Cost of Renewable Energy

Kyle A. Weiland

Department of Civil, Environmental, and Architectural Engineering The University of Kansas Lawrence, KS

Table of Contents
Introduction ................................................................................................................................ 2 Background ................................................................................................................................ 2 Renewable Energy ...................................................................................................................... 4 Going Green ............................................................................................................................ 6 Results ...................................................................................................................................... 11 Conclusion ................................................................................................................................ 13

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Introduction
The topic of sustainability has become very popular over the last couple of years. People are talking about it, and there is an ever increasing pressure to go green. But what exactly is sustainability? Sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations (Sustainability, 2011). Companies are constantly producing more efficient products such as more fuel efficient vehicles or more energy efficient pieces of equipment. Becoming more sustainable as a group is important but it is also extremely expensive. With sustainability being in its infant stage, like any new idea or product, it is expensive to implement because designers and innovators are still researching the best solutions. A popular topic dealing with sustainability is renewable energy. Since the Industrial Revolution, we have mainly obtained our electricity from the burning of coal. In recent years we have discovered the harmful effects burning coal has on the environment, and have attempted to devise ways to combat these harmful effects. A few concepts that have been developed are using wind and using the sun to generate useful electricity. This paper will discuss the different possibilities of renewable energy and how much it would cost to generate the majority of our electricity through renewable means.

Background
The idea of sustainability has been around since the seventeen hundreds, but since the ever increasing knowledge about the harm that humans are bringing to the environment, sustainability has become a more mainstream topic. The Industrial Revolution marked the starting point of humans destruction of the environment and the world that we inhabit. During

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the Industrial Revolution large manufacturing machines were invented and implemented into the manufacturing of goods and services. People also started moving from rural areas into large cities looking for a better life. Possibly the biggest change that the Industrial Revolution brought was the generation and wide spread distribution of electricity to the general public. This development was one of epic proportions because it allowed production of goods to be expedited. It allowed people to bring light into their homes and businesses in a much safer way, and the production of electricity also brought about entertainment and the ability to see during night time hours. The discovery of power generation and distribution was one that changed the world in many positive ways and also in many negative ways. The primary means of generating the ever increasing electrical demand of the Industrial Revolution was to burn coal, which heated water to turn it into steam. The steam was then used to rotate turbines that generated the electricity that was in such high demands. This has been the primary means of power generation since the Industrial Revolution to present day. In 2008 coal was the main fuel for electricity generation at forty one percent and was responsible for forty three percent of the global carbon dioxide emissions (Lund, 2011). A few other means have been implemented during those years such as using natural gas and oil to power vehicles and heat buildings. All of these resources are known as fossil fuels and they provide more than eighty percent of todays energy (Inman, 2011). In the past decade new information has been discovered about the adverse effects the burning of fossil fuels has on our planet. When fossil fuels are burned the by-product is carbon dioxide which is released into the atmosphere. Carbon dioxide is labeled as a greenhouse gas, meaning it depletes the ozone layer which protects us from harmful ultraviolet rays produced by the sun. Carbon dioxide also enhances radiative forcing and contributes to global warming (Bossel, 2008). It is estimated that about 21.3 billion

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tons of carbon dioxide is produced each year (Bossel, 2008). Fossil fuels are a non-renewable resource which means that they take millions of years to form. After centuries of drawing from the Earths fossil fuel reserves, they are starting to dry up. Humans are using more fossil fuels then the Earth can produce (Bossel, 2008). As the fossil fuel reserves, that have been providing the world energy for the past century, start to run out it will force us to search in new areas and dig deeper to find more fossil fuels. In doing this it will only increase the cost to the general public to purchase these necessary commodities. In other words the energy needed to recover fossil fuels from the Earth will grow exponentially with the depletion of current reserves (Bossel, 2008). With the reduction in fossil fuels it has become apparent that a new form of energy generation be implemented as soon as possible.

Renewable Energy
The use of fossil fuels as our main source of energy has produced many negative side effects for our planet which in turn affects us as inhabitants of this planet. The demand for electricity is constantly on the rise with the ever increasing population and a greater number of products running off electricity. Generally people want everything to be powered by electricity. Figure 1 shows how energy consumption has increased since 1990 and predicts the amount of energy that will be consumed up to 2030.

