Making bucks without carbon

Why sustainable energy is no longer an expensive trend.
3 Min.

Text: Felix Bürkle, 21.08.2020

Renewable energy is a polarizing topic. Not least because it is inevitably linked to the increasingly heated debate on climate change and how to combat it. While some people praise renewable solutions for power generation as the only alternative for the continued existence of our planet, others see them as an ideological construct that is, at best, in its infancy and cannot even meet the current demands. But is this accusation justified? An internationally respected organization says no – and even demonstrates how renewable energies could secure long-term prosperity and lower energy prices for end consumers.

A shadowy existence

Looking at the current situation of renewable energies in Germany, this tense relationship can be seen in many places. On the one hand, demonstrators occupy forests threatened by deforestation or construction sites on which coal-fired power plants are to be built. On the other hand, whenever the construction of wind turbines is planned somewhere, well-organized citizens’ groups are formed who are afraid of too much shade on their terraces and thus often impede the projects. These examples, albeit exaggerated, show how divided the general population is when it comes to renewable energies. But where do these doubts come from?

Expensive, inefficient and not very powerful?

For many, renewable energies feel like an alternative that is not needed at all. After all, electricity has been coming out of the socket reliably for decades. Why would you change anything? As a comparatively new way of producing electricity, renewable energies have had a major weak point precisely here. But it is not only the trust in their reliability that was lacking. From a technical and economic point of view, the technologies were also unable to compete with the established systems for a long time. The development and operation of renewable energies cost more money than could be earned with them.

This ultimately also deterred end consumers, for whom so-called green electricity had long been available from many suppliers. Private PV systems on the roof also tended to be met with derision. Everything was somehow new and uncertain. Horror scenarios of a collapse of the electricity supply were circulating if, as some demanded, fossil fuels were to be completely abandoned in the near future.

But on closer inspection, these times seem largely over in 2020. Renewable energies are well on the way to becoming the best alternative in every respect.

Working together for more sustainability

2009 saw the formation of IRENA, the International Renewable Energy Agency. This alliance of over 160 countries has set itself the goal of promoting and using renewable energies. The first ideas for something like this date back to the 1980s, when a commission headed by former German Chancellor Willy Brandt focused on international development issues. Today, IRENA is one of the most respected organizations in the field of renewable energy and spreads awareness of the topic on a regular basis, thanks to reports, studies and other publications.

Ten years that change everything?

In June 2020, IRENA published the report “Renewable Power Generation Costs in 2019.” Contrary to what the title might suggest, however, it is not only about the year 2019, but can be understood as a kind of summary of the past decade. According to IRENA, this was a time in which the entire renewable energy sector had developed to such an extent that it could now finally be transformed from a skeptically eyed vision into a real alternative.

Photovoltaics – more efficient than ever before

The quicksheet published by IRENA to accompany the report provides the most impressive figure right at the beginning – electricity production costs for photovoltaics have fallen by 82 percent since 2010. For large PV systems, prices of $0.068 per kilowatt hour can already be achieved. You do not need to be an economic expert to realize that this development holds enormous potential for all parties involved in the energy market. The costs for the production of wind energy also show respectable reductions of 39 percent on land and 29 percent at sea. To determine these figures, the IRENA 2019 report evaluated the cost data of over 17,000 projects. The overall result was that 56 percent of all newly commissioned plants were below the most cost-effective comparable alternative using fossil fuels.

According to IRENA calculations, projects commissioned in 2021 will again massively undercut the above figures, meaning that PV prices of $0.039 per kilowatt hour will be achieved. This makes them 20 percent more cost-effective compared with coal power.

As the reason for the above-average good development in photovoltaics, IRENA cites the approximately 80 percent drop in original costs for PV modules, which previously made amortization more difficult and thus also deterred end consumers. But now their attractiveness for generators as well as commercial and private users of electricity is increasing immensely.

A question of money

At present, however, coal power continues to play a central role. In order to realize the potential of renewable energies, it is also necessary to consider the potential for savings if we can consistently do without coal in the future.

IRENA makes the following calculation: if the least competitive 500 gigawatts of existing coal-fired power plants were to be replaced by photovoltaic and wind power, the system production costs would fall by between $12 billion and $23 billion per year, depending on the price of coal. So far, these costs have largely been passed on to end customers. With the consistent support of renewable energies, the costs of power generation could be significantly reduced, because, in addition to indispensable measures such as maintenance and grid work, the cost factor that is probably most decisive, financially speaking, is eliminated – the procurement of fossil fuels.

Achieving prosperity through independence

Even if the replacement of old coal-fired power plants initially involves investment, a system that pays for itself can be created in the long term, which everyone can benefit from economically – from the generator to the end customer. However, energy supply is not only a question of money.

Fossil fuels are finite and only available in certain regions of the world. This leads to dependent relationships, which often also lead to massive political tensions if used as a means of pressure. Renewable energies can remedy this situation and democratize power generation to a certain extent. Because wind, water and sun are always available, albeit in different forms. Provided that the necessary technology and infrastructure are available (and wanted), electricity supply can be guaranteed.

More sustainable, more cost-effective, safer – this is the electricity supply of the future thanks to renewable energies. Anyone who invests now will have a decisive edge when it comes to ideally combining environmental protection and economic efficiency in the future.