People wonder: Is renewable energy affordable? How does it compare to fossil fuels? Can we make enough money from renewable energy to make up for what we spend to set it up?

We need to understand the costs of renewable energy to answer these questions. By looking at how much it costs to start using renewable energy, how much we need to keep it running, and how it benefits us in the long run, we can see if it’s worth the investment.

In 2020, the world invested over $300 billion in renewable energy projects, showing how much we’re investing in clean energy.

In this blog post, we’ll go through the costs of renewable energy in simple terms. We’ll also tackle common worries and misunderstandings, and we’ll show how renewable energy can help us build a cleaner, brighter future.

Let’s dive right in;  

Initial Investment: Upfront Costs of Renewable Energy Projects

Starting renewable energy projects requires a big initial payment. Here’s a look at how much it costs to get started with different types of renewable energy compared to fossil fuels:

Solar Energy

To set up solar panels on rooftops or in fields, you’ll need to spend around $15,000 to $25,000 for a home system.

Wind Energy

Putting up wind turbines, which generate electricity from wind, can cost between $1.3 million to $2.2 million per megawatt. That’s a lot!

Hydropower

Building dams and turbines to generate power from water can range from $1,000 to $5,000 per installed kilowatt. It varies a lot depending on the size.

Geothermal Energy

Drilling wells to access heat from the Earth’s core for power costs between $2 million to $5 million per megawatt. It’s pricey!

Biomass Energy

For using materials like wood or crops to create energy, building a plant can cost a lot, depending on the size and what’s available.

Comparatively, fossil fuel projects also need a lot of money to start. For example, natural gas power plants might cost around $1 million to $1.5 million per megawatt, while coal plants could be between $2 million to $3 million per megawatt.

While renewable energy setups have higher initial costs, they bring benefits like lower running costs and less harm to the environment in the long run. So, even though it’s expensive to start, investing in renewable energy can pay off in the future.

Operational and Maintenance Costs

Operational and maintenance (O&M) costs are essential for the efficient, long-term operation of renewable energy systems. 

Here’s a brief overview of O&M costs for various renewable energy technologies:

Solar Energy:

• Routine Maintenance: Minimal, mainly involves cleaning panels to maintain efficiency.
• Inverter Replacement: Typically needed every 10-15 years.
• Monitoring Systems: Costs for performance monitoring to quickly address issues.

Wind Energy:

• Inspection and Repairs: Regular checks for wear and tear on turbines.
• Lubrication and Parts Replacement: Routine lubrication and component replacement.
• Monitoring Systems: Systems to optimize performance and identify maintenance needs.

Hydropower:

• Turbine Maintenance: Regular inspections and maintenance to prevent wear.
• Dam Upkeep: Maintaining structural integrity and managing reservoirs.
• Environmental Compliance: Monitoring water quality and managing fish populations.

Geothermal Energy:

• Well Maintenance: Ensuring wells remain productive and safe.
• Equipment Servicing: Regular maintenance of turbines and cooling systems.
• Monitoring Systems: Tracking system performance and health.

Biomass Energy:

• Feedstock Management: Procuring, transporting, and processing biomass.
• Equipment Maintenance: Maintaining combustion systems and digesters.
• Ash Disposal: Managing by-products and ensuring emission compliance.

Renewable energy systems generally have lower O&M costs than fossil fuel systems due to fewer moving parts and no fuel costs. 

Having a good understanding of these costs helps evaluate the long-term economic benefits of renewable energy.

Cost Comparisons: Renewable Energy vs. Fossil Fuels

Now, let’s compare the cost of renewable energy and Fossil fuel; 

Incentives and Subsidies Help

Government incentives and subsidies play a crucial role in making renewable energy more affordable and competitive with fossil fuels. Here’s a look at the different types of financial support available:

Tax Credits and Rebates

• Investment Tax Credits (ITC): Reduces the cost of installing renewable energy systems by allowing a percentage of the installation cost to be deducted from tax liabilities.
• Production Tax Credits (PTC): Provides a per-kilowatt-hour tax credit for electricity generated by renewable energy resources.
• Rebates: Offered by federal, state, or local governments to lower the initial costs of renewable energy systems.

Grants and Loans

• Grants: Financial assistance provided by government agencies to support renewable energy projects.
• Low-Interest Loans: Government-backed loans with favourable terms to help finance renewable energy installations.

Feed-in Tariffs and Renewable Energy Certificates

• Feed-in Tariffs (FiTs): Guarantees long-term contracts and a fixed price for renewable energy producers, encouraging investment by ensuring a return on investment.
• Renewable Energy Certificates (RECs): Tradable certificates representing the environmental benefits of generating one megawatt-hour of renewable energy, providing additional revenue streams for producers.

These incentives and subsidies help reduce the financial barriers to adopting renewable energy, making it more accessible and attractive to individuals, businesses, and large-scale investors. 

By lowering upfront costs and providing financial stability, they accelerate the transition to a more sustainable energy future.

Also Read: Wind Power Technology 101 (Everything You Should Know)

Final Thoughts

We’ve learned a lot about renewable energy costs. While it might seem expensive to start with, it’s worth it in the long run because it helps our planet and saves money.

Renewable energy, like solar and wind power, is becoming cheaper and more popular. Even though it costs money upfront, it pays off in the end because it’s good for the environment and our wallets.

Let’s keep supporting renewable energy by investing in it and making policies that encourage its use. By doing this, we can fight climate change, use fewer fossil fuels, and make our world better for everyone.

Together, we can make a difference. Let’s choose renewable energy to build a cleaner, healthier future for ourselves and the planet.