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Figure 1: World energy consumption, 1990-2035 (quadrillion Btu). OECD stands for Organization for Economic Cooperation and Development. Source: Energy Information Administration

The increase in demand for electricity multiplies the use of fossil fuels which leads to more carbon dioxide being released into the atmosphere. This increase in carbon emissions has many adverse effects as has been discussed earlier in this paper along with the negative effects of depleting the fossil fuel reserves. With the demand for electricity on the rise it is clear that something must be done to reduce the carbon emissions and keep the cost of electricity at a reasonable rate. Multiple solutions have already been created and implemented to solve this ever growing issue. New more energy efficient equipment is being produced. Vehicles that get better gas mileage resulting in less oil being consumed are being put on the market. Cleaner ways to mine and burn coal are being utilized (Pasqualetti, 2011). All of these solutions are a good start but they just do not provide a big enough impact to slow our carbon emissions and decrease the rate at which we mine fossil fuels. Something on a much bigger scale needs to be implemented for us to see any real change with the environmental impacts we are causing. Many people believe that the change that must be done is to produce all our energy from renewable resources such as the wind, the sun, water, and ocean waves. Many of these renewable sources have already been implemented on a small scale with individual buildings having solar panels or wind 5|Page

turbines powering a portion of, if not all of the building. Hydro-electric dams are being built to help alleviate some of the pressure on traditional power generation means. Wind turbine farms are also being constructed to help as well. With all these new strides to help reduce carbon emissions it still is not enough. Today about eighty percent of our energy comes from fossil fuels while only twenty percent comes from renewable sources like the sun or wind (Bossel, 2008). Figure 2 shows the complete breakdown of energy production in 2006. To make any significant changes to the harm we are causing our planet these percentages need to be reversed and be reversed as soon as possible.

Figure 2: Role of Renewable Energy Consumption. Source: Energy Information Administration

Going Green
Carbon emissions are a serious problem that we are only starting to realize and trying to fix. The solutions that we have created are only a band-aid to heal a scratch. To completely heal the planet we must dig deeper to the root of the problem and fix it with revolutionary treatment. The root of the problem is the over reliance the human race has on fossil fuels (Finally Time for Wind, 2005). We use fossil fuels to power everything from our vehicles to our televisions. There have been many new ideas and regulations to try and limit our carbon emissions. Some of 6|Page

these ideas are building small wind farms or installing solar panels on buildings to assist with power generation. These small changes only account for about one to two percent of electricity generation on a global scale (Lund, 2011). A regulation that can be followed is LEED, which awards points for making a building sustainable. All of these are good first steps because it is said that you must crawl before you can run, but it is about time that we start running. The way to fix the carbon emission problem is to up the scale. There have been many talks about what it would take to have all of our power generated from renewable sources. In order to fully convert to renewable means of energy production many things would need to change and an abundance of money would be needed. The transition is something that must be done, though, in order to keep electricity prices at a reasonable rate and to leave a better world to our children then was left to us. The transition to the majority of our energy being produced through renewable energy means would not be an easy one. It would have to overcome many obstacles and setbacks. One of the main challenges that would have to be overcome is that the new renewable energy technologies are linked to costs and volume (Wilson, 2011). In order for the transition to be a viable option, the price of new energy needs to be reduced and be relevant energy wise, the volumes need to be increased significantly (Lund, 2011). For this to be accomplished great sacrifices would have to be made by governments and their people. An overall agreement and acceptance to this change would need to take place. Having the majority of our electricity come from renewable means would also have to overcome social barriers. According to a study done by Martin Pasqualetti, people are the ones that are holding back a greater push for harnessing renewable resources for our benefit. In the case for wind energy Pasqualetti states that people are reluctant to accept wind turbines due to the fact that they are large and can interrupt the

