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Renewables
Why Renewables? The Challenges
Costs
The costs of renewables have dropped sharply in recent years and, in
many cases, will continue to drop. But at today's costs, they still are
far from cheap. Solar (photovoltaic) systems
typically cost 25 to 50 cents per kWh – far above that of fossil-fuel
based electricity. Geothermal costs
are quite a bit lower – typically around 6 cents per kWh, and in
some cases even less. Wind costs are quite variable,
but new wind projects in 2002 are typically (but not always) in the 4
to 6 cents per kWh range.
Whether or not geothermal and wind are 'competitive' with fossil fuels is a contentious and unending argument. (Most agree that photovoltaics clearly cost more). In terms of first (initial) costs only, the purchase price of a natural gas turbine is on the order of $500 per kilowatt, or roughly half the first costs of a wind turbine. Of course, looking only at first costs is much too simplistic. Pulling fuel and operations and maintenance costs into the calculation results in wind being much closer in cost – but at today's natural gas prices of $3 to $4 per 1000 ft3, natural gas-fired electricity is going to be less expensive per kWh output than that from wind. This conclusion will vary depending on assumptions about future natural gas prices, the time value of money, and other factors – but in many cases it is still the case that renewables cost more.
Whether or not renewables are worth the extra cost is of course a separate question. Renewables have many advantages over fossil fuels, notably reduced environmental impact. And energy users may be willing to pay a premium for them. But it's worth recognizing from the outset that, at today's fossil fuel prices, renewables will, in most cases, cost more.
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