Assessment Of The Short, Medium And Long Term Cost Implication Of Renewable Energy

Electrical Electronics Engineering

Assessing the short, medium, and long-term cost implications of renewable energy involves analyzing various factors that impact its economic viability over time. In the short term, initial investment costs for renewable energy technologies such as solar panels, wind turbines, and biomass facilities may be higher compared to conventional fossil fuel alternatives. However, these costs are offset by lower operational and maintenance expenses, as renewable energy sources typically rely on abundant and free natural resources like sunlight and wind. In the medium term, advancements in technology and economies of scale lead to significant reductions in the cost of renewable energy infrastructure, making it increasingly competitive with traditional energy sources. Additionally, government incentives and subsidies further drive down costs and accelerate deployment. Over the long term, the declining cost trajectory continues, facilitated by ongoing innovation, improved efficiency, and widespread adoption of renewable energy solutions. Moreover, the long-term benefits of renewable energy, such as reduced environmental impact, energy security, and resilience to price volatility, contribute to its overall cost-effectiveness. Despite initial investment challenges, the transition to renewable energy offers substantial economic advantages, creating jobs, stimulating economic growth, and mitigating the financial risks associated with climate change and fossil fuel dependency.

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

As energy demand increases over time in many places, countries around the world and local governments diversify investment in a variety of energy sources to meet the demand [Carli et al, 2017]. Fossil fuels such as oil and natural gas are reliable energy sources, but are not sustainable and cause significant and irreversible damage to the environment in the long term in addition to their immediate damage such as fine dust emissions due to burning oil and mercury emissions caused by coal combustion. Renewable energy alternatives such as solar and wind are widely available and may be explored to meet part of the demand. In addition, improving the energy efficiency of existing applications is a cost-effective way to help meet the demand without significant increase in energy production [Zhong et al, 2014].

Development of energy alternatives to fossil fuels faces a number of challenges [Zhong et al, 2014]. First, several alternatives such as nuclear, biomass, solar, wind, and hydroelectric are available. A municipality has limited resources and cannot invest in all alternatives simultaneously and equally [Carli et al, 2017]. It is difficult to predict which energy alternatives will be most beneficial in the long term and determine which alternatives should be invested and the amount of investment. Secondly, the development of energy alternatives depends on many factors such as geographic conditions, population, societal needs, and politics. An energy alternative that is well suited for one city may be the worst choice for another city. Thirdly, there are many criteria such as cost and security that dictate the selection of energy alternatives. Which criteria should be included in the decision process for comparing energy alternatives and how to weigh different criteria need to be analyzed.

Newly installed renewable power capacity increasingly costs less than the cheapest power generation options based on fossil fuels. The cost data presented in this comprehensive study from the International Renewable Energy Agency (IRENA) confirms how decisively the tables have turned.

More than half of the renewable capacity added in 2019 achieved lower electricity costs than new coal. New solar and wind projects are undercutting the cheapest of existing coal-fired plants, the report finds. Auction results show these favorable cost trends for renewables accelerating.

Solar and wind power costs have continued to fall, complementing the more mature bio energy, geothermal and hydro power technologies. Solar photovoltaic (PV) shows the sharpest cost decline over 2010-2019 at 82%, followed by concentrating solar power (CSP) at 47%, onshore wind at 40% and offshore wind at 29%.

Electricity costs from utility-scale solar PV fell 13% year-on-year, reaching nearly seven cents (USD 0.068) per kilowatt-hour (kWh) in 2019. Onshore and offshore wind both fell about 9% year-on-year, reaching USD 0.053/kWh and USD 0.115/kWh, respectively, for newly commissioned projects. Costs for CSP, still the least-developed among solar and wind technologies, fell 1% to USD 0.182/kWh.

Among other implications:

Replacing the costliest 500 gigawatts of coal capacity with solar and wind would cut annual system costs by up to USD 23 billion per year and yield a stimulus worth USD 940 billion, or around 1% of global GDP.
Replacing the costliest coal capacity with renewables would also reduce annual carbon dioxide (CO₂) emissions by around 1.8 gallstones, or 5% of last year’s global total.
By 2021, up to 1 200 gigawatts of existing coal-fired capacity would cost more to operate than new utility-scale solar PV would cost to install.
Continuing cost declines confirm the need for renewable power as a low-cost climate and carbonation solution, aligning short-term economic needs with medium- and long-term sustainable development goals.
Renewable power installations could form a key component of economic stimulus packages in the wake of the COVID-19 pandemic.

Along with reviewing overall cost trends and their drivers, the report analyses cost components in detail. The analysis spans around 17 000 renewable power generation projects from around the world, along with data from 10 700 auctions and power purchase agreements for renewables.

1.2 PROBLEM STATEMENT

Cities around the world face a great challenge in establishing a short, medium and long-term strategy for the development of energy alternatives because of their cost implication. Is because of the cost of purchase and maintenance the people considers most when it comes to having a renewable energy sources. This study addresses the situation.

1.3 AIM AND OBJECTIVES OF THE STUDY

The main aim of this work is to determine the short, medium and long term cost implication of renewable energy. The objectives are:

To determine the present and future cost of using renewable energy
To discuss the challenges of renewable energy

To provide solution to renewable energy challenges

1.4 RESEARCH QUESTION

What are two long term benefits of renewable energy sources?
What are the costs disadvantages of using renewable energy?

What are the costs of renewable energy sources?

Is renewable energy cheaper in the long run?

1.5 SIGNIFICANCE OF THE STUDY

This research will help to assess renewable energy and identify the energy alternatives for a city using the analytic hierarchy process. The methodology integrates experts’ input and data analytics and helps decision-makers form long-term strategies for renewable energy development.

1.6 SCOPE / LIMITATION OF THE STUDY

Many form of electricity generation have existed in the past, But the twenty-first century is already seeing the start of the next great transition in energy sources—away from fossil fuels towards renewable energy sources. The scope of this work focused on assessing the cost implication of renewable energy.