Which Renewable Energy Source Is The Most Expensive?
Renewable energy sources such as solar, wind, hydropower, geothermal, biomass, and ocean energy offer clean alternatives to fossil fuels. However, costs and challenges exist with scaling up renewable energy production.
Recent inflation and supply chain issues have increased project costs across the renewable energy sector. At the same time, energy demand continues to rise globally. Determining the most cost-effective renewable energy sources is key to tackling climate change and transitioning away from fossil fuels.
This article provides an overview of the major renewable energy sources and compares their costs and economic viability. Understanding the expenses associated with each renewable technology can help guide future investment and policy decisions.
Solar
Solar power comes in two main forms, photovoltaic (PV) and thermal. PV solar uses panels made up of solar cells to convert sunlight directly into electricity. Thermal solar uses mirrors or lenses to concentrate sunlight to heat some sort of fluid, which can then be used to drive a generator to produce electricity.
The cost of PV solar panels has dropped dramatically in the past decade, with prices now around $0.89 to $1.01 per watt according to SolarReviews.com (1). However, large scale solar farms require a significant amount of land, with around 3-5 acres needed per megawatt of capacity. Land rental rates for solar farms range from $300 to $4,000 per acre annually according to Coldwell Solar (2). So while the panels themselves are relatively cheap now, acquiring sufficient land can be a significant cost.
Sources:
(1) https://www.solarreviews.com/blog/what-is-a-solar-farm-do-i-need-one
(2) https://coldwellsolar.com/commercial-solar-blog/how-much-investment-do-you-need-for-a-solar-farm/
Wind
Wind power can be generated both onshore and offshore using wind turbines. Onshore wind turbines are installed on land, while offshore turbines are installed in bodies of water like oceans, lakes, and rivers.
Onshore wind is generally less expensive than offshore wind. According to the U.S. Department of Energy, the average cost of land-based wind power ranges from $32-62 per MWh, while offshore wind power costs $90-174 per MWh [1].
The high costs of offshore wind are largely due to expenses related to turbine foundations, underwater cables, shore connections, and maintenance. Offshore turbine maintenance is particularly costly because specialized vessels and equipment are needed to access turbines in the water [2].
The capital cost of an average onshore wind turbine is around $1600-$2200 per kW of capacity. Offshore turbines range from $4000-$5000 per kW [3].
Maintenance accounts for 9-25% of the total cost of energy for onshore wind turbines over their lifespan [4]. Regular maintenance is crucial to maximize turbine availability, generation, and lifespan while minimizing costly unplanned repairs.
Hydropower
Hydropower is one of the oldest and most widely used renewable energy sources. It uses the natural flow of water to generate electricity through turbines connected to generators. While hydropower can provide clean, reliable electricity, the costs associated with dam construction makes it an expensive option.
According to the International Renewable Energy Agency, the average cost for large hydropower projects ranges from $0.02 to $0.19 per kWh, assuming a 10% cost of capital [1]. Statista reports the global average installation cost for hydropower was $2,881 per kW in 2022 [2]. The high upfront costs are largely due to the massive dams and reservoirs required.
Building large dams and reservoirs can cost billions of dollars and take many years to construct. The Itaipu Dam between Brazil and Paraguay, built in the 1980s, cost $20 billion and took 18 years to complete [3]. Geography also limits hydropower to areas with consistent water flow, ruling out arid regions.
Geothermal
Geothermal energy utilizes the natural heat from the Earth’s interior to produce renewable electricity and energy for heating and cooling (1). While geothermal energy can be very cost-effective once installed, the high upfront drilling costs make it one of the most expensive renewable energy sources to develop initially.
According to the National Renewable Energy Laboratory (NREL), drilling a 4-kilometer geothermal well costs around $5 million on average (2). For deeper 10-kilometer wells, drilling costs can exceed $10 million per well (2). These considerable drilling expenses are a major barrier to widespread geothermal adoption.
Moreover, geothermal energy is only feasible in suitable locations with adequate subsurface heat and permeability (3). This geographically limits where geothermal plants can be built, further increasing development costs in feasible areas due to high demand.
