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The Economics of Clean Energy

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Beyond environmental impacts, renewable energy (RE) demonstrates the effective way of achieving economic sustainability in various sectors. A lot has been said about its creation of over 10 million jobs globally so far. Such development may also be referred to as a shift from perilous jobs to healthy ones. Clean energy sourcing has forced a shrink to non-renewable energy projects (also ways of employment) or better still redirected employment channel in the energy sector. This may also be considered as we hype the employment opportunities achieved through RE technology. Of course, it has discouraged investment for further development in fossil-fired plants which would have also created more jobs, even though with negative environmental footprints.

In its promotion for welfare, renewable energy is affording a direct conduit to transform the lives of over one billion people with no access to electricity, mostly in the developing countries. Renewable energy could be said to have simulated economic potentials by leading a path to new innovations and technology, if not as bait for GDP rise by dwindling fossil fuel importation. However, the economics of clean energy has by far been affected by many factors despite its fat promises. This includes global policy changes, technology advancement and the need for energy expansion projects.

As a less carbon-intensive source of energy, RE is rapidly growing in recent years. This has been attributed to policy support in various nations and sharp cost reductions caused by advances in the production of its materials; mostly wind turbines and photovoltaic cells. International Energy Agency (IEA) experts suggest that clean energy would increase more than 30% by 2022, with wind and solar PV contributing nearly 82% of the global renewable energy estimated to hit 1,150 GW in the next two years.

Regardless of the huge economic benefits promised by clean energy sources, most countries are yet to join the energy transition significantly. Some of the hindrances include policies, financial strength and partly system of government. Under national policies, countries are liable to establish regulations for clean energy based on what they have and of course, priority. For instance, China, undisputed clean energy growth leader is not only working hard to achieve 100% clean energy for economic sustainability. As world’s number one carbon emitter, the impact of pollution in China is reportedly growing more dangerous. About 157 million people in the country are living in areas with a dangerous level of air pollution. Also, yearly premature deaths of about 670,000 persons in the country have been linked to coal emissions. Aside from the high level of energy transition, China is also interested in the renewable energy market. The country exports about 90% of its produced photovoltaic cells.

Factors driving the rapid growth of clean energy

The needs to strengthen energy security, maximize revenues from investments, increase access to reliability and mitigate climatic change are most factors influencing the global transition to clean energy. Among the 194 countries that participated in the Paris Accord signed at the World Climate Summit in an agreement to reduce Earth’s average temperature by century ending, 145 nations recognized renewable energy projects as the only way to comply with the agreement, according to IRENA. Also, China is not the only nation with records of premature deaths linked with air pollution. WHO reports that about 7.3 million premature deaths yearly may be caused by outdoor or household air pollution and clean energy switch is being recognized as the only way to arrest air pollution.

Global energy market uncertainties do not affect renewable energy sources. Hence, nations and sub-nations are encouraging policies that will provide clean energy just for energy security and reliability. Nations like Saudi Arabia and Singapore are among nations vividly building clean energy not because they needed to expand power capacity, but to provide a more reliable source of energy.

With its major disadvantage being the cost of investment, subsidies and loans supporting clean energy projects have proved to be instrumental in driving the technology. For instance, SoftBank Group will be contributing massively to Saudi Arabia’s $200 billion solar project which will supply 200GW clean energy and represent the world’s biggest solar PV plant when completed. Similarly, the European Bank of Reconstruction and Development (EBRD) and the European Investment Bank (EIB) have both given green light to Greece for loans as the country struggles to meet up with its clean energy target due to financial crisis.

Areas with recent advances driving the economics

Today, government established tariffs for renewable energy is no longer effective in most countries due to competitive auctions which usually come with long-term power purchase agreements (PPAs). Remuneration levels for wind and solar PV projects have been controlled largely by increased competition, reducing them by 35% within just two years. This has mechanized options for cost-effective policies in countries like India, Turkey and Germany.

Offshore wind

The global average generation costs for offshore wind projects have been estimated to drop by at least 33% between now and 2022. Advances in offshore wind farms have been largely controlled by demand and competition. Although most EU nations are yet to meet their established clean energy targets for the next few years, ongoing wind projects in the Mediterranean Sea led by countries like Norway, Italy and Scotland is a major drive for new designs and competition in the clean energy market, with Scotland building the world’s largest wind turbine that can power a home for 24 hours in one spin. This has generally cut down the cost of building floating wind farms significantly. Some of these advances have been attributed to increased skilled personnel in the industry. Also, the recent low cost of carbon fibre materials used as an option to reduce weight and enhance farm performance is one of the advances that has reduced the cost of offshore wind farms by one-third since 2009.

Energy Storage Knowledge

While more people are growing interest to install clean energy, the quest to understand how energy can be stored has also grown, including how it works. Since 2017, there have been demonstrations on energy storage pilot around the world to encourage people and increase their benefits. For instance, a demonstration project to training and educate people about storage utility took place in Texas. In Hawaii, such project identified how accumulated storage can form virtual power plants. A similar project is going on in the U.K. and as well as Australia to optimize recycled electric vehicles and to show the benefits of combining solar with storage in remote areas respectively.

The knowledge being disseminated is breading insights in policy making as new regulations that will help to improve clean energy projects even at grass root level are bound to be established.

Energy from waste

Waste management is a growing crisis in many cities across the globe. More governments are beginning to channel this problem into a good thing by using waste for energy. India is one of the countries that have recognized waste-to-energy facilities as a means to control landfill expansion. The country is estimating to process one-third of its waste with the facility for clean energy. This is not new to China which prides 40% of the global renewable energy growth. The nation just commissioned its eighth waste-to-energy project in Shandong province.

America, United Arab Emirates and European Union are a few to mention that have adopted waste-to-energy projects as a means to improve clean energy economics. Experts opine that global policy for waste-to-energy will soon roll out to boost clean energy sourcing in this sector.

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