Renewable Energy and Economics: Is 100% Renewable Energy in the US Economically Feasible?

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Is a 100% renewable energy nation economically feasible?

 

Electric cars… high efficiency buildings… the world is slowly evolving to attempt to decrease our carbon footprint and preserve our dwindling natural resources. One of our largest contributors to this footprint is our energy sector, which is responsible for  37% of the US total greenhouse gas output. Around the world we have been striving to meet their energy needs with renewable sources such as hydroelectric, wind, and solar power in order to cut down on harmful greenhouse gas emissions. Today, hydro power, solar power, and wind power is widely used throughout the US, however the three power sources combined only provide for 13% of the nation’s power consumption. In a world where climate change risks and the dwindling amount of natural resources can eventually threaten the lives of billions of people, how come we as a nation have not done more to use fully renewable energy sources?

The ugly truth is that it is a much more desirable business plan to purchase a coal or natural gas fired plant than it is to independently build a solar field, a wind farm, or a hydroelectric plant. Resources such as coal and natural gas are abundant and inexpensive, making them highly desirable fuels for energy production. The issue with these plants plants is that they release large amounts of greenhouse gases such as CO2. The main concern is with coal plants, which account for 77% of the CO2 production for the entire energy sector. More recently, companies that invest in power plants have been leaning towards natural gas plants for their cleaner energy and the abundance of natural gas as a result of domestic fracking, however coal plants still make up a third of the nation’s power supply.

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On the other hand, many renewable energy sources are not nearly versatile of investments as are coal and natural gas plants since they have a more unpredictable energy output and, on average, do not produce quite as much energy as coal and gas plants do. A gas or coal plant can be built almost anywhere, whereas wind, solar, and hydroelectric plants rely on delicate climate patterns to produce energy. For example, in order for solar plants to operate effectively they need to be built in places where it is dry and sunny year round, such as in the southwest and in southern california as the amount of sun received by such a plant varies directly with the amount of energy produced. Therefore, it would be much less profitable or effective to build one in a more variable climate, such as in New England or in the northwest, where winters can be unpredictable and storms occur frequently, giving the panels much less sunlight to work with. Wind Farms can only produce a lot of energy if they are built where there is wind year round, making them popular on the coast and in the great plains. This however limits them from being built in locations inland where there is less wind, as the windmills would not be able to produce enough energy to make a large revenue. Hydro plants are can produce a lot of energy when built on a large river, however they are very difficult and expensive to construct and can clash with conservation laws in some states.

After significant deregulation in the 1980’s, our national energy sector became based upon the idea that large companies would treat power plants as investments, and therefore would seek a large profit from them. Because of this, investors sought to build plants that had large profit margins and had easily predictable revenues. Up until recently, the issue with renewable plants is that, on average, they are harder to manage and they propose a less profitable venture, and therefore were avoided by most investors. However, nowadays there are many government run initiatives to increase renewable energy usage in the country which, in many cases, make renewable plants much more desirable investments. I have consulted a relative of mine who works at a company that invests in power plants and he told me that many state governments are now required to have a certain percentage of their energy come exclusively from renewable energy sources and, because it is crucial that they meet the requirement, they are willing to create lucrative long-term contracts with power distributors who run renewable plants. For example, say Arizona is required to have 30% percent (not factually accurate) of their energy consumption come from solely solar power plants. In order to meet the legal requirement, the state government of Arizona would be forced to pay a provider on a very long term contract (ex. 20 years). Because of lucrative profits and the guarantee of payment, it would appear as a very favorable investment to develop a solar power plant in Arizona. Laws such as these are increasing the usage and development all types of sources of renewable energy and are causing many investors to add many renewable plants to their power portfolios.

Political action and dwindling resources are making the switch to renewable energy widespread, however new innovations with nuclear energy and with gas plants are making these traditional methods increasingly environmentally friendly. In my opinion, continual political pressure will cause a lot of growth in the renewable energy sector, however in the near future the idea of having 100% renewable energy is illogical as it is much more economically feasible to run more advanced models of traditional plants alongside renewable energy sources rather than focus 100% on renewable energy.
Read More Here:

http://www3.epa.gov/climatechange/ghgemissions/gases/co2.html

http://www.eia.gov/forecasts/aeo/electricity_generation.cfm

 

About the author

Theo Bartlett is a seventeen-year-old from Rye, New York and is currently a V-former at St. Mark’s School in Southborough Massachusetts. At St. Marks, Theo is a member of the varsity cross-country team, rows on the varsity crew team, is a prefect in Maple dorm, and works in admissions as an admissions prefect. He is considering majoring in economics or possibly business in college. Theo loves to ski and sail in his freetime. He has worked at the Stage Harbor Yacht Club for four years, where he teaches children ranging from eight to fourteen years old how to sail. Theo is also a part time volunteer at Pleasant Bay Community Boating in Chatham, MA , where he teaches adolescents and adults with mental disabilities how to sail. Theo loves to spend time with his parents, his three younger siblings, and his dog.

1 Comment

  1. Victor Imparato

    Money makes the world go ’round, and there is too much money invested in coal and oil companies to completely stop the U.S. involvement in the industry. I’m all for producing cleaner energy, but we can’t depend solely on solar, wind and other methods of producing energy.

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