Sylvie Willis
The transition from fossil fuels to clean energy is imperative to combat climate change. Despite the perception that renewable energy is more expensive, it is now the most affordable source of power in most parts of the world. The cost of clean energy technologies has been decreasing over the years due to technological advancements and improvements, making them more cost-competitive than conventional fuels like coal, natural gas, and oil. The International Renewable Energy Agency (IRENA) reported that around 90% of newly commissioned renewable energy is more cost-effective for electricity generation than most fossil fuels. The benefits of cheaper renewable energy will be passed on to consumers, making the transition to clean energy a financially prudent decision.
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What You'll Learn
Solar and wind energy are the most affordable sources of electricity
Solar and wind energy are now the most affordable sources of new electricity in 82% of the world, according to a recent study by RMI. This is largely due to the rising costs of fossil fuels, which have been impacted by the war in Ukraine and wholesale prices.
Solar PV became the most affordable renewable energy in history in 2021, after it became cheaper than gas. Onshore and offshore wind are also among the cheapest sources of renewable energy. In 2023, the IEA reported that 96% of newly installed, utility-scale solar PV and onshore wind capacity had lower generation costs than new coal and natural gas. Three-quarters of these new wind and solar plants offered cheaper power than existing fossil fuel facilities.
The cost of renewable technologies has been decreasing since 2010 due to technological advancements and economies of scale. The price of solar energy is expected to fall by half by 2030, and wind energy by a quarter, according to a report by clean energy think tank RMI. As renewable energy continues to get cheaper year on year, fossil fuels are becoming more expensive.
The transition to renewable energy sources will also reduce our dependence on gas, which is expected to reduce costs overall compared to the average electricity wholesale market price. In addition, renewable energy sources emit little to no greenhouse gases and will help to reduce our impact on climate change.
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Fossil fuels are subsidised by governments, clean energy less so
The cost of energy is a complex issue, with many factors influencing the price paid by consumers. One significant factor is the role of government subsidies, which can distort the true cost of energy and influence the adoption of clean energy technologies.
Fossil fuels have long been subsidised by governments worldwide, with these subsidies often taking the form of tax breaks, direct funding for research and development, and price caps. In 2023, governments collectively spent around $620 billion subsidising fossil fuels, compared to just $70 billion on consumer-facing clean energy investments. This disparity is significant and influences the relative costs of fossil fuels and clean energy for consumers.
The reasons for subsidising fossil fuels are varied. Historically, fossil fuel subsidies have aimed to promote cheap and abundant energy, which has contributed to economic growth. However, this has led to inefficient behaviour, with consumers burning more fossil fuels and contributing to climate pollution. Additionally, fossil fuel subsidies disproportionately benefit higher-income households, hindering growth and contributing to social inequities.
On the other hand, clean energy subsidies are often implemented to level the playing field and make renewable energy sources more cost-competitive. These subsidies can take the form of investments in research and development, tax credits for utilities or consumers, and requirements for a certain percentage of energy to come from renewable sources. While these subsidies have been successful in some cases, such as with solar and wind energy, the overall investment in clean energy transitions lags due to real or perceived risks and access to finance.
To accelerate the transition to clean energy and reduce the cost for consumers, policy interventions are crucial. This includes phasing out inefficient fossil fuel subsidies, implementing carbon pricing mechanisms, and providing targeted support for vulnerable communities. By addressing the stark inequalities in the current energy system, countries can promote sustainable and equitable outcomes while driving down the costs of clean energy technologies.
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Clean energy infrastructure requires less space
The transition to clean energy offers an opportunity to improve the relationship between energy production and nature. By focusing on wind and solar energy, the environmental impact of energy infrastructure can be significantly reduced. This can result in a net gain in the quality of natural habitats.
In addition to requiring less space, clean energy technologies are often more cost-competitive over their lifespans than those reliant on conventional fuels like coal, natural gas, and oil. Solar PV and wind energy are the cheapest options for new generation. The costs of renewable technologies have been decreasing due to technological advancements and economies of scale. According to a report by the International Renewable Energy Agency (IRENA), renewable energy sources are now more cost-effective for electricity generation than most fossil fuels worldwide.
The benefits of a faster transition to clean energy and growing shares of renewables will result in lower costs for consumers. Retail electricity prices are typically less volatile than oil product prices, providing more predictable costs. As renewable energy continues to become more affordable, it will drive further adoption and contribute to a more sustainable future.
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Clean energy is more reliable than fossil fuels
The IEA reported that in 2023, an estimated 96% of newly installed utility-scale solar PV and onshore wind capacity had lower generation costs than new coal and natural gas. Three-quarters of these new wind and solar plants offered cheaper power than existing fossil fuel facilities. The cost of renewable energy technologies has been decreasing since 2010 due to technological advancements and economies of scale, and this trend is expected to continue.
The benefits of a faster transition to renewable energy sources will result in lower costs for consumers. Retail electricity prices are typically less volatile than oil product prices, providing more predictable costs. Additionally, a transition to wind and solar energy can result in significantly reduced environmental impacts and biodiversity losses.
Furthermore, renewable energy sources are more reliable in terms of their availability. It tends to be windier during the winter months when electricity demand is higher, so wind turbines produce more power during this time. Just one rotation of the blades on a turbine at Dogger Bank, the world's largest offshore wind farm, can generate enough clean energy to power an average UK home for two days.
While there may be concerns about the upfront costs of transitioning to clean energy, the long-term gains in terms of cost savings, environmental benefits, and job creation make it a more reliable and sustainable option than fossil fuels.
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Clean energy creates more jobs
Clean energy is cheaper than fossil fuels, and this is only set to continue as renewable energy becomes more affordable. In 2023, an estimated 96% of newly installed, utility-scale solar PV and onshore wind capacity had lower generation costs than new coal and natural gas.
This is good news for the global economy, and it is also positive for employment. Clean energy creates more jobs than fossil fuels. A broad government study found that renewable energy creates 4.3 times as many jobs as coal and 5.4 times as many as natural gas. The ongoing shift to clean energy is, therefore, beneficial for employment and workers.
In the US, there are now more jobs in solar power than in oil, gas, or coal extraction. This is reflected in the statistics, which show that from 2014 to 2015, solar employment increased by 6%, while employment in upstream oil and gas and support services dropped by 18%. This is due to the falling consumption of coal and the continued reduction in labor intensity.
Clean energy jobs are also generally of higher quality and are more distributed. The American Clean Power Association (ACP) reported that clean energy manufacturing contributes $18 billion to GDP, attracts $33 billion in domestic investment, and supports 122,000 jobs. Clean energy provides direct employment for over 460,000 Americans.
The transition to clean energy is, therefore, an opportunity to create more jobs, as well as being beneficial for the economy and the environment.
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Frequently asked questions
Yes, renewable energy is cheaper than fossil fuels. Solar and wind energy are now the most affordable sources of new electricity in 82% of the world.
The cost of renewable energy technologies has been decreasing since 2010 due to technological advancements and economies of scale. In 2023, 96% of newly installed, utility-scale solar PV and onshore wind capacity had lower generation costs than new coal and natural gas.
Clean energy is a more reliable and affordable source of energy than fossil fuels. It also creates three times as many jobs as the fossil fuel industry and helps to reduce greenhouse gas emissions.
The future of clean energy looks promising, with advancements in technology and improvements in energy efficiency. However, challenges such as geopolitical tensions and trade tariffs could hinder progress.
