Why Is Green Energy Getting So Expensive?

In the midst of our accelerating climate crisis, energy is facing several hot-button questions about the future of the industry. But on the heels of a recent Energy Policy Institute at the University of Chicago study, which debates the cost-effectiveness of renewable mandates, the real question is this: if renewable costs have plummeted, why are electricity prices soaring? 

For years, green energy has been touted by policymakers and energy leaders as the easy, cost-effective solution for phasing out fossil fuels. While these claims aren’t necessarily wrong, they’re not entirely correct, either. Generating green energy might be cheaper than brown, but the reality is that green energy is only inexpensive in the first stage of the transition to net-zero. As we progress in the transition (which we should absolutely be continuing, let’s be clear), costs are going to rise because the road implementation is getting bumpier. 

Green Energy’s Intermittency Creates Cost Issues

Until now, renewable energy like wind and solar have been largely inexpensive because of the large fossil fuel generation that still supplies most of our electricity needs. On days when the sun doesn’t shine or the wind doesn’t blow, we rely on fossil fuel energy to fill in the gap. However, electricity becomes more expensive as renewable implementation increases and fossil fuels fall to the wayside.

Countries that have recently stepped up their wind and solar capacity, like Germany and England, are painfully aware of this conundrum. After last year’s summer of mild wind and little sunshine, both countries were forced to pay record prices for liquefied natural gas to make up for the lack of renewable energy generation. 

The solution to moving past the need for fossil fuels on days the weather won’t cooperate is better energy storage technology. We’ll need to find a way to store the excess electricity generated on very sunny or windy days to replace fossil fuels completely. Battery storage is widely recognized as a viable option, but battery storage costs need to fall by a lofty 90% before it becomes cost-competitive.

Renewables Infrastructure Expansion Comes With A Higher Price Tag

Generating renewable energy from sources like wind and solar requires massive amounts of space in geographically advantageous areas. The U.S. is using up the best locations pretty quickly, which means energy generators will soon expand to locations that are further away from cities and existing infrastructure. It’s estimated the U.S. will need to lay out thousands more miles of transmission lines to reach remote windy and sunny areas. That will require a 50% expansion of the U.S. power grid. Public spending and higher energy bills will need to foot part of the bill. 

Higher transmission costs are also associated with transporting renewable energy from remote areas to denser populations. As the grid continues to expand into more desolate regions, the price of transmission will rise, too. Non-hydro renewables generation mushroomed by 77 percent between 2012 and 2017 — and so did transmission costs, by 50 percent.

Green Energy: A Worthy But Expensive Cause

Though the road to implementation is a long one ahead, renewables will give us the opportunity to avert the point of no return in the climate crisis. 

In the grand scheme of things, renewable energy implementation is still in its infancy. We’ll wobble before we can walk, meaning we’ll have to grit our teeth and pay high prices for the trial and error associated with new investments in renewable energy infrastructure. There’s certainly no doubt that it’s costing a lot to prevent future climate disasters from striking — but the cost of inaction is far greater.

by | Aug 15, 2022

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