Who Is Willing To Pay More For Renewable Energy?
The costs of renewable energy have fallen dramatically in recent years. According to a 2022 report from the International Renewable Energy Agency (IRENA), the global weighted average levelized cost of electricity (LCOE) for newly commissioned onshore wind projects fell 5% between 2021 and 2022. The LCOE declined from $0.035/kWh to $0.033/kWh. This continuing cost decrease makes renewable energy sources like wind and solar increasingly competitive with fossil fuels.
Current Costs
Over the past decade, the costs of renewable energy technologies like solar and wind power have declined dramatically while fossil fuel prices have remained volatile. According to IRENA, between 2010 and 2022, the global weighted average LCOE (levelized cost of electricity) of utility-scale solar PV fell by 85% and that of onshore wind by 56%. This has made renewables highly competitive with fossil fuels in many parts of the world. In 2021, almost two-thirds of the renewable power added globally had lower costs than the cheapest new fossil fuel-fired options, even without financial support.
The LCOE for fossil fuel power plants varies significantly based on the fuel type and technology. As of 2020, the estimated global weighted average LCOE stood at around $53 per MWh for coal, $58 per MWh for combined cycle gas turbines (CCGT), and $77 per MWh for oil-fired plants. In comparison, solar PV and onshore wind had global weighted average LCOEs of just $44 per MWh and $39 per MWh respectively in 2020.
With continued technological improvements and economies of scale, the costs of renewable power are expected to decline further in the coming years. This will make them more affordable and economically viable alternatives to conventional fuels in many markets.
Environmental Benefits
Using renewable energy can provide significant environmental benefits as compared to fossil fuels. According to the U.S. Environmental Protection Agency, generating energy from renewable sources like wind, solar, and hydroelectric systems results in no greenhouse gas emissions from fossil fuels, reducing air pollution. https://www.epa.gov/statelocalenergy/local-renewable-energy-benefits-and-resources
The Union of Concerned Scientists also notes that renewable energy sources like wind and solar emit little to no greenhouse gases. By avoiding the use of coal, oil, and natural gas, renewable energy can play a major role in reducing climate change emissions and the impacts associated with air pollution and global warming. https://www.ucsusa.org/resources/benefits-renewable-energy-use
The United Nations has stated that renewable energy sources are critical for powering a safer climate future since they do not contribute net greenhouse gases. Transitioning from fossil fuels to clean renewables can significantly lower emissions and help mitigate the effects of climate change. https://www.un.org/en/climatechange/raising-ambition/renewable-energy
Public Support
Polling data gives key insights into public opinions about higher costs for renewable energy. According to a poll conducted by the Yale Program on Climate Change Communication in 2019, nearly half of Americans (47%) reported that they were willing to pay more for renewable energy, while 50% said they were unwilling to pay any extra amount (https://climatecommunication.yale.edu/publications/who-is-willing-to-pay-more-for-renewable-energy/). In 2018, a National Survey on Energy and Environment (NSEE) found that 25% of Americans said they would pay at least $100 more per year, or about $8.33 per month, for renewable electricity (https://www.sciencedirect.com/science/article/am/pii/S2214629620300347). These polls indicate significant public support for paying modestly higher costs to transition the energy system towards renewable sources.
Political Backing
There has been increased political momentum in recent years to boost investment in renewable energy at the federal level. The Biden administration has made tackling climate change and transitioning to clean energy a key priority. Some major initiatives include:
The Biden administration launched the Clean Energy Accelerator initiative, which will invest over $20 billion to demonstrate technologies like clean hydrogen, advanced nuclear reactors, carbon capture, and sustainable aviation fuels (https://www.whitehouse.gov/briefing-room/statements-releases/2023/07/14/fact-sheet-biden-harris-administration-launches-historic-20-billion-competition-to-catalyze-investment-in-clean-energy-projects-and-tackle-the-climate-crisis/).
The Inflation Reduction Act passed in 2022 also included major investments and tax credits for renewable energy development, estimated to reduce emissions by 40% by 2030 (https://www.doi.gov/pressreleases/biden-harris-administration-advances-15-onshore-clean-energy-projects-potential-power).
The USDA is investing $11 billion to expand clean energy infrastructure in rural areas (https://www.usda.gov/media/press-releases/2023/05/16/biden-harris-administration-makes-historic-11-billion-investment).
