| Energy: Alternative Energy Economics
Introduction
Conspiracy Theory?
"It's a conspiracy."
When discussing alternative forms of energy, this term is an oft repeated
phrase. Some people use it to explain why there is not widespread use
of alternative forms of energy such as solar or wind. These conspiracy
theorists usually state that large oil/electric companies fear these types
of energy and are in working behind the scenes in an illegal manner to keep
them off of the market. While there is no solid evidence to support
these claims, they still persist.
A more plausible explanation
for why these forms of alternative energy are not in widespread use in the
world has more to do with economics than it does with some type of global
conspiracy. The price of usable energy produced by these renewable forms
of energy has not been competitive, historically, with the price of energy
produced by most fossil fuels. Research and development on alternative
energy over the last several decades has brought the price of energy by solar
and wind down considerably. Over that time, the price of solar and
wind energy has dropped by a factor of about 5-6 times. At the present,
wind energy can be generated at a cost of about $.04/kwhr1 in
many parts of the U.S., while solar systems generate at a cost of about $.10-$.30/kwhr
and biomass at a cost of about $.08/kwhr2. While this compares
very favorably to coal and gas generated electricity at about $.03/kwhr,
the fact remains that burning coal or gas in a power plant to create electricity
is still cheaper to getting the energy to market than it is to use these
renewable forms.
True Economics
Of course, the price
of bringing the energy to market does not necessarily cover all of the costs
of producing energy. Environmentalists and others have claimed that
just looking at the cost of producing the energy does not take into account
the cost of correcting the damage that is wrought by using a particular energy
source. When those costs are included, some forms of alternative energy,
such as wind, beat coal and gas fired plants for producing electricity.
Estimates for adding in the medical and environmental costs (black lund disease,
smog, asthma, etc.) of electricity production from coal actually drive the
price of it up to $.055 - $.083/kwhr3.
The following websites
will give you more information about the state of alternative energy in the
U.S. and some of the recent advances in using them.
Alternative Energy
Energy Efficiency and Renewable Energy Network
(Dept. of Energy)
National Renewable Energy Lab
True Cost
1996 NREL Report
on Economics
Union
of Concerned Scientists
Alternative Energy
Projects
Wind Projects in the U.S.
(American Wind Energy Association)
GreenPower
Network (Dept. of Energy)
After reading through
these and any other sites that you might find, answer the
following questions:
- Which form of alternative energy
seems to be performing the best at this point? Why?
- Are any of these forms of energy
economically feasible for use in your area? Would you pay to have them
installed? Would you pay to buy energy from a power company that used
them?
- Who pays for the medical and
environmental costs for bringing energy sources to market? Are these
costs being paid by the energy providers, or by somebody else? Should
this be changed? If so, how should it be done?
- American Wind Energy Association,
February 4, 2002, http://www.awea.org/faq/cost.html
- SUNLAB, Sandia National Labs,
February 4, 2002, http://www.energylan.sandia.gov/sunlab/PDFs/financials.pdf
- "Exploiting Wind Versus Coal",
Mark Z. Jacobson and Gilbert M. Masters, Science, August 24, 2001, Vol. 293.
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