Sources:
(2) https://www.nrel.gov/docs/fy23osti/82771.pdf
(3) https://www.forbes.com/home-improvement/hvac/geothermal-heating-cooling-systems-cost/
Biomass
Biomass power plants utilize organic materials like wood, plants, waste and alcohol fuels to produce electricity. According to the US Department of Energy, the main costs associated with biomass power plants are the fuel costs and the boiler/generator equipment costs.
Fuel costs can vary greatly depending on the type of biomass feedstock used. Materials like wood chips, agricultural residues and waste materials often have low or even negative fuel costs if they are waste products. However, purpose-grown energy crops and forestry products can cost $20-50 per dry ton according to the US Department of Energy [1].
The boiler and generator equipment for a biomass plant ranges from $3,000-$5,000 per kilowatt installed according to the US Department of Energy [2]. So a 10 MW biomass power plant could cost $30-50 million just for the boiler and generator. Additional costs include things like site preparation, transmission equipment, pollution control systems, and more.
Ocean Energy
Ocean energy technologies harness the energy of the ocean’s waves, tides, currents, salinity gradients, and thermal gradients to generate electricity. However, ocean energy currently has very high infrastructure costs compared to other renewable energy sources (UNEP Regional Seas Reports and Studies No. 30). These high capital costs are due to the immature state of ocean energy technology and the challenges of building and maintaining equipment in harsh marine environments (Ocean energy potential of the West African region (1983)).
For example, building and installing a 80-100 MW ocean energy facility can cost $373 million to $653 million, much higher than comparable wind or solar installations (UNEP). Additionally, operation and maintenance costs are estimated to be 5-25 cents per kWh for ocean energy, versus just 1-5 cents for wind and solar (UNEP).
While ocean energy holds great promise as a renewable resource, the technology is still in early developmental and demonstration stages. More R&D and experience operating ocean energy facilities will be needed to mature the technology and bring down costs to competitive levels.
Comparison
According to the Energy Information Administration (EIA), the 2022 Levelized Cost of New Generation Resources report indicates that geothermal and offshore wind are currently the most expensive renewable energy sources on a per kilowatt-hour (kWh) basis when comparing costs across technologies.[1]
The EIA report provides the following summary of levelized costs per megawatt-hour (MWh) for new generation resources entering service in 2026:[1]
- Onshore Wind: $50.37/MWh
- Solar Photovoltaic: $58.42/MWh
- Hydropower: $63.18/MWh
- Geothermal: $97.25/MWh
- Offshore Wind: $168.91/MWh
Based on this data, geothermal and offshore wind are the most expensive renewable energy technologies on a per kWh basis. Offshore wind, in particular, is estimated to cost over 3 times more than onshore wind or solar PV.
The Winner
After reviewing the costs of various renewable energy sources, ocean energy emerges as the most expensive option. Technologies like wave power, tidal power, and ocean thermal energy conversion have very high capital and operating costs compared to other sources like solar, wind, and geothermal.
The main reasons ocean energy is so much more expensive are:
- Challenging marine environments – Equipment has to withstand corrosion, storms, and being submerged.
- Low energy density – The ocean’s energy is dilute, so large devices are needed to extract meaningful amounts.
- Immature technologies – Ocean energy is less commercially developed than other renewables.
- High maintenance – Saltwater and weather cause breakdowns that require frequent repairs.
While costs are dropping as technology improves, ocean energy remains multiple times more expensive per kilowatt-hour than onshore options. For the foreseeable future, ocean energy will occupy just a niche role in renewables due to its high price tag.
Conclusion
As we have seen, there are several types of renewable energy sources, each with their own costs and benefits. Of the major renewable sources, geothermal energy is generally the most expensive to build, operate, and maintain on a per-megawatt basis. The high upfront capital costs, complex drilling and reservoir development, and ongoing operation and maintenance expenses make geothermal facilities a significant investment.
That said, geothermal offers some unique advantages as a clean, renewable baseload source of energy, and costs can be competitive under the right geological conditions. As technology improves and geothermal plants grow larger in scale, costs are likely to come down further. All renewable energy sources have an important role to play in powering a sustainable future.
Looking ahead, continued research, development, and investment will be key to driving down the costs of geothermal and other renewable sources. With more technological breakthroughs and economies of scale, the most expensive sources today could become the most affordable options tomorrow. The outlook for renewables remains bright, but navigating the complexities and uncertainties of costs will be an ongoing challenge.
