricity. This shift represents a substantial victory for green energy, as it may offer the push the industry needs to become the new norm. Here's how this monumental shift happened.
Energy Subsidies
One of the leading causes behind the affordability of wind and solar energy is government energy subsidies. To combat climate change, many governments offer consumers and businesses subsidies for using sustainably-sourced power. These monetary incentives reduce the end cost of choosing renewable energy sources.
Even if a sustainable source of energy costs more upfront, it may be cheaper in the long run. By subsidizing renewables through tax breaks or direct payments, governments pay back a portion of these initial costs. The result is a reduced overall economic impact on consumers who invest in green energy.
Subsidy programs do carry the caveat that they are taxpayer-funded operations. Considering that almost everyone pays taxes and far fewer buy renewable energy, this factor doesn't affect the end cost that much. For the individual investing in clean energy, the economic impact is smaller still, even including taxes.
New Technology
As more people have adopted or invested in solar and wind energy, they've funded research in these areas. More studies have led to the creation of more efficient technology, which makes renewables more affordable. Wind and solar energy are technologies, not fuels, so as science improves, they get cheaper.
Environmental factors like solar radiation can cause product failures, so renewable energy technologies need to be resilient. Balancing resilience and efficiency was an issue for earlier machines, but that's not the case anymore. Modern green tech is cheap to produce, durable and harnesses more energy.
Fossil fuel technologies may increase fuel efficiency, which makes them cheaper, but that's not the only factor. Even with cost-effective means of using fossil fuels, users still have to buy fuel. No governments or organizations control the supply of sunlight or wind, so advances in green tech have a more significant influence.
Market Volatility
Fossil fuels are subject to market volatility that's not present in the sustainable energy industry. Unlike renewables, fossil fuels don't necessarily become cheaper over time. These energy sources are finite resources, and various companies and governments control their supply, creating a volatile market.
Both crude oil and coal have undergone several price hikes in the past few decades. The price of renewables, on the other hand, consistently trends downward. Overall, fossil fuels are becoming more expensive while the opposite is true of renewables.
Fossil fuels aren't always expensive. Recently, crude oil has seen a massive price drop, but it won't remain this cheap. If historical trends are any indication, the price will eventually rise again, unlike wind and solar energy.
The Bright Future of Renewable Energy
Solar and wind energy may not be a long way from becoming a standard power source. These trends mean that renewables aren't just the more environmentally-conscious choice, but they make more economic sense as well. As technology continues to improve and more authorities invest in renewables, they'll become cheaper across the globe.
The price drop in renewables isn't a momentary fluke. By nature, these resources will continue to grow more affordable, regardless of what the fossil fuel market does.
The content & opinions in this article are the author’s and do not necessarily represent the views of AltEnergyMag
Comments (0)
This post does not have any comments. Be the first to leave a comment below.
Featured Product