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landscape. People do not want to accept turbines because they think they look ugly or take away from scenic views. Pasqualetti also states that in his study he found the people dislike wind turbines because they can be noisy and flicker when they are rotating. Solar energy sees many of the same obstacles as wind energy does. Skeptics dislike how large solar plants occupy many acres of land and take away from the lands natural beauty. For renewable energy to become the majority means of power generation it is going to have to overcome these obstacles. If renewable energy finds a way to overcome all of the obstacles and short comings, how much will it cost and what is the volume of resources that would be needed to have the majority of our energy be produced through renewable means. To estimate the cost of implementing renewable energy the learning or experience curve must be examined. The increase of the installed capacity leads to positive learning effects through learning by doing and by using more of the new technology (Lund, 2011). In other words the more renewable energy sources, like wind turbines or solar panels, that are installed, the more efficient the producers and installers become resulting in faster production and installation times. This will only lead to lower production and installation costs which decrease the costs to the consumer. In order to estimate the learning curve a formula is derived. Figure 3 is the learning curve formula.

Figure 3: Learning Curve Formula where c is the unit cost of the renewable technology, V is the cumulative installed where LR is the learning rate. volume and parameter is equal to Source: (Lund, 2011)

This relationship in Figure 3 shows how the cost and volume of renewable technologies are related. For an all renewable energy generation scheme to be even considered it must be cost comparative to our current means of energy production. If it takes hundreds of years to reach its payback period then it could not be deemed cost effective and since the money factor is critical, 8|Page

the cost is the single most important criteria in the estimating process. The volume that would be needed to reach the cost breakeven point of the target cost or in other words, the point where money can start being made with the new technology is given by the equation in Figure 4.

Figure 4: Cumulative volume leading to breakeven point where cT is the cost of the renewable technology. Source: (Lund, 2011)

In order for an all renewable solution to be viable people are going to have to accept the changes that need to be made and assist anyway they can, for example by paying higher taxes to help pay for the renewable technologies to be produced and installed (Wilson, 2011). This extra cost to the consumer from the renewable technology production and installation can be roughly estimated by integrating the equation in Figure 4. Figure 5 shows this integration.

Figure 5: Extra cost to consumer. Source: (Lund, 2011)

As stated before implementation of renewable energy is not only dependant on the cost of renewable technologies but also on the volume of renewable technologies. The estimation of the volume needed can be done with a diffusion model. Based on diffusion theory and empirical observations is can be shown that the annual change in the volume of a renewable technology on a global scale correlates well with its overall share of the energy market (Lund, 2011). This relationship can be shown with the equation in Figure 6.

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Figure 6: Annual capacity addition of renewable technology where V is the total volume of the renewable technology, S is the market share of the renewable technology and F is an empirical correlation function. Source: (Lund, 2011)

The equation in Figure 6 can be graphed to show the relationship between the growth of renewable technology from year to year and the total share of the world energy. Figure 7 depicts this relationship.

Figure 7: Average yearly market growth of energy technologies as a function of the market share of all energy. Source: (Lund, 2011).

It can be clearly observed from Figure 7 that the greater the percentage of the overall world energy the lower the year to year growth. If the majority of our energy is to come from renewable resources, the year to year growth is going to have to increase drastically. The total volume of the renewable energy technologies over time can be estimated using the equation in Figure 8.

Figure 8: Total volume of renewable technology over time where the subscript k stands for the time points. Source: (Lund, 2011).

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Using these equations in a coupled way, one can estimate the volume of renewable technology along with the associated cost of having a majority of our energy come from renewable sources.

Results
The equations presented previously can be used to roughly estimate the cost and volume needed to convert our traditional means of energy production into a renewable one. For this estimate it was assumed that by 2050 a majority of our energy should come from renewable resources. In doing this estimate many assumptions were made as is the case when the cost and volume of something is trying to be predicted. The final estimate is that by 2050 renewable energy production would account for about 61.7% of all electricity generation. Wind power would make up about 25% and solar power would account for about 15% with the remaining 26.7% of renewable energy coming from sources like hydro-power and waves (Lund, 2011). This change in the way we produce energy would result in about 8.1 gigatons of carbon dioxide emission savings (Lund, 2011). This is a vast improvement from the amount we are releasing into the atmosphere at present, and it can only be improved. If we were to not make this transition to a cleaner means of energy production, global emissions could double from todays value of about 29.4 gigatons of carbon dioxide to 50 gigatons of carbon dioxide by (Top Myths about Wind Energy, 2011). The cost of achieving this transition by 2050 is roughly estimated at 327 billion dollars for wind energy and 1432 billion for solar energy (Lund, 2011). The breakeven point for wind would be achieved around 2027 and the breakeven point for solar would be reached around 2032 (Lund, 2011). Once the two technologies reach their respective breakeven points they become profitable. Figure 9 shows a detailed cost breakdown of implementation of renewable technology.

