What is the Cost of Renewable Energy?

What is the cost of renewable energy? This is the question that politicians should be asking themselves before they compose their energy policy. Obviously there are a lot of variables that influence the answer here. Technologies are developing all the time so efficiency is likely to improve over time - and thus the cost will fall. In wind energy the costs are being driven down by size, the latest and largest wind mill to date was erected in August 2012 in Denmark, a Siemens giant at 6 MW and 196 meters height.

World's largest Windmill 2012. Credit: Ingeniøren

Subsidies, tax exemptions as well as unit compensation is likely to change over time, as politicians change policies. Unit costs are influenced by the size of the investment, but also by the life time of the investment as well as the operation and maintenance costs. In some cases there are fuel costs that can change over time as demand and supply can change over the life time of the investment, in other cases (wind, solar, hydro and wave) the "fuel" generally is free, but can vary in quality and quantity.
With this list of variables it is clear that it can be difficult to compare different technologies. But we would still like the answer, thank you very much. So how about this chart from Alt Energy Stocks:

Cost comparison of different renewable energy technologies. status 2009. Credit: altenergystocks.com

The chart dates back from 2009 and is based on a California context. Interesting to see that solar comes out as a very expensive type of energy. Surely the Solar PV industry shakeout has changed this picture a bit. But is it enough to defend the big move Germany has made into solar? Resulting in a record 40% supply of national energy production on one sunny day in May 2012.

Installation price of solar PV plants in Germany have fallen 50% since 2009 after the industry shakeout. Credit: Bundesverband Solarwirtchaft.

This is surely an interesting subject that I hope to revisit soon, so we can get more facts on the table.

What is Renewable Energy?

A lot of people get a bit confused, when they hear about renewable energy. The energy part most people understand, but what is really renewable? The term renewable energy comes as an alternative to finite energy sources also known as petroleum or mineral oil in its wider sense. In the time perspective of the human being the energy that we pump up or extract from the interior of our planet are finite and exhaustible and NOT considered renewable.

So what is renewable energy? If we turn to people already in the market as authorities on this subject in this case Kachan & Co, the inventor of the cleantech term they have recently published their revised definition of renewable energy. They consider renewable energy to consist of the following 11 technologies: 

- Wind

- Solar

- Renewable fuels (biofuels)

- Marine

- Biomass

- Geothermal

- Fuel Cells

- Waste-to-Energy

- Nuclear

- Emerging (osmotic power and kinetic power)

- Measurement and Analytics

In fact Kachan & Co seem to get a bit carried away, maybe because they come with a cleantech perspective. In my objective nuclear cannot be included as a renewable energy source. Nuclear can be argued to be relatively clean, but the source of energy is mined and finite and thus does not fit the definition. Fuel cells also seems a bit out of place. Kachan argues that fuel cells today are not just storage of energy, but also generation of heat and power. However, it seems that Fuel Cells is more a technology that is a special case of one or more of the previous categories. Measurement and Analytics, is also a category that we can safely take away. For some reason Kachan is not mentioning Hydro. I have marked with red the Kachan technologies that I cannot accept in my understanding of renewable energy.

If we cross check with Wikipedia they are a bit more conservative, as they are only listing six different sources of renewable energy: wind, solar, biofuels, biomass, geothermal and hydro. Our last authoritative source of definition is the International Energy Agency that use the same categories as Wikipedia but add a seventh the Marine.

I agree with all of the categories used by the International Energy Association. For the purpose of this blog I shall be using also the emerging as well as the waste-to-energy technologies in my definition. The emerging technologies seem still to be quite exotic, whereas the Waste-to-energy in my opinion is an important source of energy, which it would be wrong not to take into the energy mix.

So my list looks like this, and these will be the subjects that will be considered in more detail in this blog going forward:

- Wind

- Solar

- Renewable fuels (biofuels, liquid and gaseous)

- Marine

- Biomass

- Geothermal

- Hydro

- Waste-to-Energy

- Emerging (osmotic power and kinetic power)