Types of Renewable Energy: A Cost Comparison
The escalating prices of crude oil and natural gas as supply dwindles has prompted some reluctant governments to further consider investment in green energy alternatives. However, conventional types of renewable energy resources with widespread, practical usage all require initial capital investments that often dwarf what is required for natural gas and coal power plants.
Fortunately, the increase in research and development has yielded cheaper production methods and more durable, cost-effective materials that continue to bring these costs down.
In an effort to assess the real viability of alternative energy solutions on a large-scale, it is useful to compare the cost per kilowatt-hour (kWh) for each of the five most common types of renewable energy resources. The cost in cents per kWh includes initial capital costs (amortized), maintenance, fuel and waste disposal costs. Tax incentives are built into the calculations.
Natural gas and coal power currently have per kWh costs of $0.039 – $0.055, although these costs continue to rise as energy reserves continue to be depleted. Natural gas burns more cleanly than coal and doesn’t require as much mining, although they both produce substantial carbon dioxide emissions. Renewable resources, in contrast, enjoy pricing stability for the next 20 or more years. Along with minimal or zero emissions, tax subsidies, and inexhaustible fuel sources, sustainable resources have a host of environmental and financial benefits.
1. Biomass – ($0.029-$0.09/kWh)
Cost estimates vary depending on the combustion method used. In solid waste landfills, naturally occurring anaerobic digestion creates methane used to generate electricity. Similarly, waste generated by lumber mills provides fuel that is essentially free. A slightly more costly source of biomass energy is the anaerobic digestion of animal manure. Conventional combustion technology is the most flexible but also the most expensive to implement and operate. Although these types of renewable energy resources can eliminate waste products while generating electricity, biomass fuels are bulky and expensive to transport far distances. And unlike other renewable resources, the cost of biomass fuels is not being driven down by technological innovation.
2. Wind – ($0.038-$0.06/kWh)
The use of lightweight but durable materials and more aerodynamic designs have significantly lowered the production cost of the wind turbine. Cost alone is not the only concern when considering wide-scale deployment of wind farms. Susceptibility to failure from mechanical fatigue, the inability to function well in the rain or in cold climates, and the noise created from vibration, should all be taken into account when considering the true cost of using this abundant energy source. Despite the substantial upfront investment required for the generator, it requires a marginal operating cost of less than $0.01 per kilowatt-hour.
3. Geothermal – ($0.039-$0.30/kWh)
The considerable variability of costs for this renewable energy resource comes largely from the type of plant constructed and the depth of drilling required. Boasting incredible uptime of more than 97%, geothermal plants can operate more efficiently and consistently than coal plants with uptimes of around 70%. Geothermal energy is created by pumping heated water from deep below the surface of the earth which is then used to turn a steam turbine. In comparison to natural gas, the annual reserves available are quite low. Only 13 US states have geothermal resources, whereas all of them have natural gas resources. Binary geothermal plants (currently the preferred technology) are small, and can be built in a variety of different places including acreages and rural farmland. Even though they are smaller, they still carry a higher initial investment than natural gas plants. Despite the sustainability of its free fuel source, the high cost of well drilling and pipeline construction prevent many of these plants from ever being built.
4. Hydro – ($0.051-$0.11/kWh)
Accounting for more than 20% of worldwide energy production, hydro power is the most practical and universal of these five types of renewable energy resources. While they can only be built in a limited number of places due to the extraordinary amount of space required, hydro power plants are the most efficient source of green electricity and contribute no waste or emissions into the environment. Environmentalists argue that large hydroelectric power projects destroy marine ecosystems and disrupt fragile habitats. In response to these protests, governments and private enterprise have developed several cutting-edge technologies such as hydrokinetic power systems that generate power without the need for dams.
5. Solar – ($0.15-$0.30/kWh)
Solar power systems include photovoltaics, which convert the sun’s energy directly into electricity, and solar-thermal which uses solar energy to heat water in residential and commercial applications. The high cost of these types of renewable energy is largely due to the high price of silicon crystals. Silicon prices continue to rise as their widespread production applications are leading to supply shortages. However, newly developed alternative materials could bring the cost down below $0.05/kWh in the near future.
The environmental benefits of using green electricity unarguably outweigh any financial drawbacks. Nonetheless, it’s still prudent to consider the real financial viability of each of these leading types of renewable energy resources as a real alternative to fossil fuel-based energy.