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Figure 9: Yearly financial support needs. Left: Wind power, Right: Solar power.

It should be noted that if this transition should occur the average cost of electricity to the consumer would be about the same as it is today. There would be no increase or decrease in the average cost of electricity from what it is today (Finally Time for Wind, 2005). This is a positive aspect because electricity costs have steadily been on the rise over the last century and with easily accessible fossil fuel reserves running out, electricity costs will only continue to rise (Top Myths about Wind Energy, 2011). The amount of resources that would be needed is enormous. To achieve a majority of energy production the world would need roughly 4 million wind turbines with a capacity of about 5 megawatts each (Inman, 2011). A 5 megawatt turbine is about two to three times bigger than todays conventional wind turbine. In addition to the wind turbines the world would need about 90,000 large-scale solar plants, each with a capacity of about 300 megawatts (Inman, 2011). Also about 1.7 billion 3 kilowatt solar panels would need to be installed on individual homes and businesses to assist with energy production (Inman, 2011). These numbers might seem like a lot but it must be remembered that this is a global estimate so these wind turbines and solar panel farms would be spread throughout the globe. So if you think about it on a large scale it does not seem unattainable. In fact it seems quiet feasible. It should be noted that only wind and solar technologies were examined because they show the 12 | P a g e

most promise in a renewable energy future. To become independent of fossil fuels will take a lot of money and a lot of resources but it is something that has to be done and be done as soon as possible if we are to salvage our planet.

Conclusion
Becoming a sustainable Earth has become an important topic in recent years, and it will only become more important the longer we pollute our environment. Change has to happen as soon as possible and that change is producing the majority of our electricity with renewable technology. To make this transition it would cost just fewer than 2,000 billion dollars and require millions of wind turbines and solar panels. These numbers are gigantic but they are not the main limiting factor keeping the transition dormant. The main obstacles that are being faced are a lack of public and governmental support. They just do not think the problem is severe enough to spend the kind of money and resources that would need to be spent to accomplish such a massive undertaking. If a renewable means of energy production was able to overcome all of its obstacles it would only lead to a cleaner, better world for humanity.

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Works Cited
Bossel, D. U. (2008). Alternative Energy Conversion. European Fuel Cell Forum (pp. 1-14). Chianciano: World Academy of Ceramics. Finally Time for Wind. (2005, March 23). Retrieved November 22, 2011, from Telosnet: http://telosnet.com/wind/future.html Inman, M. (2011, January 17). Going "All the Way" with Renewable Energy. Retrieved November 30, 2011, from National Geographic : http://news.nationalgeographic.com/news/energy/2011/01/110117-100-percent-renewableenergy/ Lund, P. (2011). Boosting New Renewable Technologies Towards Grid Parity-Economic and Policy Aspects. Renewable Energy , 2776-2784. Pasqualetti, M. J. (2011). Social Barriers to Renewable Energy Landscapes. The Geographical Review , 201-223. Sustainability. (2011). Retrieved Novemeber 29, 2011, from United States Environmental Protection Agency: http://www.epa.gov/sustainability/basicinfo.htm Top Myths about Wind Energy. (2011, June 14). Retrieved November 22, 2011, from RenewableUK: http://www.bwea.com/energy/myths.html Top Ten Wind Energy Myths. (2009, Febuary 3). Retrieved November 22, 2011, from Wind Energy Planning: http://www.windenergyplanning.com/top-ten-wind-energy-myths/ Wilson, A. (2011). The Foll of Building-Integrated Wind. Environmental Building News , 18 (5), 130-139.

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