These initiatives demonstrate strong political will to mobilize public and private investment into renewable energy sources and infrastructure.
Corporate Trends
Many major corporations have committed to transitioning to renewable energy sources. According to [Vestas](https://www.investopedia.com/investing/top-alternative-energy-companies/), leading renewable energy companies include NextEra Energy, Brookfield Renewable, and Clearway Energy. Large oil companies like BP and Shell have also begun investing heavily in wind and solar projects to diversify their energy portfolios.
For example, [Enel Green Power](https://www.nerdwallet.com/article/investing/5-renewable-energy-stocks-to-watch) has become a leading renewable energy company with operations in Europe, the Americas, Africa, Asia, and Oceania. Major corporations are finding it makes strategic and economic sense to embrace clean energy sources like wind and solar. This corporate transition is driving growth in the renewable energy sector.
Regional Differences
There are clear geographic variations in renewable energy use across the United States. According to the EPA, the West and Northeast regions generate the most renewable energy per capita, largely from hydropower and wind power respectively (EPA, 2023). The South and Midwest regions generate the least renewable energy per capita currently. However, the South in particular is seeing massive solar power growth, with states like North Carolina, Georgia, Florida and Texas leading the way. The Midwest lags behind in renewable adoption outside of leaders like Iowa, but states across the region are ramping up wind and solar investments.
At the city level, municipalities in progressive states like California, Washington, Oregon and others on the West Coast and in New England are committing to 100% renewable energy goals, with cities like San Francisco already surpassing 80% renewable electricity (C40 Cities, 2022). More politically conservative cities in the Midwest and South have been slower to commit, but economic factors like plunging solar costs are driving adoption nonetheless.
Demographic Differences
There are some notable differences in support for renewable energy based on demographics. According to Pew Research (https://www.pewresearch.org/science/2023/06/28/majorities-of-americans-prioritize-renewable-energy-back-steps-to-address-climate-change/), younger Americans show greater support for renewable energy and addressing climate change compared to older generations. For example, 81% of adults under 30 prioritize developing alternative energy sources like wind and solar power, compared to 68% of those ages 50 and older.
Income level also impacts views – lower income adults are less inclined to support renewable energy policies. Just 55% of those earning under $30,000 per year believe the U.S. should phase out fossil fuel use, versus 75% of those earning $75,000 or more annually.
Education plays a role as well, with college graduates more likely to back renewable energy development and climate action than those without a college degree. According to Pew (https://www.pewresearch.org/science/2023/06/28/what-americans-think-about-an-energy-transition-from-fossil-fuels-to-renewables/), 87% of college grads support more solar farms, compared to 73% of those with a high school education or less.
Barriers to Adoption
There are still several challenges limiting more widespread adoption of renewable energy. Some of the main barriers include upfront costs, grid and infrastructure limitations, and policy and regulatory hurdles.
The upfront costs of building new renewable energy projects like wind farms or solar arrays can be high. According to the Union of Concerned Scientists, the “capital costs, or the upfront expense of building and implementing these technologies, can be prohibitive” (Barriers to Renewable Energy Technologies). The infrastructure and technology for storing and transmitting renewable energy also needs major upgrades in many places.
Integrating large amounts of variable renewable sources like wind and solar onto the electric grid can be complex. Upgrades are needed to balance supply and demand, control voltage, and maintain reliability (Overcoming Barriers to Renewable Energy). Renewables often require new transmission lines to transport electricity from generation sites to load centers.
On the policy side, regulatory and legislative hurdles in some areas make it difficult for new renewable projects to move forward. Streamlining permitting and approval processes could help accelerate renewable energy growth. Lack of strong national policies, incentives, and mandates in some countries remains an obstacle as well (Breaking barriers in deployment of renewable energy).
Conclusions
In summary, the willingness of the public to adopt and pay for renewable energy is increasing, but still faces challenges. Key findings show strong environmental concern among younger demographics, particular acceptance in liberal states, and growing corporate investment in renewables. However, costs remain higher than traditional sources and some regions of the country are likely to lag behind others. Looking ahead, as costs continue to decrease and new policies provide incentives, a majority of Americans are likely to support and adopt renewable energy more broadly. To accelerate this transition, focus on educating the public on environmental and health benefits, advancing more progressive state policies, and incentivizing corporations to lead the way.
